IHG Q1 RevPAR growth beats expectations

(Sharecast News) - InterContinental Hotels Group posted better-than-expected growth in first-quarter revenue per available room (RevPAR) on Thursday as it backed its expectations for the full year.

Global RevPAR grew 4.4%, with growth of 3.6% in the Americas, 5.6% in EMEAA and 5.7% in Greater China. Global RevPAR was ahead of expectations for a 3.3% increase.

Chief executive Elie Maalouf said there had been "notable strength in the US on top of good growth this time last year, and further acceleration in Greater China following a return to growth in the prior quarter".

"Our diverse EMEAA region also performed well despite challenges from the conflict in the Middle East, where we continue to do all we can to support our guests, teams and owners," he added.

He also said that the impact of the Middle East conflict and some wider disruption to international travel flows is expected to be more than offset by increases in demand elsewhere.

"While still early, our confidence of achieving full year consensus growth forecasts and profit expectations is underpinned by the strength of our performance year-to-date," Maalouf said.

At 1010 BST, the shares were up 3.1% at 150.35p.

Dan Coatsworth, head of markets at AJ Bell, said: "The global travel and hospitality sector is not well served by the current uncertain geopolitical backdrop so, in that context, IHG's latest update is robust.

"The Holiday Inn owner unveiled growth in the key revenue per available room metric which was significantly above expectations. This was supported by strong corporate demand and group bookings with leisure travel looking more subdued.

"This likely reflects a lagged recovery from the pandemic period when in-person events and conferences were put on hold.

"Another notable feature of the first quarter was the continued recovery in its Chinese operations which have been a problem child for the group. Strength in this area and the North American market helped make up for an inevitable downturn in the Middle East.

"IHG's offering is diversified with budget, mid-market and premium options and the company can grow without putting huge amounts of capital to work thanks to its franchise model.

"The continued progress on a $950 million share buyback is testament to its confidence in the outlook and a strong balance sheet."

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InterContinental Hotels