InterContinental Hotels Group (IHG) on Friday said it expects to post a “very strong financial performance” following 2023’s close, after the hospitality firm reported a sharp uptick in revenues on the back of rebounding sales in China.
The London-listed firm said revenues per available room (RevPAR) – a key indicator for the hotel industry – jumped 10.5% in the third quarter, following a 43.2% year-on-year surge in RevPAR from its Greater China business.
IHG
IHG,
shares, however, dipped by 4% in Friday’s trading session as the Windsor-headquartered company said “short-term financing challenges” were limiting the development of new hotels.
Higher interest rates have hindered the hotel sector’s ability to raise cash, which has in turn slowed construction of new hotels this year, according to a Jun. 2023 report from Boston Consulting Group.
The uptick in IHG’s Greater China segment came as occupancy across its hotels in the region surpassed pre-COVID levels for the first time since 2019, following a prolonged downturn in the business prior to the loosening of pandemic restrictions.
IHG’s RevPAR growth was largely driven by price hikes that have seen the hotelier’s rates increase by 14.8% since 2019. Meanwhile, occupancy across the entirety of IHG’s hotel business remained 1.3% lower than in 2019 at rates of 72% in the third-quarter.
Bank of America analysts, led by Muneeba Kayani, were nonetheless impressed by IHG’s performance, as they said the 10.5% uptick in RevPAR outstripped their forecasts of 9% RevPAR growth.
IHG said it is now on course to return $1 billion to shareholders in 2023, in the form of share buybacks and dividend payments, following the launch of a $750 million share buyback scheme in February 2023.
Elsewhere, European stocks dipped 1% on Friday in a drop that saw the Stoxx Euro 600 index hit its lowest point in seven months. The European index has suffered over the past week amid growing fears around the conflict between Israel and Hamas.
Shares in shampoo seller L’Oreal fell 1% after the French firm reported a “slower-than-expected” recovery of sales from its beauty division in China and an underwhelming performance from its Travel Retail Asia business.
Stock in Norwegian recycling company Tomra Systems plunged 22% as the company missed its third quarter results estimates. UBS shares also fell 2% as the Swiss bank outlined plans to lay off staff at Credit Suisse, after taking the financier over in June.
