IHG has reported a significant milestone in its financial performance, achieving an operational profit exceeding $1 billion for the inaugural time.
- The company’s remarkable performance is attributed to strong trading across major hotel brands, including Holiday Inn and Crowne Plaza.
- Revenue per available room surged by 16% year-on-year, reflecting the robust recovery in travel demand post-Covid restrictions.
- IHG witnessed a notable expansion in its global presence, opening 275 hotels and signing 556 new ones into its pipeline.
- A new share buyback programme aims to return over $1 billion to shareholders in 2024.
In a landmark financial achievement, InterContinental Hotel Group (IHG) has successfully surpassed the $1 billion mark in operational profit for the first time. This substantial growth, marked by a 23% increase, is largely driven by strong trading across its major hotel brands, such as Holiday Inn, Crowne Plaza, and Iberostar. The easing of Covid travel restrictions, which had lingered into 2022, played a pivotal role in this resurgence.
The key metric of revenue per available room experienced a significant 16% year-on-year increase, underlining the heightened demand for travel. Occupancy rates rose by six percentage points, while the average daily rate saw a 5% uptick compared to the previous year and a 13% rise compared to 2019. This reflects the broader recovery trend in the hospitality sector as travel activities normalise post-pandemic.
IHG’s global expansion strategy is evident in its opening of 275 hotels in 2023, adding almost 48,000 rooms to its extensive portfolio. Additionally, the company signed 556 new hotels, adding a further 297,000 rooms to its global pipeline. This ambitious growth plan highlights IHG’s commitment to consolidating its market position across various regions.
The company has unveiled a new $800 million share buyback scheme, complementing its ordinary dividends. This initiative is set to return over $1 billion to shareholders in 2024, signalling IHG’s confidence in its ongoing financial health and strategic direction. The financial robustness of IHG is further evidenced by its statement that leisure revenue for 2023 exceeded 2019 levels by 33%, with business revenue also showing growth.
Digital bookings have become increasingly significant for IHG, with its mobile app and other mobile platforms accounting for 58% of all digital reservations. This shift underscores the evolving consumer behaviour towards mobile-centric booking solutions, which the company has effectively capitalised on to drive growth.
Chief Executive Elie Maalouf has expressed pride in the company’s achievements, noting the strength of travel demand across all markets. He announced the continuation of financial programmes that will further benefit shareholders while highlighting the brand’s global footprint expansion. Maalouf also reiterated IHG’s strategic foresight, which is anticipated to bolster their RevPAR and system size growth in the long run.
In a nod to the resilience of the travel sector, legal expert Philip Baker emphasised the industry’s ability to withstand economic pressures, such as the cost of living crisis, which has not dampened consumer demand. He applauded IHG’s strategic priorities, which are set to sustain its upward trajectory amidst stiff competition.
IHG’s financial performance underscores the enduring strength and resilience of the travel industry in the post-pandemic era.
