Skift Take
IHG posted its strongest quarter of hotel openings in recent years, as the hotel giant accelerates its global expansion plans.
InterContinental Hotels Group (IHG) saw strong momentum in its expansion efforts in the third quarter. The hotel group added 17,500 rooms across 98 hotels, more than doubling its growth pace from the same period last year.
“We’re headed toward one of our biggest years ever in terms of both hotel openings and signings,” said Michael Glover, chief financial officer, in a call with analysts Tuesday.
IHG’s development growth was the highlight of an otherwise mostly uneventful financial update from the owner of Holiday Inn, Crowne Plaza, and 17 other brands. Executives said they broadly saw a continuation of positive performance trends.
“We’re very pleased with the progress we’re making,” said IHG CEO Elie Maalouf.
IHG’s Third Quarter Growth Spurt
- IHG’s development pipeline showed robust health, with new signings up 14% year-over-year at 19,200 rooms.
- Much of the quarter’s expansion came from a deal with German hotel group Novum Hospitality, which contributed 6,200 rooms. IHG signed a deal with Novum in April to add dozens of properties over the coming years.
- The third quarter expansion drove net growth of 4.1% on a rolling 12-month basis.
- IHG’s global pipeline now stands at 327,000 rooms, representing potential future growth of over 30% of its current system size and marking a 12% increase from last year.
- China is a hotspot. IHG saw hotel openings in China rise more than 50% year-over-year, with 5,500 rooms added in the quarter. Despite the country’s economic troubles, year-to-date signings in China are up over 20% compared to last year.
- The company’s newest brand, Garner, has rapidly expanded since its launch a year ago. “More than 85” Garners are in the pipeline, and 4 are open.
- In the luxury and lifestyle category, IHG has “over 900” either open or are in development globally. “Intercontinental still remains the largest and fastest-growing traditional luxury brand in the world,” Maalouf added.
- Looking ahead, IHG forecasted a significant ramp-up in openings during the fourth quarter, following typical seasonal patterns.
- IHG said it would end its licensing agreement with The Venetian Resort Las Vegas in January 2025, removing about 7,000 rooms from its system. However, executives talked down the impact, saying the fee contribution had been relatively minimal.
Deceleration in Revenue Growth
The global hotel giant reported modest growth in a key revenue metric in the third quarter, with stark regional differences. IHG only saw 1.5% growth in revenue per available room worldwide in the quarter as it weathered headwinds from a weak economy in China and turmoil in the Middle East.
- IHG has been seeing a deceleration in the key revenue metric for a few quarters as the leisure travel boom softens worldwide. More positively, group bookings were at record levels in the third quarter.
- In the Americas, revenue per available room was up 1.7% overall. Canada, Latin America, and the Caribbean specifically saw stronger growth at 6.2%.
- Europe, Middle East, Asia & Africa (EMEAA) revenue per available room was up 4.9%. The UK was only up 2%, but Continental Europe was up 7%, boosted by the Paris Olympics.
- Greater China was down 10.3%, partly due to economic weakness and partly because of tough comparisons to last year’s post-reopening surge. Executives said year-over-year comparisons would be more favorable in the fourth quarter.
Accommodations Sector Stock Index Performance Year-to-Date
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