InterContinental Hotels Group's Q1 2025: Examining Contradictions in Government Spending, Currency Impact, and Growth Outlook

Government spending impact, currency impact on guidance, impact of U.S. government spending and international travel, revenue per available room (RevPAR) and pricing power, and growth expectations and strategic focus are the key contradictions discussed in InterContinental Hotels Group's latest 2025Q1 earnings call.



RevPAR Growth and Global Performance:
- InterContinental Hotels Group (IHG) reported a 3.3% increase in RevPAR globally for Q1 2025, with ADR up 2.2% and occupancy up 0.6 percentage points.
- Growth was driven by strong performance across all three driver segments: rooms revenue for Leisure stays was up 2%, Business stays were up 3%, and Groups were strongest with a 5% increase.

System Growth and Development:
- IHG opened 14,600 rooms across 86 hotels in the quarter, more than double the same period last year, resulting in 7.1% gross growth year-on-year.
- This growth was supported by increases in each region, strong development activity in areas like Saudi Arabia, India, and Japan, and the completion of the acquisition of the Ruby brand.

Ancillary Revenue and Cost Management:
- The company expects a 130 basis point increase in fee margin expansion from ancillary fee streams, including loyalty point sales and the new U.S. co-brand credit card agreements.
- IHG has maintained strong cost discipline, growing fee revenue by 6% last year with overhead costs growing only 1%, reflecting its strategy of growing revenues faster than controlling overheads.

Performance by Region:
- In the Americas, RevPAR was up 3.5%, with occupancy up 0.7 percentage points, and demand was strong across groups, leisure, and business segments.
- The EMEAA region saw a similar increase with RevPAR up 5%, driven by strong performance in Continental Europe and the Middle East, boosted by inbound leisure travel from Greater China.