InterContinental Hotels Group has drawn on a surge in World Cup-related travel to offset a sharp deterioration in its Middle Eastern business, highlighting the uneven impact of the conflict on the global hotel industry.
The Holiday Inn owner said revenue per available room, a closely watched measure of hotel performance, rose 4.8 per cent across the Americas in the first half of the year, with growth accelerating to 5.4 per cent in the second quarter. World Cup host cities contributed about 1 percentage point to the increase as football fans drove bookings around tournament venues.
The boost helped IHG absorb the effects of the conflict in the Middle East, which has disrupted hotel trading across the region and weighed on some international travel since the war began on February 28.
Underlying revenue rose 6 per cent to $1.26bn in the six months to June 30, while operating profit increased 10 per cent to $665mn. On a statutory basis, however, pre-tax profit fell 9 per cent to $578mn.
The contrasting figures underscore the extent to which strong demand in the Americas and other markets is compensating for a severe regional shock.
IHG’s global RevPAR increased 4.1 per cent during the first half, although momentum weakened during the quarter. Growth slowed to 3.5 per cent in the three months to June, from 4.4 per cent in the first quarter, as the conflict began to weigh more heavily on travel patterns.
The Middle East was the clearest casualty. RevPAR plunged 19 per cent in the second quarter after declining 2 per cent in the first three months. The region represents about 5 per cent of IHG’s global hotel system, limiting the direct financial hit but underscoring the scale of the disruption in one of the industry’s most strategically important travel markets.
Elie Maalouf, IHG’s chief executive, said the company expected the effects of the conflict and wider disruption to international travel to be “fully offset by growth in demand elsewhere”.
That resilience is particularly evident in markets benefiting from major sporting and cultural events. The World Cup has provided an unusually concentrated boost to hotel demand across the Americas, allowing IHG to raise room rates and occupancy in several host locations even as geopolitical risks have increased elsewhere.
The UK, IHG’s third-largest market with 378 hotels, recorded RevPAR growth of 3.1 per cent in the second quarter. Continental Europe rose 2.3 per cent, while Asia Pacific increased 6 per cent.
Greater China delivered first-half RevPAR growth of 3.1 per cent, helped by a strong first quarter as bookings around Chinese New Year boosted demand.
The results suggest that global hotel groups remain capable of redirecting growth towards markets benefiting from stronger domestic travel, major events and recovering consumer demand. But they also expose the growing divergence between regions as geopolitical instability reshapes international travel.
For IHG, the immediate question is whether demand generated by the World Cup and stronger trading elsewhere can continue to compensate for weakness in the Middle East — and whether the conflict begins to have a broader effect on long-haul travel rather than remaining a predominantly regional shock.
So far, the company is betting that the global appetite for travel remains stronger than the geopolitical forces working against it.
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