IHG performs below par as costs kick-in

City A.M. Reporter
InterContinental Hotels Group (IHG), the world’s biggest hotel operator, reported third-quarter earnings below expectations after staff incentive costs turned out higher than anticipated.

The group, which operates seven chains including InterContinental, Crowne Plaza and Holiday Inn, yesterday said third quarter operating profit fell by seven per cent to $115m (£71m). This was below forecasts of $120m to $125m. InterContinental, which runs more than 4,500 hotels worldwide, said the operating profit fall reflected a $35m increase in costs, including a $25m rise in expected staff payments under long-term incentive plans (LTIP).

“Although Revpar (revenue per available room) trends are tracking ahead of expectations, the impact of higher than expected LTIP costs are likely to cap any upside. This may disappoint the market after recent upgrades at industry peers,” Citigroup analysts said in a note.

US rivals Hyatt and Starwood have both posted quarterly earnings which were ahead of expectations.

InterContinental said revenue per available room, a key industry measure, rose by 8.1 per cent, including growth in China of 24.4 per cent and the fastest rate of growth in the Europe, Middle East and Africa region for two years.

“The quarter saw a return to rate growth for the first time since early 2009, a clear sign that the recovery is gathering pace,” chief executive Andrew Cosslett said in a statement.