InterContinental Hotels announced a 61% rise in group revenue per available room (RevPAR) in the first quarter, however, noted tighter trading in the Greater China region due to Covid-19 restrictions, in the group’s trading update on Friday.
InterContinental Hotels Group (IHG) reported strong trading circumstances, with travel demand continuing to rise in practically all of its core regions throughout the world in the first quarter.
Revenue per available room, a key metric in the hotel business, increased by 61% in the first quarter, compared to the same period in 2021 for IHG which means the group’s RevPAR has reached 82% of 2019’s level.
The average daily rate for the first quarter, which reflects the average rental revenue collected for an occupied room per day, was up 27% YoY and in line with 2019 said IHG.
The group’s gross system size growth was greater than 4.9% YoY and more than 0.7% YTD.
However, InterContinental’s net system size growth was higher than 3.4% YoY after adjustments for the disposals of Holiday Inn and Crowne Plaza were taken into consideration and more than 0.5% YTD.
The group also signed 16,600 rooms in 120 hotels, which was 15% better than in 2021 and 2020, leading IHG’s global pipeline to grow to 278,000 rooms in the first quarter.
InterContinental signed a new $1.35bn syndicated bank RCF in April and the prior syndicated facility of $1.27bn and the $75m bilateral facility have both been discontinued. The new five-year RCF matures in April 2027.
IHG Regional performance
After a difficult January, IHG reported the Americas and EMEAA areas had sequentially improved trading in February and March.
In comparison to 2021, the Q1 RevPAR increased by 58% in the Americas and occupancy was close to 60%, down 6% from 2019, while the rate was up 1% said IHG.
The spring break holiday period boosted demand, resulting in leisure room income being 10% higher than in 2019 which, when combined with an increase in corporate reservations and the return of more group events, should support future increases in both occupancy and rate.
With 2,200 rooms and 23 hotels opened in the quarter, the gross system size increased by 2.7% YoY and 7,800 rooms were added to the pipeline from 73 hotels, demonstrating a gradual improvement in the agreements pace and exceeding the Q1 signings in 2019 for InterContinental in the Americas.
In comparison to 2021, Q1 RevPAR increased by 122% and occupancy was reaching 50% but the rate was down only 4% for EMEAA.
Previous restrictions, particularly on international travel, were generally lifted over the quarter in all markets leading to a wide range of performance within EMEAA as Q1 RevPAR was down just 7% compared to 2019 in the Middle East and 15% in the UK, followed by 38% lower in Australia, 45% lower in Continental Europe, 58% lower in South East Asia and Korea, and 64% lower in Japan.
With 3,500 rooms from 17 hotels opened in the quarter, gross system size increased by 5.7% YoY and on an adjusted basis, net system size increased by 4.2% in EMEAA. The group also said 2,300 rooms were added to the pipeline from 15 hotels.
However, the tightening of localised travel restrictions following a spike in Covid-19 cases impacted commerce in Greater China in March.
First-quarter RevPAR in Greater China was down 7% compared to 2021 and down 42% from Q1 in 2019.
Occupancy was 36% and the rate was down 17%, however, the Winter Olympics increased Beijing’s performance.
In March, travel restrictions imposed in response to a surge in Covid-19 cases resulted in a 53% drop in RevPAR compared to 2019, with over a third of the estate either shuttered or repurposed said IHG.
Greater China noted a gross system size growth of 11.3% YoY and added 6,600 rooms from 32 hotels to the pipeline.
Keith Barr, CEO of IHG, said, “We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world.”
“The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.”
“As occupancy levels rise and due to the strength of our brands, our hotels are seeing increased pricing power; in March, our hotels in the US achieved leisure rates up by more than 10% on 2019 levels and rate across the whole of the US business was 4% ahead.”
“Trading in Greater China continues to be impacted by restrictions put in place to control rising Covid cases. Our strategic focus on strengthening and expanding our brand portfolio continues to drive growth.”
InterContinental Hotels Group shares have fallen 1% to 4,930p after the group noted growth in all regions but explained a slow down in China due to lockdowns.
