Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Demand for hotels and office space is picking up as economies reopen from pandemic lockdowns, according to two companies this morning… but worries over the delta variant continue to weigh on markets.
InterContinental Hotels Group (IHG) has reported a significant improvement in demand over the first half of 2021, with revenue per room (RevPAR, a key measure) up 20% on 2020.
IHG, which owns Holiday Inns, is seeing the strongest recovery in China and the US, helping it to make an operating profit of $138m for the six months to June 30th, up from a loss of $233m.
IHG is also seeing a bounceback in business travel as well.
And while Europe is lagged in H1, IHG says business has picked up in recent weeks as the easing of lockdown restrictions sees families take holidays again.
Keith Barr, chief executive officer for IHG Hotels & Resorts, explains:
“Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds.
It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China.
Essential business travel was a key element of our resilience throughout the pandemic, and we are now seeing more group activity and corporate bookings start to come back. These trends and the momentum in the business have continued in recent weeks, including in EMEAA where a lifting of travel restrictions in some markets is also now driving improvements in demand. With occupancy and rate continuing to improve, nearly 50% of our hotels achieved RevPAR above 2019 levels in July.
However, IHG will not be paying an interim dividend for 2021 – a reminder that conditions are not back to normal as trading is rather lower than in 2019.
Chris Bailey
(@Financial_Orbit)UK stocks today #2 –
Listening to the IHG CEO on BBTV – excited about growth of the business but won’t pay an interim dividend. ‘Still have way to go’. Still think restrictions will be in place next year, ’23 = ’19. Places like London, San Fran, NY more of an issue for them pic.twitter.com/57d7xAmGkQ
IWG, the serviced offices firm, says it’s seeing signs of recovery after posting a loss in the first half of the year, with revenues down 15% year-on-year in January-June.
IWG, which owns the Spaces and Regus brands, says it’s saw a “strong occupancy recovery” in the second quarter in its major markets, and anticipates “future top-line recovery” thanks to the growth of hybrid working and new customer wins.
The company – a rival to WeWork – says enquiries and customer retention rates have returned to pre-COVID-19 levels in Q2, reporting:
- Very strong recovery in meeting room and day office usage in Q2 with revenue up 39.9% on Q1 2021
- Month-on-month improvement in EBITDA during Q2
- US showing the strongest recovery; June was a record month for space sold
It has reported a pre-tax loss from continuing operations of £162.7m for the first half, compared with a loss of £237.3m for the first half of 2020.
But IWG warns that the pace of recovery dependent on continued easing of pandemic restrictions.
Mark Dixon, Chief Executive of IWG plc, says the firm has “cautious optimism” about the second half of the year, and expects a stronger recovery in 2022.
“The month-on-month improvements in our key operating metrics as we came into the summer months are encouraging and we anticipate this momentum continuing into the second half of 2021.
The significant move to hybrid working has created unprecedented demand for our flexible work products. This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices.
Chris Bailey
(@Financial_Orbit)UK stocks today #5 –
IWG – may talk about ‘continue to make progress with our franchising and partnering agreements…pace of recovery remains dependent on the continuing easing of pandemic restrictions across our markets’. Hopes re ’22 but still well below pre Covid level pic.twitter.com/jyYEZryutq
The markets remain a little subdued, with worries over the spread of the Delta variant of the coronavirus denting sentiment, pushing oil and metal prices down yesterday.
Jeremy Naylor
(@JeremyNaylor_IG)#Tuesday #markets drift as #deltavariant cases rise. #COIN up 8% ahead of #earnings #crypto. #USD holds gains on #taper talk. #AUDUSD near 9mth lows on drop in biz conf. #Gold retraces recent drop. For more: #EarlyMorningCall @IGcom 07:30amUK – https://t.co/t7xbaLPqC7 pic.twitter.com/nWEfbKCXr3
IGSquawk
(@IGSquawk)Very much back to August norm…..
European Opening Calls:#FTSE 7131 -0.02%#DAX 15752 +0.04%#CAC 6816 +0.04%#AEX 773 +0.12%#MIB 26136 -0.01%#IBEX 8857 -0.10%#OMX 2385 +0.00%#STOXX 4180 +0.07%#IGOpeningCall
The agenda
- 10am BST: ZEW survey of eurozone economic sentiment
- 11am BST: NFIB survey of US small business confidence