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InterContinental Hotels Group PLC on Tuesday reported improved profit and revenue in 2022 on the back of a strong rebound in travel following the Covid-19 pandemic.
Chief Financial Officer Paul Edgecliffe-Johnson told a conference call he remained optimistic for the future of demand, particularly within and outbound from China.
The hotel and resort chain reported pretax profit of $540 million for 2022, up 50% from $361 million in 2021.
Revenue totalled $3.89 billion in 2022, up 34% from $2.91 billion in 2021. This was in line with expectations of $3.9 billion from UBS and just below expectations of $3.97 billion from Jefferies.
By region, IHG said Europe, the Middle East & Africa saw the largest revenue growth, up 82% against the previous year. Meanwhile, Greater China saw the greatest decline, with revenue down 25% year-on-year.
However, CFO Edgecliffe-Johnson said that things have ‘quickly returned to normal’ in the Great China region since the lifting of lockdown restrictions.
‘We’re really pleased with how strong demand has come back. What we saw in the summer of 2022, when restrictions were lifted, was that demand came straight back into the hotels. Holiday destinations, in particular Sanya in China, actually saw stronger rates and stronger occupancy in the summer of 2022 than pre-Covid. And that was despite the fact there was still some restrictions out there,’ he explained, adding that travel during the Chinese New Year holiday period was almost back to pre-pandemic 2019 levels.
Edgecliffe-Johnson suggested the strong return in demand in China was due to ‘revenge travel’ following the lifting of severe restrictions in the country.
‘What I think we’ll see is what’s termed revenge travel, people making up for what they’ve missed out on, for domestic travel but also travel to Southeast Asian resorts and other places around the world,’ he said.
As a result of this, the CFO said he is expecting to see ‘very strong’ demand in China and ‘very strong’ demand outbound from China.
IHG proposed a final dividend of $0.945. This represented an increase of 10% against the year prior and takes the total payout for the year to $1.384, up 61% from $0.859.
The company also announced a share buyback programme to return $750 million of surplus capital in 2023.
‘In 2022 we saw demand return strongly in most of our markets, pushing group revenue per available room back close to 2019 levels and fee margin ahead. It’s particularly pleasing that in the second half of the year we exceeded 2019 levels for both RevPAR and profitability,’ Chief Executive Keith Barr said in the company’s statement on Tuesday.
Group comparable RevPAR improved 37% year-on-year in 2022. However, it remained 3.3% below pre-pandemic 2019 levels.
Shares in InterContinental Hotels were down 1.2% at 5,526.00 pence on Tuesday morning in London.
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