Third-quarter systemwide room revenue generated by business transient travel at IHG Hotels & Resorts properties increased 2 percent year over year, executives said Tuesday, adding they expect further demand growth into 2025.
On the whole, third-quarter systemwide average daily rate and revenue per available room each increased year over year while occupancy decreased slightly.
The increase in third-quarter business travel room night revenue was additionally pronounced in IHG's Americas region, where it grew 3 percent year over year.
"We feel like the underlying economy is going well," IHG CFO Michael Glover said Tuesday during an earnings call. "As we go through our [2025] corporate rate negotiations, we're seeing really strong demand. Most of our corporates are saying they're going to increase travel overall, will spend more on trade shows and events, customer outreach and building their customer base, and also still are connecting with employees," noting that many corporate clients have yet to fully implement return-to-office policies.
Glover added that business travel by small and midsize enterprises was "up 8 percent year to date," adding "there's nothing there to suggest a slowdown."
Group business was particularly strong in the third quarter, with systemwide revenue for the segment up 6 percent year over year and 7 percent in the Americas region. IHG CEO Elie Maalouf on the call said all signs point to continued group demand next year.
"Pace looks strong through the rest of 2024 and into 2025," Maalouf said, citing a recent American Express Global Business Travel survey in which about two-thirds of meeting planning professionals expect a larger budget for meetings next year. "What's on the books for groups and meetings cumulatively for all future time periods is 25 percent ahead of this time last year."
IHG Q3 Metrics
IHG systemwide third-quarter RevPAR increased 1.5 percent year over year to $95, while ADR increased 1.7 percent to $132.72. Systemwide occupancy declined 0.1 percentage points to 71.6 percent.
Third-quarter Americas region RevPAR increased 1.7 percent year over year to $104.37, while ADR also increased 1.7 percent to $144.33. Occupancy held steady at 72.3 percent.
IHG in the third quarter opened 98 hotels throughout the world totaling 17,500 rooms, a pace Maalouf in a statement noted was "well over double the same period last year," due in part to its new partnership with German hotel operator Novum Hospitality.
IHG's third-quarter net rooms increased 4.1 percent year over year to 968,000 rooms in 6,505 hotels. The company's pipeline in Q3 increased 12 percent to about 327,000 rooms.
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