Intercontinental Hotels Group (LON:IHG), the company behind well-known brands like Holiday Inn and Crowne Plaza, has reported a 2.6% rise in global revenues for the first quarter of 2024, fueled by expansion efforts and robust market performance, particularly in Europe and Asia.
IHG’s expansion drives growth with 6,200 new rooms
IHG continues to expand its global footprint, opening over 6,200 rooms across 46 hotels during the first quarter.
This marks an 11% increase in room openings compared to the same period last year, underscoring the company’s aggressive growth strategy.
This expansion has not only increased IHG’s market presence but also contributed to a 2.6% rise in global revenues per available room, a key performance indicator in the hospitality industry.
Japan leads the way for IHG
The growth was particularly strong in the EMEAA (Europe, Middle East, Asia, and Africa) regions, where revenues surged by nearly 9%.
Japan stood out with a significant 16.9% increase in room revenue, boosted by a weaker yen and increased travel activity around the Chinese New Year, coupled with eased travel restrictions.
While the Middle East, Continental Europe, and the UK also showed growth, room revenue in the U.S. experienced a slight decline of 0.3%.
Growth strategy in focus
In alignment with the growth strategy outlined by CEO Elie Maalouf in February, IHG aims for high single-digit growth in fee revenue through an increase in revenue per room and an annual expansion in the number of hotels.
Last month, IHG reinforced this strategy by announcing a long-term agreement with NOVUM Hospitality, which is set to double its presence in Germany to over 100 hotels.
IHG stock takes a hit
Despite these positive developments, IHG’s stock fell 1.27% to 7,788 pence in early trading, reflecting investor reactions to a first-quarter revenue that slightly missed analyst expectations.
Jefferies analysts noted that the 2.6% revenue growth was lower than their estimated 3.4%.
Tourism trends and operational forecasts
IHG remains optimistic about the demand for leisure travel, a sector that has seen a surge over the past year.
Although some U.S. hoteliers anticipate a slowdown, IHG’s broad market base and diverse brand portfolio appear to buffer against significant downturns.
“Travel still remains key to what people want to do,” stated CEO Elie Maalouf, highlighting the enduring appeal of leisure travel despite economic uncertainties.