InterContinental Hotels has reported a bounce back in European trading as tourists who were avoiding travel in the aftermath of terrorist attacks returned to countries such as France, Belgium and Turkey.
The owner of Crowne Plaza and Holiday Inn hotel brands said in a trading update that in the third quarter of 2017, overall average revenue per room rose 2.3 per cent compared with the same period last year.
However, it also revealed muted sales growth in its main US market — which analysts say has been made more challenging by the popularity of Airbnb. Its shares traded flat at 4,078p in the morning in London.
IHG’s revenues per room in Europe rose 7.1 per cent in the three months to September 30, thanks to “double-digit growth” in Belgium and Turkey and 6 per cent growth in France.
Tourists and business travellers had not completely relaxed about security in Europe, said IHG finance director Paul Edgecliffe-Johnson, but they had returned to the region nonetheless.
“People have just got used to the fact that there is an underlying level of threat,” he said. “But they want to travel and they want to visit these great destinations. They want to get on with their lives.”
France had three major terrorist attacks last year including a vehicle-ramming attack in Nice. Belgium was rocked by a bombing at Brussels airport and at a city metro station in March last year.
IHG’s third-quarter performance in the US was weaker than in Europe, partly because travel companies had cancelled group bookings after hurricanes wreaked destruction in the Caribbean, Texas and Florida last month.
IHG has consistently said Airbnb is not a major threat because its hotels cater for the better-off and for business travellers.
But Simon French, an analyst at Cenkos Securities, said he thought Airbnb was affecting IHG’s US business, “at least at the margins,” which was one reason why growth in revenue per room in the US was 0.8 per cent.
“Most of the hotel groups say they are not threatened by Airbnb, but I tend to question this as while US hotel occupancy is high, room rates are not really rising in IHG’s case, which suggests competition from a service that is outside the traditional hotel sector.”
IHG also reported 5 per cent revenue per room growth in the UK outside London. In London, the figure was 3 per cent.
In China, revenue per room rose 9 per cent, helped by weak figures in the third quarter of last year, IHG said
The growth in the UK was partly driven by domestic tourists who chose to stay at home for their holidays because of the weaker pound, Mr Edgecliffe-Johnson explained.
“It is staycations, that’s definitely one of the reasons for it,” he said. No British city stood out as a staycation venue, he added, pointing out tourists were visiting Holiday Inns across the country “for the spas and the restaurants. Often the visit to the hotel itself is the whole experience.”
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