Mainstream properties help lead a Q2 comeback at IHG

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The Holiday Inn Montego Bay is open for business. IHG says the brand has helped drive its recovery in recent months.
The Holiday Inn Montego Bay is open for business. IHG says the brand has helped drive its recovery in recent months.

Despite recording a 75% drop in global RevPAR for the second quarter, InterContinental Hotels Group (IHG) CEO Keith Barr told investors that IHG's outsize presence in the mainstream segment is helping to drive a recovery for the company.

Systemwide, IHG saw global occupancy rebound to 45% by July, compared with 20% in April.

"Across the different chain scales, while we're seeing very limited improvements in upscale and luxury and many of our hotels in these segments remain closed, mainstream has had the greatest improvement in occupancy," Barr said during IHG's second quarter earnings call on Tuesday.

IHG's mainstream portfolio includes its Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, Staybridge Suites, Candlewood Suites, Avid and Atwell Suites brands. IHG's mainstream segment accounts for roughly 84% of the company's total rooms in the U.S.

Within that mainstream segment, IHG's upper-midscale brands, which include Staybridge and Atwell, are showing particularly promising rebound trends.

"In the U.S., more than 30% of all branded rooms sold last week by the industry were in the upper-midscale segment of mainstream, which was more than upscale, upper-upscale and luxury combined," Barr added.

For Q2, IHG saw U.S. RevPAR fall 69.3% over the same period last year.

In Europe, the Middle East, Asia and Africa, second quarter RevPAR dropped 87.6%, while Greater China reported a RevPAR decline 59.2%; that compares to the steepest RevPAR drop of 89% for China in February.

"[Greater China] has shown a trend of gradual RevPAR improvement," said IHG CFO Paul Edgecliffe-Johnson. "Tier 1 cities were down 66% [in the quarter], reflecting their greater weighting in upscale and luxury hotels and international inbound travel, and Tier 2 cities were down 50%, reflecting their greater mix of leisure and resort destinations and a pick-up in demand for domestic travel."

Meanwhile, of the company's 9,500 hotels worldwide, only 317 properties, or 5%, remain temporarily shuttered. That number is down from a high of nearly 1,000 properties closed at the end of April.

For the first half of the year, IHG reported a 51% decline in revenue year over year, to $488 million.

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