Holiday Inn owner IHG beats revenue view as US, China growth offset Middle East declines
IHG's Quarterly Performance and Regional Trends
By Raechel Thankam Job
May 7 (Reuters) - InterContinental Hotels Group topped quarterly room revenue estimates on Thursday as its U.S. business rebounded and China sales accelerated, but it warned that the Iran war was negatively impacting demand in the key Middle East market.
Hotels in the U.S. and some other regions have benefitted from strong bookings by affluent travellers, helping offset a pullback globally from budget-conscious customers, though the Middle East conflict threatens to disrupt air travel and hit tourism.
Global Revenue Growth and Market Metrics
IHG, owner of the Holiday Inn brand, reported a 4.4% growth in global revenue per available room (RevPAR) in the three months ended March 31, beating expectations of 3.3%. The keenly watched metric captures how well hotels monetise available rooms.
IHG shares rose as much as 4% to a record high of 151.75 pence, outperforming the FTSE 100 which was down 0.6%.
Regional Performance Highlights
U.S. Rebounds, China Accelerates
U.S. RevPAR rose 3.4% after three quarters of declines, while Greater China posted 5.7% RevPAR growth on strong leisure demand and business travel domestically.
CEO Elie Maalouf told analysts that "consumer spending is good" in the U.S., despite weak sentiment surveys.
"We're not seeing an indication that someone is making a decision not to do a trip because of an extra bit of $100 or more of gas prices," CFO Michael Glover said.
AlphaValue analyst Yi Zhong said that while IHG's mid-scale brands are well-placed to capture value-seeking leisure travellers, its business travel exposure may temper gains versus peers.
Middle East Business Lags
IHG's Middle East RevPAR fell 2% in the quarter, steeper than what rivals Hilton and Marriott reported, following a sharp decline in March after the U.S.-Israeli war on Iran erupted.
IHG warned Middle East performance has worsened in the current quarter, with RevPAR falling about 50% and spillover into broader Europe, Middle East, Africa and Asia region performance in April.
Maalouf said the negative impact was being "more than offset" by other markets.
Though the Middle East accounts for only 5% of IHG's global business, it was outpacing the group's much larger U.S. and Greater China markets last year. It has been scaling up its luxury presence in markets like Saudi Arabia.
Conclusion and Outlook
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Mrigank Dhaniwala, Muralikumar Anantharaman and Chizu Nomiyama )