A Hotel Chief Talks About Managing His Way Through the Pandemic

(Bloomberg Businessweek) -- InterContinental Hotels Group’s chief executive officer was sheltering in place with family in the U.K., where the company is based, when he spoke by phone about how businesses may recover from the virus.

● While about 400,000 people work in InterContinental hotels around the world, the company is basically a franchise operation ● Almost 6,000 hotels are individually owned small businesses that may employ 15 to 20 people ● The hotels are hosting front-line medical workers

What’s the impact been on business?

We’ve never seen an impact on demand for the hotel industry like this in our lifetime. We had a fairly good January and February. And then, as an industry, we saw revenue begin falling quite quickly in March. I saw the U.S. data just this morning: From the start of April, it looks like U.S. revenue per available room is down 80% year over year.

What have you resorted to?

At the corporate level, we’ve been cutting people’s salaries, cutting capital expenditures, and really focusing on liquidity to make sure we can get through this very, very challenging time. People have been furloughed.

What about government stimulus and assistance?

These programs are going to have to expand and be extended, because this is not going to be over in a month. Business doesn’t go back to normal tomorrow. Until you get better therapeutics, broad-based testing, and a vaccine, I don’t believe you can fully reopen.

How does InterContinental head into the future?

We’ll learn from this. It may lead to temperature checks, increased cleanliness standards, and changing food and beverage operations. We have a team of innovation people working on this now, thinking through how this is going to evolve.

And what’s the post-Covid-19 era like?

The companies with scale can leverage their procurement powers to reduce the costs to operate, of distribution, of building all those things. That will create value for owners. The bigger companies will get bigger, and some of the smaller companies will need to consolidate. That reality is the new norm going forward.
 
Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With Carol Massar and Jason Kelly, weekdays from 2 p.m. to 6 p.m. ET on Bloomberg Radio.

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