21st Feb 2023 14:19
(Alliance News) - InterContinental Hotels Group PLC on Tuesday reported improved profit and revenue in 2022 on the back of a strong rebound in travel following the Covid-19 pandemic.
Russ Mould, investment director at AJ Bell, said the scale of the hotelier's recovery story was "quite impressive" now that Covid is finally placed in the rear-view mirror in terms of disruption to the hospitality industry.
The hotel and resort chain reported a pretax profit of USD540 million for 2022, up 50% from USD361 million in 2021.
Revenue totalled USD3.89 billion in 2022, up 34% from USD2.91 billion in 2021. This was in line with expectations of USD3.9 billion from UBS and just below expectations of USD3.97 billion from Jefferies.
"In 2022 we saw demand return strongly in most of our markets, pushing group revenue per available room back close to 2019 levels and fee margin ahead. It's particularly pleasing that in the second half of the year we exceeded 2019 levels for both RevPAR and profitability," said Chief Executive Keith Barr.
Group comparable RevPAR improved 37% year-on-year in 2022. However, it remained 3.3% below pre-pandemic 2019 levels.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the company benefited from the resurgent popularity of holidays and mini breaks during the year.
Meanwhile, Victoria Scholar, head of investment at interactive investor, cited pent-up demand post pandemic with stronger occupancy rates and higher prices for rise in annual revenue.
By region, IHG said Europe, the Middle East & Africa saw the largest revenue growth, up 82% against the previous year. Meanwhile, Greater China saw the greatest decline, with revenue down 25% year-on-year.
Streeter called China a "big block" on IHG's recovery but suggested that the re-opening of the country and the "renewed appetite for trips among wealthier Chinese [customers]" should bode well for IHG moving forward.
AJ Bell's Mould agreed, saying the next leg of IHG's recovery story should come from China as the economy reopens following a lengthy period of stringent Covid containment measures.
"It is well placed to benefit from Chinese residents having the freedom to move around the country, and from foreign tourists visiting the Asian superpower," he said.
Chief Financial Officer Paul Edgecliffe-Johnson told a conference call that he remained optimistic for the future of demand, particularly within and outbound from China.
"What I think we'll see is what's termed revenge travel, people making up for what they've missed out on, for domestic travel but also travel to Southeast Asian resorts and other places around the world," he said.
Shares in InterContinental Hotels were down 1.6% at 5,502.00 pence on Tuesday afternoon in London. Over the past 12-months, the stock is up 13%.
IHG proposed a final dividend of USD0.945. This represented an increase of 10% against the year prior and takes the total payout for the year to USD1.384, up 61% from USD0.859.
The company also announced a share buyback programme to return USD750 million of surplus capital in 2023.
By Heather Rydings, Alliance News senior economics reporter
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