Demand for hotel rooms has reached record lows, the boss of InterContinental Hotels has warned, as the travel industry faces one of its biggest existential threats in decades.
Chief executive Keith Barr, whose company owns Holiday Inn, said a massive fall-off in new customers had forced his business to “take the right steps” to protect itself as he announced swingeing cuts.
“Demand for hotels is currently at the lowest levels we’ve ever seen,” Mr Barr said.
Revenue per available room, the chain’s favoured measure, dropped by 90% in China in February, and was down 6% across the first two months of the year globally.
In March the business believes that global revenue per room will drop by around 60%.
“Cancellation activity for April and May, and current booking trends, indicate continued challenging conditions,” it added.
Intercontinental revealed that it would be cutting costs, eliminating its dividend and reducing salaries in a bid to save cash.
The chain, which manages or owns more than 5,900 hotels around the world, said it would also relax brand standards in a bid to save money.
It hopes to save 150 million US dollars (£127 million) by challenging all non-essential spending, and cutting salaries including “substantial decreases” for the board and top management.
It will also slash marketing spending and will contain costs best it can.
“InterContinentals Hotel Group has a robust business model and the measures we are announcing today to reduce costs and preserve cash give us the capacity to manage the business through this unique environment and to support our owners during this incredibly difficult time,” said Mr Barr.
He added: “These were not easy choices and we are mindful of the impact these decisions will have on our colleagues and shareholders. However, we believe that these are essential to ensuring that we come out of this as strong as we possibly can and ready to capitalise on what remains an industry with excellent long-term growth potential.”
Investors reacted well to the news, sending shares, which had been languishing for weeks, up by around 15% shortly after markets opened in London on Friday.
More than 400,000 people work for the business around the world.