InterContinental Hotels shrugs off tough market as tourists return to areas hit by terror attacks

 
Courtney Goldsmith
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InterContinental Hotels said tourists were returning to areas hit by terrorist attacks
InterContinental Hotels said tourists were returning to areas hit by terrorist attacks (Source: IHG)

Holiday Inn owner InterContinental Hotels Group (IHG) revealed sales grew in the third quarter despite a challenging hospitality market as holidaymakers flocked to Europe, but hurricanes in the Americas held revenues back.

In a trading update, IHG said its revenue per available room (revpar) rose 2.3 per cent in the third quarter. Revpar was up 2.2 per cent in the year to date.

The hotel operator opened 11,000 rooms in the period, increasing the net system size by 4.1 per cent compared with the previous year to 786,000 rooms.

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Keith Barr, who succeeded Richard Solomons as the boss of the firm over the summer, said the company's revpar growth was its strongest since 2012 and it signed hotels into its pipeline at the fastest third-quarter rate since 2008.

The company made an "excellent start" to its plans to accelerate the growth of its brands around the world, he said, adding:

Looking ahead, despite macro-economic and geopolitical uncertainties around the world, we remain confident in the outlook for the remainder of the year.

Europe was particularly strong with revpar jumping 7.1 per cent in the quarter. The UK delivered revpar growth of four per cent with brands driving outperformance in London, which was up three per cent.

The company said European markets that were previously impacted by terrorist attacks posted strong growth in the quarter, with sales in France growing six per cent while Belgium and Turkey rose in double digits.

London's hotel bookings have managed to hold up despite terror attacks with a recent report by PwC pointing to the weakness of the pound as a major contributing factor.

However, in the Americas, revpar only grew 0.8 per cent in the quarter due to the impact of hurricanes Harvey and Irma and an earthquake in Mexico.

Steve Clayton, manager of a Hargreaves Lansdown fund that has shares in IHG, said:

Q3 was a solid quarter, with IHG benefitting from rising room rates and a growing number of hotels joining their brands.

The group say they are on track to launch their new cloud-based Guest Reservations System later this year. This, plus the ongoing strength of their mobile booking app are key weapons in the fight against the online travel agents, who threaten the dominance of established brands.

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