Intercontinental Hotels Group plc (NYSE:IHG) Q2 2020 Earnings Conference Call - Final Transcript
Aug 11, 2020 • 04:30 am ET
Ladies and gentlemen, welcome to the IHG Half Year Results Call. My name is, Heidi, and I will be coordinating the call today. [Operator Instructions] I will now hand over to your host, Stuart Ford, to begin. Stuart, please go ahead.
Good morning everyone and welcome to IHG's 2020 half year results conference call. I'm Stuart Ford, Head of Investor Relations at IHG. And I'm joined this morning by Keith Barr, our Chief Executive Officer; and Paul Edgecliffe-Johnson, our Chief Financial Officer.
Just to remind listeners on the call that in the discussions today the Company may make certain forward-looking statements as defined on the US law. Please refer to this morning's announcement and the Company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. For those analysts or institutional investors who are listening on the webcast to follow the presentation, may I remind you that in order to ask a question, you will need to dial in using the details on Page 10 of the RNS or as supplied in your email invite. If you're dialed in over the phone, the presentation can be downloaded and the webcast can be viewed by ihgplc.com or click through from the linked on Page 10 of the RNS.
I'll now hand over the call to Keith.
Thanks, Stuart, and good morning everyone. The impact of COVID-19 continues to be felt across the global economy as the biggest challenge the travel and tourism industry has ever faced. As a company, we've acted quickly, effectively and responsibly to provide support to our people, to our owners and to our guests, focusing on what's needed both now and for the longer term. We know it's going to take time for things to recover, but as the world rediscovers travel and restrictions are lifted, we continue to work hard market by market to provide the reassurance and True Hospitality that guests need and the support that's so important to our owners right now.
Turning to how we navigated the crisis. Our global RevPAR declined 52% in the first half and 75% in the second quarter as hotel demand fell to the lowest levels we've ever seen on the back of government travel restrictions around the world. In most markets, these have now started to ease to varying degrees, and we currently have 95% of our estate open.
In July, we expect our RevPAR decline to have improved to around 58% with global occupancy hitting 45%, up from the low point of 20% back in April. The first half RevPAR declined led to an 83% fall in underlying operating profit. As we've talked about previously, we've taken decisive action to preserve cash throughout the crisis, which meant that our free cash flow was contained to a $66 million outflow in the half and was broadly neutral in the second quarter. This meant that we have been able to maintain the $2 billion of liquidity