InterContinental upbeat despite slump in shares
IMPROVING conditions in Europe and rising US demand helped InterContinental Hotels Group (IHG) deliver full-year profits ahead of forecasts, despite shares sliding more than three per cent yesterday.
The owner of Crowne Plaza, Holiday Inn, and InterContinental said pre-tax profits rose 10 per cent to $600m (£359.3m) in the year to 31 December, ahead of forecasts of $585m, while revenues rose 3.7 per cent to $1.9bn.
Global revenue per available room (Revpar), a key industry measure, rose 3.8 per cent for the year, led by solid trading in the US.
Revpar in Europe also increased sharply, rising from 0.7 per cent in the first nine months to 4.9 per cent in the fourth quarter.
But despite what analysts described as “solid” results, shares fell yesterday after bullish investors expecting news of a further cash return to shareholders were left disappointed.
The company’s strategy of selling hotels in return for management contracts has resulted in strong free cash flow levels, allowing it to return over $7.5bn to shareholders since 2004.
In October last year IHG paid $350m to shareholders via a special dividend on top of a $500m share buyback programme, which IHG said yesterday is now 78 per cent complete.
The hotelier raised gross proceeds of $830m during the year through the disposal of three hotels, including London’s Park Lane Hotel, the InterContinental New York Barclay and the Mark Hopkins hotel in San Francisco, which it announced it had sold yesterday for $120m.