IHG reports F&B cost savings for owners following procurement expansion

IHG Hotels & Resorts has said that, following the expansion of its procurement solutions, smaller owner groups recently onboarded in the UK have seen typical savings of 7%-15% on food costs and 10%‑15% on beverage costs.

The group is also piloting renewable energy sourcing on behalf of owners and developing a power purchase agreement. This is against a backdrop of increasing costs hitting hospitality business owners hard, with inflation in the foodservice sector hitting 11.5% in June and some operators reporting energy price hikes of up to 500%.

In IHG’s half-year results to 30 June 2022, the group reported revenue for the period of $840m (£695m), up 49% on the same period last year. Average daily rate for the period, meanwhile, was up 4% against 2019, with occupancy up 10 percentage points on 2021, but down 10 percentage points compared to 2019.

IHG opened almost 100 hotels in the half, passing 6,000 globally, and signed more than 200 properties to take its pipeline to 1,858. It reported “growing interest” in conversion opportunities, which represented more than a quarter of openings in the period.

Chief executive Keith Barr said: “We saw continued strong trading in the first half of 2022 with increased demand for travel in most of our markets. This brought group revpar very close to pre-pandemic levels in the second quarter. Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform.

“The recovery in demand and pricing led to group profit more than doubling versus 2021, with profitability in the Americas now ahead of 2019. The EMEAA region also saw excellent improvement in performance. Whilst Greater China had a tough period as Covid-related travel restrictions were tightened, we have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains.”

He added: “Whilst the economic outlook faces uncertainties as central banks and governments take action to manage inflation, we remain confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth.”