2nd May 2014 08:20
LONDON (Alliance News) - InterContinental Hotels Group PLC Friday said revenue per available room was up 6% in the first quarter and declared a USD750 million special dividend after completing two asset disposals during the period, in line with the firm's ongoing strategy to reduce the capital intensity of the business.
IHG said global RevPAR was up 6.0% during the quarter, driven by a 2.4% rise in occupancy and a 1.9% boost in average daily rate.
The company, hotel brands including Crowne Plaza, Holiday Inn, and Intercontinental Hotels & Resorts, was trading 9.19% higher Friday morning, the second highest gainer on the FTSE 100.
Following two asset sales in March, the hotel brand owner said it is returning USD750 million to shareholders through a special dividend with share consolidation, in line with its strategy to continue to reduce the capital intensity of the business, adding that "given the strength of the global demand for prime hotel assets, we are now reviewing our opportunities for further asset disposals."
The special dividend takes the total funds returned to shareholders to USD10.3 billion since 2003. "This reflects our clear capital allocation strategy whereby we are committed to returning surplus funds to shareholders, whilst maintaining an efficient balance sheet and continuing to invest behind growth," said IHG.
During the period the group opened 9,000 rooms, expanding capacity to 689,000 rooms and increasing net system size by 2.2% on last year. IHG signed 13,000 rooms during the period, increasing its pipeline to 182,00 rooms, with 45% currently under construction. Looking ahead, the company said that with a 13% active industry pipeline it is well positioned for sustained growth of 5%.
"We have made an excellent start to the year with our strongest RevPAR performance in seven quarters and our best first quarter for pipeline signings1 in six years. This reflects the continued growth momentum in the business and the strong preference for our portfolio of brands from both owners and guests," said Richard Solomons, Chief Executive of InterContinental Hotels Group.
In the Americas division, RevPAR was up 6.6%. In the US, 6.4% RevPAR growth was driven by mid-to-high single digit performance across all of its brands, led by its Crowne Plaza and extended stay brands, said the firm.
Asia, Middle East & Africa RevPAR rose 3.8%, but was 7.1% higher excluding Thailand, Egypt and Lebanon where there has been ongoing political unrest during the quarter. This rise was led by South East Asia which, excluding Thailand, drove double digit RevPAR growth.
Greater China RevPAR was up 3.9%, as strong growth in tier one cities and resorts continued during the quarter, said IHG.
Looking ahead, Solomons said, "Current trading trends give us confidence for the rest of the year and our strategy for high quality growth positions us well for continuing outperformance in an industry with compelling long term growth prospects."
In its full-year results in February, IHG reported higher 2013 pretax profit and revenues, rising to USD600 million from USD547 million, and USD1.90 billion up from USD1.84 billion, respectively, driven by new hotel openings and as occupancy and room rates rose at its existing hotels as it reiterated its confidence for continuing growth in 2014.
Shares in IHG were trading 9.19% higher at 2,211.56 pence per share Friday morning.
By Alice Attwood; [email protected]; @AliceAtAlliance
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