Hotels group IHG reports slowdown in hotel occupancy rates
Holiday Inn owner nonetheless adds 12,000 rooms in first quarter in expansion drive
InterContinetal Hotel Group the owner of Holiday Inn and Kimpton hotels, reported a first-quarter slowdown in hotel occupancy rates, especially in the US, but has stayed on track with its aggressive expansion drive.
The FTSE 100 company said in an update on Friday that it had added 12,000 rooms to its portfolio in the three months to March and had another 24,000 in the pipeline.
Like-for-like group revenue per available room, or revpar — the industry’s favoured performance measure — meanwhile was up 0.3 per cent, compared with an increase of 3.5 per cent for the same three months last year. Occupancy rates were down 0.2 per cent.
Industry analysts have been warning of a slowdown in IHG’s core US market for some time. Analysts at Morgan Stanley said in February that they expected overall US revpar to slow from an annual 3 per cent growth rate between 2016 and 2018 to 1.4 per cent this year “driven by a more challenging corporate demand environment”.
Nearly two-thirds of IHG’s rooms are in the Americas with about a quarter in Europe, the Middle East and Africa and the rest in China.
To counter slowing growth in the US, IHG hopes to expand its reach in Asia and target “highest opportunity segments”. It said that it had opened 18 hotels and signed another 52 in Greater China this quarter, its highest number yet.
IHG has been investing heavily in the luxury sector. In February it bought Six Senses, a group of resorts, in a $300m cash deal, which it hopes to expand with another 60 sites over the next decade.
The investment is funded by a programme to achieve $125m of annual savings by 2020, which chief executive Keith Barr said was “going well”.
“While macroeconomic and geopolitical uncertainties remain in some markets, the strong fundamentals of our business give us confidence for the balance of the year,” Mr Barr said.
Revpar declined most in Europe, Africa and the Middle East, which the company attributed to the unrest during gilets jaunes protests in France and “tough trading conditions” in the Middle East.
Like Whitbread, which reported its full-year results on Tuesday, IHG said that revpar in London was up but that the UK regions remained flat.