- Quarterly growth slows to 1.5%
- Greater China contracts by 10%
- 2024 shareholder return over $1bn
The message from InterContinental Hotels Group’s (IHG) seems to be the global travel boom is petering out after the Holiday Inn-owner revealed slower revenue growth in the third quarter.
Investors didn’t appear too bothered though - after falling 1.8% in early trading the shares perked up into positive territory gaining almost 1% to £86.38.
Over the last year the shares are up around 50% compared with a 12% advance in the blue-chip FTSE 100 index.
TOUGH CHINA COMPARATIVES
Group RevPAR (revenue per available room) growth, a key performance metric for the hotel industry, slowed to 1.5% in the three months to the end of September, impacted by a 10.3% drop in Greater China.
The company said it remained ‘very encouraged’ by the longer-term demand drivers in the region and the shorter-term performance reflected unusually strong prior-year comparatives.
Elsewhere, the US delivered RevPAR growth of 1.7% while Europe, the Middle East and Asia experienced another strong period of 4.9% growth. Management said the business was on track to deliver full year results in line with market expectations.
The company has completed 77% of the $800 million share buyback programme announced in February and, together with approximately $255 million of dividends, it will have returned just over $1 billion to shareholders in 2024, equivalent to 7.1% of its market capitalisation.
EXPERT VIEW
AJ Bell investment director Russ Mould commented: ‘Traditionally the Chinese market was where companies went for growth, but recently it has been more of a graveyard for their ambitions and the slump in IHG’s revenue per available room in China is notably high.
‘Last year’s figures were strong thanks to a resurgence in domestic travel but this outcome won’t do anything to quieten concerns about IHG’s performance in the country.
‘Elsewhere, the picture is more positive and it’s significant that overall revenue per available room is higher in the third quarter, despite the weak Chinese showing.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (Ian Conway) own shares in AJ Bell.
