IHG profits double as travel rebounds from Covid curbs
InterContinental Hotels Group doubled interim profits, reinstated dividends and announced a $500m share buyback as travel demand increased after Covid restrictions eased.
The owner of the Crowne Plaza and Holiday Inn chains, said operating profit for the six months to June 30 rose 101 percent to $377m. Revenue per available room, a key metric, rose 51% but was still 10.5% lower than pre-pandemic 2019.
Profits in the Americas were now ahead of 2019. The EMEAA region also saw “excellent improvement in performance”. Greater China had a tough period as Covid-related travel restrictions were tightened, but there had been a strong recovery in recent months, “although risk of further volatility in trading in the region still remains” IHG said .
A dividend of 43.9 cents a share was declared, up 10% on the previous payment in 2019.
"We saw continued strong trading in the first half of 2022 with increased demand for travel in most of our markets. This brought group RevPAR very close to pre-pandemic levels in the second quarter,” said chief executive Keith Barr.
“Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform.”
Interactive Investor analyst Keith Bowman said the ongoing hit to trading at IHG's China business remained a "hinderance" with labour shortages still presenting a challenge.
"On the upside, InterContinental offers both brand and geographical diversity, with options from luxury to essential, or value brands available. New hotels continue to be opened, net debt is down 30% year-over-year, while the interim dividend payment has been restarted at 10% above its pre-Covid 2019 level. On balance, and with trading still recovering, analyst consensus opinion currently points towards a cautious buy,” he said.
Reporting by Frank Prenesti at Sharecast.com