Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:
“We have made a good start to 2017, with 3.4% net system size growth year-on-year and 2.7% RevPAR growth driven by increases in both rate and occupancy, and benefitting from the later timing of Easter.
We continued our focus on building and leveraging scale in our priority markets, opening 49 hotels in the quarter, including our 300th for Greater China, and signing hotels into our pipeline at the fastest rate for the first quarter since 2008. We also strengthened our boutique portfolio with the opening of a Hotel Indigo property in downtown Los Angeles.
Despite the uncertain economic and political environment in some markets, we remain confident in the outlook for 2017 and our ability to deliver sustainable growth into the future.”
First Quarter RevPAR performance Group
RevPAR was up 2.7%, with rate up 0.8% and occupancy up 1.2% points. The shift in timing of Easter out of Q1 had a positive impact, especially in the Americas and Europe, which we expect to reverse in Q2.
RevPAR was up 2.2%, with US RevPAR up 1.9%. Performance stabilised in oil producing markets, where RevPAR was up 1% excluding the favourable impact of Houston hosting the Super Bowl. This is the first quarter of oil market growth since Q4 2014 as we begin to lap softer comparables. We remain cautious on the outlook for oil producing markets due to ongoing high levels of forecast supply growth. RevPAR in US non-oil markets grew 1.9%. In the rest of the region, Mexico RevPAR grew 10%, with Canada and Latin America both growing around 3%.
RevPAR was up 6.9%. In the UK, RevPAR outperformed the industry, growing almost 8%, with rate up 5% and occupancy increasing 1.8%pts. London RevPAR grew 12%, benefitting from increased international inbound travel, and the provinces continued to grow mid-single digits. Germany RevPAR grew 9%, due to a favourable trade fair calendar, which is not expected to benefit the remainder of 2017. Russia RevPAR grew 7% driven by increased corporate and leisure demand. Performance in markets impacted by terror attacks in 2015 and 2016 improved, as we annualised against weaker trading comparables. Most noticeably in France, RevPAR grew almost 6%, driven by over 8% growth in Paris as a result of increased leisure demand.
Asia, Middle East & Africa
RevPAR was up 0.1% in Q1. Outside the Middle East, RevPAR grew 4%. India RevPAR growth of 13% was driven by tourist arrivals following the easing of visa conditions, whilst Australasia and Southeast Asia were up low to mid-single digits. In the Middle East, RevPAR declined 7% due to the ongoing impact of low oil prices, high supply growth and government austerity measures.
RevPAR was up 3.8% in the quarter, with 4.3% growth in mainland China led by growth in tier 1 and tier 2 cities. In Beijing and Shanghai, RevPAR was up over 5%, attributable to strong corporate and meetings demand. Hong Kong RevPAR grew 1.8%, the second consecutive quarter of growth in the market, driven by strong corporate and transient demand. Macau RevPAR was up over 2%, with a continuation of tough underlying trading conditions mitigated by the ramp up of one new hotel.
Strategic progress Strengthening our preferred brands
- Expanded InterContinental Hotels & Resorts’ position as the largest luxury hotel brand, signing our first hotel in Taiwan. We expect to open additional hotels in key cities in 2017 including Los Angeles and Singapore.
- Signed 10k rooms (80 hotels) into the Holiday Inn Brand family pipeline, its best first quarter signings rate since 2008, and continued to roll out our new room and public space design solutions across the estate.
- Broadened out our boutique, luxury, and lifestyle portfolio with the opening of two Hotel Indigo properties, including the largest for the brand, in Los Angeles. We also opened our fifth HUALUXE, in Zhangjiakou, China, host city for the 2022 Winter Olympics.
Growing through targeted hotel distribution
- Net system size up 3.4% year on year to 767k rooms (5,175 hotels).
- 7k rooms (49 hotels) opened in the quarter, and 7k rooms (48 hotels) removed. This was in line with our expectation for the first quarter, typically our smallest quarter for openings.
- 14k rooms (112 hotels) were signed; our highest Q1 hotel signings since 2008.
- Opened our 300th hotel in China and continued to expand our China franchising solution ‘Franchise Plus’ with our 1st opening, the Holiday Inn Express Shanghai Pujiang, and our 25th signing since launch in May 2016.
- 232k pipeline rooms, up 5% year-on-year; ~ 45% under construction and ~90% in our ten priority markets.
Financial position and capital allocation
The financial position of the group remains robust, with an on-going commitment to an efficient balance sheet and an investment grade credit rating.
As previously announced, on 22 May we will return $400m to shareholders by way of a special dividend with share consolidation. This will take the total returned to shareholders, including from ordinary dividends, to $12.8bn since demerger in 2003.
The strengthening of the US Dollar against many major currencies globally reduced group RevPAR to 1.2% in the quarter, when reported at actual exchange rates. A breakdown of constant vs. actual currency RevPAR by region is set out in Appendix 2.
1 RevPAR growth is at constant exchange rates (CER) unless otherwise stated.
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