Intercontinental Hotels Group (IHG), the owner of Holiday Inn, expects a 50% hit to its operations in the Middle East as the Iran war disrupts global travel. Revenue per available room in the region fell 26% year-on-year in March, reversing the 9% growth seen in January and February.
Impact of the Iran War
The conflict has stifled tourism to the Middle East and caused a worldwide jet fuel shortage, forcing airlines to avoid price hikes and cancel flights. IHG reported that revenue has declined further in the second quarter, with a projected 50% sales drop for the period. The FTSE 100 hotelier operates affordable chain Holiday Inn, with over 1,000 branches worldwide, and luxury brands like Kimpton Hotels.
Wider Regional Effects
The Iran war is now affecting the broader Europe, Middle East, and Africa (EMEA) region. IHG saw revenue fall 7% in April, despite a 6% rise in the first quarter. However, the company said it will "more than" offset the impact through better-than-expected growth in other regions. Disruption to travel routes between the UK and the Middle East has also impacted London hotels, with fewer visitors from the region.
Confidence in Growth
IHG operates 1,478 hotels and 287,602 rooms in the EMEA region. Global revenue jumped 4.4% in the first quarter, driven by 5.7% growth in Greater China. The company opened 82 new properties and now runs over 7,000 hotels, with 163 more in the pipeline. CEO Elie Maalouf said: "Our business model is strategically diversified and resilient in capturing demand across geographies, chain scales, and different stay occasions, and is heavily weighted to domestic and intra-regional travel." IHG remains confident of growth despite the Middle East downturn.
