Pent-up travel demand — which drove global travel recovery following the Covid-19 pandemic — is over, said Intercontinental Hotels Group CEO Elie Maalouf.
“People began traveling really by the tip of 2020 as restrictions began to lift,” he said. “So we’re really past revenge travel — even in China.”
The corporate’s latest quarterly update showed travel demand remained strong through the close of the summer travel season.
“We predict we’re in a sustainable place,” Maalouf said. “Our bookings for groups and meetings going into 2024 and beyond are the strongest we have seen in a really very long time.”
“We’re pleased with the demand that we’re seeing from travelers … and hope it continues,” he added.
IHG’s third quarter trading update, which published Friday, showed the corporate’s revenue per available room — or “revpar” — was up 10.5% in comparison with third quarter 2022, and nearly 13% higher in comparison with the third quarter of 2019, which was before the pandemic.
That is despite a 3% drop in revpar, in comparison with 2019, in large cities in Greater China, that are more depending on international travelers.
Maalouf told CNBC that lack of “airlift,” or flight capability, into China is below 50% of prepandemic levels, which is affecting travel recovery in cities like Beijing, Shanghai, Guangzhou and Shenzhen.
“But when you take a look at the country as an entire, travel — which is usually domestic in China — it’s recovered well above 2019,” he said, adding that greater than 80% of IHG’s business in China is in mid-sized to smaller cities.
Room rates and global growth
Occupancy levels within the third quarter at IHG hotels was 72% — just 1% shy of pre-pandemic levels, in line with the quarterly update. But average room rates have jumped well above 2019 levels — up nearly 6% in Greater China, 15% within the Americas, and 24% in Europe, Middle East, and Africa (EMEA) and Asia.
But rising rates are barely maintaining with inflation, said Maalouf.
“Room rates have not likely exceeded inflation in any of our markets,” he said. “I feel people’s willingness to travel is exhibited by the actual fact they’re willing to pay.”
IHG opened 50 hotels — with some 7,700 rooms — from July to September, with a net system growth of 4.7% year-on-year — this includes the corporate’s strategic alliance with the Spanish-owned Iberostar Hotels & Resorts, in line with the trading update.
Our regional headquarters for the Middle East is in Dubai — and it’s staying in Dubai.
Elie Maalouf
CEO of Intercontinental Hotels Group
The corporate currently operates greater than 6,200 hotels worldwide and has one other 1,978 within the pipeline.
“We’re seeing growth really across all of our brands, across all of our businesses and across all of our regions,” he said. But “the population of the center class and GDP growth is shifting more east … Southeast Asia, Central Asia, China. That is why we’re very committed to this region.”
Maalouf also addressed the launch of Garner — IHG’s newest brand which is about to be priced lower than Holiday Inn Express — the corporate’s largest brand with 3,131 hotels worldwide as of Sept. 30.
“In america, there are about 9,000 hotels that we expect are excited by joining a system. Not that we’ll have 9,000 hotels joining us, but we expect a robust proportion will.”
Maalouf said the primary Garner hotels will likely open by year-end in america.
Monitoring the Middle East
The CEO disputed reports that IHG is establishing a Middle East regional headquarters in Saudi Arabia.
“Our regional headquarters for the Middle East is in Dubai — and it’s staying in Dubai,” he told CNBC.
He said the corporate recently opened an office in Riyadh, reflecting its plans to expand within the Kingdom. IHG operates 40 hotels in Saudi Arabia — including InterContinental, Crowne Plaza, Holiday Inn, Staybridge Suites and Voco hotels — with one other 36 hotels in the event pipeline.
The Israel-Hamas war could complicate ambitious tourism goals in Saudi Arabia and the United Arab Emirates, but Maalouf said IHG hasn’t modified its long-term plans within the region.
“It’s really heartbreaking, tragic, distressing to see the lack of life that is occurring, and we hope that there is a very quick end of the hostilities,” he said.
“We’re monitoring the situation very closely. But we have also been within the region for generations, and we sit up for staying engaged.”
