Pent-up demand for travel – which spurred the global travel recovery from the Covid-19 pandemic – is over, said Intercontinental hotel group CEO Elie Maalouf.
“People really started traveling at the end of 2020, when restrictions started to be lifted,” he said. “So we’re really past the point of revenge travel, even in China.”
The company’s latest quarterly update showed that travel demand remained strong as the summer season ended.
“We think we’re in a sustainable place,” Maalouf said. “Our group and meeting bookings through 2024 and beyond are the strongest we’ve seen in a very long time.”
“We are pleased with the demand we are seeing from travelers… and hope it continues,” he added.
IHG’s third-quarter trading update, released Friday, showed the company’s revenue per available room – or “revpar” – was up 10.5% compared to the third quarter of 2022 , and almost 13% more compared to the third quarter of 2019, which was before the pandemic.
And this, despite a drop in revpar of 3% compared to 2019 in the large cities of Greater China, which are more dependent on international travelers.
Maalouf told CNBC that the lack of “air bridge,” or flight capacity, to China is less than 50% of pre-pandemic levels, affecting the resumption of travel in cities like Beijing, Shanghai, Guangzhou and Shenzhen.
“But if you look at the country as a whole, travel – which is mainly domestic within China – has recovered well above 2019,” he said, adding that more than 80% of IHG’s business in China are made in medium-sized or smaller cities. .
Room Rates and Global Growth
Third-quarter occupancy levels at IHG hotels were 72%, just 1% lower than pre-pandemic levels, according to the quarterly update. But average room rates climbed well above 2019 levels: up nearly 6% in Greater China, 15% in the Americas, and 24% in Europe, Middle East, Africa ( EMEA) and Asia.
But rising interest rates are struggling to keep up with inflation, Maalouf said.
“Room prices haven’t really outpaced inflation in any of our markets,” he said. “I think people’s willingness to travel is demonstrated by their willingness to pay.”
IHG opened 50 hotels – with some 7,700 rooms – from July to September, with net system growth of 4.7% year-on-year – this includes the company’s strategic alliance with Spain’s Iberostar Hotels & Resorts , according to the trade report. .
The company currently operates more than 6,200 hotels worldwide and has 1,978 more in the pipeline.
“We’re really seeing growth across all of our brands, across all of our businesses and across all of our regions,” he said. But “the middle-class population and GDP growth are moving more east…Southeast Asia, Central Asia, China. That’s why we’re very engaged in that region “.
Maalouf also discussed the launch of Garner, IHG’s new brand that is expected to be priced lower than Holiday Inn Express, the company’s largest brand with 3,131 hotels worldwide as of September 30.
“In the United States, we think there are about 9,000 hotels interested in joining a system. Not that we will have 9,000 hotels joining us, but we think a high proportion will.”
Maalouf said the first Garner hotels would likely open by the end of the year in the United States.
Middle East Surveillance
The CEO disputed reports that IHG would establish a Middle East regional headquarters in Saudi Arabia.
“Our regional headquarters for the Middle East is in Dubai – and it remains in Dubai,” he told CNBC.
He said the company had recently opened an office in Riyadh, reflecting its expansion plans in the Kingdom. IHG operates 40 hotels in Saudi Arabia – including InterContinental, Crowne Plaza, Holiday Inn, Staybridge Suites and Voco – with another 36 hotels under development.
The war between Israel and Hamas could complicate ambitious tourism goals in Saudi Arabia and the United Arab Emirates, but Maalouf said IHG has not changed its long-term plans in the region.
“It is truly heartbreaking, tragic and distressing to see the loss of life that is occurring, and we hope that the hostilities will end very quickly,” he said.
“We are monitoring the situation very closely. But we have also been in the region for generations and look forward to remaining engaged.”
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