In a promising sign of recovery for the hotel industry, IHG Hotels & Resorts has reported a significant upswing in revenue from worldwide business travel. The revenue marked a 6% year-on-year increase and was notably 3% higher than figures recorded in the third quarter of 2019.
IHG’s CEO, Elie Maalouf, shared this positive news during an earnings call, stating, “Business revenue is above 2019 levels, and the further normalization of global working habits has seen the return of more meetings, conferences, and events.”
The revival of business travel revenue in 2023, a trend experienced by many hotel companies, is predominantly attributed to the rising room rates. In the third quarter, IHG’s systemwide average daily rate (ADR) climbed by 4.1% year-on-year, reaching $130.20. This increase played a significant role in raising the revenue per available room (RevPAR) by an impressive 10.5% to $93.22.
IHG’s systemwide occupancy rate also experienced a substantial uptick, increasing by 4.1 percentage points to reach 71.6%. A remarkable 14.1% surge in occupancy in China contributed significantly to this growth. China has been bouncing back from the effects of its COVID-19 lockdowns, which continued until the country’s borders reopened in January.
In the EMEAA region (comprising Europe, Middle East, Asia, and Africa), hotel occupancy reached 73% in the quarter, reflecting a 4.7-point increase from the previous year. Despite this growth, occupancy rates still remain 4 points lower than those recorded during the same quarter in 2019.
Average daily rates in the EMEAA region saw an 8.6% year-on-year increase, and they were nearly 24% higher than the figures from 2019. The RevPAR also demonstrated impressive growth, surging by 15.9% compared to the previous year. Notably, IHG’s RevPAR in continental Europe marked a 31% increase from 2019 and an 18% increase in the UK during the same timeframe.
In the Americas, occupancy rates increased by 0.7 percentage points to 72.2%. The average daily rate saw a 3.1% increase, reaching $140.28, and RevPAR grew by 4.1% to $101.26.
Elie Maalouf added, “As well as year-on-year RevPAR growth in each of our three regions, it was also pleasing to see rooms revenue growth for each of leisure, business, and group travel.”
Looking ahead, IHG is making ambitious strides, with nearly 1,980 hotels in its development pipeline, amounting to over 292,000 rooms. This figure represents a significant increase of 5.1% compared to the previous year. The resilience and resurgence of the hotel industry are undoubtedly encouraging, pointing to the gradual return to normalcy in the wake of the pandemic.