IHG, the owner of Holiday Inn and Crowne Plaza, is optimistic about the growth of room revenue in the second half of 2023, regardless of any economic pressures. The hotel group has witnessed a 27% increase in operating profit from reportable segments in the first half of the year, leading to a 10% rise in dividend. While IHG did not provide specific profit numbers for the second quarter, its global revenue per available room, a crucial metric for the hotel industry, rose by 17% in Q2. This growth can be attributed to higher room rates and a rebound in China.
Leisure travel has been thriving since the lifting of pandemic restrictions, with individuals willing to spend generously on vacations despite the rising cost of living. IHG’s US counterparts, Marriott and Hilton, have also raised their full-year results guidance. Similarly, other sectors within the travel industry, such as airlines, have experienced positive effects. However, concerns have been raised regarding a potential slowdown as consumers face financial strains due to high inflation and borrowing costs.
IHG’s finance chief, Michael Glover, reassured that the group has not observed any signs of demand slowing down in the US, which is its largest market. Although some holiday resorts in the US have witnessed a slight decrease in room rates, IHG stated that there has been no significant resistance to high prices. In the first half of the year, the average daily rate increased by 7%. IHG’s newly appointed chief executive, Elie Maalouf, who took over from Keith Barr in July, highlighted the buoyant leisure demand in the Americas and EMEAA (Europe, Middle East, Asia, and Africa) regions, as well as the strengthening of business and group travel.
Overall, IHG remains positive about the future of the hotel industry, with expectations of continued growth in room revenue across its regions in the second half of 2023. The company’s performance in the first half of the year, along with the rebound in China and the strong demand for leisure travel, indicates a promising outlook for IHG and the wider hospitality sector.