INTERCONTINENTAL Hotels (IHG) – the world’s biggest hotelier – has heralded a recovery in the hotel market, helped by the return of the business traveller, as it beat forecasts with a 22 per cent rise in first-half profits.
The company, which runs more than 650,000 rooms in over 4,500 hotels worldwide, posted an operating profit of $219m (£138m) for the first half of 2010, up from $179m the previous year and ahead of analysts’ expectations. Meanwhile the half-year dividend rose five per cent to 12.8 cents a share.
Revenue per available room, or revpar – a key industry measure – grew 7.4 per cent in the second quarter of the year, compared with a 0.2 per cent rise in the first quarter. By July, revpar was up 8.1 per cent. A one per cent increase in revpar improves full-year operating profit by $13m.
Chief executive Andrew Cosslett said trading strengthened as the first half progressed with Asia leading the recovery, especially China.
Room occupancy was higher with business travellers returning in increasing numbers, he added.
He said: “Rates are now stabilising across the world, with most markets seeing growth towards the end of the first half.
“The economic environment does remain uncertain, however, with short booking windows and limited visibility.”
Cosslett said that business travellers were flocking back as companies which had reined in their budgets were now realising that it was in many cases a false economy.
He said: “The perception that business people just go on jollies is wrong. A lot of businesses are now realising that stopping those face to face meetings was actually harming their business.”
The group has been expanding massively in China while carrying out a massive overhaul of its Holiday Inn brand.
IHG is carrying out a three-year revamp of its 3,400-strong Holiday Inn chain across the globe.