Key facts
- InterContinental Hotels Group (IHG) reported a 19% drop in Middle East revenue per available room for the three months to June.
- The Iran war has negatively impacted tourism and international travel flows in the region.
- The Middle East accounts for only 5% of IHG's global market.
- Growth in the Americas was boosted by 1% due to the FIFA World Cup.
- Total revenue for IHG grew 7% to $1.3bn in the year to June, while pre-tax profit fell 9% to $578m.
- IHG is increasing investment in AI for back-office functions and digital platforms.
InterContinental Hotels Group (IHG), the owner of Holiday Inn, has reported a significant slowdown in its Middle East business, attributing the decline to the ongoing conflict involving Iran and its impact on regional tourism. The company's revenue per available room in the Middle East decreased by 19% in the second quarter, following a 2% dip in the preceding quarter.
The conflict has also affected the group's broader Europe, Middle East, and Asia region, where growth slowed considerably from 5.6% in the first quarter to just 0.6% in the second. IHG acknowledged the "ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows."
Despite these challenges, IHG emphasized that the Middle East constitutes only 5% of its global market and expressed confidence that growth in other regions would fully offset the slowdown. The company highlighted a 1% revenue boost in the Americas during the second quarter, partly due to the FIFA World Cup. Growth in the US market accelerated to 5.2% from 3.4%, driven by a stronger economy.
Overall, IHG reported a 7% increase in total revenue to $1.3 billion for the year ending June, though pre-tax profit declined by 9% to $578 million. The group also achieved record new site development, with nearly 200 hotel openings in the first half of the year. IHG is increasing its investment in artificial intelligence, with an 8% rise in related costs to $12 million in the last three months, for use in back-office functions and digital platforms.