InterContinental Hotels Group has today topped quarterly room revenue estimates as its US business rebounded, but it warned that the Iran war was negatively impacting current-quarter demand in its key Middle East market.
Hotels in the US and some other parts of the world have generally benefitted from strong bookings by affluent travellers, helping offset a pullback from budget-conscious customers hit by persistent inflation.
However, the Middle East conflict threatens to disrupt air travel and hit tourism and consumer demand in several major markets.
IHG, one of the world's biggest hotel groups and owner of the Holiday Inn brand, reported that global revenue per available room (RevPAR) grew 4.4% in the three months ended March 31, compared to expectations of 3.3%, sending its shares up 4%.
While US RevPAR rose 3.4% after three quarters of declines and Greater China posted RevPAR growth of 5.7%, the hotel operator saw Middle East RevPAR fall 2% in the quarter, led by a sharp decline in March after the US-Israeli war on Iran broke out.
IHG's Middle East decline was steeper than that reported by rivals Hilton and Marriott.
The group warned growth in the Middle East has worsened so far in the current quarter, with RevPAR falling about 50% and the impact spilling over into the broader Europe, Middle East, Africa and Asia region performance in April.
IHG has been scaling up its luxury and upper‑upscale brand presence in markets like Saudi Arabia. Though the Middle East accounts for only 5% of IHG's global business, it was punching above its weight in growth last year, outpacing the group's much larger US and Greater China markets.
CEO Elie Maalouf, however, expects demand in other markets to offset the negative impact from the Middle East.
