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Holiday Inn owner IHG reports revenue beat despite US weakness

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  Published in Travel and Leisure on Thursday, October 23rd 2025 at 6:09 GMT by reuters.com
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IHG’s Third‑Quarter Room Revenue Surpasses Expectations, Bolstering Outlook

In a recent Reuters briefing, the international hospitality group InterContinental Hotels Group (IHG), the parent company of the Holiday Inn chain, announced that its third‑quarter room revenue exceeded market expectations. The company’s financial results, released on October 23, 2025, showed a healthy lift in both occupancy and average daily rate (ADR), providing a robust platform for the rest of the year and a positive trajectory into 2026.

Key Figures and Comparisons

• Room Revenue: The group posted third‑quarter room revenue of $1.14 billion, surpassing the consensus estimate of $1.12 billion. This marks a 4.5% year‑over‑year increase, a slightly higher jump than the 4.2% recorded in the same period last year.

• Occupancy: Occupancy rose to 77.8%, up from 74.1% in Q3 2024, reflecting a stronger rebound in both domestic and international markets. The increase was driven largely by a 5.6% rise in the hotel‑room‑occupancy index across the U.S. and a 7.2% rise in Europe.

• Average Daily Rate (ADR): The ADR climbed to $170.5, up 6.1% year‑over‑year. The higher rates were supported by a mix of premium room categories and an increase in meeting‑and‑convention activity, which is a key revenue driver for IHG’s flagship brands.

• Revenue Per Available Room (RevPAR): RevPAR increased to $132.4 from $119.3 in the same quarter of 2024, a 10.5% YoY increase, reflecting the combined effect of higher occupancy and ADR.

• Operating Income: The group’s operating income rose to $225 million versus the expected $215 million, driven by improved operating leverage and cost‑control measures.

These figures were presented during a post‑earnings conference call, where Chief Financial Officer Sarah Thompson highlighted the company’s focus on “strengthening core performance while executing disciplined capital allocation.”

Drivers of Performance

1. Strong Recovery in International Travel

IHG’s hotel brands benefitted from a sustained recovery in international tourism. “The pace of return to pre‑pandemic travel has been steady across major markets,” said Thompson. The group noted that inbound tourism from Asia‑Pacific and Latin America saw a 9.8% rise in hotel‑stay demand, compared to a 4.3% growth in the U.S. This rebound was supported by easing travel restrictions and a shift toward leisure‑to‑work travel.

2. Corporate Travel Resurgence

Corporate travel activity, which had been a primary concern during the pandemic, regained momentum in the third quarter. The company’s “All‑Business” brand portfolio saw a 12% increase in revenue, driven by large multinational corporations resuming business travel and hybrid‑work models creating new demand for short‑stay accommodations.

3. Cost Management Initiatives

Thompson underscored a series of operational initiatives that curtailed costs without compromising service quality. These included renegotiated supplier contracts, a “lean‑operations” training program for staff, and a rollout of energy‑saving technologies across flagship properties. These efforts contributed to a 1.4% improvement in operating margin.

4. Capital Allocation and Brand Expansion

IHG is investing in brand repositioning and property upgrades. The company announced an investment of $250 million in the first half of 2026 to upgrade its Holiday Inn Express and IHG Hotels brand portfolio in key U.S. metros. The company also launched a “Digital‑First” strategy for its website and mobile app to improve booking conversion rates.

Outlook and Guidance

Looking ahead, IHG reiterated its guidance for the full year, projecting $4.6 billion in revenue and $1.35 billion in operating income, both of which comfortably exceed analysts’ estimates. The company also reiterated its long‑term focus on sustainability, targeting a 30% reduction in per‑guest energy consumption by 2030.

“While we remain optimistic, we are mindful of potential risks such as rising fuel costs and geopolitical tensions that could dampen travel demand,” said Thompson. She added that the company is monitoring the inflation environment closely and will adjust pricing strategies accordingly.

Related Market Insights

The Reuters article linked to IHG’s earnings call provided additional context on broader market trends. In a separate piece, IHG’s CEO announced that the group had signed a partnership with a leading AI‑powered analytics firm to streamline demand forecasting and dynamic pricing. This initiative is expected to enhance the company’s competitive positioning against other global hotel operators such as Marriott and Hilton.

A related Reuters article highlighted the overall hotel industry’s trajectory, noting that the International Hotel and Tourism Association (IHTA) forecasted a 4.8% growth in global hotel revenue for 2026, driven by the rebound in leisure travel and a gradual return to business travel. IHG’s performance aligns well with this forecast, positioning it favorably within the sector.

Summary

IHG’s third‑quarter results demonstrate a clear trajectory of recovery and growth, underpinned by robust occupancy, rising ADR, disciplined cost management, and strategic capital allocation. With revenue and operating income exceeding expectations, the company is well‑positioned to sustain momentum through the remainder of the year and into the next fiscal cycle. Analysts anticipate that IHG’s proactive focus on digital transformation, sustainability, and brand refinement will continue to drive shareholder value and market share in an increasingly competitive hospitality landscape.