The FTSE-100 hotel group that owns the Holiday Inn, Crowne Plaza and other chains was impacted by a weakening of demand in China.
InterContinental Hotels Group said global revenue per room available, or Revpar, the key industry measure, rose by 1.5 percent in the three-month period ending in September. This was lower than consensus estimates of 1.9 percent and the 3.2 percent growth reported in previous quarter.
The group’s footprint is global, with revpar up by 1.2% in the United States; 7.1% in Continental Europe and 2.2% in the UK.
IHG attributed the biggest drop in revpar to China, where it fell by 10.3 percent. IHG compared the results with last year, when domestic travel was on the rise after the end of the lockdowns. The company said that the typhoons and public holidays in September had a negative impact on its performance.
The company still said that 2024 would be a big year for openings and signings, both in Greater China.
IHG has 6,500 hotels in 100 countries, including Staybridge Suites, Kimpton, and 19 brands. The company has more than 2,200 hotel projects in the pipeline.
IHG opened 98 new hotels in the third quarter with 17,500 rooms, which is more than twice the number of the same period the previous year. The deal with Novum Hospitality, which doubles IHG’s presence in Germany, accounts for more than a third. The company also announced that the licensing agreement it has with The Venetian Resort and The Palazzo , both in Las Vegas , will expire at the end this year. This means 7,092 rooms are being removed.
The group announced that its licensing agreement will expire at the end this year with The Venetian Resort (above) and The Palazzo, both in Las Vegas.
The company announced that it had completed 614 million of its $800,000,000 share buyback, which was announced in Feb. IHG’s $1.05 billion return in 2024 will be boosted by the buyback and ordinary dividends of $255 million. This represents just over 7 percent of the $14.9 billion in market capitalisation of the group at the beginning of this year.
Elie Maalouf said the increased openings and signings during the period is a “clear indication of the strength and attraction of our brands to owners and the wider enterprise”.
He said: “We made significant progress in this past year to strengthen IHG’s enterprise platform, expand our brands, and meet our growth algorithm.
The power of the algorithm is derived from the compounding of fee revenues by combining revpar, system extension and ancillary revenue streams. This in turn increases margins, and with our strong cash flow, we can reinvest our surplus capital in our business.
The company is expecting to end the year according to market expectations.
IHG shares have increased by over 45 percent since last year. Analysts at Jefferies pointed out that the group has a “full value”, while Peel Hunt said that even though IHG is an “outstanding business,” analysts believe there are more downside risks than upside risks for the shares.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.