In China, only 10 of IHG’s hotels are closed compared with 178 at the height of the outbreak there © VisMedia

Hotels must make “visible” changes to their hygiene standards in order to persuade customers to return as the industry faces its “most significant challenge” ever, the head of InterContinental Hotels Group has warned.

Keith Barr, chief executive of IHG, which owns the Crowne Plaza and Holiday Inn brands, said that the company was trialling electrostatic sprayers and removing standard guest room items such as pens and paper in order to “make sure people feel comfortable again”.

“Covid-19 represents the most significant challenge both IHG and our industry have ever faced,” he said after the company’s first-quarter update on Thursday.

Occupancy levels across IHG’s hotels fell to historic lows in the first quarter, despite only roughly 15 per cent of its global estate being closed at the end of April. Revenue per available room (revpar) — the industry’s favoured metric — was down 55 per cent in March compared with the same month in 2019.

The company said it expected revpar to drop by 80 per cent in April.

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Hotels have been among the worst-hit sectors during the coronavirus crisis as governments across the world have enforced closures and global travel has all but stopped.

The US group Hilton said on Thursday that revenues had dropped by $284m in the first quarter of 2020 compared with last year and that the pandemic would have a “material negative impact” on its business “for an indeterminate length of time”. The group posted $18m profit for the quarter to the end of March, down from $158m in 2019.

IHG, which has a greater exposure to China than Hilton and felt the impact of the disease earlier, said that it could survive 18 months with no one in its hotels.

In China, only 10 of IHG’s hotels were closed compared with 178 at the height of the outbreak there. Revpar had improved from a like-for-like decline of 89 per cent in February to roughly 75 per cent in April.

IHG, which operates about 5,900 hotels, said last month that it had secured a $740m loan through the Bank of England’s coronavirus support scheme and that it had $2bn liquidity to see it through the crisis. It has also extended a $1.28bn credit facility until September 2023 and waived debt covenant tests until 2021.

The more heavily indebted Hilton said that it had $9.6bn of long-term debt outstanding and cash of $1.8m at the end of March. It has drawn down the entirety of a $1.75bn revolving credit facility, issued $1bn in senior notes and pre-sold $1bn worth of loyalty points in order to boost liquidity. It has also cut its dividend and halted a share buyback programme.

Despite the sharp drops in revenue, both companies said that deals for new hotels were going ahead. Mr Barr said that it had made a number of signings for larger hotels in China, including one in Shanghai under the luxury Regent brand. Hilton said it opened 8,800 rooms in the quarter.

“Although development may slow in the near term, the signs are there that it can pick up quickly once the pandemic has passed,” said Richard Clarke, an analyst at Bernstein.

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