Holiday Inn owner IHG revenue drops 19% in Middle East as Iran war hits tourism

Intercontinental Hotels Group saw overall growth slow

The owner of Holiday Inn has seen revenues at its Middle Eastern operations take a significant hit as the Iran conflict hit the region’s tourism sector.

Intercontinental Hotels Group (IHG) revealed its revenue per available room in the Middle East fell by 19 per cent in the three months to June, following a two per cent decline in the preceding quarter.

The fallout from the Iran conflict dented the group’s overall revenue across its Europe, Middle East and Asia region, with growth slowing sharply 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, warned shareholders that it is contending with “ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows”.

However, the group noted that the Middle East accounts for just five per cent of its global market. “We continue to expect these [impacts] to be fully offset by growth in demand elsewhere,” it stated, as reported by City AM.

“This demonstrates the strength of IHG’s business model which is strategically diversified and resilient,” said Elie Maalouf, IHG’s chief executive.

IHG reported a welcome trading uplift from the FIFA World Cup this summer, which contributed one per cent revenue growth to its performance in the Americas region in the three months to June. The hotels group has witnessed its US market growth gather pace in recent months, climbing from 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 recorded revenue growth of 3.1 per cent in the UK, 2.3 per cent across continental Europe and six per cent in East Asia and the Pacific.

IHG saw total revenue climb seven per cent to $1.3bn (£928m) in the year to June, while pre-tax profit dipped nine per cent to $578m (£428m).

The group achieved record levels of new site development in the first half of this year, with close to 200 hotel openings during the period. IHG currently operates 7,100 hotels across the UK, with a further 2,400 in the pipeline.

IHG revealed it is channelling significant investment into AI, reporting an eight per cent rise in gross costs to $12m over the past three months, attributing the increase to its expanding use of the technology in back-office functions as well as across its websites and apps.

Shares in the group dropped 2.5 per cent to 151p in early trading.