InterContinental raises dividend as recovery boosts growth

InterContinental Hotels has put its confidence in the global economic recovery with a rise in its final dividend for the first time in three years and plans to open more hotels.

The world's biggest hotels group, home to the InterContinental, Crowne Plaza and Holiday Inn brands, delivered full-year 2010 results in line with analysts’ forecasts with a 22 per cent profit rise.

Demand from Asia, business travellers and a revamp of its Holiday Inn chain all boosted its operating profit to $444m (£277m) last year, narrowly beating forecasts of $442m.

“After a slow start to the year, the industry staged the sharpest recovery in its history, exceeding all expectations,” chief executive Andrew Cosslett said. “Our priority is to increase market share and improve margins in an industry set for strong growth over the next few years.”

The UK-based group will also raise its dividend by 16 per cent to $0.48 per share, from $0.41 in 2009.

InterContinental, which runs more than 4,500 hotels in more than 100 countries, said it would grow its estate by 3-5 per cent a year from 2012, revamp its Crowne Plaza chain and also sell its flagship InterContinental New York Barclay hotel.

Its upbeat tone chimed with recent comment from rivals, including U.S. groups Marriott on Monday and Starwood earlier this month.

Keith Bowman, equity analyst at stockbrokers Hargreaves Lansdown said IHG was “helping to fuel optimism in the global economic recovery.”

“China remains a point of strength, with Germany and a reduction in the sales tax providing a highlight in Europe,” he said.

“On the downside, Egypt has been impacted, southern Europe continues to prove challenging, whilst the group’s core US marketplace is only just beginning to face up to the prospect of required government spending cuts," he added.

InterContinental, which makes about two thirds of its profit in the United States, pushed its revenue per available room (RevPAR), a key industry measure, up 8.4 per cent in January, following increases of eight per cent in the fourth quarter and 6.2 per cent in 2010.