InterContinental Hotels Group PLC has reported ‘solid’ third quarter performance, giving it confidence for the rest of the year.
Highlights
- Global third quarter RevPAR growth of 3.3%, with 3.6% in the first nine months.
- 8k rooms opened in the quarter taking system size to 679k rooms as at 30 September, up 1% year on year.
- 16k rooms signed in the third quarter, up 18% year on year, taking the pipeline to 180k rooms at the quarter end.
Richard Solomons, Chief Executive:
“We have delivered a solid third quarter performance with RevPAR growth in all four regions, driven by our preferred brands. RevPAR growth of 3.3% in the quarter was led by a strong performance in our Asia, Middle East and Africa region, up 5.4%. We have driven group RevPAR up 3.6% in the first nine months, with 4.4% in our largest region, the Americas.
“We continue to develop our high quality pipeline which underpins our future growth plans. Signings of more than one hotel a day included two new hotels for our InterContinental brand, in London and Sydney, and our second owned hotel for EVEN Hotels.
“Despite the ongoing challenges in some of our markets, current trading trends give us confidence for the rest of the year and our strategy for high quality growth positions us well for continuing success into the future.”
RevPAR performance
Americas
Americas RevPAR grew 3.7% in the quarter and was up 4.4% in the first 9 months. RevPAR growth softened in September to 2.1%, as group business was slow to pick up following the earlier timing of certain holidays in the month, a trend that was experienced by the industry as a whole.
US RevPAR grew 3.5% in the third quarter, with 4.5% growth in the first 9 months. The pace of growth was strongest in upscale and luxury brands, with third quarter RevPAR in the US up 6.2% for the InterContinental brand and 7.6% for Hotel Indigo. The RevPAR dynamic in the US remains favourable, with industry room nights sold achieving record highs for the past 31 months, and rooms supply growth still well below the 2% per annum historic average.
Europe
Third quarter European RevPAR was up 1.3% despite some tough comparatives, with 0.6% growth in the first 9 months.
In the UK RevPAR grew 1.5% in the third quarter. London was impacted by the tough August comparatives from the Olympic Games in 2012, but outside of London growth was good through the quarter led by an increase in occupancy.
In Germany RevPAR was down 2.8% in the quarter reflecting the strong trade fair schedule in the prior year, particularly in Berlin and Munich. RevPAR grew 0.4% in France driven by good growth in the provinces, with Paris negatively impacted by the earlier timing of Ramadan in July and the absence of the biennial Paris Motor Show, which was held in September last year.
Asia, Middle East & Africa
AMEA achieved good growth in the quarter, with RevPAR up 5.4%, led by 5.0% rate growth. RevPAR in the first 9 months was up 6.0%.
Southeast Asia RevPAR grew 10.1% in the third quarter driven by continued strength in Indonesia and Thailand. 11.7% RevPAR growth in Japan reflects increased international business with particular strength in Tokyo and Okinawa. In the Middle East and Africa RevPAR was broadly flat, with a good performance in Saudi Arabia and the UAE offset by declines in Egypt, which has been impacted by the increased political unrest since July. In Australasia, RevPAR was up 3.9%, with solid trading in Australia.
Group system size
Net rooms up 1% year on year to 679k rooms (4,653 hotels), with a strong opening programme in the fourth quarter.
8k rooms (59 hotels) opened in the quarter, driven by the Americas and Greater China regions.
7k rooms (49 hotels) were removed from the system, mostly in the Americas, consistent with the strategy to drive high quality growth.
Group pipeline
IHG’s high quality pipeline now stands at 180k rooms (1,102 hotels), with over 40% under construction.
Signings of 16k rooms (101 hotels) in the third quarter represent an 18% increase year on year, and include 67 hotels for the Holiday Inn brand family, 10 more than in the same period last year.
Notable signings in the quarter included a Holiday Inn hotel in Mecca, Saudi Arabia, which will be the largest Holiday Inn hotel in the world with over 1,200 rooms when it opens in 2016, and a third InterContinental hotel in London, scheduled to open in 2015.