Whitbread and IHG unlikely to see recovery before late 2010

Whitbread and InterContinental Hotels Group have been warned their performance is unlikely to recover before late 2010.

According to finance industry advisor, Fitch Solutions, in its latest update on global liquidity, despite early signs of stabilisation in hotel occupancy rates, operating profit would not recover until late next year.

The performance of IHG, which operates Holiday Inn, and Whitbread, which operates Premier Inn, are emblematic of a sector that continues to see plummeting demand from the global recession.

Fitch's Johnny Da Silva said that, as discretionary spend is the first thing to go during a recession, hotels would suffer as a consequence:

“With discretionary income often the first thing to go in an economic downturn, hotels in particular are being adversely affected by the decline in the number of commercial property projects.

“European hotel operators are likely to report a sharp decline in their operating profit in 2009. Until there is a rebound in average room rates, it is too early to call a recovery in the European hotel sector. Fitch believes this is unlikely to happen before late 2010 or even 2011.”

Half-year profits slump by 38% at InterContinental >>

Whitbread unveils a mixed picture in trading update >>

First glimmers of hope for hotel recovery, says analyst firm >>

Hospitality insolvencies set to rise after summer lull >>

By Gemma Sharkey

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