InterContinental Hotels Group Plc, the world’s largest provider of hotel accommodation, said 2013 profit rose 10 percent. The shares fell after the company said renovation costs will hurt this year’s earnings.
Operating profit before exceptional items and tax climbed to $668 million from $605 million a year earlier, the Denham, England-based company said today in a statement. The company also announced the sale of the InterContinental Mark Hopkins hotel in San Francisco for about $120 million.
The owner of the Holiday Inn and Crowne Plaza brands is benefiting from growing demand for accommodation in the Americas, which account for about half of the company’s sales. Renovations at the New York Barclay and Paris Le Grand hotels will reduce operating profit in 2014 by about $10 million, according to the statement.
“The underlying outlook remains positive,” analysts at Numis Securities wrote in a report today. However, the company “faces some short-term headwinds given dilution from asset disposals and planned refurbishment.” Numis has a hold rating on the stock.
InterContinental fell as much as 4.9 percent in London trading, the biggest decline since Aug. 21. The shares were down 3.2 percent at 1,982 pence at 10:17 a.m.
Revenue from the company’s hotels in the Americas rose 9 percent, while operating profit from the region climbed 13 percent. InterContinental plans to increase its full-year dividend by 9 percent to 70 cents.
“Although economic conditions in some markets remain uncertain, forward-bookings data is encouraging and we are confident that we will deliver another year of growth,” Chief Executive Officer Richard Solomons said in the statement.
Net income fell to $372 million, or 139.3 cents a share, from $537 million, or 183.9 cents, a year earlier, InterContinental said. Revenue rose 4 percent to $1.9 billion.
InterContinental has been divesting properties over the past 10 years as it focuses on operating its hotels. The company agreed to sell an 80 percent stake in New York Barclay in December and continues to review the possibility of selling more of the 7 properties it has not yet agreed to sell, Chief Financial Officer Paul Edgecliffe-Johnson said on a conference call with reporters.
InterContinental operates 4,600 hotels and 687,000 hotel rooms in 100 countries. Its fastest growth is in China, where the company increased its number of rooms by 11 percent to 6,944 in 2013.