Hotel company IHG is seeing “encouraging signs of recovery” for business travel as the Holiday Inn owner returned to profit in 2021.
London-based IHG, which also owns brands such as InterContinental, Crowne Plaza, Kimpton and Staybridge Suites, said there has been a “rapid return” of demand as Covid-19 travel restrictions have been lifted, amid higher vaccination rates and renewed economic activity.
This strong recovery helped IHG to increase group revenue by 21 per cent to $2.9 billion in 2021, while the hotel giant made an operating profit of $494 million last year, compared with a loss of $153 million in 2020.
Keith Barr, CEO of IHG Hotels & Resorts, said: “Trading improved significantly in 2021, with revpar (revenue per available room) getting closer to pre-pandemic levels as the year went on, profitability and cash flow rebounding strongly, and signings accelerating in the fourth quarter.
“As vaccination rates rise and restrictions are lifted around the world, we are seeing the demand for travel increase. While there may be unexpected challenges ahead, we are confident in our ability to respond and adapt to what consumers and owners need as we position IHG for strong future growth.”
IHG said the quickest market to see demand return was domestic leisure bookings, reflecting a similar picture to other major hotel players.
The company added that essential corporate travel had “already proved resilient”, while discretionary business travel, group bookings and international trips were now showing “encouraging signs of recovery”. IHG has been targeting the corporate market through its 'Welcome Back to Business' campaign.
IHG admitted that while technology could replace “certain kinds” of business travel post-pandemic, hotels were also likely to be used more often to facilitate the move towards “increasingly flexible working arrangements”.
“These further support a view that overall demand levels could be little changed,” added the company.
IHG revealed that 2,200 hotels were now using its centralised RFP (request for proposal) processes, which had helped to successfully “roll over” corporate rates. The company added that corporate customers were “embracing” its strategy to move from static to dynamic hotel rates.
IHG said it had seen a “particularly strong recovery” in the US during 2021, recording a 51.2 per cent rise in revenue to $774 million in the Americas region compared with 2020.
As a comparison, in the EMEAA (Europe, Middle East, Asia and Africa) region, there was only a 37.1 per cent increase in revenue to $303 million over the same period.
“The signs are encouraging that we are nearing the end of the pandemic, and we are confident in the strength of IHG's enterprise, market positioning and ability to drive attractive levels of long-term, sustainable growth," added Barr.