Intercontinental Hotels Group Q1 Earnings Call Highlights

Key Points

• IHG posted solid Q1 trading, with global RevPAR up 4.4% as occupancy and average daily rate both improved. Growth was broad-based across regions and brands, with business travel and group revenue also rising.
• Development remained strong, as IHG opened 82 hotels in the quarter and pushed its global network to more than 7,000 properties. Its pipeline rose to 343,000 rooms, and conversions made up 53% of signings.
• Management stayed upbeat on full-year results despite Middle East disruption, saying demand elsewhere should more than offset the weakness. The company also reiterated confidence in consensus profit growth and continued its $950 million share buyback.

Intercontinental Hotels Group NYSE: IHG reported a strong first-quarter trading update, with executives pointing to broad-based revenue per available room growth, continued development momentum and resilience from the hotel operator’s global footprint despite disruption in the Middle East.

Chief Executive Officer Elie Maalouf said global RevPAR rose 4.4% in the first quarter, supported by performance across all three regions and all brands. Average daily rate increased 2%, while occupancy rose 1.5 percentage points. On a comparable hotels basis, rooms revenue from groups rose 7%, business travel increased 6% and leisure grew 1%.

Maalouf said IHG’s short booking window limits visibility, but comparable on-the-books global revenue for the second quarter indicated continued growth. He said disruption tied to the Middle East conflict and broader international travel flow issues were expected to be “more than offset” by demand increases elsewhere.

Regional RevPAR Growth Led by Greater China and EMEAA

Chief Financial Officer Michael Glover said RevPAR in the Americas rose 3.6% during the quarter, with the U.S. up 3.4%. Occupancy in the region increased 0.9 percentage points and rate grew 2%. Comparable rooms revenue from groups increased 9%, while business travel rose 6%. Leisure demand was broadly flat against a high prior-year comparison.

Glover said trading momentum in the Americas had continued into the second quarter, with the rolling eight weeks through May 2 showing a further improvement from the first-quarter RevPAR growth rate.

In Europe, the Middle East, Asia and Africa, RevPAR increased 5.6%, driven by a 2.1 percentage point rise in occupancy and 2.2% rate growth. East Asia and Pacific RevPAR grew 11%, Continental Europe rose 5% and the U.K. increased 3%.

The Middle East, which Glover said represents 19% of EMEAA system size and 5% of IHG globally, was disrupted from the start of March. RevPAR in the region moved from 9% growth in the first two months of the quarter to a 26% decline in March, resulting in a 2% decline for the quarter. In April, Middle East RevPAR declined closer to 50%, contributing to an approximately 7% RevPAR decline for EMEAA overall in the month.

Glover said IHG expected Middle East performance to improve in May with travel for the Hajj pilgrimage, adding that religious tourism in Saudi Arabia had proven resilient.

Greater China RevPAR accelerated to 5.7% in the first quarter, supported by strong leisure demand around Chinese New Year and an improvement in business travel. Occupancy rose 2 percentage points and rate increased 1.8%. Tier 1 cities grew RevPAR by 6.4%, while Tier 2 through Tier 4 cities increased 2.9%.

Hotel Openings Push IHG Past 7,000 Properties

IHG opened 14,900 rooms across 82 hotels in the quarter, taking its global estate to more than 7,000 hotels. Maalouf said openings exceeded the prior year’s strong first quarter and resulted in 6.6% gross growth year over year and 5% net growth. Year-to-date net system growth was 0.9%, 20 basis points higher than the comparable point last year.

IHG added 21,400 rooms to its pipeline in the quarter, up 6% year over year excluding the Ruby brand acquisition in 2025. The company ended the quarter with a pipeline of 343,000 rooms, 3% higher than a year earlier and equivalent to 33% of its current system size.

Conversions represented 53% of signings. Maalouf highlighted Garner, IHG’s essentials conversion brand, which has reached nearly 200 open and pipeline hotels globally across 17 countries less than three years after launch. Garner also made its debut in Greater China with Garner Beijing Art District, which opened one month after signing.

In Greater China, IHG opened 7,500 rooms, up 73% from the same quarter last year, and surpassed 900 open hotels in the region. Gross growth in Greater China was 12.9% and net system growth was 10.4%. Glover said the company remained confident in China’s long-term hotel demand fundamentals, citing a growing middle class, economic growth and under-penetration of hotels per capita.

Executives Reaffirm Profit Expectations

Glover said IHG was 25% through the $950 million share buyback program announced in February, which had reduced the company’s share count by a further 1.1% this year.

He said IHG remained confident in achieving full-year consensus growth forecasts and profit expectations. Consensus net system size growth stood at 4.5%, and Glover said the company continued to see “more upside opportunity than downside risk” to that figure. Consensus operating profit from reportable segments was $1.38 billion, implying 9% growth from 2025, while adjusted earnings per share consensus of $5.66 implied 13% growth.

During the question-and-answer session, Maalouf said the Middle East represented 9% of IHG’s pipeline, with most of that pipeline in Saudi Arabia, Egypt and Turkey. He said Saudi Arabia had been less affected than other parts of the Gulf Cooperation Council, while Egypt and Turkey were not currently impacted by the conflict.

Asked about U.S. consumer demand and higher fuel prices, Maalouf said IHG was not seeing an impact in its numbers. He cited record employment levels, real wage growth, financial market strength and investment in infrastructure, data centers and artificial intelligence as supportive factors. Glover said the company was not seeing evidence that higher gasoline prices were causing consumers to cancel trips.

AI, Loyalty and Co-Brand Card Updates

Maalouf said IHG had made progress on artificial intelligence initiatives in guest acquisition and loyalty, hotel commercial optimization and corporate cost efficiency. The company plans to launch an AI-powered conversational search tool on its website and mobile app in the coming months, allowing guests to use natural-language searches to describe destinations, hotel features and local attractions.

IHG is also deploying an AI-powered content management platform and refreshing its loyalty platforms with a cloud-based CRM tool powered by Salesforce. Maalouf said the aim was to deliver more personalized guest experiences, more relevant promotions and faster loyalty rewards.

The company also announced a co-brand card agreement in Japan with Sumitomo Mitsui Card Company and Visa, with products expected to launch in 2027. Maalouf said previously announced U.K. co-brand debit card products with Revolut and Visa were on track to launch in the coming months.

Asked whether international card agreements could drive upside to IHG’s target to triple credit card revenue by 2028, Maalouf said the deals were accretive outside the U.S. but “nowhere near” the profitability of the U.S. market and would not meaningfully move the 2028 target.

IHG said its second-quarter update and first-half 2026 financial results are scheduled to be announced on Aug. 11.

About Intercontinental Hotels Group NYSE: IHG

Intercontinental Hotels Group plc (IHG) is a multinational hospitality company that develops, owns, manages and franchises a broad portfolio of hotels and resorts. The company operates across full-service luxury and upscale segments as well as midscale and extended-stay categories, providing lodging, food and beverage, meeting and event services, and related guest amenities. IHG's business model emphasizes brand franchising and management agreements, while retaining ownership or direct investments in a smaller portion of its global property portfolio.

IHG's brand portfolio spans global and regional names designed to serve different traveler needs and market segments.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.