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InterContinental Hotels Tripped Up by Security Concerns and Low Oil Prices

Skift Take

Concerns about security, especially in Europe, continue to play on the minds of both business and leisure travellers. Still InterContinental’s CEO remains bullish, believing that the sector’s fundamentals “remain compelling.”

— Patrick Whyte

InterContinental Hotels Group has endured a slowdown in revenue-per-available-room growth as it continues to feel the effects of terrorism in Europe and the sluggish oil industry.

RevPAR, which is a key metric in the hotel industry, grew by 1.3 percent in the third quarter but this was below analyst predictions of 1.8 percent and the 2 percent increase it saw in its first half performance.

In the Americas region RevPAR was up 1.9 percent, compared with 2.4 percent in the first half of the year. IHG said it had suffered because of its exposure to oil producing markets where RevPAR declined by 7.3 percent.

The two worst performing regions were Europe and Asia, Middle East and Africa (AMEA). In the former RevPAR was flat as terrorism in destinations such as France, Turkey and Belgium continues to impact travel. London too was a disappointment, mainly down to “industry–wide supply increases”.

RevPAR in AMEA fell 0.1% and IHG noted the impact of lower oil prices in the Middle East.

“Looking ahead, while industry RevPAR growth has slowed, the fundamentals for the sector, and particularly for IHG, remain compelling,” said CEO Richard Solomons.

IHG is continuing to push its niche offerings. Its wellness brand EVEN Hotels is expanding outside of the U.S. with a deal signed to develop the portfolio in Australia and New Zealand and in the boutique segment it has signed its highest number of Hotel Indigo Rooms since the third quarter in 2007.

Solomons added: “We remain focused on executing our commercial strategy to drive competitive advantage. This includes broadening the footprint of our global portfolio of brands, across which we drove our highest signings for eight years, including our best ever third quarter performance for Greater China.”

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