REG - Interco. Hotels Grp - 2025 First Quarter Trading Update

Intercontinental HotelsAnnouncement

08/05/2025 07:01

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RNS Number : 7822H  InterContinental Hotels Group PLC  08 May 2025

 

 

InterContinental Hotels Group PLC

2025 First Quarter Trading Update

8 May 2025

 

 Global RevPAR +3.3%, driven by globally diverse footprint and growth in each
 of Business, Leisure and Groups; strong quarter of development performance,
 with openings and signings well ahead of last year;

whilst at an early stage, on track to meet full year consensus profit
 expectations

 

Highlights

 

 ●    Q1 global RevPAR +3.3%, with Americas +3.5%, EMEAA +5.0% and Greater China
      -3.5%
 ●    Q1 global rooms revenue on a comparable basis saw Business +3%, Leisure +2%
      and Groups +5%
 ●    Average daily rate +2.2% and occupancy +0.6%pts
 ●    Gross system size growth accelerated to +7.1% YOY, +1.5% YTD; opened 14.6k
      rooms (86 hotels) in Q1, more than double the same period last year
 ●    Net system size growth +4.3% YOY, 0.0% YTD (or +5.0% YOY and +0.7% YTD
      excluding the impact of removing rooms previously affiliated with The Venetian
      Resort Las Vegas); global system of 987k rooms (6,668 hotels)
 ●    Signed 25.8k rooms (158 hotels) in Q1, or 20.2k excluding the Ruby brand
      acquisition, compared to 17.7k in the same quarter last year; global pipeline
      of 334k rooms (2,265 hotels), +9.4% YOY
 ●    $324m of 2025's $900m share buyback programme completed to date, reducing the
      share count by 1.9%

 

Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, said:

 

"We had strong trading performance and development activity for our world
class brands in Q1, despite increased volatility in the macro environment.
Global RevPAR grew +3.3%, reflecting the strength of our globally diverse
footprint and increases across each of our three demand drivers of Business,
Leisure and Groups. Americas RevPAR increased by +3.5% led by continued growth
in the US, and our EMEAA region also had strong performance, up +5.0%. In
Greater China, a -3.5% RevPAR reduction was similar to the previous quarter,
as we came up against strong comparatives and further increases in outbound
leisure travel.

 

We celebrated the opening of 14.6k rooms across 86 hotels in the quarter, well
over double the same period last year. A strong signings performance of 25.8k
rooms across 158 properties was also well ahead of 2024, leading to a +9.4%
year-on-year increase in our pipeline. This included 5.7k rooms across 30
hotels from our acquisition in February of premium urban lifestyle brand,
Ruby. Since acquiring the brand, a further two Ruby signings have already been
added. Demand for quick-to-market conversions to IHG's brands and enterprise
platform continues to be high, representing around 60% of openings and 40% of
organic signings in the quarter.

 

Looking ahead, while noting that some forward economic indicators have
softened, our comparable on-the-books global revenue for Q2 continues to show
growth on the same position a year ago. Our ability to capture demand across
geographies and chain scales, as well as being heavily weighted to domestic
stay occasions, are resilient strengths of our business. As a result, while
still early, we remain on track to meet full year consensus profit
expectations.

 

The outlook of attractive long-term structural growth drivers for both demand
and supply remain unaltered for the travel industry and for IHG in particular.
The power of our growth algorithm comes from the compounding nature of
increasing fee revenues through the combination of RevPAR, system expansion
and ancillary fee streams, which in turn helps to grow margins and, with our
strong cash generation, allows us to reinvest in our business and return
surplus capital to shareholders. Notwithstanding shorter term macro-economic
uncertainties, we remain confident in the strength and resilience of IHG's
enterprise platform and our ability to capitalise further on our scale,
leading positions and the fundamental growth drivers for our markets."

 

Regional performance

 

Americas

Q1 RevPAR grew by +3.5% for the region as a whole and was also up +3.5% in the
US, ahead of FY 2024's +2.5% for the region and +1.7% in the US. Occupancy for
the region was up +0.7%pts to 63.4% for the quarter, and rate was up +2.4%.
Last year's trends by demand driver continued, with Q1 rooms revenue on a
comparable basis strongest for Groups at +6%, Business was up +4% and Leisure
was +2% on 2024 levels. The first two months of the quarter were strongest,
whereas the rolling 8 weeks to Saturday 3 May in aggregate, which also
normalises for the shift in timing of Easter between March and April, has seen
RevPAR broadly flat. The current position of revenue on-the-books for
comparable hotels for the balance of Q2 is also currently broadly flat. We
remain confident for growth beyond, as economic uncertainty subsides and
industry fundamental tailwinds prevail.

 

Gross system growth was +3.4% YOY and +0.8% YTD, with 4.0k rooms (31 hotels)
opened in the quarter which was +30% more than last year. Net system size
change was -0.1% YOY and -1.6% YTD. Excluding the impact of removing 7.1k
rooms that were previously affiliated to IHG's system with The Venetian Resort
Las Vegas, net system size growth was +1.3% YOY and broadly flat YTD. There
were 4.5k rooms (42 hotels) added to the pipeline in the quarter, including 12
hotels signed across the Holiday Inn Brand Family, and 18 across our extended
stay brands. With further progress in the quarter, our midscale conversion
brand, Garner, now has 59 open and pipeline hotels in the region.

 

EMEAA

We saw another quarter of strong demand for this diverse region overall. Q1
RevPAR was up +5.0%, compared with growth of +6.6% achieved for FY 2024.
Occupancy for the quarter was up +0.6%pts to 66.7%, and rate up +4.0%. By
major geographic markets within the region, RevPAR ranged from broadly flat in
the UK, to up +5.6% in Continental Europe, +6.2% in the Middle East and +6.8%
in East Asia & Pacific. The latter continued to benefit from increased
levels of inbound leisure travel from Greater China which contributed to
strong double-digit growth in numerous countries, on top of very strong
increases last year.

 

Gross system growth was +11.6% YOY and +2.3% YTD, with 6.2k rooms (30 hotels)
opened in the quarter which was almost six-fold last year. Openings included
1.5k rooms from a further 13 conversions as part of the initial April 2024
NOVUM Hospitality agreement, taking the total converted to date to 11.7k rooms
and 71 hotels. Net system size growth was +9.8% YOY and +1.7% YTD. There were
12.9k rooms (72 hotels) added to the pipeline, including 5.7k from the
acquisition of the Ruby brand in February 2025 (comprising 3.5k rooms across
20 open hotels that will begin to be added into IHG's system this year, and
2.2k rooms across 10 hotels in the Ruby pipeline at the time of acquisition).
There was also a further 0.6k rooms added to the pipeline from the first two
Ruby hotel signings since the acquisition. Conversions represented the
majority of room openings and 45% of organic room signings in the quarter.
Signings included 3 further Garner properties as it develops across the
region, and 8 signings across the voco and Vignette Collection brands as their
rollouts continue.

 

Greater China

Q1 RevPAR was down -3.5% which was broadly in line with the previous quarter
and compares to the -4.8% reduction for FY 2024. Looking forward from here,
there is an easing in the strong comparatives from the prior resurgent return
of post-Covid travel demand. We remain encouraged of further improvement to
come, and by the continued attractiveness of the longer-term demand drivers
for the region. Occupancy for the quarter was up +0.4%pts to 52.8%, while rate
was down -4.3%. Tier 1 cities saw RevPAR down ‑2.2%, whilst Tier 2-4 cities
were -5.7% with further impact from increased outbound leisure travel, though
rooms revenue on a comparable basis saw Leisure broadly flat for the region
overall.

 

Record-breaking momentum in development activity has continued. Gross system
growth was +11.6% YOY and +2.3% YTD, with 4.4k rooms (25 hotels) opened in the
quarter which was more than double the same quarter last year and included the
milestone of exceeding 800 open hotels in the region. Net system size growth
was +9.1% YOY and +1.8% YTD. There were 8.5k rooms (44 hotels) added to the
pipeline, also well ahead of the same quarter last year.

 

Share buyback progress

 

As announced at the time of reporting our 2024 full year results on 18
February, a new $900m share buyback programme is returning surplus capital to
shareholders in 2025. This follows the $800m programme in 2024, $750m in 2023
and the $500m programme announced in 2022, which already reduced the total
number of voting rights in the Company by 4.6%, 6.1% and 5.0%, respectively.
The 2025 programme is 36% complete with $324m (£251m) having been
cumulatively spent to date, repurchasing 2.9 million shares. The 2025
programme to date has therefore reduced the total number of voting rights in
the Company by a further 1.9% to 155.6 million as at market close on Wednesday
7 May 2025.

 

The $900m share buyback programme, together with the anticipated sustainable
growth in ordinary dividend payments which IHG has increased at a rate of 10%
a year for each of the last three years, would result in over $1.1bn being
returned to shareholders in 2025. This is equivalent to 5.9% of IHG's $19.8bn
(£15.8bn) market capitalisation at the start of 2025, and 6.5% of IHG's most
recent $17.9bn (£13.4bn) market capitalisation.

 

Additional comments on current trading conditions and 2025 outlook

 

As noted above, whilst we are still at an early stage of the financial year,
we are on track to meet current full year 2025 consensus profit expectations.
This would result in another year of IHG delivering on our growth algorithm.

 

As an asset-light, fee-based, predominantly franchised business model, IHG has
no material direct exposure to tariffs on the fees charged to and therefore
the revenues received from hotel owners, or on the operating costs that IHG
incurs. As part of the many benefits provided to hotel owners of joining IHG's
enterprise platform, we use our scale to help reduce owner costs through
procurement programmes for hotel goods and services, and we are actively
working with owners and our diversified and typically localised supply chains
to further enhance these benefits. IHG does not directly assume supply chain
risk for these programmes, and instead focuses on providing resilient and
responsible supply chain options for owners.

 

Periods of macro-economic uncertainties and challenges can lead to broader
impacts on business and consumer confidence, which can in turn impact travel
spending patterns in the shorter-term. Nevertheless, we are encouraged by the
global revenue on-the-books for Q2 as described above, and we remain confident
that the attractive long-term structural growth drivers for both demand and
supply remain unaltered. IHG's fee-based income streams, together with diverse
demand drivers across geographies, chain scales and stay occasions, mean IHG
is well positioned to remain resilient through varying cycles. We are also
ensuring our cost base remains highly efficient and agile, whilst continuing
to make cost and capital expenditure investments that drive long-term growth.
No material changes are currently envisaged to any areas of IHG's investment
priorities.

IHG's Board expects the company to continue its strong track record of
generating substantial capacity to support the investment plans that drive
growth, to fund a sustainably growing ordinary dividend, and to routinely
return surplus capital to shareholders. IHG has a consistent capital
allocation approach, targeting a leverage ratio within a range of 2.5-3.0x net
debt:adjusted EBITDA and to maintain an investment grade credit rating. As
previously described, the $900m share buyback programme for 2025, together
with our other investments including the acquisition of the Ruby brand, are
expected to result in leverage at the end of 2025 to be comfortably around the
lower end of our target range.

 

 

For further information, please contact:

Investor Relations:         Stuart Ford (+44 (0)7823 828 739); Kate
Carpenter (+44 (0)7825 655 702);

Joe Simpson (+44 (0)7976 862 072)

Media Relations:           Neil Maidment (+44 (0)7970 668 250); Mike
Ward (+44 (0)7795 257 407)

 

 

Conference call for analysts and institutional investors:

Elie Maalouf, Chief Executive Officer, and Michael Glover, Chief Financial
Officer, will host a conference call commencing at 9:00am (London time) today,
8 May 2025. A listen-only audio webcast can be accessed at
https://www.investis-live.com/ihg/67e3c7150a60c30015481a28/martn
(https://www.investis-live.com/ihg/67e3c7150a60c30015481a28/martn) or via
www.ihgplc.com/en/investors/results-and-presentations
(https://urldefense.com/v3/__https:/www.ihgplc.com/en/investors/results-and-presentations__;!!EOxaMA!UQW-l3BiA8XXUiPMd4eGsANkqfgpOAuKdUs9F8vIC-aM7gqhkAVKAWJvBF8MUhNAo70bweitd6U_Wa_E$)
.

 

Analysts and institutional investors wishing to ask questions should use the following dial-in details for a Q&A facility:
 UK:                           020 3936 2999
 US:                           646 233 4753
 Other international numbers:  Click
                               here (https://www.netroadshow.com/events/global-numbers?confId=80311)
 Passcode:                     437852

 

An archived replay is expected to be available within 24 hours and will remain
available, accessed at www.ihgplc.com/en/investors/results-and-presentations
(https://www.ihgplc.com/en/investors/results-and-presentations) .

 

 

Appendix 1: RevPAR(a) movement summary at constant exchange rates (CER)

 

                Q1 2025 vs 2024
                RevPAR  ADR     Occupancy
 Global         +3.3%   +2.2%   +0.6%pts
 Americas       +3.5%   +2.4%   +0.7%pts
 EMEAA          +5.0%   +4.0%   +0.6%pts
 Greater China  -3.5%   -4.3%   +0.4%pts

 

 

Appendix 2: RevPAR(a) movement at CER vs actual exchange rates (AER)

 

                Q1 2025 vs 2024
                CER (as above)  AER     Difference
 Global         +3.3%           +1.9%   -1.4%pts
 Americas       +3.5%           +2.4%   -1.1%pts
 EMEAA          +5.0%           +3.0%   -2.0%pts
 Greater China  -3.5%           -4.5%   -1.0%pts

 

 

Appendix 3: System and pipeline summary of Q1 2025 YTD and YOY growths, and
closing positions (rooms)

 

                System                                                                                 Pipeline
                Openings  Removals(b)  Net      Total    YTD%      YOY%      YTD%         YOY%         Signings  Total
                                                         Reported  Reported  Adjusted(b)  Adjusted(b)
 Global         14,556    (15,048)     (492)    986,633  0.0%      +4.3%     +0.7%        +5.0%        25,823    333,992
 Americas       4,028     (12,556)     (8,528)  519,466  -1.6%     -0.1%     -0.3%        +1.3%        4,472     108,364
 EMEAA          6,172     (1,581)      4,591    271,065  +1.7%     +9.8%     +1.7%        +9.8%        12,862    109,184
 Greater China  4,356     (911)        3,445    196,102  +1.8%     +9.1%     +1.8%        +9.1%        8,489     116,444

 

(a.    ) RevPAR (revenue per available room), ADR (average daily rate) and
occupancy are on a comparable basis, based on comparability as at 31 March
2025 and includes hotels that have traded in all months in both the current
and the prior year. The principal exclusions in deriving these measures are
new openings, properties under major refurbishments and removals. See 'Use of
key performance measures and non-GAAP measures' in IHG's full year and half
year results announcements for further information on the definitions.

 

(b.    ) Removals include 7,092 rooms previously affiliated with the
Venetian Resort Las Vegas which exited IHG's system in January 2025. The
adjusted measures of YTD system size growth and YOY system size growth are
presented for the Americas region and globally to show the impact of if these
rooms had been excluded from the comparable opening position.

 

 
 
Website:

The full release and supplementary data will be available on
www.ihgplc.com/en/investors/results-and-presentations
(https://www.ihgplc.com/en/investors/results-and-presentations) from 7:00am
(London time) on 8 May 2025.

 

About IHG Hotels & Resorts:

IHG Hotels & Resorts (https://www.ihgplc.com) (tickers: LON:IHG for
Ordinary Shares; NYSE:IHG for ADRs) is a global hospitality company, with a
purpose to provide True Hospitality for Good.

 

With a family of 20 hotel brands and IHG One Rewards
(https://www.ihg.com/onerewards/content/us/en/home) , one of the world's
largest hotel loyalty programmes with over 145 million members, IHG has more
than 6,600 open hotels in over 100 countries, and a development pipeline of
more than 2,200 properties.

 

-     Luxury & Lifestyle: Six Senses (https://www.sixsenses.com/) ,
Regent Hotels & Resorts (https://www.regenthotels.com/) , InterContinental
Hotels & Resorts
(http://www.intercontinental.com/hotels/gb/en/reservation) , Vignette
Collection (https://www.vignettecollectionhotels.com/) , Kimpton Hotels &
Restaurants (https://www.ihg.com/kimptonhotels/hotels/gb/en/reservation) ,
Hotel Indigo (http://www.ihg.com/hotelindigo/hotels/gb/en/reservation)

-     Premium: voco hotels
(https://www.ihg.com/voco/hotels/gb/en/reservation) , Ruby
(https://www.ruby-hotels.com/) , HUALUXE Hotels & Resorts
(https://www.ihg.com/hualuxe/hotels/gb/en/reservation) , Crowne Plaza Hotels
& Resorts (http://www.ihg.com/crowneplaza/hotels/gb/en/reservation) , EVEN
Hotels (http://www.ihg.com/evenhotels/hotels/us/en/reservation)

-     Essentials: Holiday Inn Express
(http://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation) , Holiday Inn
Hotels & Resorts (http://www.ihg.com/holidayinn/hotels/gb/en/reservation)
, Garner hotels (https://www.ihg.com/content/us/en/garner-hotels) , avid
hotels (https://www.ihg.com/avidhotels/hotels/us/en/reservation)

-     Suites: Atwell Suites (https://www.atwellsuites.com/) , Staybridge
Suites (http://www.ihg.com/staybridge/hotels/gb/en/reservation) , Holiday Inn
Club Vacations
(https://www.ihg.com/holidayinnclubvacations/hotels/us/en/reservation) ,
Candlewood Suites (http://www.ihg.com/candlewood/hotels/us/en/reservation)

-     Exclusive Partners: Iberostar Beachfront Resorts
(https://www.ihg.com/content/us/en/iberostar-beachfront-resorts)

 

InterContinental Hotels Group PLC is the Group's holding company and is
incorporated and registered in England and Wales. Approximately 385,000 people
work across IHG's hotels and corporate offices globally.

 

Visit us online for more about our hotels and reservations
(http://www.ihg.com) and IHG One Rewards
(https://www.ihg.com/onerewards/content/us/en/home) . To download the IHG One
Rewards app, visit the Apple App
(https://apps.apple.com/us/app/ihg-hotel-deals-rewards/id368217298) or Google
Play (https://play.google.com/store/apps/details?id=com.ihg.apps.android)
stores.

 

For our latest news, visit our Newsroom
(https://www.ihgplc.com/en/news-and-media) and follow us on LinkedIn
(https://www.linkedin.com/company/ihghotels&resorts/) .

 

Cautionary note regarding forward-looking statements:

This announcement contains certain forward-looking statements as defined under
United States law (Section 21E of the Securities Exchange Act of 1934) and
otherwise. These forward-looking statements can be identified by the fact that
they do not relate only to historical or current facts. Forward-looking
statements often use words such as 'anticipate', 'target', 'expect',
'estimate', 'intend', 'plan', 'goal', 'believe' or other words of similar
meaning. These statements are based on assumptions and assessments made by
InterContinental Hotels Group PLC's management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. By their
nature, forward-looking statements are inherently predictive, speculative and
involve risk and uncertainty. There are a number of factors that could cause
actual results and developments to differ materially from those expressed in,
or implied by, such forward-looking statements. The main factors that could
affect the business and the financial results are described in the 'Risk
Factors' section in the current InterContinental Hotels Group PLC's Annual
report and Form 20-F filed with the United States Securities and Exchange
Commission.

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