IHG first to report 3Q earnings; RevPAR up 10% YOY

IHG Hotels & Resorts reported strong results for 3Q23, citing continued overall strong demand and a growing rebound in China with RevPAR now above 2019 levels.

Q3 RevPAR increased 10% versus 2022 and 13% versus 2019, representing the fifth quarter of sequential improvement exceeding pre-pandemic highs.

Systemwide occupancy was 72%, one percentage point behind 2019 and CEO Elie Maalouf added that pricing remained “very robust” with rooms revenue growth in leisure, business and group travel.
IHG also announced plans on Friday to return capital to shareholders, driven by a significant increase in RevPAR. It will disclose capital allocation details, including a $1 billion return through share buybacks and dividends, alongside its full-year results in 2023.

IHG expanded its global footprint and development pipeline by opening around 8,000 rooms across 50 hotels and adding 17,000 rooms from 123 properties into its ongoing pipeline. The company increased its room count by 4.7% year-on-year to 929,987 rooms. Year to date, signings are up by 16%.

Reflecting the breadth and attractiveness of our portfolio, ‘quicker to market’ conversions have increased this year to be over one-third of openings and signings.

Elie Maalouf

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“Reflecting the breadth and attractiveness of our portfolio, ‘quicker to market’ conversions have increased this year to be over one-third of openings and signings,” Maalouf said. “This will soon be further boosted by our new midscale conversion brand, Garner, which became franchise ready in September. There was good development progress across all our categories, and our six luxury and lifestyle brands continue to represent a growing proportion of IHG with over 800 open and pipeline hotels in that category.”

In the Americas, Q3 RevPAR was up +4.1% vs 2022 (+13.8% vs 2019), with US RevPAR +3.1% (+11.8% vs 2019). Occupancy was 72%, +0.7% points on last year (-0.6% points vs 2019), while rate was +3.1% (+14.8% vs 2019). Leisure rooms revenue in Q3 for the total estate was +3% higher than last year, and +22% on 2019 levels, driven by another strong summer vacation period.

Gross system size growth was +3.9% YOY, with 2,000 rooms (18 hotels) opened in the quarter. Net system size growth was +2.9% YOY. A further 5,100 rooms (55 hotels) were added to the pipeline. Signings included eight avid hotels, 16 hotels across the Holiday Inn brand family, and a further 26 across IHG’s extended-stay brands.

Looking closer at Greater China , Q3 RevPAR was +43.2% vs 2022 (+9.3% vs 2019). Occupancy was 67%, +14.1% points (and up +2.3% points vs 2019), while rate was +13% (+5.6% vs 2019). Tier 1 cities saw RevPAR vs 2019 -3%, reflecting the more gradual return of international travel; the performance was stronger across Tier 2-4 cities which were +13%.

Gross system size growth in China was +8.1% YOY, with 3,600 rooms (21 hotels) opened in the quarter. Net system size growth was +5.5% YOY. A further 6,900 rooms (37 hotels) were added to the pipeline. IHG said as development activity continues to improve following the extended period last year of COVID-related restrictions in the region, this was the highest quarterly signings performance since 2021.

IHG did not provide guidance but looking ahead, Maalouf said “while there are macro-economic uncertainties and some short-term financing challenges holding back new hotel development, I am excited about the future for IHG and the attractive, long-term demand drivers for our markets. As such, we’re confident in the strengths of IHG’s business model, scale and in our strategic priorities to capture sustainable, profitable growth.”