Daily Podcast: IHG’s Return to Growth

Today’s edition of Skift’s daily podcast discusses the cuts behind IHG’s positive earnings season, European leaders’ attempts to manage climate change, and TripAdvisor’s attempts to save its subscription plan.

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Episode Notes

Here’s what you need to know about the business of travel today.

And now, here’s what you need to know about the business of travel today.

IHG Hotels & Resorts announced on Tuesday it returned to profitability last year, but how did the company get there? One major step it took was dropping underperforming hotels from its portfolio, writes Hospitality Reporter Cameron Sperance.

IHG reported a $494 million profit for 2021, in contrast to its $153 million loss the previous year. Its return to being in the black was accelerated by a company initiative to dump struggling hotels from two brands, Holiday Inn and Crowne Plaza. The company had announced early last year it was reviewing hotels across both brands for potential removal. IHG cut a combined 151 hotels from Holiday Inn and Crowne Plaza. In addition, roughly 70 percent of hotel rooms IHG deleted came from the two brands.

Next, European authorities are putting forth numerous proposals to address climate change as part of the European Union’s quest to reach carbon neutrality by 2050. However, numerous travel companies are pushing back due to their concerns that the proposed legislation could unfairly penalize the corporate travel sector, reports Corporate Travel Editor Matthew Parsons.

The European Commission has unveiled about a dozen proposals as part of its Fit for 55 package, which is designed to reduce greenhouse gas emissions by 55 percent by 2030, compared to 1990 levels. The proposals include a new carbon tax, airline reporting standards and regulations for cleaner energy. In addition, seven European countries are calling on bigger increases in the minimum amount of sustainable aviation fuel airlines must use in the future.

As the cost of adopting sustainable fuel will be a major concern for businesses in the travel industry, executives from the Global Business Travel Association have said they’ll send key representatives to explain to policymakers the importance of corporate travel. Parsons writes that the trade body will argue that caring about sustainability doesn’t mean giving up on travel and that economies need people to travel for business. Furthermore, the organization wants to see concrete evidence that any new fees or taxes imposed will be invested in green energy instead of simply being used by governments as a convenient way to raise money.

Finally, Tripadvisor CEO Steve Kaufer touted the company’s fledgling Tripadvisor Plus subscription membership program for discounted hotel rooms last year as a potential billion dollar business. But despite its goals coming nowhere near fruition, Kaufer still believes his company can run a successful travel subscription program, reports Executive Editor Dennis Schaal.

Kaufer told investors in February 2021 that Tripadvisor Plus could develop into a billion dollar business if it could attract 10 million consumers paying $100 to sign up. However, Tripadvisor was forced to scrap the Plus business model in part because hotels bristled at numerous rate parity violations. Kaufer, though, said last week that Tripadvisor is still committed to producing a successful travel subscription program, especially as the company is conducting surveys to find the right market fit for such an offering.