IHG Hotels & Resorts and Hilton Worldwide both reported increased revenues from the business transient segment in the third quarter, according to executives on the companies’ respective earnings calls. IHG, said officials, saw systemwide revenue generated by transient business travel increase by 2% year over year. They said they anticipate further demand growth into next year. The increase in third-quarter business travel room night revenue was more marked in the Americas region, where it grew 3% year over year.
Third-quarter systemwide average daily rate (ADR) and revenue per available room (RevPAR) overall at IHG each increased year over year while occupancy decreased slightly.
Michael Glover, IHG’s CFO, said that as the company goes through its corporate rate negotiations, it is seeing “really strong demand.” Most corporate clients, he said, are saying they’re going to increase travel overall, and will spend more on trade shows and events, customer outreach and building their customer base. He said they are also still connecting with employees, noting that many corporate clients have yet to fully implement return-to-office policies.
Glover added that business travel by small and midsize enterprises was “up 8% year to date,” adding, “There’s nothing there to suggest a slowdown.”
Group business was very strong for IHG in the quarter, with systemwide revenue for the segment up 6%-7% in the Americas region. Elie Maalouf, CEO, said the pace for groups looks strong through 2025, noting, “What’s on the books for groups and meetings cumulatively for all future time periods is 25% ahead of this time last year.”
IHG systemwide third-quarter RevPAR increased 1.5 % year over year to $95, while ADR increased 1.7% to $132.72. Systemwide occupancy declined 0.1 percentage points to 71.6%.
Christopher Nassetta, CEO, said he thinks the company will continue to see business transient “grind up.” He said the company will likely surpass in 2025 prior peaks of 2019 in terms of demand levels. “All the anecdotal and hard evidence that we’re getting from most of our big accounts and our SMB business suggests that,” said Nassetta, “and you will continue to have good pricing power there.”
Third-quarter group RevPAR for Hilton increased 5% year over year, buoyed by a broad-based increase in demand. “We’re seeing really terrific demand” for corporate meetings, said Nassetta.
Hilton’s systemwide third-quarter RevPAR increased 1.4% year over year to $121.04, while ADR increased 1% to $161.18, and occupancy grew 0.3 percentage points to 75.3%.
In the US, third-quarter RevPAR increased 1% to $127.83, while ADR grew 0.8% to $169.59 and occupancy increased 0.2 percentage points to 75.4%.
Third-quarter revenue increased 7% year over year to $2.87 billion, and net income declined to $344 million from $377 million one year prior.
Hilton’s development pipeline at the end of the third quarter totaled 492,400 rooms, up 8% from last year.
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