InterContinental Hotels Group Plc 2026 Q3 Earnings Call

Good morning, everyone, and welcome to IHG Hotels & Resorts conference call covering the 2026 third quarter trading update. I am Stuart Ford, Senior Vice President and Head of Investor Relations at IHG, and I am joined this morning by Elie Maalouf, our Chief Executive Officer, and Michael Glover, our Chief Financial Officer. Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements as defined under U.S. law. Please refer to this morning's announcement on the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. For those analysts or institutional investors who are listening via our website, may I remind you that in order to ask questions, you will need to have registered using the details on page 2 of this morning's RNS release.

The release, together with the usual supplementary data pack for the third quarter, can be downloaded from the Results and Presentation section under the Investors tab on ihgplc.com.

Now over to Elie. Thank you, Stuart, and good morning, everyone.

I will begin today's call by providing a brief overview of our global trading and development performance in the third quarter. I will then hand over to Michael to go through the performance in each of our three regions in more detail, and he will also cover the share buyback and financing updates. I will then provide some brief concluding remarks, and we will open up the call for Q&A in about 15 minutes or so. Let me start by thanking our teams around the world for their hard work and dedication. We have delivered another strong performance, with RevPAR growth accelerating in the third quarter and our development momentum continuing. The quarter once again demonstrated the benefits of IHG's strategic diversification across geographies, brands, and stay occasions. Turning first to trading. Global RevPAR grew by 5.3% in the third quarter, taking growth for the year to date to 4.6%.

The U.S. performance was very strong, with growth across every brand, every demand driver, and every location type. This reflects the ongoing strength and breadth of the U.S. economy and of IHG's enterprise platform. The EMEAA region also saw very good growth overall, particularly in Europe and East Asia Pacific. The wider Middle East sub-region improved to broadly flat, though there were still declines in the GCC countries. In recent weeks, there have been escalations of the conflict in the Kingdom of Saudi Arabia, and we hope for a speedy and lasting resolution right across the region. In Greater China, RevPAR eased in this last quarter, impacted by adverse weather and changes to public holiday timings.

RevPAR growth remains positive year to date, and we remain confident in the strength of the outlook. At a global level, both rate and occupancy contributed to the 5.3% RevPAR growth, with average daily rate up 3.9% and occupancy increasing by 0.9 percentage points. By demand driver, rooms revenue on a comparable hotels basis was up 10% for groups, up 5% for leisure, and up 4% for business, further demonstrating the benefit of strategic diversification. Turning to development activity, we expect 2026 to be another record year and the fifth straight year of accelerating net system growth. In the quarter, we opened 12,900 rooms across 92 hotels, taking our year-to-date total to almost 300 and expanding our global system to 7,200 hotels. Net system growth was 4.9% year-on-year.

Among openings in the quarter, we celebrated our 1,000th opening in Europe and globally, our 200th for Hotel Indigo and our 150th for voco. There were plenty more opening debuts to new countries. For example, the first Vignette Collection hotels into each of Spain, Germany, and the Dominican Republic. We signed 21,100 rooms across 164 hotels in the quarter, almost twice the number of hotels we opened. With that momentum, year to date, signings have already topped 500 hotels. Our pipeline is more than 3% bigger than a year ago and equivalent to growth of 33% on our current system size. Development is split roughly evenly between new builds and conversions, the latter of course moving more quickly through the pipeline. Each of our collection and conversion-focused brands, voco, Vignette, Garner, and Noted Collection, continue to expand around the world, demonstrating the breadth and attractiveness of our brand portfolio.

With that, let me now hand over to Michael to run through the regions in more detail for you.

Thanks, Elie. Starting with the Americas, where RevPAR growth accelerated to 6.8% in the third quarter, taking year-to-date growth to 5.6%. Rate grew by 3.9%, and occupancy increased by 2.1 percentage points to 73.9%. You have to go all the way back to 2017 for a higher level of occupancy. In the U.S., RevPAR grew by 6.9% in the quarter.

And 5.4% year to date. The tail end of the FIFA World Cup in July added 40 basis points to the region's RevPAR growth in the third quarter. The quarter also had within it a small benefit from the timing of public holidays and events, which supported a further uptick in travel rather than any sort of shift from the prior or following quarter. Aside from those small benefits, the vast majority of the strength of the performance in the U.S. is a reflection of the ongoing strength and breadth of the U.S. economy, as we noted. That is also reflected in the growth of all three demand drivers. Groups was strongest, with comparable rooms up 12% compared with 2025, followed by leisure up 7%, and business up 6%. Turning to development in the region, gross system growth was 3.6% year on year, and net system growth was 2.1%.

We opened 4,000 rooms across 39 hotels in the quarter, 1,300 rooms more than the same period last year. Notable openings included the InterContinental Presidente Mexico City, the new flagship Crowne Plaza in Times Square, New York, 11 Holiday Inn Expresses, and eight more Garner properties. Moving to signings in the quarter, we signed 5,700 rooms across 65 hotels. These included 24 hotels for the Holiday Inn brand family, 22 across our extended stay brands, and 14 across our conversion-focused brands. Highlights included signing InterContinental Bogotá, further expanding the brand's presence to one of Latin America's most important gateway cities, as well as signings to take the voco brand into additional markets in Central America and the Caribbean. Moving on now to Europe, Middle East, Asia, and Africa region, where RevPAR grew by 5% in the third quarter, a significant improvement on the 0.6% growth in the prior quarter.

This takes the region to 3.9% for the year to date. In Q3, rate grew by 4.1%, and occupancy increased by 0.6 percentage points to 75.5%. Looking at the major geographic sub-markets, RevPAR increased by 3% in the U.K., 4% in continental Europe, and grew 8% in East Asia and Pacific. A number of other markets were even stronger. For example, India and Africa both growing in the mid-teens. The Middle East improved to be broadly flat in Q3, having been 19% lower in Q2. Within this Q3 improvement, Egypt and Turkey performed strongly, though countries closest to the ongoing conflict continue to experience declines. Across the six GCC countries of KSA, the UAE, Qatar, Kuwait, Bahrain, and Oman, there was a RevPAR decline of 12% in Q3. Turning to development in the EMEAA region, gross system growth was 7.1% year on year, and net system growth was 6%.

We opened 3,600 rooms across 23 hotels in the quarter. We also signed 7,000 rooms across 47 hotels. These included 21 conversion deals and further signings for Noted Collection, which has already secured hotels in five countries since its launch in February. Elsewhere, we signed two further Vignette Collection properties in France, additional Kimpton hotels in Thailand and Italy, and a Ruby in Greece. Finally, moving on to Greater China. Year to date, RevPAR has grown by 1%, although the third quarter, it eased by 3%, with rate down 0.8% and occupancy decreasing by 1.6 percentage points to 62.3%. A number of adverse weather events impacted domestic travel during the first two months of the quarter, while changes to public holiday timings supported more international outbound leisure travel in late September. However, we did capture the benefit of that outbound travel in EMEAA during the quarter.

These factors contributed to RevPAR declining by 7.5% in Tier 2 to 4 cities, while Tier 1 cities grew by 0.2%. There was very strong growth in Hong Kong and Taiwan. We continue to remain confident in the attractive long-term fundamentals of the Greater China market, underpinned by strong economic development, a growing middle class, and the continued under-penetration of hotel rooms per capita. Because of these strong fundamentals, development activity in the region remains excellent. Gross system growth was 12.1% year-on-year, and net system growth was 10.3%. We opened 5,300 rooms across 30 hotels in the quarter, taking year-to-date openings to 20,500 rooms. A particular highlight was the opening of Holiday Inn Shanghai NECC, which brought the new Holiday Inn design to Shanghai and became our 90th hotel opened in a city with a population of some 25 million.