IHG Hotels & Resorts is perhaps the most optimistic of the hotel companies reporting Q1 2025 numbers so far as CEO Elie Maalouf said "while still early, we remain on track to meet full year consensus profit expectations."
"Looking ahead, while noting that some forward economic indicators have softened, our comparable on-the-books global revenue for Q2 continues to show growth on the same position a year ago," he said. "Our ability to capture demand across geographies and chain scales, as well as being heavily weighted to domestic stay occasions, are resilient strengths of our business."
In the U.S., total government [state, local and federal) is less than 5 percent of IHG's revenues, Maalouf said during the call with investors. "Federal government is less than 3.5 percent or less of revenues," he continued. "Is a small part of our business." And that small part is pretty "low-rated business" as well, Maalouf said.
"We anticipate that that federal government impact will probably continue but we were able to perform quite well despite that impact," he continued. "Our outlook is steady, including continued assumption of that impact for federal government now."
Q1 highlights include:
- Q1 global RevPAR +3.3 percent, with Americas +3.5 percent, EMEAA +5.0 percent and Greater China -3.5 percent.
- Q1 global rooms revenue on a comparable basis saw business +3 percent, leisure +2 percent and groups +5 percent.
- Average daily rate +2.2 percent and occupancy +0.6 percent pts.
- Gross system size growth accelerated to +7.1 percent year over year, +1.5 percent year to date; opened 14.6k rooms (86 hotels) in Q1, more than double the same period last year.
- Net system size growth +4.3 percent year over year, 0.0 percent year to date (or +5.0 percent year over year and +0.7 year to date excluding the impact of removing rooms previously affiliated with The Venetian Resort Las Vegas); global system of 987k rooms (6,668 hotels).
- Signed 25.8k rooms (158 hotels) in Q1, or 20.2k excluding the Ruby brand acquisition, compared to 17.7k in the same quarter last year; global pipeline of 334k rooms (2,265 hotels), +9.4 percent year over year.
- $324m of 2025’s $900m share buyback program completed to date, reducing the share count by 1.9 percent
“We had strong trading performance and development activity for our world class brands in Q1, despite increased volatility in the macro environment," Maalouf said. "Global RevPAR grew +3.3 percent, reflecting the strength of our globally diverse footprint and increases across each of our three demand drivers of Business, Leisure and Groups. Americas RevPAR increased by +3.5% led by continued growth in the US, and our EMEAA region also had strong performance, up +5.0 percent. In Greater China, a -3.5 percent RevPAR reduction was similar to the previous quarter, as we came up against strong comparatives and further increases in outbound leisure travel.
"We celebrated the opening of 14.6k rooms across 86 hotels in the quarter, well over double the same period last year. A strong signings performance of 25.8k rooms across 158 properties was also well ahead of 2024, leading to a +9.4 percent year-on-year increase in our pipeline. This included 5.7k rooms across 30 hotels from our acquisition in February of premium urban lifestyle brand, Ruby. Since acquiring the brand, a further two Ruby signings have already been added. Demand for quick-to-market conversions to IHG’s brands and enterprise platform continues to be high, representing around 60 percent of openings and 40 percent of organic signings in the quarter.
"The outlook of attractive long-term structural growth drivers for both demand and supply remain unaltered for the travel industry and for IHG in particular. The power of our growth algorithm comes from the compounding nature of increasing fee revenues through the combination of RevPAR, system expansion and ancillary fee streams, which in turn helps to grow margins and, with our strong cash generation, allows us to reinvest in our business and return surplus capital to shareholders. Notwithstanding shorter term macro-economic uncertainties, we remain confident in the strength and resilience of IHG’s enterprise platform and our ability to capitalize further on our scale, leading positions and the fundamental growth drivers for our markets.”