(Reuters) – InterContinental Hotels (IHG.L)(IHG) warned on Tuesday that fewer travellers are booking its rooms in China because of the coronavirus outbreak.
The owner of the Holiday Inn chain has been highlighted by analysts as among the European companies most directly exposed to the epidemic.
The group had begun to see an impact on bookings in late January and has now closed or partially closed 160 of its 470 hotels in Greater China, it said on Tuesday.
The company’s annual results on Tuesday showed that revenue per available room (RevPAR) had already declined by 4.5% last year in Greater China while performance in European and U.S. markets was little changed.
Based on current disruption the impact equates to about $5 million a month for IHG’s mainland China business, Chief Executive Keith Barr said on an analysts call, describing the decline as “a short-term blip”.
Barr added that the region contributes less than 10% of group profit.
IHG last month said that up to Feb. 29 it would allow customers to change or cancel stays in mainland China, Hong Kong, Macau and Taiwan at no additional cost. Rival Airbnb last week extended its suspension of bookings in Beijing until April 30.
Rival Hilton Worldwide (HLT.N) has shut roughly 150 hotels in China, which could hit adjusted core profit in the first quarter by between $10 million and $20 million, Chief Executive Christopher J. Nassetta said this month.
One yardstick for the impact of the crisis on the company is the previous SARS outbreak, which cut IHG’s RevPAR in the Asia Pacific region by 27% in the three months to June 2003.
There is more at stake this time. In 2003 IHG had little more than 40 hotels in China. Now more than 400 of its almost 6,000 hotels worldwide are in Greater China and it is constructing almost as many again.
The company has been investing heavily in China, its fastest-growing market, and has revamped rooms at Holiday Inns to woo local business travellers. It plans to open 393 hotels in China and operates four hotels in Wuhan, the centre of the coronavirus outbreak.
“It (Greater China) is, though, a smaller part of our business overall, representing 15% of our open rooms and less than 10% of our operating profit,” said IHG finance chief Paul Edgecliffe-Johnson.
(This story has been refiled to correct to February 29 from February 3 in paragraph 7.)
Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru; Editing by David Goodman