Hotels giant IHG sees uptick in room bookings after tough first half

Shares were up nearly 4% this morning as management announced an increase in bookings as lockdowns are eased

Article updated: 11 August 2020 2:00pm Author: Helal Miah

  • Group revenues halved to $488m and operating profit margins down 82% to $74m
  • Despite this and the fact the numbers were slightly below expectations as well as the dividends being suspended, the shares this morning are up nearly 4%
  • Managers remain positive as business has picked up since lockdowns have eased
  • Recommendation: There are a number of risks including the possibility on entrenched economic slowdowns as a result of this crisis as well as the very strong competition in the sector. We therefore maintain our Hold recommendation on the stock

The owner of Holiday Inn and Crown Plaza hotels has reported horrible half year numbers with revenues halving to $488m and operating profit margins down 82% to $74m. There are many other measures of performance available but all show the substantial damage to the business from the global pandemic.

Despite this, the shares are up nearly 4% this morning. This seems to be based on the management’s rather upbeat statement suggesting room bookings are picking up as lockdowns are eased and their domestic bookings were resilient as staycations increased. The group also opened 90 new hotels and agreed to open 181 more during this period, showing that it is not retrenching during this crisis, although this rate of opening is slower than previously planned.

With a tentative recovery in the sector, travellers are showing preference towards more budget friendly hotels such as Holiday Inn. With more openings coming along, the feeling is that IHG will do well to capture some pent-up demand from travellers and holidaymakers as long as lockdowns are not too stringent.

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Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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