InterContinental Hotels Group has sought to reassure markets with news it has secured new financing arrangements to strengthen its liquidity position.
Moves include amending its syndicated revolving credit facility to include a waiver of existing covenants until December 31st next year.
The amendment introduces a minimum liquidity covenant of $400 million, tested at half- and full-year, up to and including June 30th, 2021.
The Bank of England has also confirmed IHG is as an eligible issuer for the UK government’s Covid Corporate Financing Facility.
IHG has thus issued £600 million in commercial paper under this facility.
In total, the hotel giant now has access to $1.35 billion of cash on deposit and existing bank facilities are currently $660 million undrawn, taking total available liquidity to around $2 billion.
IHG said it had seen global RevPAR fall by a quarter over the past three months, with a 55 per cent decline in March.
However, trading in Greater China continues to “steadily improve”, the company added, with only 12 out of 470 hotels now closed.
Around ten per cent of hotels were closed in the United States, IHG said in a statement to markets, while the figure was closer to 50 per cent in Europe, Middle East, Australia and Africa.
Occupancy levels in comparable open hotels are currently in the low to mid 20 per cent range across the business, the statement added.
IHG said it would provide more information during a trading update on May 7th.
Following the announcement, GlobalData analyst Ralph Hollister said IHG could take some comfort from the figures.
He explained: “Although these figures are startling, IHG can take some degree of comfort knowing that its main competitors also find themselves in a very similar position.
“Occupancy levels in its open hotels are currently in the low to mid-20 per cent range across the business.
“These figures illustrate that the company is still a long way from any kind of formal recovery.
“Infection rates in the US and Europe need to drop significantly so that restrictions on movement can be lifted and confidence within IHG’s target markets can be restored.
“Until occupancy rates regain normality and international tourism flows are resumed, IHG finds itself in a positive position to deal with the economic impact Covid-19 is creating.”
Hollister concluded: “Hotel giants such as IHG that emerge unscathed may be able to benefit from consolidation.
“Failing companies due to Covid-19 could provide ripe pickings for IHG, especially ones that align with its brand strategy.”