Holiday Inn owner IHG beats revenue estimates on resilient US travellers (updated)

Intercontinental Hotels

Yesterday 07:27

Third-quarter revenue per available room up 5.3% versus forecast up 4.4%
IHG expects $40 million to $60 million increase in 2027 interest costs
Shares fall 1%, paring earlier losses 
Recasts, adds CEO comments from earnings call throughout
By Simone Lobo and Yadarisa Shabong
Oct 22 (Reuters) - Holiday Inn owner IHG IHG.L beat quarterly room revenue forecasts after trips by affluent Americans at home and abroad offset weakness in China and the Gulf countries, it said on Thursday.
Wars, civil unrest, high airfares and elevated borrowing costs cloud the general outlook for tourism and hotels, but IHG reported 5.3% growth in third-quarter revenue per available room, or RevPAR, an industry metric.
That exceeded the 4.4% expected in a company-compiled consensus and the company said it was confident of meeting market expectations this year.
"This year is going to be another record of Americans travelling to Europe despite higher airfares and higher temperatures," CEO Elie Maalouf told analysts in a post-earnings call. 
Shares in the hotel group, which also owns Crowne Plaza, however, slipped 1% at 1221 GMT after it forecast higher adjusted interest expenses in 2027 and investors focused on its exposure to Saudi Arabia and the wider Gulf region.

        JPMorgan analysts said profit-taking could weigh on the stock, which has gained about 17% this year, while IHG's forecast for a $40 million to $60 million increase in 2027 interest costs could pressure earnings estimates. 
Maalouf said he was confident about the fourth quarter. 
In France, he said the civil unrest would pass and the country would remain a leading tourism destination.
Turning to the US, he said many IHG customers there drive to hotels rather than fly, cushioning them from higher airfares, although oil prices have also risen as a result of the war with Iran.
         
MIDEAST AND INTEREST COST CONCERNS WEIGH ON SHARES
Maalouf also said the Middle East would quickly return to growth once the conflict that began with US-Israeli airstrikes at the end of February ends.
RevPAR was flat in the Middle East after a 19% decline in the previous quarter, as strong travel demand in countries including Egypt and Turkey offset a 12% fall in the Gulf Cooperation Council region.
Attacks on Saudi Arabian airports have added to concerns about travel in the region. Saudi Arabia accounts for about 4% to 5% of IHG's hotel development pipeline, the analysts said.
Maalouf said projects in Saudi Arabia could be delayed but he was not aware of any cancellations so far.
     

 (Reporting by Simone Lobo in Bengaluru. Writing by Yadarisa Shabong. Editing by Janane Venkatraman, Mark Potter and Barbara Lewis)
 ((Simone.Lobo@thomsonreuters.com, +919920570373))