6th May 2016 09:44
LONDON (Alliance News) - InterContinental Hotels Group PLC on Friday reported slowing growth in revenue per available room in the first quarter of 2016, which it blamed on the earlier timing of Easter and low oil prices, as well as taking a hit from the terrorist attacks in Paris last year.
The hotel operator, which owns brands including Holiday Inn, Crowne Plaza and InterContinental Hotels, said group RevPAR grew by 1.5% on a constant currency basis in the first quarter year-on-year, driven by a 1.0% increase in room rates and 0.3 percentage point rise in room occupancy.
However, this slowed from 2.2% growth in the fourth quarter of the prior year, which also slowed from 4.8% growth in the third quarter.
Geographically, first-quarter RevPAR grew by 1.9% in the Americas, by 1.4% in Europe, by 2.2% in Greater China, but declined by 1.1% in Africa, the Middle East and Asia.
In the fourth quarter of the prior year, RevPAR grew in the Americas by 2.8%, by 3.9% in Europe and by 0.8% in Africa, the Middle East and Asia. Greater China performed better in the first quarter though, bouncing back from a 3.1% decline in the fourth quarter which was due to challenges in Macau and Hong Kong.
IHG said results were hit by an earlier Easter this year, particularly in the Americas and Europe, but it expects this effect to reverse in the second quarter.
It also cited falling oil prices as a major reason for lower RevPAR growth, contributing to a 10% decline in oil producing markets in the Americas and a 10% decline in the Middle East, offsetting strong performances from the other markets within those regions.
RevPAR in France also suffered from declines in Paris following the terrorist attacks which occurred there last year, but Greater China was able to bounce back due to strong growth in mainland China, despite the challenges in Hong Kong and Macau persisting.
Shore Capital analyst Greg Johnson said IHG's slowdown in RevPAR was "as expected", while Numis analyst Wyn Ellis said the results show that the hotel industry is "close to a cyclical
peak" which may stimulate further consolidation in the sector.
On an actual currency basis, RevPAR slipped by 0.7% in the first quarter year-on-year due to the strengthening of the dollar, which has been harming its results for some time.
RevPAR at actual exchange rates grew by 0.7% in the Americas, but declined by 3.1% in Europe, by 4.6% in Africa, the Middle East and Asia, and by 1.6% in Greater China.
"Looking ahead, despite economic and political uncertainty in some markets, current trading trends and the momentum behind our brands give us confidence for the rest of the year," IHG Chief Executive Richard Solomons said in a statement.
IHG opened 5,000 new rooms in the quarter, taking the total size of the estate to 742,000 rooms across 5,028 hotels. It made 15,000 room signings, 10,000 of which are for Holiday Inn and 5,000 for InterContinental Hotels, which was its best quarter in terms of room signings for eight years.
Shares in IHG were trading down 1.3% at 2,661.32 pence on Friday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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