Accor deal with Inter Continental could lead to wave of consolidation

Rumors of a merger between Accor and InterContinental Hotels Group could foreshadow a wave of acquisitions in the hospitality industry.

The two giants have reportedly discussed a deal internally, though no official moves have been made.

Ralph Hollister, a tourism analyst at GlobalData, explained: “Although this deal seems to be just speculation, the enormity of this potential merger proves that industry consolidation could be accelerated due to behemoths acquiring, merging or striking partnerships with each other to increase market share.”

He added: “Many reasons for a merger between the two companies make the prospect plausible, especially during the current Covid-19 induced economic downturn, during which both companies have experienced significant losses.

“A major reason for this merger would be that th

e newly formed company could achieve savings in central costs.

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InterContinental Hotels Group (IHG) Announces New Signing - To open InterContinental in Rome

Key Take Away

InterContinental Hotels Group (IHG®) announces the signing of a franchise agreement with Westmont Hospitality Group and funds managed by Oaktree Capital Management, L.P. (“Oaktree”), for a captivating property in the heart of Rome.

The project is held by a newly established real estate investment fund managed by Milan-based Castello SGR, one of Italy’s premier real estate management companies

Latin America’s Hotel Construction Pipeline Remains Sluggish at the Close of the First Quarter of 2020

In the recent Latin America Hotel Construction Pipeline Trend Report, analysts at Lodging Econometrics (LE) state that the total construction pipeline stands at 702 projects/124,050 rooms, down 2% by projects and up less than 1% by rooms, year-over-year (YOY).

In the first quarter of 2020, 22 new hotels/3,825 rooms opened throughout Latin America, while new project announcements into the pipeline recorded a new all-time low of 36 projects/3,596 rooms

Mexico leads Latin America’s construction pipeline with 222 projects/40,639 rooms. Next is Brazil, standing at 137 projects/22,607 rooms. Peru follows with 41 projects/5,702 rooms; Colombia is next with 36 projects/5,899 rooms and then the Dominican Republic with 33 projects/8,105 rooms. Collectively, these five countries account for 69% of the rooms in the total pipeline.

Cities in Latin America with the largest pipelines include Lima, Peru with 31 projects/4,691 rooms; Mexico City, Mexico with 26 projects/4,358 rooms; Cancun, Mexico with 23 projects/11,234 rooms; Sao Paulo, Brazil with 18 projects/3,294 rooms; and Guadalajara, Mexico with 18 projects/2,302 rooms.

Top hotel franchise companies in Latin America’s construction pipeline are Marriott International with 129 projects/22,571 rooms, AccorHotels with 98 projects/13,049 rooms, Hilton Worldwide at a record high 88 projects/12,345 rooms, and InterContinental Hotels Group (IHG) with 61 projects/7,116 rooms. These four companies account for 54% of the projects in the total construction pipeline.

The top brands in the pipeline are AccorHotel’s Ibis brands with 67 projects/8,868 rooms, Hampton by Hilton with 25 projects/2,952 rooms and Hilton Garden Inn with 23 projects/3,189 rooms. These are followed by Marriott’s Fairfield Inn with 17 projects/2,489 rooms and IHG’s Holiday Inn Express with 17 projects/2,075 rooms.

COVID-19 did not have a full impact on first quarter 2020 Latin America results reported by LE. Only the last 30 days of the quarter were affected. LE’s market intelligence department has and will continue to gather the necessary global intelligence on the supply side of the lodging industry and make that information available to our subscribers. It is still early to predict the full impact of the outbreak on the lodging industry. 

InterContinental Hotels Group PLC Business Update

InterContinental Hotels Group ("IHG") provides a business update in light of the rapidly evolving situation regarding Covid-19.

Current trading

IHG's Global RevPAR decreased 6% across January and February, with a broadly flat performance in the US offset by declines in Greater China, which saw an almost 90% decline in February.

During March, given the measures adopted by governments around the world to restrict travel and social contact, we are anticipating Global RevPAR declines of around 60%, with steeper declines in those markets most impacted by restrictions. Cancellation activity for April and May, and current booking trends, indicate continued challenging conditions. In Greater China we now have 60 hotels closed compared to 178 at the peak, and in recent days have begun to see improvements in occupancy, albeit at low levels.

Cost actions

We have many cost reduction and cash conservation measures at our disposal. These measures will result in a reduction of up to $150m in our fee business costs. Similar actions, along with a reduction in marketing spend, are being taken across the System Fund in response to expected lower assessment fee receipts. We are also taking action in our owned, leased and managed lease hotels to contain costs.

In addition, to support our owners and manage their cash flows, we have launched a comprehensive package of measures including delaying renovations and relaxing brand standards.

Cash Flow

IHG remains conservatively leveraged. The staggered bond maturity profile, with the first maturity of £400m not due for repayment until 2022, provides long term funding. In addition, the company has access to a $1.4bn Revolving Credit Facility (RCF), which is currently $1.2bn undrawn, which together with free cash flow generation provides significant liquidity

 In addition, the Board is withdrawing its recommendation of a final dividend of 85.9¢ (~$150m) announced on 18 February 2020 and will defer consideration of further dividends until visibility has improved.

We continue to monitor the situation closely and will provide further commentary at our First Quarter trading update on 7 May 2020.

IHG to open first Regent hotel since brand acquisition

IHG (Inter Continental Hotels Group) announces the signing of a management agreement with Shanghai 21st Century Hotel Co., Ltd. for its iconic property located in Lujiazui, Shanghai, China.

From 16 May 2020, the hotel will be officially branded as Regent Shanghai Pudong and ready to welcome guests with a truly unique and luxury experience, which the legendary brand is famous for. All existing reservations will be automatically forwarded and honoured by Regent Shanghai Pudong.

Expanding its luxury footprint, IHG announced the acquisition of a majority stake in Regent Hotels & Resorts in March 2018 and brought the much-loved brand into the top end of its portfolio. Since then IHG has worked quickly to combine its expertise in luxury with Regent’s deep heritage and revered legacy, relaunching the brand by evolving it to appeal to the modern luxury traveller.

Renovation is already underway to rebrand the iconic InterContinental Hong Kong into a Regent hotel in 2021, bringing the hotel back to its roots as it first opened its doors as a Regent in 1980.

In addition, the brand is also expecting new openings in Phu Quoc, Vietnam later this year, Bali, Indonesia in 2021, Kuala Lumpur, Malaysia as well as Chengdu, China in 2023.