18th Feb 2014 12:54
LONDON (Alliance News) - Intercontinental Hotels Group PLC Tuesday reported higher 2013 pretax profit and revenues, driven by new hotel openings and as occupancy and room rates rose at its existing hotels.
It added that it's confident of achieving further growth in 2014. Although economic conditions remain challenging in some markets, it is encouraged by the forward bookings data it has.
However, it saw its shares fall as it also said it expects to spend towards the top end of its previous USD250 million to USD350 million guidance for 2014 capital expenditure, prompting analysts to review their forecasts for the year as they worried that the closure of large numbers of rooms for refurbishment would curtail the company's growth.
The owner of hotel brands including Crowne Plaza, Holiday Inn, and Intercontinental Hotels & Resorts, reported a pretax profit of USD600 million for 2013, up from USD547 million in 2012, as revenues rose to USD1.90 billion, from USD1.84 billion.
It said total gross revenue from hotels in its system rose 25 to USD21.6 billion, as revenue per available room rose 3.8%, driven by a 1.8% increase in rates and a 1.3 percentage point rise in occupancy.
Its net profit fell to USD372 million, down from USD537 million in 2012, as its tax bill rose to USD226 million, from USD9 million.
It opened 237 hotels during the year and signed a further 444 into its pipeline, the highest level for five years. It closed or sold 142 hotels.
The company separately announced the sale of the 383 room InterContinental San Francisco Mark Hopkins Tuesday, for USD120 million gross cash proceeds. It will continue to manage the hotel under a long-term contract with the new owners, a joint venture between affiliates of Woodridge Capital Partners and funds managed by Oaktree Capital Management L.P.
The company has now agreed to dispose of three owned InterContinental hotels over the past 12 months, raising total gross proceeds of almost USD830 million, part of an effort to reduce the number of hotels in the chain. It also sold Intercontinental's in London and New York.
On a regional basis, the hotels company said it had performed strongly in the Americas, with revenue per available room up 4.3%, solidly in Europe with 1.7% growth in RevPAR, and strongly in Asia, the Middle East and Africa, wth RevPAR up 6.1%.
China was its slowest market, with RevPAR up 1.0% for the year as a whole, although it was up 2.4% in the fourth quarter.
"IHG's scale and strength in the (China) region drove significant outperformance compared to the industry throughout 2013. This reflects the resilience of our business despite the ongoing industry-wide challenges, including the impact of the China-Japan territorial island dispute, natural disasters in some regions and the slower macroeconomic conditions," it said.
Intercontinental Hotels raised its 2013 dividend to 70.0 cents, from 64.0 cents in 2012.
"Our decision to increase our ordinary dividend by 9% reflects our confidence in our proven strategy to deliver high quality growth," Chief Executive Richard Solomons said in the earnings statement.
However, its capital spending plans worried some analysts. As well as planning to spend towards the top end of its previous guidance on increased investments in its hotels and its technology platforms, it will also spend about USD175 million for refurbishing and extending the InterContinental New York Barclay hotel, part of the deal under which it sold the hotel.
Intercontinental Hotels shares were down 3.7% at 1,971 pence Tuesday, the biggest decline on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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