IHG’s Third Quarter Interim Management Statement reveals RevPAR growth of 7.0% – double digit in the UK, and system growth to 697k rooms, with a strong pipeline. Hotel Indigo is now up to 119 hotels, and Staybridge Suites has reached 200.
Wyn Ellis of Numis commented on the positive results and prospects:
“We consider IHG to be a well managed business with an attractive business model and a sound strategy for growth. Organic growth prospects are promising and the company is particularly well positioned in the United States hotel market, which is at the sweet spot in the cycle (high occupancy, rising demand and limited supply growth are driving strong RevPAR growth). This is a situation that we believe will persist for at least another couple of years.”
Highlights
Global Q3 comparable RevPAR growth of 7.0%; 6.3% in the first nine months
8k rooms opened in Q3; net system size up 2.7% year on year to 697k rooms
16k rooms signed in Q3; over 90% of year to date signings located in our priority markets
High quality pipeline of 190k rooms at quarter end; over 45% under construction
Key growth milestones reached for Staybridge Suites and Hotel Indigo; record signings for InterContinental Hotels & Resorts
Richard Solomons, Chief Executive of InterContinental Hotels Group PLC:
“We delivered our best quarterly RevPAR performance in over two years with growth in each of our four regions. Performance in the US was particularly strong where RevPAR was up 8.7%, demonstrating the excellent momentum in the business and the success of our winning strategy.
“We continue to focus on enhancing our scale position and developing our high quality pipeline, opening 8k rooms in the period, signing 16k rooms into the system, and delivering solid net system size growth of 2.7%.
“Our preferred brands reached several important milestones in the quarter. Staybridge Suites became the fastest growing brand in its segment to reach 200 open hotels, and Hotel Indigo opened its 60th hotel. InterContinental Hotels and Resorts reinforced its position as the largest global luxury hotel brand with record quarterly signings.
“Whilst some of our markets face heightened uncertainty and risks, we continue to see strong momentum in the business and remain encouraged by current trading and positive booking trends.”
Third Quarter RevPAR performance
Americas
RevPAR was up 8.4% in the third quarter and 7.5% in the first 9 months. In the US, RevPAR was up 8.7% in the third quarter and 7.5% in the first 9 months, the strongest quarterly US RevPAR growth in 8 years. Q3 RevPAR growth in the US continued to be driven by record levels of demand, with comparable occupancy rates 1.7% points above the previous third quarter peak, and 4.5% growth in average daily rate. Trading in the quarter was led by higher leisure demand and increased groups business, particularly at our Holiday Inn and Crowne Plaza hotels, where IHG outperformed the industry on a total RevPAR basis.
Europe
RevPAR was up 6.1% in the third quarter and 5.3% in the first 9 months. There were particularly strong performances from the UK and Germany, two priority markets. The UK delivered double digit RevPAR growth reflecting strong performance in both London and the regions; and Germany drove high single digit RevPAR growth due to a favourable trade fair calendar. InterContinental Paris – Le Grand reported Q3 RevPAR up 7.3% following the completion in the second quarter of the renovation of the Salon Opera ballroom.
Asia, Middle East & Africa
RevPAR was up 4.4% in the third quarter and 4.1% in the first 9 months. Priority markets of Middle East, Indonesia and India performed strongly, with the latter benefiting from improved business confidence following the recent election. Japan and Australia performed solidly both delivering low single digit RevPAR growth. Trading in Thailand has shown signs of returning to relative stability.
Greater China
RevPAR was up 0.8% in the third quarter and 3.0% in the first 9 months. Trading was strongest in tier one cities, especially Shanghai, Guangzhou and Shenzhen with good levels of transient and corporate business. Performance in certain tier two and three cities was impacted by new supply as these markets develop, and trading in Northern China remains challenging where there is higher contribution from government business. RevPAR at InterContinental Hong Kong was up 5.4% in the quarter with increased group business and corporate events, despite the disruption from the on-going redevelopment adjacent to this hotel. Minimal impact so far from recent protests.
Substantial scale drives high quality growth
Group system size
Net rooms were up 2.7% year on year to 697k rooms (4,760 hotels). 8k rooms (59 hotels) opened in the quarter, over 90% of which were in priority markets where IHG is building on established scale presence.
4k rooms (31 hotels) were removed from the system, mainly in the Americas, reflecting continued focus on driving high quality growth.
Group pipeline
IHG’s high quality pipeline now stands at 190k rooms (1,198 hotels), with more than 45% under construction and 90% situated in priority markets.
16k rooms (107 hotels) were signed into the pipeline in the third quarter taking total signings in the first nine months to 45k rooms (315 hotels), the strongest Q3 year-to-date underlying performance since 2008. Development activity in the Americas continues to benefit from favourable financing conditions, particularly for refinancing existing hotels with stable cash flow, and strong industry RevPAR performance.
Building preferred brands
InterContinental Hotels & Resorts enhanced its position as the largest global luxury hotel brand with the signing of landmark hotels in Jakarta, Singapore and Los Angeles, where a 900-room new build InterContinental hotel will be the largest for the brand in the US. In September, InterContinental New York Barclay closed for a major refurbishment, which will substantially reposition it as a flagship hotel when it reopens in approximately 18 months.
IHG enhanced its position in Mexico, one of the priority markets where IHG is the largest hotel company with over 20k open rooms, by strengthening IHG’s 20-year relationship with Grupo Presidente to expand the footprint and diversity of brands in key cities and resort destinations.
Hotel Indigo Paris Opera opened in the quarter, the first for the brand in France and 60th worldwide. This took the brand to 119 hotels in the system and pipeline combined, with 5 hotels opened and 14 hotels signed so far in this its 10th anniversary year.
Staybridge Suites celebrated its 200th open hotel in the quarter; a milestone met faster than any other brand in its segment, with the opening of Staybridge Suites Denver Stapleton.
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