IHG’s First Quarter Interim Management Statement shows upward RevPAR, growth in all four regions, and continuing increase in its global scale with 4.9% growth in rooms (to a total of 723k). UK RevPAR growth of 7.7% was driven by rate increases in both London and the provinces as the economic environment continues to improve.
Fiona Cincotta, senior market analyst at finspreads.com said:
“Intercontinental Hotel posted a 5.9% rise in first quarter global room revenue, with growth across all of its regions. The rise in global revenue per room was lead by a 6.6% increase in its core US market.
“The US market has seen record demand whilst the UK and Europe also produced strong figures. Asia, Middle East and Africa produced growth in the region of 6.2% a whole 5% points ahead of the market.
“The world’s largest hotelier impressed the market and appears to have positioned itself well to take advantage of an improving economic climate not just in the US but also across the globe. Only in February Intercontinental posted a 10% rise in 2014 profit and so far 2015 looks to be an equally successful year.”
Richard Solomons, Chief Executive of InterContinental Hotels Group PLC:
“We have made a strong start to the year, executing against our winning strategy to deliver RevPAR growth of 5.9%. We achieved our highest first quarter for hotel signings in seven years, and openings in five years, demonstrating the continued momentum behind both our established and new brands.
“Holiday Inn continues to go from strength to strength, opening in its 75th country, and delivering the highest number of first quarter hotel signings since 2008. Our industry-leading boutique brands are performing strongly, with high single digit RevPAR growth in the US and a growing geographical distribution. We opened Hotel Indigo in two new markets, opened three Kimpton Hotels and Restaurants and signed a further four, as we start to leverage our scale, growing the brand’s room count by almost 5% in the two months since acquisition.
“We continue to lead the industry with our focus on innovation in technology, and through our strategic relationship with Amadeus we will develop the hotel industry’s first cloud-based Guest Reservation System. It will enable us to shape the future foundations of our sector and allows us to concentrate on our own bespoke platforms, as we accelerate our work to revolutionise and personalise the guest experience through digital technology.
“With our current trading performance and the strong momentum behind our brands we remain confident that our winning strategy will continue to deliver sustainable high quality growth.”
Highlights
- Global Q1 comparable RevPAR up 5.9%, driven by rate up 3.4% and growth in all four regions.
- Increasing our global scale: net system size of 723k rooms, up 4.9% year on year (3.3% excluding Kimpton); 14k rooms signed into our 201k room pipeline, highest Q1 hotel signings in seven years.
- Continued growth of our industry-leading boutique hotel brands with strong US RevPAR performance and an expanding global presence.
- Strategic relationship with Amadeus to revolutionise the technological foundations of the global hospitality industry and develop a next generation Guest Reservation System.
First Quarter RevPAR performance
Americas
RevPAR was up 6.2%, with growth in the US of 6.6% and Mexico of 8.8%, partially offset by softer trading in Canada and Latin America.
The US continues to benefit from record levels of demand and low levels of supply, with occupancy the highest IHG has ever recorded in the first quarter. Rates in the US increased by 4.4%, with the Holiday Inn brand family increasing price ahead of its industry segment, and boutique brands, Hotel Indigo and Kimpton Hotels and Restaurants, achieving RevPAR growth of 9.4% and 7.1% respectively.
Europe
RevPAR was up 5.8% with solid growth in the UK and Germany, two priority markets.
UK growth of 7.7% was driven by rate increases in both London and the provinces as the economic environment continues to improve. Germany was up 4.7%, with strong performance by the Holiday Inn brand family offset by reduced trade fair activity, which impacted InterContinental hotels in key cities. Elsewhere, Central and Southern Europe are showing good signs of recovery but difficult trading conditions persist in Russia and the CIS.
Asia, Middle East & Africa
RevPAR was up 6.2%, supported by strong performance in the established markets of Middle East and Japan.
Middle East was up 5.7%, driven by high single digit growth in Saudi Arabia and recoveries in Egypt and Lebanon. Japan grew by 9.9%, benefiting from growth in rate due to increased international tourism. Across South East Asia IHG outperformed the industry in Thailand and Indonesia, with the former recovering strongly after the political disruption in 2014.
Greater China
RevPAR was up 2.4% driven by continued industry outperformance and robust trading in mainland China.
IHG outperformed the overall industry, with RevPAR 5%pts ahead of the market against a backdrop of continuing government austerity. Mainland China RevPAR was up 6.3%, led by Shanghai up 11.2% and strong performance in the other tier one cities. This was partially offset by RevPAR declines in both Macau and Hong Kong, with the latter impacted by softer market conditions following the “Occupy Central” protests in late 2014.
Strategic progress
Enhancing our portfolio of preferred brands
- continue to develop the Holiday Inn brand family, the largest in the industry, into established and new markets. 5k rooms were opened and 9k signed into the pipeline in the quarter, and Holiday Inn now has a presence in 75 countries.
- opened Hotel Indigo in two new markets, Thailand and Finland, and secured two signings in Bali as IHG continues to roll out the brand globally.
- The integration of Kimpton is progressing well. Since acquisition, four new signings secured, and three new properties have opened, growing the room count by almost 5% in just over two months.
- Staybridge Suites recorded its highest number of signings in Q1 for seven years. The brand now has over 100 hotels in the pipeline.
- The first hotel for the HUALUXE Hotels and Resorts brand opened in Yangjiang, with the second scheduled to open in Nanchang during the second quarter of 2015.
Building and leveraging scale
- Net system size up 4.9% year on year (3.3% excluding Kimpton) to 723k rooms (4,921 hotels).
- 7k rooms (57 hotels) opened in the quarter and 6k rooms (38 hotels) were removed, with 3k in the Americas.
- IHG’s pipeline increased to 201k rooms, with nearly 90% in priority markets and 45% under construction.
- 14k new rooms (102 hotels) were signed into the pipeline as financing conditions, particularly in the US, remain favourable for IHG’s preferred brands.
Driving revenue delivery through technology and loyalty
- IHG and Amadeus will develop a next-generation Guest Reservation System that will revolutionise the technological foundations of the global hospitality industry. Amadeus will use a new cloud-based community model, a first in the hotel sector and similar to the model it developed across the global airline industry. This follows a successful engineering study, and as launch partner, IHG is in prime position to take advantage of this technology to deliver a superior guest experience.
- IHG launched enhancements to its award winning loyalty programme, IHG Rewards Club, that focus on building more personalised relationships with the nearly 86 million members worldwide. This will include a new top tier of membership that offers members 100% extra bonus points on qualifying stays, an industry first.
- IHG’s industry-leading digital solutions continue to expand with mobile bookings exceeding $100m in a month for the first time in March.
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