IHG net-system-size growth strongest in more than a decade

IHG experienced its strongest net-system-size growth in more than a decade last year, according to the company’s full-year 2019 report, which showed a 5.6 percent increase (5 percent excluding the Sands partnership in Macao) to approximately 884,000 rooms.

Meanwhile, the company's global revenue per available room dipped 0.3 percent for the year and 1.8 percent in Q4 year-over-year. IHG attributed this to increased supply growth outpacing demand in some markets, especially the U.S. upper-midscale segment; ongoing unrest in Hong Kong; and uncertainty around macro and geopolitical factors, such as the U.S.-China trade discussion and Brexit.

"By making our strategic model work harder we are strengthening our business, accelerating net rooms growth and driving financial results," said Keith Barr, IHG's CEO, on the company's earnings conference call. "We are focusing on the parts of our business where it matters most, expanding and repositioning our brand portfolio, sharpening our operations and ensuring we put our scale to best use."

Over the year, IHG added 65,000 rooms while an ongoing focus on the long-term health of its brands drove 18,000 removals. Full-year signings, which included record performance in Greater China and EMEAA, dropped 1 percent year over year. The company’s pipeline now stands at approximately 283,000 rooms, of which 40 percent is currently under construction.

RevPAR Trends Downward

In the Americas, RevPAR declined 0.1 percent in 2019 and 1.6 percent in Q4. For the United States specifically, the metric dipped 0.2 percent in 2019 and 1.7 percent in Q4 due to ongoing softness in small-groups business, which impacted the company’s Holiday Inn and Crowne Plaza brands, along with increased room supply in the upper-midscale segment. In Canada, weaker corporate and group business in Ontario and Alberta contributed to a 1 percent decrease in 2019 and 3 percent drop in Q4. In Latin America and the Caribbean, RevPAR grew 6 percent (4 percent in Q4), with strong performances in Brazil and Colombia. Mexico RevPAR declined 2 percent in 2019 and in Q4.

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In Greater China, comparable RevPAR fell 4.5 percent in 2019 and 10.5 percent in Q4. In Hong Kong, RevPAR fell 27 percent last year (63 percent in Q4) largely due to ongoing unrest. In Mainland China, RevPAR was down 1 percent, with market outperformance throughout the year.

In the EMEAA region, occupancy growth of 0.7 percent drove a comparable RevPAR rise of 0.3 percent (0.2 percent in Q4). For the year, RevPAR rose 1 percent in the United Kingdom and 3 percent in continental Europe. Increased supply and political unrest contributed to a 3 percent RevPAR decline in the Middle East and continued supply growth and lower corporate and retail demand helped lead to a 1 percent RevPAR decrease in Australia.