IHG Hotels & Resorts made further inroads to recovery in 2021, with the performance of its U.S. hotels boosting its total global portfolio.

The Denham, England-based hotel chain also spent 2021 removing slightly more hotels from its portfolio than it opened, but the company's pipeline is encouraging, executives said on an earnings call with analysts.

While IHG Hotels & Resorts' 2021 performance was an improvement over 2020, overall metrics are still behind pre-pandemic levels, with the company's full-year revenue per available room at 70% of full-year 2019 RevPAR. But in the fourth quarter of 2021, IHG's RevPAR was 83% of RevPAR in the fourth quarter of 2019.

IHG CEO Keith Barr said performance growth primarily is driven by the company's U.S. hotels. IHG's U.S. RevPAR for the full year was up 54% on 2020 numbers and down just 17% of full-year 2019 RevPAR. In the fourth quarter, RevPAR was up 76% year over year and down by 5% when compared to the fourth quarter of 2019.

Barr said leisure demand in the U.S. has risen 2% above 2019 levels, and he added fee margins in the U.S. also have moved above 2019 numbers.

“The consumer is quite healthy, especially in the U.S," Barr said. "Discretionary spend has increased in 2021 and into 2022. If you have not booked your vacation, you probably ought to do it now. Demand is high, and supply is low."

Elsewhere, RevPAR was up 118% over 2020 in the Europe, Middle East and Africa region, but down 33% on 2019 levels.

Due to the pandemic and a system reappraisal, IHG was a net remover of rooms in 2021, according to its earnings statement. The company exited 49,667 rooms in 264 hotels during the year, with most properties formerly part of the Holiday Inn and Crowne Plaza brands, Chief Financial Officer and Head of Group Strategy Paul Edgecliffe-Johnson said.

Among other exits, 108 Holiday Inn Express hotels and 43 Crowne Plaza hotels left the system, which combined totaled approximately 34,000 rooms, Edgecliffe-Johnson said.

In 2021, IHG opened 43,958 rooms in 291 hotels, and its portfolio ended the year at approximately 880,000 rooms. One noticeable milestone reached in 2021 was the opening of the 3,000th Holiday Inn Express, which Barr said is the “single largest global brand in the industry.”

Barr said that while the firm’s portfolio is now more rounded, there is an increased focus on premium, luxury and lifestyle. IHG's Voco is one brand that is rapidly reaching scale, according to Barr.

He added some markets continue to struggle, including the “New Yorks, Chicagoes, Parises and Londons of this world.”

In terms of future development, IHG signed 69,800 rooms in 437 hotels during 2021, which was an increase of 23% above 2020. Its global pipeline now stands at approximately 271,000 rooms in 1,797 hotels. Forty percent of that pipeline is in construction, Edgecliffe-Johnson said.

Edgecliffe-Johnson said investors are very active again.

“Previously, they would have been investing behind retail, behind other forms of commercial real estate, but those really are off the table now, and investment is in hotels, which favors us," he said. “There is still room for [investment] to return to 2018 levels, and that mostly is due to [restraints in] the financial markets."

Analysts asked if IHG had any gaps in its portfolio, but Barr said, “We’re very disciplined in our use of capital.”

A big focus, he said, is on targeting annual fees of at least $50 million from each hotel in brands Atwell, Avid, Regent, Six Senses, Vignette Collection and Voco.

“We’re emerging from the pandemic a stronger and more agile business, and our owners agree,” Barr said.

IHG Hotels & Resorts posted an operating profit of $494 million for full-year 2021 and will return to paying shareholders dividends, this time approximately 89 cents per share.

“Half our hotels back to pre-pandemic levels, and [earnings before interest and tax] is more than doubling, helped by cost savings of $75 million,” Edgecliffe-Johnson said.

He added such numbers resulted in the board recommending the return to dividend payments.

Cash flow increased to $571 million, and IHG regained its investment grade credit rating of 2.5-times to 3-times net debt.

The strategy is to “invest in the business to drive growth, sustainably grow dividend and return surplus funds to shareholders,” Barr said.

In a press release accompanying the results, Barr said “working hand in hand, our colleagues and hotel owners have once again shown incredible efforts to navigate the ebbs and flows of recovery. … [With] more than doubling our operating profit from reportable segments and substantially reducing our net debt, the board is pleased to be recommending the reinstatement of a dividend.”

Globally, IHG's total revenue for 2021 was $2.91 billion, an increase of 21% over 2020 numbers.

Revenue from reportable segments came in at revenue $1.39 billion, an increase of 40% on 2020 and 32% down on those of 2019.

As of press time, IHG stock was trading at 50.38 pounds sterling ($68.26) a share, up 5.3% year to date. The London Stock Exchange’s FTSE 100 index was up 1.8% over the same period.