Holiday Inn owner suffers Middle East slowdown as Iran war hits tourism

Holiday Inn's owner, Intercontinental Hotels Group (IHG), is experiencing a revenue decline in its Middle Eastern operations due to the ongoing Iran war disrupting the region's tourism industry. IHG's revenue per available room in the Middle East fell by 19% in the three months to June, compared to a 2% decrease in the preceding period.

This decline has led to an overall revenue drop for the Europe, Middle East, and Asia region, with growth slowing from 5.6% in Q1 to just 0.6% in Q2. IHG, which owns hotel brands such as Crowne Plaza and Vignette Collection, stated that it is facing ongoing impacts from the Middle East conflict and wider disruption to international travel flows.

However, the group emphasized that the Middle East accounts for only 5% of its global market and expects these impacts to be fully offset by growth in other regions. IHG's CEO, Elie Maalouf, highlighted the company's strategically diversified and resilient business model. Despite the challenges, IHG benefited from a 1% revenue growth in the Americas region in the three months to June, driven by the FIFA World Cup.

The hotels group also reported growth in its US market, accelerating from 3.4% in Q1 to 5.2% in Q2. IHG's total revenue grew by 7% to $1.3bn (£928m) in the year to June, while pre-tax profit fell by 9% to $578m (£428m). The group has seen record levels of new site development in the first half of the year, with nearly 200 hotel openings.

IHG is investing in AI, recording an 8% increase in gross costs to $12m in the past three months, attributed to its expanding use of the technology in back-office functions and online platforms. The company's shares fell by 2.5% to 151p in early trading.