IHG Hotels 2020 Results

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IHG Hotels today released its 2020 results that contain some information of interest to our readers.

There are few words about loyalty and expected more significant “breakage” (people let their points expire).

You can access IHG Hotels here.

READ MORE: IHG Rewards Rate & Bonus Points And Miles Promotions

IHG Brands

The percentage is based on the number of hotels, not the number of rooms. More than half of IHG Hotels properties are Holiday Inn Express.

Only 7% of IHG’s hotels are considered Luxury and Lifestyle, and even then, I would say that it is questionable if the Indigo brand belongs to this group (it used to be a conversion brand when it was launched in the 2000s).

The premium that consists troubled Crowne Plaza-brand represents 8% of the portfolio.

Loyalty & Participation

Dynamic pricing and targeted promotions may work for some, but not for all.

Hotels Open December 31, 2020:

IHG lost luxury hotels in 2020.

Hotel Pipeline as of December 31, 2020:It is interesting to see how many of the Six Senses, Regent, InterContinental, and Kimpton hotels will materialize as currently described on the pipeline.

Yearly RevPAR Performance:

Greater China has rebounded while most other markets are still struggling (nothing unexpected).

Here’s what they say about loyalty:

Enhanced loyalty offer: IHG Rewards members traditionally account for around half of guest stays. During 2020, prioritisation of our loyalty marketing supported demand from our most loyal members, who proved the most resilient during the toughest Covid-impacted periods. Dynamic pricing for Reward Nights has rolled out globally, with rates now set daily, enabling more than 80% of hotels to reduce their points pricing to deliver around 25% more value for guests outside of peak times. This has led to a 30% increase in Reward Night redemption since launch. IHG Rewards was also recognised in 2020 as Best Hotel Rewards Program and Best for Families by NerdWallet for good value, ease to earn and our response to Covid-19.

System Fund:

System Fund The Group operates a System Fund to collect and administer cash assessments from hotel owners for the specific purpose of use in marketing, the Guest Reservation System, and hotel loyalty programme, IHG Rewards. The System Fund also benefits from proceeds from the sale of loyalty points under third-party co-branding arrangements. The Fund is not managed to generate a profit or loss for IHG over the longer term, although an in-year surplus or deficit can arise, but is managed for the benefit of hotels in the IHG System with the objective of driving revenues for the hotels. In the year to 31 December 2020, System Fund revenue decreased by $608m (44.3%) to $765m, largely due to lower assessment fees reflecting the level of reduction in hotel revenues resulting from Covid-19, as well as fee reliefs given, and lower loyalty revenue due to lower redemption activity. This was partially offset by a favourable adjustment relating to a change in the actuarial assumptions around the ultimate rate of consumption of IHG Rewards points (‘breakage’) leading to increased revenue recognition year-over-year. A System Fund income statement deficit of $102m was recorded over the year, resulting from lower revenues, partly offset by actions targeted to lower costs including a reduction in marketing spend. System Fund expenses included $24m of expected credit losses, $20m reorganisation costs and $41m impairment principally relating to the US corporate headquarters.

Here’s IHG’s financial presentation:

Download (PDF, 3.67MB)

And their full results:

Download (PDF, 1.36MB)

Conclusion

IHG Hotels is very light on the luxury segment and is mainly a hotel chain for select service and extended stay hotels.

I like how the IHG uploads their presentation with the financial results for everyone to see (the financial information is always available, but presentations not always).

It pays to stay up to date on what takes place with IHG Hotels if you are vested into the IHG Rewards.

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