- IHG’s revenue per available room rose by 1.5% in the quarter ending September
- Demand in China was partly hit by typhoons and the timing of public holidays
Intercontinental Hotel Group’s growth rate halved during the third quarter amid continued struggles in the Chinese market.
The Holiday Inn owner reported that revenue per available room (RevPAR) rose by only 1.5 per cent year-on-year in the three months ending September, compared to 3.2 per cent in the previous quarter.
RevPAR in Greater China slumped by 10.3 per cent, with ‘Tier 2-4 cities’ declining at double the rate of larger Tier 1 cities – 12.2 per cent vs 6.1 per cent, respectively.
Weaker demand: Intercontinental Hotel Group’s growth rate halved during the third quarter amid continued struggles in the Chinese market
IHG said the result reflected the strong comparative rebound in domestic travel last year, the timing of public holidays, and a series of typhoons in September.
Hainan island – often nicknamed China’s Hawaii – was hit by super typhoon Yagi, the most powerful storm to hit Asia this year.
Soon afterwards, Shanghai was hit by Typhoon Bebinca, the strongest storm to hit the financial hub in 75 years, which led to the city briefly halting all air, sea and major ground transport.
Demand was partly offset by a shift among Chinese customers towards overseas leisure travel, particularly to the East Asian and Pacific region, where IHG’s RevPAR rose by 6.3 per cent.
IHG also achieved strong performances in Continental Europe, seeing its RevPAR increase by 7.1 per cent, and the Canada, Latin America and Caribbean region, which enjoyed aggregate growth of 6.2 per cent.
While occupancy rates across its estate slipped by 2.1 percentage points to 64.9 per cent, the company was boosted by record group bookings and higher demand from business travellers.
Elie Maalouf, chief executive of IHG, said: ‘We are pleased with the latest trading performance and another strong period of development activity.’
Consequently, the FTSE 100 business, which also owns the Crowne Plaza and Hotel Indigo brands, anticipates finishing 2024 ‘in line with market expectations.’
It further expects to deliver over $1billion to shareholders, including $800million in share buybacks and around $255million of ordinary dividend payments.
IHG has rebounded strongly since the loosening of pandemic-related restrictions that caused substantial financial damage to the global tourism industry.
Mark Crouch, analyst at eToro, said: ‘Even the most optimistic IHG investor will have been pleasantly surprised by the success the luxury hotel owner has delivered in the last couple of years.’
He added that despite subdued economic growth in China, recent interest rate cuts and proposed stimulus measures could be ‘the catalyst for unlocking the pent-up momentum, throwing more momentum behind IHG in the process.’
IHG shares were 0.8 per cent up at £86.32 on late Tuesday morning, meaning they have risen by about 49 per cent over the past 12 months.
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