Despite a drag from its Middle East hotels, IHG Hotels & Resorts is reporting resilient global performance and strong development momentum, giving executives confidence in the company’s medium- to long-term growth prospects.
During the company’s first-half 2026 earnings results, IHG CEO Elie Maalouf said a strong pipeline of hotel signings has the group confident it can deliver “high-single digit percentage growth in fee revenue annually over the medium to long term.”
The United Kingdom-based hotel group plans to achieve this through continued growth in hotel revenue per available room (RevPAR) and expansion of its global hotel portfolio. Maalouf also pointed to improving global business and travel fundamentals as reasons for optimism.
IHG’s global RevPAR increased 4.1% year over year during the first half of 2026, according to Chief Financial Officer Michael Glover. Hotels in the Americas recorded 4.8% RevPAR growth, while Greater China increased 3.1%. RevPAR across Europe, the Middle East, Africa and Asia rose 3%.
“Trading in the U.S. accelerated in the second quarter, growth in Greater China continued and a good performance elsewhere in our EMEAA region helped offset challenges in the Middle East,” Maalouf said in a statement accompanying the results.
Middle East Challenges Offset by Wider Growth
The Middle East remains a drag on IHG’s performance. However, the region represents 19% of the company’s EMEAA system size but only 5% of its global portfolio.
IHG’s Middle East RevPAR declined 2% year over year in the first quarter. The decline accelerated to 19% in the second quarter.
Despite the weaker trading environment, IHG executives remain confident that the region will recover.
“We are not seeing any out-of-the-ordinary exits in the Middle East whatsoever. There might be a delay of some of the projects for a quarter or two, not that we have registered that yet,” Maalouf said.
Glover added that hotel performance in the Middle East has improved more rapidly than he had expected.
Meanwhile, the region’s development pipeline remains concentrated in a handful of markets. Approximately 90% of IHG’s Middle East pipeline is located in Saudi Arabia, Egypt and Turkey, Maalouf said.
“We remain on track to meet full-year consensus profit and earnings expectations,” he added.
China Pipeline Continues to Expand
China remains another important growth market for IHG.
During the first six months of 2026, the company signed 60 Holiday Inn-family hotels in China. IHG’s total pipeline in the country now consists of 591 hotels and approximately 116,000 rooms, representing more than half the size of its existing portfolio in China.
“China is a profitable market and it is becoming even more profitable,” Maalouf said.
IHG’s net system size increased 5% year over year, supported by an 11.7% increase in Greater China and a 6.3% increase across Europe, the Middle East, Africa and Asia.
During the first half, IHG opened 197 hotels with approximately 31,500 rooms. Group revenue increased 7% to $1.25 billion, around $10 million ahead of the company’s previous guidance.
Global hotel signings reached 352 hotels and approximately 49,200 rooms, representing an 8% increase in room count compared with the same period last year.
New Hotel Openings to Support Future Fee Growth
Glover said IHG expects the benefits of its recent network expansion to become more visible in the coming quarters.
“Most agreements have a graduated fee structure that sets up over the first few years of operations. As a result, the full fee revenue contribution of recent openings is only partially reflected initially and builds over time,” Glover said.
At the group level, IHG has seen approximately a 40-basis-point year-over-year improvement in fee-related performance. In the U.S., the improvement has reached 110 basis points, he added.
“We do believe that will continue to improve. There is always some other noise in there, but really that’s what’s driving that, and that is a good problem to have,” Glover said.
The growing hotel network therefore provides IHG with an additional source of future fee revenue as recently opened properties mature.
U.S. Air Force Agreement Adds Long-Term Visibility
Maalouf also highlighted IHG’s updated 50-year agreement with Centinel to operate hotels catering to the U.S. Air Force.
The agreement is scheduled to begin in late 2027 and initially involves 23 properties, providing another long-term component to IHG’s development and fee-revenue outlook.
At the same time, IHG plans to maintain its focus on cost management and operational efficiency.
Maalouf said the company is on pace to return $950 million to shareholders during the full year. IHG will also continue to manage its cost base and keep overhead growth below the expected increase in revenue, supporting further margin expansion.
IHG Stock Outperforms FTSE 100
IHG’s operating momentum has also been reflected in its share price.
As of press time, IHG stock was trading at $155.20 per share, up 12.1% year over year. Over the same period, the London Stock Exchange’s FTSE 100 Index had gained 9.2%.
With global RevPAR growth, an expanding hotel pipeline and increasing contributions from recently opened properties, IHG executives remain confident about the company’s ability to deliver sustained fee-revenue growth over the medium to long term.
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Editorial disclosure: This article is an independently written editorial analysis based on industry reoprting from CoStar News and insights from Terence Baker. The content has been rewritten and contextualised for editorial clarity and relevance.
