IHG to cut $150 million in costs

Miles Hurley Miles Hurley Uploaded 20 March 2020

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Worldwide: With hotel demand at record lows, InterContinental Hotels Group, the group behind Kimpton and Hotel Indigo, announced $150 million in cost cuts.

The company is expecting its RevPAR to fall by around 60 per cent in March, with steeper declines in individual markets that are locked down.

IHG points fingers at the coronavirus spread, and cancellations due to it. While the company is reopening hotels in China, where the virus originated, it is concerned for cancellations in its core markets of Europe and the US, where it holds around 70 per cent of its hotels.  

They have joined hundreds of listed companies in withdrawing its financial dividend and deferring decisions on payouts. IHG has approximately $1.2 billion in un-drawn cash available in a revolving credit facility, should they need to rely on further financial reserves.  

CEO Keith Barr said to Skift: “These were not easy choices and we are mindful of the impact these decisions will have on our colleagues and shareholders. In Greater China we now have 60 hotels closed compared to 178 at the peak, and in recent days have begun to see improvements in occupancy, albeit at low levels.” 

The group has already begun cutting salaries and incentives, primarily for executives and board members.

IHG is not alone in the global hospitality world fearing for the future. Mariott has already begun to furlough many of its employees worldwide, while many London boutique hotels have temporarily ceased business in order to delay the spread.

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