3rd Update - Holiday Inn Group (IHG) revenue exceeds expectations thanks to strong spending resilience from American tourists

The full text has been rewritten and supplemented with comments from the CEO during the earnings call

Simone Lobo/Yadarisa Shabong

Reuters, October 22 - InterContinental Hotels Group (IHG) IHG.L said on Thursday that a rise in travel by high-income Americans at home and abroad helped offset weakness in the markets of China and the Gulf countries, resulting in quarterly revenue per available room that exceeded expectations.

War, (link) social unrest (link), high airfares and rising borrowing costs have cast a shadow over the travel and hospitality sector's outlook. However, IHG reported that third quarter revenue per available room (RevPAR, an industry metric) increased by 5.3%.

This figure surpassed the market expectation of 4.4% compiled by the company, and IHG said it is confident it will meet market expectations this year.

"Despite higher airfares and warmer temperatures, the number of Americans traveling to Europe this year will again reach a record," CEO Elie Maalouf told analysts during the earnings call.

However, the hotel group, which also owns Crowne Plaza, saw its share price drop 1% at 12:21 GMT after forecasting increased adjusted interest expenses for 2027, with investors also focusing on its exposure to Saudi Arabia and the broader Gulf region.

Analysts at JPMorgan said profit-taking might be putting pressure on the share price—which has risen about 17% so far this year. Meanwhile, IHG forecasts interest costs to rise by $40 million to $60 million in 2027, potentially weighing on earnings expectations.

Maalouf said he is confident about the fourth quarter.

Speaking about France, he said domestic unrest would gradually subside and the country will remain a major tourist destination.

Discussing the US market, he said many IHG customers in the country chose to drive to hotels instead of flying, which partially mitigated the impact of rising airfares, despite oil prices climbing as a result of the conflict involving Iran.

Middle East situation and interest cost concerns weigh on share price

Maalouf also said that once the conflict, which began with US-Israeli airstrikes at the end of February, is over, the Middle East region will rebound quickly.

RevPAR in the Middle East held steady after falling by 19% the previous quarter, as robust tourism demand in countries including Egypt and Türkiye offset a 12% drop in the Gulf Cooperation Council (GCC) region.

Attacks on airports in Saudi Arabia have heightened concerns over travel safety in the region. Analysts say that Saudi Arabia accounts for about 4% to 5% of IHG’s total hotel development pipeline.

Maalouf said that projects in Saudi Arabia may be delayed but, for now, he is not aware of any being canceled.

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