Third-quarter systemwide room revenue generated by business transient travel at IHG Hotels & Resorts properties increased 2 per cent year over year, executives said on Tuesday this week, adding they expect further demand growth into 2025.
On the whole, third-quarter systemwide average daily rate and revenue per available room each increased year over year while occupancy decreased slightly. The increase in third-quarter business travel room night revenue was additionally pronounced in IHG's Americas region, where it grew 3 per cent year over year.
"We feel like the underlying economy is going well," IHG chief financial officer Michael Glover said on Tuesday during an earnings call. "As we go through our [2025] corporate rate negotiations, we're seeing really strong demand. Most of our corporates are saying they're going to increase travel overall, will spend more on trade shows and events, customer outreach and building their customer base, and also still are connecting with employees," noting that many corporate clients have yet to fully implement return-to-office policies.
Glover added that business travel by small and midsize enterprises was "up 8 per cent year to date," adding "there's nothing there to suggest a slowdown."
IHG CEO Elie Maalouf on the call said all signs point to continued group demand next year. "Pace looks strong through the rest of 2024 and into 2025," Maalouf said, citing a recent American Express Global Business Travel survey in which around two-thirds of meeting planning professionals expect a larger budget for meetings next year.
"What's on the books for groups and meetings cumulatively for all future time periods is 25 per cent ahead of this time last year."
IHG's Q3 metrics
IHG systemwide third-quarter RevPAR increased 1.5 per cent year over year to $95, while ADR increased 1.7 per cent to $132.72. Systemwide occupancy declined 0.1 percentage points to 71.6 per cent.
Third-quarter EMEA RevPAR increased 4.9 per cent, with occupancy up 0.9 per cent to 74.6 per cent, and average daily rate up 3.6 per cent.
IHG in the third quarter opened 98 hotels throughout the world totaling 17,500 rooms, a pace Maalouf in a statement noted was "well over double the same period last year," due in part to its new partnership with German hotel operator Novum Hospitality.
IHG's third-quarter net rooms increased 4.1 per cent year over year to 968,000 rooms in 6,505 hotels. The company's pipeline in Q3 increased 12 per cent to about 327,000 rooms.