Gains outside the Americas drive IHG’s growth

DENHAM, UK — IHG Hotels & Resorts said its global RevPAR grew 2.6% year-over-year with ADR up 2.3% and its pipeline has increased 6.6% over the same period as part of its first quarter earnings. 

The global hotel company had its greatest RevPAR gains in Europe, the Middle East and Asia and Africa (EMEAA) with a gain of 8.9% YOY while greater China was up 2.5%. 

CEO Elie Maalouf said RevPAR gains in the Americas were relatively flat at -0.3%. He expects numbers in Greater China to continue improving as international inbound continues to increase into the country. He said global occupancy had a slight increase of 0.2%

“Global occupancy moved up to 62%, and [ADR] increased by a further +2% as pricing remained robust, reflecting the complete return of leisure, business, and group travel,” he said.

IHG opened 46 hotels and more than 6,200 rooms in the first quarter and said it had gross system size growth of 5% YOY and 0.7% in Q1. It said the increase is 11.1% higher YOY when adjusting for its partnership with Iberostar for resort and all-inclusive hotels. Net unit growth increased by 3.4% YOY. 

The company also signed more than 129 properties and nearly 18,000 rooms during the quarter as its hotel pipeline increased 6.6% YOY.

“‘Quicker to market’ conversions generated over 35% of openings and signings in the quarter, reflecting the attractiveness of our brands and enterprise platform,” he said.

Maalouf also mentioned IHG’s recent partnership with NOVUM Hospitality, which will double the company’s presence in Germany. The deal will bring 119 hotels and 17,700 rooms to IHG’s global system in the coming years. 

“This further validates the attraction to hotel owners of joining IHG’s enterprise and boosts confidence for our net system growth outlook,” he said. 

IHG also said, after an internal review, it is lowering the standard loyalty assessment fee its owners pay into its system fund, which stood at $1.564 billion at the end of 2023 (up 27% from five year ago). The company said the changes will improve economics for its owners and help grow its ancillary fee streams. 

“The combined power of our platform and efficiency of our operating model will continue to drive IHG forward,” he said. “We are excited about the future and our ability to capitalize further on our strengths, scale and leading positions, and on the attractive, long-term demand drivers for our markets.”

IHG also said it has already completed $239 million of its planned $800 million share buyback program for 2024, which has reduced its overall share count by 1.4%.

Regional performance

IHG said in the Americas, RevPAR in the first quarter was down -0.3% YOY with U.S. RevPAR down 1.9% but up in the aggregate 11.3% in Canada, Latin America and the Caribbean. Occupancy was down 1.1% to 63.1% while ADR was up 1.5%. Gross system growth was up 2.3% YOY as the region added 26 hotels and 3,100 rooms in Q1 with 61 hotels and 5,100 rooms in the pipeline. 

The company’s growth was strongest in Europe, the Middle East Asia and Africa (EMEAA) with RevPAR up 8.9% YOY, ADR up 4.5% and occupancy up 2.7% to 66.7% Geographically, RevPAR was strongest in Japan (16.9%), Australia (+10.2%), the Middle East (+7.4%), continental Europe (+6.2%) and the UK (+2.4%). Gross system growth was up 7.2% YOY with 10 hotels and 1,000 rooms added in Q1. There are 28 hotels and 5,400 rooms in the pipeline. 

RevPAR growth in greater China was up 2.5% YOY with ADR up 1.3% and occupancy up 0.7% to to 53.5. IHG said the RevPAR performance in Tier 1 cities was up +7.3%, but down 2.1% in Tier 2-4 cities. Gross system growth grew +10.4% YOY with 10 hotels and 2,100 rooms added in Q1 with 40 hotels and 7,200 rooms in the pipeline. IHG said development continues to gain in the region with signings up 22% YOY.