Executives at IHG Hotels & Resorts are confident its hotel business will return to 2019 performance levels, but that is not likely to happen across the remainder of 2021.

Speaking on the company's first-quarter 2021 earnings conference call, Paul Edgecliffe-Johnson, chief financial officer and head of group strategy, said he did not expect to see a “fundamental and structural, meaningful change in demand that will come into our hotels.”

“My experience is that structural demand does not change over time, and we are looking forward to seeing the rates and business we had in 2019,” he said.

Liquid capital is $2.1 billion, he said, but the firm has paid back the majority of the 600 million pounds sterling ($834 million) it received from the United Kingdom government in COVID-19 financial aid.

He added that IHG has worked hard to strengthen its business and those of its owners, with technology playing a leading role.

“We’ve been working for some time on pricing. There can be a bias for taking the demand too early, and we are telling franchisees that demand will come back and hard, back to 2019 rates. We’ve introduced further capabilities around surge pricing and algorithms on intra-day pricing. The idea is not to under-sell too early,” he said.

Edgecliffe-Johnson said business volumes are looking healthier in markets such as China and the U.S. where hotels are open, although average daily rate is “not quite there” yet.

“Rates and occupancy in 2019 were the result of a 10-year cycle. [The industry] needs a stronger room environment to get back to 2019 rates, but nothing suggests we will not get back to 2019 rates in due course,” he said.

He said there is demand from owners to build new product in the limited-service segment, where gross-operating profit returns are high, but he added in markets such as the U.S., employee costs are going up.

In a statement accompanying the results, CEO Keith Barr said “there was a notable pick-up in demand in March, particularly in the U.S. and China, which continued into April. While the risk of volatility remains for the balance of the year, there is clear evidence from forward bookings data of further improvement.”

Edgecliffe-Johnson said he also has noticed a rise in corporate demand.

Forward-looking demand indicators point to continued improvements in China and the U.S., he said, but there might be “further bumps” in recovery, perhaps due to new strains of COVID-19 and subsequent government restrictions.

“This is not Wall Street doing a road show, but rather business guests staying at Holiday Inn and Holiday Inn Express, needing to visit clients and doing work on site. As long as people keep their jobs, that business will stay,” he said.

He added film and entertainment crews have booked entire hotels.

This demand is an indication of what will happen in due course, he said.

“We’re seeing a lot of demand, but our normal booking window [for that type of business]­ is usually short, three weeks or so. It was down to 10 days, but it is since back up. We’re seeing a lot of bookings, an elevated number, in the U.S., where we are ahead of where we were in 2019. That does not necessarily mean at the same price,” Edgecliffe-Johnson said.

“In China, that recovery is more advanced. We are seeing conferences and large weddings [there], especially in markets where there is no restriction to demand. Nothing we see in trends in the world suggest we will not return to a strengthened business. There are good trends in rates in leisure resorts,” he added.

Global revenue per available room for the company was down 50.6% compared to the same period in 2019, and down 33.7% compared to 2020. In the U.S., RevPAR declined year over year by 40.4%.

Edgecliffe-Johnson noted there continues to be "a divergence" in performance between the company's franchise and management businesses.

For the franchise business, weighted to domestic demand in upper-midscale hotels, RevPAR declined by 36%; and its managed hotels, primarily in the upscale and luxury chain scales, reported RevPAR down 73%.

The U.S. tradition of spring break has helped in markets such as Florida and Texas, executives said, and across the entire Americas region, 99% of the company's portfolio has been reopened. Thirty-nine hotels with approximately 3,700 rooms opened in the quarter in that market.

With the recovery having started much earlier in Greater China, the firm’s hotels there posted a year-over-year RevPAR decline of 37.7% compared with the same quarter in 2019, but a RevPAR gain of 78.2% versus 2020.

IHG signed 40 additional hotels in Greater China with approximately 7,900 rooms, 25 of which are to be in the Holiday Inn family.

The company's hotels in Europe showed more muted performance, although signings are notable there, with 165 properties announced for its pipeline.

New developments in that region during the quarter included the renovation and reopening of the Voco Grand Central Glasgow, Scotland, and the signing of the InterContinental Barcelona, due to open by the end of the year.

Compared to the first quarter of 2019, RevPAR was down 75% in the U.K. and 87% across Continental Europe. At its London hotels, where demand is highly dependent on international travel, RevPAR was down 85%, Edgecliffe-Johnson said.

Across IHG's entire portfolio, approximately 7,300 rooms were opened in the quarter, but approximately 9,500 were removed — about 70% of which were from its Holiday Inn and Crowne Plaza brands.

As of press time, IHG stock was trading at 50.86 pounds sterling ($70.68) a share, a rise of 44.4% year to date. The London Stock Exchange FTSE 100 is up 19.92% for the same period.