IHG to launch new all-suites upper midscale brand

InterContinental Hotels Group (IHG) has announced plans to launch a new all-suites upper midscale brand in its preliminary 2018 financial results.

The company said launching the new brand this year would build on its “existing mainstream strength”, targeting an $18b (£14b) industry segment where strong guest and owner demand has driven around a 70% increase in room supply in the last four years.

The group reported total revenue for the year of $4.34b (£3.36m), an increase of 6% on the previous year, and operating profit of $670m (£519m), down 7%.

Global revenue per available room (revpar) increased 2.5% and IHG also announced it was raising the total dividend for the year by 10% and follows the payment of a $500m (£387m) special dividend in January 2019, taking total shareholder returns announced for the year to more than $700m (£542m).

The hotel company reported its strongest net system size growth in a decade of 4.8% including the addition of 56,000 room additions, up 17% year on year. After the removal of 18,000 rooms, this leaves IHG with 837,000 rooms globally.

Chief executive Keith Barr said: “We have made excellent progress in 2018 executing against the strategic initiatives I set out a year ago to accelerate our growth, whilst delivering a strong financial performance. The investments we have made have had a significant impact, allowing us to further evolve our established brands, move quickly to strengthen our portfolio both organically and by acquisition, and create real momentum in our business.

“Our strategic focus on accelerating our net rooms growth helped drive a net system size increase of 4.8%, and our best performance for both openings and signings in a decade, leaving us well-positioned for future growth.

“The investments we have made have been funded through our group efficiency programme which is on track to deliver $125m (£97m) of annual savings by 2020. We have successfully implemented a more efficient and agile organisational structure while building resources and capabilities focused on the most attractive growth opportunities.

“The fundamentals of our business remain strong, and while there are macro-economic and geopolitical uncertainties in some markets, we are confident in the year ahead and that our strategy will deliver industry-leading net rooms growth over the medium term.”

The group’s revpar in the UK grew just 1%, with London up 3% and the provinces flat. Fourth quarter revpar in the UK was up 4%, with strong leisure demand driving revpar in London up 10%, while the provinces were up just 1%.

2018 saw IHG acquire Principal with Covivio, enabling it to convert properties into the group’s first UK Voco and Kimpton hotels; as well as its acquisition of the luxury Regent Hotels & Resorts brand. IHG announced its acquisition of Six Senses Hotels Resorts Spas just last week for £232m.