InterContinental Hotels Reports 2-Year Recovery Forecast
Wednesday, August 26th, 2009
InterContinental Hotels, the world's largest hotelier, has announced that it will take approximately two years to recover its lost profits from the recent economic slump. The hotelier manages several major franchises and properties throughout the United States, and the U.S. accounts for approximately 70 percent of its profits. The reduced demand for hotel bookings and business travel in the United States means that companies like InterContinental Hotels are experiencing severe drops in profit.Room rates across InterContinental Hotels, and their competitors, have steadily dropped throughout 2009, and though occupancy levels have been stabilizing over the summer, room rates are still hitting record lows. Hotel groups such as InterContinental Hotels are trying to offset costs by reducing their workforce and cutting out extra services and amenities.
InterContinental Hotels estimates that it will take them approximately 24 months to recover the costs they have lost because of the economic downturn, and do not see any sign of recovery until the economic climate improves. One of the hotels' biggest challenges will be to keep rooms filled and encourage travelers to stay for several nights at a time.
The hotel and travel industry has experienced the effects of the economic downturn on a grand scale, and many major hoteliers, tour operators and airlines have been struggling to find ways to encourage more business and leisure travel across all customer segments and stimulate sales just to survive. Some hotel groups are offering discounted packages and dropping rates well below competitors just to fill rooms. Others are offering incentives such as free future stays or deep discounts on the next stay so that travelers choose their hotel over the nearest competitor.
Market analysts are expecting the slump to continue for the oncoming months, which means Fall season will put even more pressure on hoteliers such as InterContinental.
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