17th Feb 2015 08:57
LONDON (Alliance News) - InterContinental Hotels Group PLC Tuesday posted a flat pretax profit for 2014, but said revenue per available room growth was being driven by a strong supply and demand story in the Americas, the group's biggest region.
The hotels group, which owns brands including Holiday Inn, Crowne Plaza and InterContinental Hotels, reported an operating profit of USD651 million for 2014, down 3% on 2013's USD668 million profit. The decline was caused by hotel disposals and by liquidated damage receipts in 2013 that weren't all repeated, as well as revenue dipping 2% to USD1.86 billion from USD1.90 billion.
IHG said pretax profit for the year was flat at USD600 million.
Analysts were forecasting an operating profit of USD646 million, and a pretax profit for the year of USD565 million, according to a consensus of 24 analysts provided by IHG.
On an underlying basis, which measures the group's performance at constant exchange rates and takes out impact of asset disposals, operating profit improved 10% to USD648 million from USD591 million in 2013.
IHG declared a 10% increase in its total dividend per share for the year to 77.0 cents. Basic earnings per share increased by 12% to 158.3 cents, whilst adjusted earnings per share remained flat, also at 158.3 cents. IHG returned over USD1 billion to shareholders during 2014.
"We remain committed to reducing the capital intensity of the business and maintaining an efficient balance sheet with disposal proceeds received in the year of almost USD400 million and shareholder returns, including ordinary dividends, of over USD1 billion," said Chief Executive Richard Solomons in a statement.
Comparable group revenue per available room rose 6.1% during the year, including an increase in average daily rate of 2.7%. IHG said that growth was driven by the Americas, its biggest region, where RevPAR grew by 7.4%, supported by what it said was a "favourable supply and demand environment". In the US, RevPar was up 7.5% in both the full year and fourth quarter.
"Strong performance across all our brands was driven by continued demand growth set against limited supply increases, with like-for-like growth in the fourth quarter benefiting from the government shut down in 2013," the company said.
In Europe, fourth quarter RevPar increased 4.2% and was up 5.1% for the year as a whole, boosted by growth in both average daily room rates and occupancy, and a strong trading performance in both the UK and Germany. Trading was particularly strong in the UK, up 8.9%, driven by strong growth in London.
"We outperformed the industry in Russia and the [Commonwealth of Independent States], but fee income declined by USD3 million in 2014, due to the challenging economic environment and currency evaluation in the second half," said IHG.
Within Asia, Middle East and Africa, comparable RevPAR increased 3.8%, driven by 2.4% room rate growth, with fourth quarter RevPAR up 3.1%.
"Our performance was led by the Middle East, up 5.6%, driven by solid performance in Saudi Arabia and recovery in Egypt, and Indonesia, up 9.1%," the company said.
IHG said that growth was also supported by positive trading in Japan, which grew by 6.7%, and Australia, up 3.9%. Thailand however suffered from political instability in the first half of the year and saw a double digit decline in RevPAR.
In China, the group has experienced negative RevPAR in recent months but its hotels have continued to outperform the industry for the last couple of years. IHG said again Tuesday that its 2014 performance was "significantly" ahead of the industry.
"This was achieved in a challenging environment with slower macro-economic conditions, government austerity measures and protests in Hong Kong," said IHG. The group said it will continued to invest in its Chinese business in 2015.
Overall, IHG said it experienced its best net system size growth since 2009, of 3.4%. The group ended the year with a total of 710,295 rooms, a net addition of 23,422 rooms.
"Looking into 2015, we face many macroeconomic and geopolitical uncertainties, but are confident that our strategy for high quality growth coupled with the momentum in the business positions us well for continued strong performance," said Solomon.
IHG said last year that it was continuing to review opportunities for further asset sales, having sold InterContinental Mark Hopkins San Francisco, signed a joint venture for InterContinental New York Barclay and closed a deal on the sale of InterContinental Paris - Le Grand at the end of last year.
Analysts had been expecting IHG to confirm further asset sales, including whether the InterContinental Hong Kong hotel is on the market, as well as make a possible announcement on further cash returns and share buybacks. However, Chief Financial Officer Paul Edgecliffe-Johnson declined to comment on a further return of capital or asset sales in a call with journalists Tuesday morning.
IHG shares were trading 3.0% lower Tuesday morning, at 2,510.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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