World Cup helps Holiday Inn owner IHG recover from Iran war bookings slump

The World Cup buzz helped lift revenues at Holiday Inn owner Intercontinental Hotels Group in the first half of the year, but it warned the Iran war still spells uncertainty for bookings. 

The FTSE 100 firm, which also owns the Crowne Plaza brand, said the football tournament hosted in North America in June and July helped it recover from a slump in bookings earlier this year. 

Revenue per available room (RevPAR), a key measure of performance for hotels, rose by 4.8 per cent in the Americas, with 5.4 per cent in the second quarter thanks to strong growth in World Cup match locations, which it said added about 1 per cent to growth. 

It helped offset the impact of the Iran war, with underlying revenues up 6 per cent to $1.26billion for the six months to June 30. Operating profits jumped 10 per cent to $665million, but statutory pre-tax profits fell 9 per cent to $578million. 

Group RevPAR rose 4.1 per cent in the first half, before slowing to 3.5 per cent in the second quarter as the resumption of hostilities hit bookings. 

IHG said RevPAR in the Middle East region slumped by 19 per cent in the second quarter, following a 2 per cent dip in the previous three months. 

IHG shares fell 2.5 per cent early on Tuesday morning. 

The hotels giant warned that ‘geopolitical risk and the economic outlook present shorter-term uncertainties’. 

Chief executive Elie Maalouf said: ‘While there are ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows, we continue to expect these to be fully offset by growth in demand elsewhere.’ 

The group opened 31,500 new rooms at 197 hotels in the period, a record level and up 8 per cent year-on-year. In total, the group operates more than a million rooms globally. 

It said it had secured a pipeline of a further 348,000 new rooms globally across 2,385 hotels. The business operates 7,100 hotels globally, with plans to open a further 2,400. 

IHG said it remained on track to meet its full-year consensus profit and earnings expectations. 

The business said it was keen to ramp up revenue from ancillary income streams, including by selling loyalty points to customers and using the group’s brands to help sell branded residential property.  

It is also ploughing money into artificial intelligence (AI) as it recorded an 8 per cent increase in gross costs to $12million in the past three months. The group said gross costs rose due to greater use of AI in back-office functions, as well as its websites and apps. 

The group’s interim dividend was increased by 10 per cent to 64.5 cents, and management said it remained on track to return more than $1.2billion to shareholders this year. 

Adam Vettese, an analyst at Etoro, said: ‘The group delivered exactly what it said it would, mid-single-digit RevPAR, accelerating system growth and another leg of margin expansion that pushed adjusted earnings up double digits. 

‘Yet the Q2 slowdown in EMEAA, still scarred by the Middle East, and the usual statutory noise around foreign exchange swings were enough to prompt a cautious reaction. Investors may have grown used to IHG beating expectations; merely meeting them no longer moves the needle.’