IHG Profit Rises 14%
InterContinental Hotels Group (IHG) has reported that its profit rose 14% to $457 million during the first of 2019.
IHG's revenue per available room (RevPAR) inched up 0.1%. However, in Greater China, where IHG operates approximately 400 hotels, RevPAR eased 0.3%, which the group blamed on a dip in business travel and protests in Hong Kong.
IHG played down any hit from the trade standoff between Beijing and Washington, saying that few of its business customers in China were from outside the country and it was well spread globally to absorb any impact.
So far, with its operations in China being focussed on domestic travellers, IHG has been largely insulated from the bruising trade wars, the group's finance chief Paul Edgecliffe-Johnson said.
"It's almost all Chinese travellers staying in Chinese hotels. We're not seeing any current impact from foreign affairs policy," Edgecliffe-Johnson said, adding that IHG's geographical spread protected it from a major hit to any single market.
"Our expectation's that [China business] will continue to grow," Edgecliffe-Johnson said. "Our ability to grow a business out there continues to be really very powerful."
Such assurances contrast with caution among some competitors and an industry group who have warned that escalating trade wars and a slowing world economy are set to dampen spending on business travel and leisure, including in China.
Analyst Sophie Lund-Yates at Hargreaves Lansdown noted spending on hotels is one of the first things to be scaled back in the face of economic turbulence.
"InterContinental have added another record number of rooms to the portfolio, with the global estate now made up of over 850,000 rooms. That's certainly impressive, but does of course mean there's even more rooms to fill," she said in a note.
Lessening Dependence On Mature US Markets And Rebranding To Compete
IHG has focussed on affluent Chinese customers to lessen dependence on mature US markets, while rebranding to compete against the likes of Marriott International Inc and Hilton Worldwide Holdings Inc.