IHG: Revenue up at Holiday Inn owner despite China slowdown
Intercontinental Hotels Group (IHG), which owns the likes of the Holiday Inn chain, saw its revenue rise during the first half of 2024 thanks to a strong performance in Europe, the Middle East and Africa.
The FTSE 100 constituent posted a revenue of $2.3bn (£1.8bn) for the six months to June 30, 2024, up four per cent.
And its revenue per room (RevPAR) – one of the most important benchmarks for hotels – rose by three per cent, with especially strong performance from its footprint in Europe, the Middle East and Africa, where it generated a 7.5 per cent rise on 2023.
The group also increased its dividend 10 per cent thanks to a 12 per cent rise in underlying profit in the six months.
In China, the country’s well documented economic struggles continued to weigh on the firm’s RevPAR, which fell 2.6 per cent over the course of the first half, dropping to seven per cent in the second quarter alone. RevPAR in the Americas rose 1.7 per cent.
And profit in its reportable segments – which don’t include the money which franchise hotels pay the company for marketing and promotional activities – was up 12 per cent, beating analyst expectations.
Adjusted earnings per share also rose 12 per cent to just over 203 cents (160p).
But its operating profit – which doesn’t include the franchise payments, known as a Systems Fund – fell by 10 per cent to $525m (£411.7m) over the same period.
IHG signing ‘more than two hotels a day’
Elie Maalouf, IHG Hotels chief executive, said: “Thanks to our teams around the world, we are making great progress on the delivery of our strategic priorities and with the clear framework to drive future value creation that we set out in February.
“RevPAR growth accelerated in the latest quarter, reflecting a strong US rebound in Q2 and the breadth of our global footprint, and development activity continues to increase.
“Together with system growth, notable margin expansion and the benefit of returning surplus capital through buybacks, adjusted EPS growth was +12 per cent.
“We celebrated 126 hotel openings in the half and the signing of a record-breaking 384 properties, equivalent to more than two a day.
“These included the first six openings and 118 signings from the NOVUM Hospitality agreement, which doubles our presence in the important and attractive German market.
“After growth of +7 per cent in Q1, a very busy Q2 saw +23 per cent more signings year-on-year or a more than doubling when including NOVUM, and this keeps us on track for net system size growth expectations.
“We continue to strengthen our enterprise to position IHG as first choice for guests and owners, further improving and growing our brands, driving loyalty contribution, rolling out new hotel technology and increasing our ancillary fee streams.
“Our cash generation and strong balance sheet continue to support further investment in growth, and we are confident in capitalising on our scale, leading positions and the attractive, long-term demand drivers for our markets.”
The results allowed IHG to rise its dividend by 10 per cent to 53.2 cents a share, having announced a bumper $800m (£627.46m) share buyback in February which the firm said was 47 per cent complete.