Specialist
Former executive at InterContinental Hotels Group plc
Agenda
- RevPAR expectations for Q4 2021 and Q1 2022
- InterContinental Hotels Group's (LON: IHG) performance through coronavirus and medium-term expansion opportunities amid labour shortages
- Franchisee network health and risk of additional franchise fee concessions, highlighting competition from Hilton (NYSE: HLT) and Marriott (NASDAQ: MAR) moving into Europe
Questions
1.
Can you outline 2-3 key trends that played out across the European hotel industry during the pandemic? What were the key surprises over the past 12 months? What should investors monitor?
2.
Are you noticing an increase in wages across the sector? Are any valuable key skills being lost?
3.
Is the wage pressure hindering the level hotels can operate at or are most still unable to operate at 100% and just have to really fight for the high wages?
4.
How long might the labour shortage last? Might this theme play out over at least the next 12 months or is the end in sight?
5.
Would you say the mid-scale market segment is likely hit the hardest by the labour issues and will feel the pinch on the profit line the most? The premium and luxury segments rely on more labour but they have more flexibility to play with rates. The budget sector is probably on the other side, where they don’t have a lot of labour but rates are quite constrained.
6.
How significantly might increasing labour fees impact IHG [InterContinental Hotels Group]? Will the company be relatively protected, while franchisees get hit more?
7.
You mentioned the resilience of local leisure travel and staycations. What might be this trend’s longer-term impacts and ramifications? Could this continue? Is there a real buoyancy for this sector that will lead to some long-term tailwinds?
8.
You said September and October 2021 were really strong months within the industry. Was this across the whole sector or did any segments or price tiers benefit more?
9.
What’s your occupancy outlook for December 2021 into Q1 2022? What sector positions might outperform?
10.
How have rates performed throughout the pandemic? We’re in a unique situation where downsizing rates won’t necessarily lead to higher occupancy, given the demand is not there for various reasons. How have players thought about rates through this and how might rates progress?
11.
Many governments have supported the industry through coronavirus, but a lot of that support is starting to tail off, including the furlough scheme in the UK. What consequences could this have for the hotel industry? Might this lead to a few asset sales, a scenario that hasn’t played out yet?
12.
What’s happened with the balance between branded hotels and independents in Europe through coronavirus? Has there been a move towards brands given they offer a sense of security?
13.
How might IHG consider signing more franchisees and picking up on the momentum you mentioned? Are there strong tailwinds there?
14.
How has IHG performed over the last 18 months in Europe? Did the company perform relatively well for this sector or was it hit harder?
15.
You said mid-scale hotels in Europe tend to do better in a crisis. How does this position IHG for the next six months and especially as we pivot towards corporate travel re-emerging?
16.
What do you make of IHG’s pipeline for further mid-scale hotels? Is this the correct long-term strategy for Europe, given so much of the company’s portfolio is weighted towards the mid-scale, or does it need to balance the portfolio more by growing out other price segments?
17.
You mentioned the Voco brand as a competitor to DoubleTree. How strong is this brand? Does IHG need to do more marketing work to push the brand and get consumers familiar with it?
18.
If there’s no significant marketing, how does IHG go about building the Voco brand, getting it to compete at the highest level and making it an attractive opportunity for franchisees?
19.
Many US brands, such as Hilton and Marriott, are starting to become stronger in Europe, . How is this impacting competition in the sector, as well as players such as IHG? Are you noticing tougher fee negotiations?
20.
Do you think IHG faces oversaturation, especially with the Holiday Inn brand in some key UK locations, such as big city centres?
21.
Did IHG provide any adequate financial support to its franchisees through coronavirus? Are you noticing any ramifications from that?
22.
You mentioned IHG dropping the royalty fee, which was unprecedented. Has this garnered any goodwill for the company within the market and among franchisees?
23.
Should we consider any other cost or margin implications for IHG or is the company’s margin expansion dependent on top-line occupancies rebounding?
24.
Do you still expect a lot of growth for IHG in Europe or is growth more likely outside of Europe, especially in Asia and the Americas?
25.
Do you think IHG’s management team is competent enough to take the company through the next growth period or is there any risk of losing key individuals?
26.
Is there risk of any contracts with airlines or big corporates being lost for good given the big tail-off in demand and travel, or is this an industry-wide issue and everyone will have to fight for contracts as travel returns?
