Third-quarter systemwide room revenue generated by business transient travel at IHG Hotels & Resorts increased 4 per cent year on year, while revenue from group travel fell by 4 per cent, according to an earnings report on Thursday (23 October). Leisure travel demand for the quarter also fell 2 per cent compared to the previous year.
The company, which owns brands such as Holiday Inn, Crowne Plaza, InterContinental and the recently acquired Ruby Hotels, saw its average daily rate (ADR) for the quarter fall by 0.4 per cent to $128.66 compared to the same time last year, while revenue per available room (RevPAR) increased 0.1 per cent year on year.
“We are pleased with our performance… and we remain on track to meet full year consensus profit and earnings expectations,” said IHG CEO Elie Maalouf in a statement, adding that after a “pause” in corporate and leisure demand in the first few quarters, the company remains optimistic moving into 2026. “We see short-term softness, but we believe in long-term strength,” he said during an earnings call.
Maalouf also underlined the resilience of the business travel segment, where demand in Q3 was up across all regions – with a 6 per cent year-on-year increase in Europe, the Middle East, Asia and Africa (EMEAA), a 2 per cent increase in the US and a 5 per cent uptick in Greater China.
“Business travel continues. Why? Because business expands, GDP expands, companies expand and employment expands and people have to go to do stuff, that’s why," Maalouf said. "Our events calendar is also very strong. People go to do stuff in business, so the idea that business travel will never recover [post Covid] obviously has been dispelled,” he added.
RevPAR for the EMEAA region in Q3 increased 2.9 per cent to $107.62, while ADR increased 0.7 per cent to $143.03 and occupancy increased 1.6 percentage points to 75.2 per cent. In Europe, slower RevPAR growth in France and Germany was offset by stronger increases in the UK and Southern Europe, the latter driven by leisure demand.
Between July and September, IHG opened 33 hotels (or 4,200 rooms) in the region, marking a 25 per cent increase on the same period last year.
Across the Americas, RevPAR for the quarter fell by 0.9 per cent to $101.18, while ADR also declined by 0.5 per cent to $140.88. Occupancy rates fell 0.3 percentage points to 71.8 per cent. The company also noted that US Government travel has declined by 20 per cent compared to 2024.
Meanwhile, in Greater China, RevPAR declined 1.8 per cent to $43.57, while ADR also fell by 2.7 per cent to $67.65, largely due to an increase in international outbound leisure trips. Occupancy rates in the region increased 0.6 percentage points to 64.4 per cent.
New collection brand
IHG on Thursday also announced plans to launch a new 'premium' collection brand “in the coming months”. Maalouf shirked investor questions for details regarding the name and rollout of the brand, stating only that it will initially focus on the EMEAA region and that it will be positioned in the upscale to upper upscale segment.
IHG opened 99 hotels (or 14,500 rooms) in Q3 and signed an additional 170 properties to its portfolio, marking year-on-year increases of 17 per cent and 18 per cent, respectively. As of 30 September, the group’s global portfolio comprised of 6,845 hotels, with an additional 2,316 hotels in the pipeline, which includes the expansion of the Ruby brand into the US, Maalouf said.