20th Feb 2024 16:33
(Alliance News) - InterContinental Hotels Group PLC results continued to reflect the post-Covid travel rebound, while shareholders lapped up a bumper new share buyback programme.
On Tuesday, the Windsor, Berkshire-based operator of the InterContinental, Holiday Inn and Crowne Plaza hotel chains said pretax profit surged 87% to USD1.01 billion in 2023 from USD540 million in 2022.
Revenue climbed 19% to USD4.62 billion from USD3.89 billion, boosted by growth in all regions. The sharpest growth was in Greater China, where revenue surged 85% to USD161 million from USD87 million. The weakest growth was in the Americas region, where revenue was 10% higher at USD1.11 billion compared to USD1.00 billion.
Susannah Streeter at Hargreaves Lansdown pointed out that rising geo-political conflict had not "trampled down on the urge to travel around the world".
"This strong performance played out across all markets, helping push full year operating profits above USD1 billion for the first time," she explained.
Crucially the key metric of revenue per available room was up 16%, with travellers willing to pay more for trips having been starved of experiences during periods of extensive Covid restrictions, Streeter observed.
The increase was most stark in Greater China, where revenue per available room soared by around 72% compared to the year before, while in the Middle East it hit 23%.
"While it’s clear that consumers have been tightening their belts when it comes to buying goods, which they might covet but not need, they are ring-fencing budgets for holidays and experiences," Streeter felt.
Bank of America agreed, noting that IHG benefited from "resilient travel demand" in the fourth quarter. BofA pointed out that occupancy is now only 1.1 percentage points below 2019 levels, with Americas and China fully recovered.
IHG proposed a final dividend of 104.0 US cents, up 10% from a year ago. This brings the total dividend for 2023 to 152.3 cents, 10% higher than 138.4 cents for 2022.
It also launched a new up to USD800 million share buyback programme aimed at reducing issued share capital.
BofA said the buyback was ahead of its USD750 million forecast.
BofA raised its price target for IHG to 8,200 pence from 7,800p and reiterated a 'buy' rating.
But Streeter did caution that if high borrowing costs linger in key markets, and Chinese consumers show more caution, "there may be less appetite going forward for expensive holidays, especially if post-Covid demand wanes".
Shares in IHG rose 5.5% to 8,344.00 pence in London on Tuesday afternoon.
By Jeremy Cutler, Alliance News reporter
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