The group, whose brands include Crowne Plaza and Holiday Inn, said it was “challenging” all discretionary costs, including reducing salaries and incentives – which it said included “substantial decreases” for members of its board and executive committee.
“These measures will result in a reduction of up to $150 million in our fee business costs,” said the group in a trading update issued on Friday morning (20 March).
It has also reduced marketing spend, while its leased and managed hotels will be permitted to delay renovations and temporarily relax brand standards to reduce costs.
Other efforts to protect cash flow include reducing capital expenditure by around $100 million compared with 2019. IHG will issue a first-quarter trading update on 7 May.
“At this unprecedented time, our top priority remains the health and wellbeing of our guests, colleagues and partners, and ensuring that in light of such a significant impact on the global economy and, in particular, on the travel industry, we take the right steps to protect the long-term health of our business,” said IHG chief executive Keith Barr.
“Demand for hotels is currently at the lowest levels we’ve ever seen. IHG has a robust business model and the measures we are announcing today [Friday] to reduce costs and preserve cash give us the capacity to manage the business through this unique environment and to support our owners during this incredibly difficult time.
“These were not easy choices, and we are mindful of the impact these decisions will have on our colleagues and shareholders.”
During January and February, IHG’s global RevPAR – revenue per available room – fell 6%, and IHG expects this to fall by about another 60% owing to worldwide efforts to restrict travel and social contact.
