IHG's room revenue growth slows as Iran war offsets US, China growth

(Corrects to say the Middle East accounts for 5% of IHG's global room inventory, not global revenue, in paragraph 5 and second bullet)

By Prerna Bedi

Aug 11 (Reuters) - InterContinental Hotels Group's room revenue growth slowed in the second quarter and first-half profit missed expectations as a sharp decline in the war-hit Middle East partly offset gains in the United States and China.

The Holiday Inn owner reported global revenue per available room (RevPAR) growth of 3.5% in the three months to June, down from 4.4% in the first quarter.

Its shares were down nearly 1.8% at 0840 GMT after first-half operating profit of $665 million came in below analysts' expectations of about $673 million, according to LSEG.

Demand from affluent travellers has remained resilient and was further supported by soccer World Cup matches held across the U.S., Canada and Mexico. However, the Iran war, now in its sixth month, has weighed on hotels and travel companies in the Middle East.

The Middle East, part of IHG's second-largest EMEAA region and accounting for about 5% of global room inventory, recorded a 19% drop in RevPAR in the second quarter. RevPAR rose 5.4% in the Americas and 0.8% in China.

"While there are ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows, we continue to expect these to be fully offset by growth in demand elsewhere," CEO Elie Maalouf said in a statement.

Finance chief Michael Glover told Reuters the drop in Middle East RevPAR eased faster than IHG had initially expected. He said the company's long-term ambitions in the region remained unchanged, although any recovery was likely to take time.

U.S.-listed rivals Hilton and Marriott reported second-quarter RevPAR growth of 3.9% and 3.4%, respectively.

IHG said its luxury brands continued to deliver the strongest growth, with the performance of resorts in China's Tier 4 cities suggesting domestic leisure travel remained robust.

IHG said it was on track to meet market expectations for annual revenue and earnings. Marriott last week forecast third-quarter profit below market expectations, while Hilton raised its annual forecasts the week before.

(Reporting by Prerna Bedi in Bengaluru. Editing by Mrigank Dhaniwala and MarkPotter)