Holiday Inn owner suffers Middle East slowdown as Iran war hits tourism
The owner of Holiday Inn has suffered a slump in revenue at its Middle Eastern business as the Iran war knocked the region’s tourist economy.
Intercontinental Hotels Group (IHG) said its revenue per available room in the Middle East slipped by 19 per cent in the three months to June. This followed a two per cent dip in the three months prior.
The impact of the Iran war knocked the group’s overall revenue in the Europe, Middle East and Asia region, with growth slipping from 5.6 per cent in the first quarter of this year to just 0.6 per cent in the second.
IHG, which also owns the Crowne Plaza and Vignette Collection hotel brands, told shareholders that it is facing “ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows”.
But it said that the Middle East region represents only five per cent of its global market. “We continue to expect these [impacts] to be fully offset by growth in demand elsewhere,” the group said.
“This demonstrates the strength of IHG’s business model which is strategically diversified and resilient,” Elie Maalouf, IHG’s chief executive, said.
World Cup boost
IHG said it scored a trading boost from the FIFA World Cup this summer, which added one per cent revenue growth to its performance in the Americas region in the three months to June.
The hotels group has seen growth in its US market accelerate in recent months, from a rate of 3.6 per cent in the first quarter to 5.4 per cent in the second.
“This uptick reflected supportive trading conditions across all demand drivers as a result of a stronger US economy,” the firm said.
In the three months to June, the FTSE 100 firm posted 3.1 per cent revenue growth in the UK, 2.3 per cent in continental Europe and six per cent in East Asia and the Pacific.
IHG saw total revenue grow seven per cent to $1.3bn (£928m) in the year to June, while pre-tax profit slipped by nine per cent to $578m (£428m).
The group posted record levels of new site development in the first half of this year, with almost 200 hotel openings in the period. IHG operates 7,100 hotels across the UK, with a further 2,400 in the pipeline.
IHG said it is piling investment into AI as it recorded an eight per cent jump in gross costs to $12m in the past three months, which it said was down to its growing use of the tech in back-office functions as well as its websites and apps.
Shares in the group fell 2.5 per cent to 151p in early trading.