IHG Hotels and Resorts reported seeing an uptick in hotel conversions, as it revealed results for the first half of 2024.
In common with other international hotel brand groups, IHG saw evidence of a softer performance at its hotels in China, and in the US. But similarly, it remains convinced of the long term outlook for the hotel sector, and is continuing to look for individual property signings, as well as transformational portfolio deals, to grow.
Transformational deals
In the first quarter of 2024, IHG announced one such transformational deal in Germany with Novum, which will see a portfolio of 119 hotels join the Holiday Inn brand. During 2024, IHG will convert more than 7,000 rooms, with a similar number due to switch during 2025 and further transfers in 2026.
“We have nearly 1,000 hotels in the pipeline in the Americas, our ground break base is significantly up versus last year,“ said CEO Elie Maalouf. And he noted early success in focusing on growth in several key international markets, highlighted on a previous results call. “We highlighted Japan, India, Germany, Kingdom of Saudi Arabia. And I’d tell you, six months later, we made very significant progress in each one of those markets, we have increased signings significantly.“
IHG achieved growth of 3.2%, opening 18,000 rooms in 126 hotels in the first half of 2024. During the period, the company also signed a record 57,100 rooms, or 384 hotels. IHG is becoming more international as it was regions outside the US that saw strongest year on year portfolio growth. The strongest growth pace was in Greater China, where the company grew its portfolio by 8.6% year on year, while for EMEEA the figure was 4.1% net. Over 40% of new openings in the first half of 2024 were conversions.
Progress with new Garner brand
Signings of 10,800 rooms represented 118 hotels added to the pipeline. Of these, 62 properties will come under IHG’s so-called Essentials brands. Out of the new signings, 15 alone were signings for its Garner flag, a midscale conversion brand only launched in autumn 2023. Garner was designed with a low conversion cost for landlords, typically around 25% less than for a Holiday Inn Express. It has already seen signings outside the US home market, including commitments to open hotels in Germany, the UK, Japan, Austria and Turkey.
The overall pipeline has grown to 110,000 rooms, up 3.5% year on year and representing a future delivery of 1,069 hotels. CFO Michael Glover said IHG is currently achieving an average of 21 months from signing to opening for newly built hotels, and seven months for conversions.
On a call with analysts, Maalouf was also questioned on whether he would consider adding further brands to the IHG portfolio. He responded: “We will create or acquire new brands if and when we see a strong consumer demand and owner demand to invest in a space of scale, where we’re not participating.”
