Holiday Inn-owner InterContinental Hotels Group (NYSE: IHG) reported a 3.2% rise in revenue per available room in the second quarter as a strong rebound in the United States offset weakness in China.
Shares in IHG, which have been pressured in the past week after a warning from U.S. rival Marriott and U.S. recession fears, rose 4% in early trade.
IHG, which also owns the Crowne Plaza, Regent, and Hualuxe hotel chains, said the industry has seen a shift in the pattern of demand this year from domestic tourism in China to overseas travel to other Asia Pacific countries.
Growth in revenue per available room (RevPAR), a key performance measure for the hotel industry, picked up in the second quarter from 2.6% in the first three months, IHG said.
“RevPAR growth accelerated in the latest quarter, reflecting a strong US rebound in Q2 and the breadth of our global footprint, and development activity continues to increase,” CEO Elie Maalouf said in a statement.
Last week, bigger rival Marriott International (NASDAQ: MAR) lowered its 2024 forecast for room revenue growth, citing softer domestic travel demand in China and North America. The warning from Marriott had also sent IHG shares tumbling on the day.
The hotel industry has benefited from higher demand and pricing as leisure travel rebounded from the pandemic, but it has had to contend with weakness in China and funding issues holding back new hotel developments in the U.S.
IHG’s RevPAR in China dropped 7% in the second quarter, while it grew 2.5% in the United States after a 1.9% drop in the prior three months.
InterContinental Hotels Group (NYSE: IHG) raised its interim dividend by 10% and reported an operating profit from reportable segments of $535 million for the first half, up 12%.
IHG did not give an annual RevPAR forecast but said that a “very busy” second quarter, which saw 23% more new hotel signings, is keeping it on track for its expectations of net system size growth – the number of new rooms opened minus those that are closed.
(Source: Reuters)
Maria Reed is a financial journalist with a passion for covering US equities. She joined the ABBO News team in June 2023. Maria holds an M.S. degree in International Economics and Finance from Otto-von-Guericke University in Magdeburg and is a CFA Level 2 candidate.
