IHG has seen strong momentum in its expansion efforts in the third quarter, with the hotel group adding 17,500 rooms across 98 hotels, more than doubling its growth pace from the same period last year. The company is on track for one of its biggest years ever in terms of hotel openings and signings. IHG’s development pipeline showed robust health, with new signings up 14% year-over-year at 19,200 rooms. The hotel giant’s global pipeline now stands at 327,000 rooms, representing potential future growth of over 30% of its current system size and marking a 12% increase from last year.
Much of the quarter’s expansion came from a deal with German hotel group Novum Hospitality, which contributed 6,200 rooms. IHG saw significant growth in China, with hotel openings in the country rising more than 50% year-over-year, despite economic troubles. The company’s newest brand, Garners, has rapidly expanded since its launch a year ago, with “over 85” in the pipeline and 4 already open. In the luxury and lifestyle category, IHG has “over 900” either open or in development globally, with Intercontinental still remaining the largest and fastest-growing traditional luxury brand in the world.
Looking ahead, IHG forecasted a significant ramp-up in openings during the fourth quarter and expects a continuation of positive performance trends. The company announced it would end its licensing agreement with The Venetian Resort Las Vegas in January 2025, removing about 7,000 rooms from its system, but executives downplayed the impact. IHG’s revenue per available room worldwide only saw 1.5% growth in the quarter, with stark regional differences. The Americas saw a 1.7% increase, while Europe, Middle East, Asia & Africa (EMEAA) saw a 4.9% increase.
In terms of stock performance, the Skift Travel 200 (ST200) includes the performance of hotels and short-term rental sector stocks within the index. The index combines the financial performance of nearly 200 travel companies worth over a trillion dollars into a single number. IHG’s deceleration in the key revenue metric for a few quarters reflects the softening of the leisure travel boom worldwide. Despite headwinds from a weak economy in China and turmoil in the Middle East, IHG remains optimistic about its expansion plans and overall performance.
In conclusion, IHG’s strong third-quarter growth in hotel openings and signings demonstrates the hotel giant’s commitment to global expansion. With a robust development pipeline, significant growth in China, and expansion of new brands, IHG continues to position itself as a leader in the luxury and lifestyle category. Despite challenges in some regions such as China and the Middle East, the company remains optimistic about its future growth and performance. The decision to end licensing agreements and the deceleration in revenue growth are minor setbacks that IHG believes will not significantly impact its overall trajectory.
