IHG sees RevPAR growth slow in Q1

3rd May 2024 07:12

(Sharecast News) - Hotels giant InterContinental Hotels Group reported a substantial easing in revenue per available room (RevPAR) growth in the first quarter as weakness in the Americas and a big slowdown in China limited progress.

However, IHG also announced that it would see a $25m uplift to profits this year after a change in its System Fund arrangements, lowering the fees it pays to franchisees to deliver its loyalty programme. The change will "improve economics for our owners", the company said.

Global RevPAR was up just 2.6% year-on-year in the three months to 31 March, down from 7.6% in the fourth quarter of 2023.

RevPAR growth in the Americas turned negative, falling to -0.3% from 1.5% in the preceding period, while Greater China growth came in at 2.5%, down from 72% in the fourth quarter which reflected a soft comparative from the previous year when travel restrictions were still in place. EMEAA growth however picked up to 8.9% from 7.0%.

Nevertheless, the company reported that global occupancy increased by 20 basis points to 62%, while the average daily rate rose 2.3% "as pricing remained robust, reflecting the complete return of leisure, business, and group travel", said chief executive Elie Maalouf.

IHG opened more than 6,200 rooms across 46 hotels in the quarter, increasing its net system size by 3.4% year-on-year to 946,000 rooms.

Meanwhile, the company announced that it signed an agreement with NOVUM Hospitality in Germany last month that will see 108 open hotels (with 15,334 rooms) and 11 hotels under development (2,369 rooms) join IHG's system over the next four years. The deal will increase the size of its global system by 1.9%.

"This further validates the attraction to hotel owners of joining IHG's enterprise, and boosts confidence for our net system growth outlook," Maalouf said.