The overhaul of the U.S. tax system has allowed one of the world’s most prominent hotel groups to expand into new territories, the chief executive of InterContinental Hotels Group (IHG) said Monday.
Speaking to CNBC on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland, Keith Barr said the changes to the U.S. tax system — finalized in December — were a boon for the company.
“It’s really going to be a positive boost to the economy, in the U.S. and probably globally, at least for the short-term,” Barr said.
“It enables us to continue to invest in our business and we’re launching new brands around the world. We’ve launched a new mainstream brand in the U.S. and we’re taking our brands into other markets like China and Asia. So it allows us to fund those things.”
In December, IHG said the tax system overhaul, which saw corporation tax slashed from 35 percent to 21 percent, would result in a “significant” one-off credit in the financial year when the bill is signed into law. It also said that initial estimates were that the bill would reduce IHG’s group effective tax rate by mid to high single-digit percentage points from January 1, 2018.
IHG has nearly 5,300 hotels in almost 100 countries, and more than 1,500 hotels in its development pipeline. Aside from InterContinental, the hotel group’s brands include Holiday Inn, Crowne Plaza and the boutique Hotel Indigo.
It has already embarked on an expansion plan. IHG opened its first Intercontinental resort in the United Arab Emirates in December and has announced plans to bring two new hotel brands to China and the Asia-Pacific region. IHG already has over 300 hotels in China, which Barr said was a key growth area.
“It’s one of our fastest-growing markets in the world,” he said. “The pace of growth is one of the challenges (in China). Understanding how fast things move and change in China, and making sure you’re really attuned to what government policy is, and where growth is headed overall.
“I think you’re seeing right now a real stabilization in the Chinese economy and potentially even an acceleration of growth and that really underpins the strength of our business there.”
US tax system overhaul likely to boost InterContinental Hotels and the global economy: CEO