23rd Feb 2016 10:48
LONDON (Alliance News) - Hotel operator InterContinental Hotels Group PLC on Tuesday said it will pay a special dividend to shareholders following the sale of two trophy properties in 2015, in line with its new asset-light approach, as operating profit grew but revenue dipped.
IHG said it will pay a total dividend of 85.0 cents per share, up from 77.0 cents per share a year earlier thanks to the confidence it has on its outlook. This includes a final dividend of 57.50 cents, an 11% year-on-year rise.
In addition to this, IHG declared a USD1.50 billion special dividend, which will be paid by means of a share consolidation in the second quarter. The special dividend is worth about USD6.33 per share. The size of the special dividend was higher than the USD1.0 billion that Numis analysts had forecast IHG would declare and follows the sales of the InterContinental Paris - Le Grand and InterContinental Hong Kong hotels last year.
News of the special dividend and the confidence expressed by the group in its outlook for the coming year sent IHG shares higher on Tuesday, up 2.1% to 2,506.00 pence to sit among the best performers in the FTSE 100 throughout morning trade.
The blue-chip hotels operator said its operating profit rose to USD680.0 million in the year to the end of December from USD651.0 million a year earlier, despite revenue dipping to USD1.80 billion from USD1.86 billion, due to the sale of two hotels in Paris and Hong Kong. Those sales were made in line with the group's asset-light strategy where it has been selling properties but retaining the management contracts for the hotels it has sold.
Pretax profit, which includes proceeds from the two hotel sales, came in at USD1.41 billion, up from GBP600 million in 2014. Before exceptional items, pretax profit rose to USD593.0 million from USD571.0 million, ahead of the USD587.0 million consensus estimate supplied by the company.
Revenue per available room rose 4.4% on a comparable basis in for the year, though this slowed to 2.4% in the fourth quarter, with growth across all its operation regions. Net room growth for the year hit 4.8%, it said, as it opened 44,000 rooms, an 8.0% rise on the year before.
IHG said its Kimpton Hotels & Restaurants brand had a strong year and said it expanded its boutique hotel presence over the course of the year with new openings in New York and Bangkok. It added changes made to enhance the rooms and public areas in its Holiday Inn outlets increased guest satisfaction levels for its budget brand.
"Our strong momentum in 2015 was driven by a clear strategy and disciplined execution," said Chief Executive Richard Solomons.
"Looking into the medium term, despite economic and political uncertainty in some markets, the prospects for the hotel industry remain good and the strength of our business model gives us the confidence to propose a 10% increase in total dividend for the year," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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