© Reuters. FILE PHOTO: A general view of an Intercontinental Hotel at The O2 in London, Britain October 20, 2020. REUTERS/Matthew Childs/File photo
By Yadarisa Shabong
(Reuters) -IHG said on Friday it expected to close out 2023 with “very strong” financials as the Holiday Inn-owner reported a rise in quarterly revenue per room thanks to strong summer travel demand and a recovery in China to pre-pandemic levels.
Its shares, however, fell 2.2% in morning trade, with Bernstein analyst Richard Clarke attributing the drop to a slowdown in IHG’s net system size growth from the prior quarter and concerns it might miss its full year guidance.
The owner of the Crowne Plaza, Regent and Hualuxe hotel chains flagged economic uncertainties ahead and said that short- term financing challenges were holding back development of new hotels.
IHG’s global revenue per available room – a key performance indicator for the hotel industry – was up 10.5% in the third quarter compared with last year. The group recorded growth across its leisure, business travel and group travel segments, CEO Elie Maalouf said in a statement.
IHG did not provide specific guidance for 2023.
While business travel revenue was already ahead of 2019 levels in the third quarter, group and meetings revenue was still below, finance chief Michael Glover told reporters. However, recent bookings offered “very good visibility” of a more than full return of this activity, he said.
The hotel industry has benefited from a boom in leisure travel demand after the pandemic, as people splurge their savings on vacations despite rising costs of living. A wider Middle East conflict however could pose a threat to tourism in the region.
Glover said IHG has not yet seen a slowdown in demand for tourism in the region because of the Israel-Hamas conflict, but added that “a lot remains to be seen”.
IHG has temporarily closed two hotels in Tel Aviv and had seen cancellations and postponement of bookings till later in the year and the group revised policies to allow guests to cancel free of charge.