Feb 21 (Reuters) – Holiday Inn owner IHG (IHG.L) missed full-year revenue expectations as it was impacted by COVID-19 curbs in China, while a $750 million share buy-back did little to cushion a drop in its share price on Tuesday.
While the tourism industry is seeing a gradual recovery since the pandemic brought businesses to a standstill, hotel chains have seen an uneven recovery in China as a rise in COVID-19 infections in the final quarter of the year led to indefinite restrictions.
IHG reported full-year revenue of $1.84 billion, missing market expectations, and a 55% rise in operating profit from reportable segments of $828 million, which also missed expectations.
Analysts on average were expecting revenue of $1.89 billion and operating profit of $831 million, according to a company compiled consensus.
Shares were down 1.6% at 5,504 pence in morning trading.
Despite the miss, IHG said it would buy back additional shares worth $750 million after the company completed a share buyback worth $500 million in January.
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Full year RevPAR – a key measure for a hotel’s top-line performance – in Greater China was down 38% from pre-pandemic levels, while the Americas market saw the strongest recovery, with RevPAR up 3.3%.
However, the hotel group saw a surge in demand in China during the Lunar New Year in January.
“Now that COVID restrictions have lifted, things have quickly returned to normal, in fact, travel for the Chinese New Year last month was almost back to 2019 levels,” Chief Financial Officer Paul Edgecliffe-Johnson said on a conference call.
The Crowne Plaza, Regent and Hualuxe owner said RevPAR across the regions in the second half of the year exceeded pre-pandemic levels of 2019.
Reporting by Radhika Anilkumar in Bengaluru; Editing by Rashmi Aich and Bernadette Baum
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