The head of IHG Hotels & Resorts sees plenty of tailwinds for the global hotel brand company around the world in the near to medium term.
During a sit-down interview as part of Barclays Capital's Eat, Sleep, Play, Shop Conference, IHG CEO Elie Maalouf pointed to several positive signs as reasons for optimism. Business travel and group bookings have surged across the hotel industry, Chinese travelers are planning longer international trips and investor confidence is keeping IHG executives aggressive in signing new franchise deals and adding to the company's hotel development pipeline.
Even in the U.S., Maalouf sees good things ahead once Donald Trump returns to the Oval Office on Jan. 20.
“We’ve been in the U.S. for 70 years now across many administrations. We’re not unfamiliar with the climate that is coming,” Maalouf said, adding that Trump's mass deportation plan would not affect IHG's hotels. “The tax regime, which came in 2017 with the first [President] Trump administration will benefit business. We advocate for growth policies. … Deregulation, low taxes, could be favorable for travel.”
Regardless of who the president is, the U.S. is a top market for Denham, England-based IHG Hotels & Resorts. IHG's Holiday Inn brand debuted in the U.S. in 1952 in Memphis, Tennessee.
Last month, Maalouf visited Las Vegas to meet with 5,000 IHG owners, who expressed a lot of confidence about improving economic conditions and how that will affect their business.
“It was the fifth [Americas Investors & Leadership Conference] I have attended since I joined in 2015. I felt strong confidence on their take on the economy and ability to get deals done. They feel demand is strong and interest rates are levelled out,” Maalouf said.
IHG predicts between 2% and 2.5% growth in hotel revenue per available room in the U.S. in 2025.
“Analysts predict healthy employment, steady inflation and a pretty good economic environment, and travel is a consequence of that. That [percentage] seems reasonable, and added to this is low supply,” he said.
Globally, there's not many headwinds that are on IHG's radar heading into 2025 for any specific market, Maalouf said.
“I would not be surprised if some did emerge, but others will be hotter. Group has been strong in this year, and bookings are very strong in 2025. Group is 15% of our business … enough to make a difference, and it is growing. That business travel is dying is a myth,” he said.
This increase in business travel is not just among accounting companies and law firms, Maalouf said. Tech, manufacturing, retail, medical and other industries are also traveling more and booking business trips.
On the leisure front, more Americans are booking international trips, especially to Europe, Maalouf said.
“That’s 17% to 19% higher post-pandemic to Europe. Some of it is currency, but also there is a rise in disposable income,” he said.
The middle-class traveler in Asia
Hotel brand executives actively monitor what's happening in the Asia-Pacific, as economic conditions in China and India can lead to major shifts in global travel patterns. Maalouf said that billions of people in Asia have never had a vacation, and China's middle class is set to double to 150 million households.
“Most travel only to visit relatives or attend a marriage or funeral, but they are starting to go on vacation,” he said.
China does have a lower average gross domestic product, and many individual investors have been stung by the country’s residential real estate slump, Maalouf said.
“There was too much residential real estate, but they are digesting it. I started my career in residential real estate, and we once had too much in the U.S., which lead to the Great Financial Crisis,” he said. “Consumer confidence has fallen a little due to this residential crash. In the U.S., we invest in shares and bonds, as well as real estate, but in China it is mostly real estate. But we saw in 2023, Chinese traveled domestically and in 2024 to Southeast Asia and Japan.”
There are plenty of opportunities for IHG to grow in China, Maalouf said.
“There still is growth in China, and they build for the future. [IHG] will finish with 800 hotels by the end of the year [in China], and there are 600 to 700 in the pipeline. Also, labor costs are less there, so occupancy can be profitable at lower levels,” he added.
Maalouf will travel to China in early 2025 to celebrate IHG's 50th anniversary of its debut in the country. In 1975, it opened the Holiday Inn Golden Mile Hong Kong, which still operates today.
Portfolio and fee plans
IHG's rooms network is increasing across its global portfolio, Maalouf said.
"More Novum rooms are to open in Germany to open next year, and we had near record signings in China in 2024. Ninety Garner Hotels are in the pipeline, and there is more than 100 Voco hotels. Our new brands are getting very good traction,” he said, referring to IHG's recent partnership agreement with German hotel developer Novum Hospitality.
Overall, IHG currently operate close to a million rooms in approximately 6,500 hotels, with a further 2,200 hotels in the pipeline.
Additional room for pipeline growth could come in urban micro-space hotels in high-density locations, he said.
“Where investors and guests are interested, but we are not there, that is an opportunity for us,” he added.
Maalouf said he believed IHG was at the very top of investors’ minds.
“We have market-applicable fees but good fees. There is a lot of firepower,” he added.
In May during IHG’s first-quarter results, Maalouf said IHG's fee structure would be adjusted due to a slight fall in its U.S. hotel metrics.
Maalouf said the United Kingdom-based firm’s growth algorithm targets “high single-digit revenue growth per year, unit growth and [revenue per available room] growth.”
“We target 100 to 150 basis points of fee-margin growth per year, with that coming from operating leverage," he said. "Anything else would be on top of that, and all that leads to [earnings before interest and taxes] growth of low double-digits per year. Share buybacks and EBIT equals [earnings per share] growth of 13% to 15% annually. We are on track for all of these. We feel pretty good on continuing to deliver that over the next years.”