Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Weakening demand in China weighed on room revenue growth at the FTSE 100 hotel group behind the Holiday Inn and Crowne Plaza chains.
InterContinental Hotels Group (IHG) said that global revenue per available room, or revpar — the key industry metric — rose 1.5 per cent in the three months to the end of September, which was below consensus estimates of 1.9 per cent and lower than the 3.2 per cent growth reported in the previous quarter.
The group has a globally diverse footprint, with revpar in the United States up 1.2 per cent; by 7.1 per cent in Continental Europe; and 2.2 per cent in the UK.
The biggest lag was China, where revpar fell 10.3 per cent, which IHG blamed on tough comparatives with the year before when there was a resurgence in domestic travel following the end of lockdowns. The company also flagged that its performance in the region was hit by the timing of public holidays along with typhoons in September.
Still, the company said that 2024 was on track to be one of the biggest years for both openings and signings in the Greater China region.
IHG, which franchises or leases the majority of its hotels, has more than 6,500 properties in 100 countries under 19 brands including Staybridge Suites and Kimpton. It has a development pipeline of more than 2,200 hotels.
Over the third quarter, IHG opened 98 hotels spanning 17,500 bedrooms, more than double the same period last year. More than a third of those rooms come from a deal with Novum Hospitality that doubles IHG’s presence in Germany. It also said that its licensing agreement with The Venetian Resort and The Palazzo in Las Vegas will end at the end of this year, removing 7,092 rooms.
The company said that so far it has completed $614 million of its $800 million share buyback that was announced in February. The buyback, topped up with ordinary dividends totalling $255 million means IHG will have returned a total of $1.05 billion in 2024. This is equivalent to just above 7 per cent of the group’s $14.9 billion market capitalisation at the start of this year.
Elie Maalouf, the chief executive, said that the increase in openings and signings in the period marks a “clear reflection of the strength and appeal of our brands and wider enterprise to owners”.
He added: “We have made great progress this year to further strengthen IHG’s enterprise platform, grow our brands and deliver on our growth algorithm.
“The power of this algorithm comes from the compounding nature of growing fee revenues through the combination of revpar, system expansion and ancillary fee streams, which in turn helps to increase margins and, with our strong cash generation, allows us to reinvest in our business and return surplus capital to shareholders.”
• The Crowne Plaza boss on why his hotel empire will stay in Britain
The company expects to finish the year in line with market expectations.
IHG’s shares, which have risen by more than 45 per cent since this time last year, closed up 148p, or 1.7 per cent, to £87.14, with analysts at Jefferies pointing out the group’s “full valuation”, while Peel Hunt argued that despite IHG being an “outstanding” business, analysts think there is more downside than upside risk for the shares.