IHG quarterly room revenue growth accelerates on China demand

  • Higher domestic demand in China helped InterContinental Hotels Group see revenue growth in its second quarter.
  • The British multinational launched two new brands in 2018, Avid Hotels in the U.S. and Voco Hotels in Europe and Asia, and in July acquired a 51 percent stake in the luxury Regent Hotels brand.

InterContinental Hotels Group Plc's (IHG) second-quarter room revenue growth accelerated, helped by higher demand in China, it said on Tuesday.

Revenue per available room (RevPAR) rose 3.7 percent in the three months to June 30, higher than the 3.5 percent growth in first quarter and 1.5 percent a year earlier.

"We've had a really strong start to the year," IHG Chief Executive Keith Barr told CNBC's "Squawk Box Europe" on Tuesday. "The number of hotel rooms we've opened up around the world is up 4.1 percent," he said, adding that underlying profit was up 8 percent and earnings per share was up 25 percent, enabling the company to increase its interim dividend by 10 percent.

The British multinational launched two new brands in 2018, Avid Hotels in the U.S. and Voco Hotels in Europe and Asia, and in July acquired a 51 percent stake in the luxury Regent Hotels brand. The company said it was on track to deliver about $125 million in annual savings by 2020, which it plans to reinvest to drive growth.

Despite trade war fears putting pressure on the Chinese stock market and a sliding yuan, Barr was sanguine on China, the hotel groups' second-largest market after the U.S. He described this as owing to China's robust domestic consumer market, which constitutes a much larger portion of revenue than international customers do.

"Principally our businesses are domestic businesses," Barr said. "What drives performance there principally is domestic travel. International inbound has a very, very small impact on overall performance too. It's incredible to see the infrastructure development, the movement toward a consumption-based economy, and the levers that the Chinese government can pull to drive performance in GDP is unlike most countries in the world. So we are fairly confident in China."