Pent-up travel demand – which has led to a global travel recovery following the Covid-19 pandemic – is over, said Elie Maalouf, CEO of Intercontinental Hotels Group.

“People only started traveling at the end of 2020 when restrictions were lifted,” he said. “So we’re really beyond revenge travel – even in China.”

The company’s most recent quarterly update showed that travel demand remained strong as the summer travel season ended.

“We believe we are in a sustainable place,” Maalouf said. “Our group and meeting bookings through 2024 and beyond are the highest we have seen in a long time.”

“We are pleased with the demand we are seeing from travelers… and hope it continues,” he added.

IHG’s third quarter trading update, released on Friday, showed the company’s revenue per available room – or “Revpar” – up 10.5% compared to the third quarter of 2022 and compared to the third quarter of 2019, which was up almost 13% before the pandemic.

This is despite a 3% decline in RPM compared to 2019 in major cities in Greater China, which are more reliant on international travelers.

Maalouf told CNBC that the lack of “air transportation,” or flight capacity, to China is less than 50% of pre-pandemic levels, impacting travel recovery in cities such as Beijing, Shanghai, Guangzhou and Shenzhen.

“But when you look at the country as a whole, travel – which in China is mostly domestic – has recovered significantly compared to 2019,” he said, adding that more than 80% of IHG’s business in China is in medium-sized to smaller cities are located.

Room prices and global growth

According to the quarterly update, IHG hotel occupancy was 72% in the third quarter – just 1% below pre-pandemic levels. But average room rates have risen significantly above 2019 levels – by almost 6% in Greater China, 15% in the Americas and 24% in Europe, the Middle East and Africa (EMEA) and Asia.

But rising interest rates are barely keeping pace with inflation, Maalouf said.

“Room rates have not really exceeded inflation in any of our markets,” he said. “I think people’s willingness to travel is reflected in their willingness to pay.”

IHG opened 50 hotels – with around 7,700 rooms – between July and September, with net system growth of 4.7% year-on-year – this includes the company’s strategic alliance with Spain’s Iberostar Hotels & Resorts, according to the trading update.

Our regional headquarters for the Middle East is in Dubai – and it will stay in Dubai.

Elie Maalouf

CEO of Intercontinental Hotels Group

The company currently operates more than 6,200 hotels worldwide and has an additional 1,978 in the pipeline.

“We’re really seeing growth across all of our brands, across all of our businesses and across all of our regions,” he said. But “middle class population and GDP growth are shifting more eastward…Southeast Asia, Central Asia, China. That’s why we are very committed to this region.”

Maalouf also touched on the launch of Garner – IHG’s newest brand, which is said to be priced lower than Holiday Inn Express – the company’s largest brand with 3,131 hotels worldwide as of September 30.

“There are approximately 9,000 hotels in the United States that we believe are interested in joining a system. Not that we will have 9,000 hotels joining us, but we think a large proportion will be interested.”

Maalouf said the first Garner hotels are expected to open in the United States by the end of the year.

Monitoring the Middle East

The CEO denied reports that IHG was setting up a Middle East regional headquarters in Saudi Arabia.

“Our regional headquarters for the Middle East is in Dubai – and it will remain in Dubai,” he told CNBC.

He said the company recently opened an office in Riyadh, reflecting its plans to expand in the kingdom. IHG operates 40 hotels in Saudi Arabia – including InterContinental, Crowne Plaza, Holiday Inn, Staybridge Suites and Voco Hotels – with another 36 hotels in the development pipeline.

The war between Israel and Hamas could complicate ambitious tourism goals in Saudi Arabia and the United Arab Emirates, but Maalouf said IHG had not changed its long-term plans in the region.

“It is truly heartbreaking, tragic and disturbing to see the loss of life and we hope that hostilities end very quickly,” he said.

“We are monitoring the situation very closely. But we have also been in the region for generations and look forward to remaining involved.”

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