IHG sees a tale of two recoveries between the U.S. and China
If you open up, the people will come. That’s the message conveyed repeatedly throughout the ongoing hotel earnings cycle — especially on the IHG Hotels & Resorts first-quarter report.
IHG (owner of brands like InterContinental and Regent as well as Holiday Inn and Avid), reported Friday that hotel performance levels at the company for the first three months of the year were at 82% of 2019 levels. That’s a 61% increase from the same quarter in 2021, and the U.S. and Americas region drove much of that recovery.
Lockdowns cause poor performance in China
IHG leaders recognize the quarter could have been better had it not been for the tough lockdown measures taking place in China amid an omicron surge hitting Shanghai, where the company has a corporate office, particularly hard.
“China has been challenging, and we've seen that come through in the numbers,” Paul Edgecliffe-Johnson, IHG’s chief financial officer, said on an investor call. “What's important to note is that our experiences in the last 24 months or so show that China demand does come back very rapidly, as it has elsewhere in the world, once restrictions are lifted.”
This year, performance in IHG’s Americas region — which is home to most of its hotels — was down only 8% from 2019 levels, compared to China where performance was down 42%. In 2021, China was the bright spot, as its performance was only 7% off 2019 levels.
IHG’s U.S. hotels were only 6% off 2019 levels for the first three months of this year, another sign of the strength of leisure travel demand picking up in March. U.S. hotels were only 1.5% off pre-pandemic performance in March, Edgecliffe-Johnson added. This nearly full recovery in the U.S. is similar to what the CEOs of Marriott and Hilton reported of their own companies earlier this week.
Business travel-oriented cities like Boston and New York City saw an accelerated recovery for the quarter, and performance at hotels in both cities was only 20% off 2019 levels; not a full rebound but still a win, as the top 25 hotel markets in the U.S. lagged leisure destinations in their recovery. IHG’s hotels in San Francisco still struggled, as performance there was only half of 2019 levels.
A closer look at China shows just how much lockdowns hurt performance.
Performance at properties in Shenzhen, China, was 77% off 2019 levels while performance in Shanghai, which didn’t begin to see tough lockdowns until the last month of the quarter, was down by 40%. IHG remains bullish on China, where it plans to open a significant number of new hotels.
“We don't know the future extent or the length restrictions,” Edgecliffe-Johnson said. “What we saw each occasion in 2021 is whenever restrictions are relaxed, demand sharply returned thereafter.”
A Russia update
Edgecliff-Johnson provided an update on the company’s position in Russia, as the hotel industry faced scrutiny of being Western holdouts amid the invasion of Ukraine. Many Western companies like Starbucks and McDonald’s suspended operations in Russia, but hotel companies still have a presence there to various degrees.
IHG and many of its competitors closed corporate offices in Moscow. The hotel company also suspended future investments, development activity and new hotel openings. But each of the major Western hotel companies still has hotels tied to their brands in Russia.
Hyatt has scaled back its presence in Russia, and there were reports in Russian media that IHG was looking to wind down its business there as well. Edgecliffe-Johnson did not address that claim during his prepared remarks, but he referenced the company’s April announcement on how IHG was evaluating the “complex, long-term management or franchise agreements” with third-party owners of the hotels in Russia.
“We are in discussions with owners,” he added. “This is a complicated process and will take some time.”
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.