5th Aug 2014 07:01
LONDON (Alliance News) - Intercontinental Hotels Group PLC Tuesday reported lower profit and revenue for the first half of the year due partly to the refurbishment of a Paris hotel and investments in Asia, but the company reported growth in most of its portfolio thanks to the economic recovery in the US and UK and continued strong growth in some Asian markets.
The company reported a pretax profit of USD377 million for the six months to end-June, down from GBP462 million a year earlier, as revenue declined to USD908 million, from USD936 million. Its underlying operating profit rose in the Americas, but declined in Europe due mainly to the refurbishment of the InterContinental Paris-Le Grand and in Asia as it invested in its hotels and trading was weak in Thailand.
Its total underlying operating profit, which excludes a USD15 million loss on the sale of owned hotels and a USD33 million hit from liquidated damages receipts, rose to USD301 million, from USD284 million, as revenue per available room grew 5.8%, driven by 6.6% growth in the US.
Intercontinental Hotels has been reviewing its hotels portfolio and selling off less profitable owned hotels, returning the proceeds to its shareholders as it tries to reduce the capital requirements of the business. Still, it had 693,000 rooms across 4,732 hotels at the end of the first half, up 2.2% on the year. It has a pipeline of 187,000 rooms, with 45% under construction and over half set for developing markets.
It has been focusing on opening so-called preferred brand hotels, like the new EVEN chain, Holiday Inn and Crowne Plaza.
"We have had our best half for signings in six years, underpinning our future growth prospects and demonstrating owners' preference for our brands. Openings included the first two EVEN Hotels in the US, a major milestone for this new brand, which satisfies a previously unmet guest need in the wellness segment," Chief Executive Richard Solomons said in a statement.
"We remain committed to reducing the asset intensity of the business, completing two asset disposals in the half, and good progress is being made with the strategic review of our remaining owned hotels," he added.
Intercontinental Hotels returned USD750 million to shareholders with a special dividend in July, and also completed a USD500 million share buyback in the first half. On Tuesday, it raised its interim dividend to 25.0 cents a share, from 23.0 cents last year, a move it said reflected its confidence in its strategy.
"Looking ahead, whilst several of our key markets continue to experience some political or economic uncertainty, we are encouraged by current trading trends," Solomons said.
The company said it was being helped by the economic recovery in the US and UK and was seeing healthy growth in revenue per available room in Japan, Australasia, and Southeast Asia, excluding Thailand where it was hurt by recent political unrest. Its hotels in China outperformed the industry, achieving 4.3% growth in revenue per available room, it said.
By Steve McGrath; [email protected]; @stevemcgrath1
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