Nov. 10 (Bloomberg) -- InterContinental Hotels Group Plc, the U.K.-based owner of the Holiday Inn brand, said third- quarter profit dropped 25 percent as higher-profit business travel slowed in the recession.

Net income was $68 million, or 22.7 cents per share, from $91 million, or 31.5 cents per share in the year-earlier period, the Windsor, England-based company said today in a statement distributed by the Regulatory News Service. Sales declined 19 percent to $401 million.

In the recession, leisure travelers paying lower room rates have risen to almost 50 percent of InterContinental’s business, compared with an earlier 40 percent, Chief Financial Officer Richard Solomons said. The vacationers are lured by discounts such as buy two nights, get one free, he said on a conference call.

“The corporate traveler remains elusive,” Solomons said. “There’s no question there’s going to continue to be rate pressure.”

InterContinental fell 17.5 pence, or 2.1 percent, to 825 pence in London trading. The shares have gained 47 percent this year, giving the company a market value of 2.36 billion pounds ($3.9 billion).

PricewaterhouseCoopers said this month it expects U.S. revenue per available room, or revpar, a standard industry measure, to drop 16 percent for 2009.

Room Rates

InterContinental, the world’s biggest hotel chain by number of rooms, said revpar dropped 15 percent over the year-earlier period, excluding currency differences. That compares with competitor Starwood Hotels & Resorts Worldwide Inc. which reported a 20 percent decline in third-quarter revpar.

InterContinental said that in October, revpar improved to a decline of 14 percent, with Asia performing best, down 9.9 percent. The company also said it’s on schedule to save about $80 million for the full year.

In August, InterContinental Chicago O’Hare hotel was put into bankruptcy by its owner, franchisee Harp Group, after Harp couldn’t renegotiate debts.

Hotel owners are spending $1 billion to renovate and change logos at Holiday Inns, and 1,378, or 41 percent, have done so to date, the company said.

InterContinental is on schedule to add 400 hotels this year, which will increase its workforce by 25,000 to about 350,000, Solomons said.

To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net

Last Updated: November 10, 2009 11:44 EST