Corona Capital: Hotels, Unemployment, Soup

Jiumaojiu International Holdings

11/08/2020 11:21

(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    By Breakingviews columnists
    LONDON/HONG KONG, Aug 11 (Reuters Breakingviews) - Corona
Capital is a daily column updated throughout the day by
Breakingviews columnists around the world with short, sharp
pandemic-related insights.

    LATEST
    - Comfort stop for hotels
    - Discomforting numbers on jobs and pay 
    - Bubbling soup stock

    HOTEL REVIVAL. The hotel industry is headed for a three-star
recovery. That’s the message from InterContinental Hotels’
 IHG.L  first-half results, which show that nearly half its
rooms will be occupied in July, a near-doubling of the April
rate. The key revenue-per-room measure also staged a
mini-rebound, forecast to be down 58% in July from last year,
versus 75% in the second quarter. The numbers suggest that the
hotel industry’s lost revenue from the Great Lockdown has
dropped significantly from the $1.4 billion a week pace of
March. The nascent recovery lifted IHG and its peer Accor’s
 ACCP.PA  shares by around 4% on Tuesday.
    Local tourism is helping IHG’s middle-market Holiday Inn
brand in the United States, where occupancy has surpassed 50%.
The no-frills appeal has also helped protect the IHG share price
in Covid-19 times. The $10 billion hotel group’s stock is down
20% since the beginning of the year. Higher-end Accor’s has
slumped 40%. (By Aimee Donnellan)

    WHAT LIES BELOW. European governments have tried to protect
labour markets from anti-Covid restrictions. Policies such as
short-time work in Germany and furloughs in the United Kingdom
have successfully contained unemployment rates. The British rate
was steady at 3.9% in the three months to June, the national
statistics office said https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest
 on Tuesday. But one key measure – of inactive people who may
begin to seek work but are temporarily not earning for
coronavirus-related reasons – more than doubled to 2.13 million
between the first and second quarters.
    Even some people with jobs are feeling the pinch. British
workers’ average pay fell in the three months to June. And
German workers’ average gross monthly earnings declined in the
second quarter from a year earlier, mainly because of the wide
use of short-time work during the coronavirus crisis, the
country’s statistics office said on Tuesday. The virus’s labour
pains are just beginning. (By Swaha Pattanaik)

    SOUPED-UP TIMES. Chinese hotpot ingredients purveyor Guoquan
is mulling an initial public offering as early as next year,
Bloomberg reported citing sources, which could raise $400
million to $500 million. The pandemic has only fanned consumers’
appetite for pre-packaged meals to cook at home; selling the
necessary spicy broth, dipping sauces, mutton and mushrooms to
locked-down consumers looks like easy money.
    The IDG Capital-backed company, which operates around 3,600
retail stores, could prove a better bet than dine-in peers,
including restaurant chain Jiumaojiu International  9922.HK  and
$26 billion Haidilao International  6862.HK . Haidilao warned https://www.haidilao.com/en/2020/07/2020070723072347018.pdf
 last month of a net loss of as much as 1 billion yuan ($144
million) for the first half of 2020. Its shares have nonetheless
surged 32% this year, suggesting that there is still plenty of
room in investors’ stomachs. Guoquan’s model will likely receive
at least as enthusiastic a reception. (By Sharon Lam)
    
        
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 (Editing by Edward Hadas, Pete Sweeney and Oliver Taslic)