InterContinental Hotels profit rises, interim dividend lifted 10%
InterContinental Hotels posted a rise in half-year profit on Tuesday as it hiked its dividend, but said revenue per available room in the US and China softened.
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In the six months to the end of June, pre-tax profit rose to $375m from $301m in the same period a year ago, with total revenue up 8% to $2.28bn.
The company, which owns the Crowne Plaza and Holiday Inn hotel chains, said revenue per available room rose 0.1% during the half as it lifted its interim dividend by 10% to 39.9 cents a share.
RevPAR in the US fell 0.2% in the second quarter and was flat in the first half, while China saw a 0.5% decline for Q2 and a 0.3% drop for the half year.
Second-quarter RevPAR in the UK was up 2%, with strong international demand driving RevPAR in London 4% higher, whilst the provinces saw 1% growth, thanks in part to the Cricket World Cup.
In Continental Europe, RevPAR was 3% higher in the half and up 4% in Q2. RevPAR in France fell 1%, taking a hit from social unrest in Paris, but Q2 saw 1% growth thanks to the FIFA Women's World Cup and the Paris Air Show. Germany grew RevPAR 4% in the half and 5% in the second quarter thanks to a favourable trade fair calendar.
Chief executive Keith Barr said: "In a slower RevPAR growth environment, we've made significant progress, opening a record number of rooms in the first half which have delivered a 5.7% increase in net system size growth, our best performance in over a decade, with future growth underpinned by our highest level of signings over the same period.
"Funded by our efficiency programme, the investments we are making behind our strategic initiatives are driving accelerated rooms growth and position us well to achieve industry leading, sustainable net system size growth over the medium-term. Whilst there are always macro-economic and geo-political uncertainties in some markets, our broad geographic spread and the resilient, cash-generative nature of our business gives us confidence in the outlook for the balance of the year."
At 1038 BST, the shares were down 1.1% at 5,233p.
Russ Mould, investment director at AJ Bell, said: "Revenue per room is under pressure and the US market in particular is stagnating, albeit against a tough comparison with last year when the damage wrought by hurricane season drove demand for rooms.
"And although the company is looking to Asia for growth, the recent disruption in Hong Kong and the impact on Chinese corporate travel of the ongoing trade war with the US are not helping on this front.
"The company has won a lot of fans thanks to its business model. Instead of owning its hotels, it operates on a franchise basis, which means it does not have to invest huge amounts of capital to expand.
"However, demand for its rooms is still linked to the performance of a global economy over which there is mounting concern."