Hotel company cites its ‘strength and diversity’
IHG Hotels & Resorts is on track to meet its 2025 profit expectations despite global macroeconomic volatility, according to executives speaking on an earnings call. The company, according to CEO Elie Maalouf, has the “strength and diversity” to withstand the volatility. He said IHG’s full-year revenue per available room (RevPAR) growth outlook is 2.3%.
Maalouf said he is encouraged by the news that the US and UK are close to a trade agreement. He said he had recently met with the chair of the U.S. House Committee on Ways & Means and with UK ministers and civil servants.
Michael Glover, CFO, said IHG has recalculated a negative effect on its business of the recent drop in the value of the US dollar to $8 million from a previous $12 million. “That [number] can move in the year … but we are an international business,” Glover said, adding that IHG’s full-year outlook would not be materially affected by movements in US dollar valuation.
US government strategies of reducing travel spend also are not of huge concern, said Maalouf. He said that total government spend — state, federal and local — is less than 5% of IHG’s revenue, with federal 3.5% or less.
International travel to IHG hotels in the US, said Maalouf, equals 5% of its business, and from Canada and Mexico, it is 1.5%. He said there was a drop from Canada, but total international travel to the US was positive for every month in this quarter, and if that travel goes somewhere else, he said, IHG is well positioned to capture it.
In the first 90 days of the year, RevPAR at IHG’s US hotels increased year over year by 3.5% and occupancy rose 7%, Glover said. “Our confidence remains for growth beyond [the second quarter], and we already see business on the books higher than last year for July and August.”
IHG opened more than 4,000 rooms in 31 hotels in the US in the first quarter, a 30% year-over-year jump. The company opened almost 15,000 rooms in 86 hotels in the first quarter globally, more than double that of the same period last year.
