InterContinental Hotels Profit Beat Estimates
InterContinental Hotels Group Plc (IHG), the owner of the Holiday Inn brand, reported a 23 percent gain in first-half earnings that beat analysts’ estimates and said it’s well placed to cope with any slowdown in the U.S. economy.
Earnings before interest and taxes in the six months ended June 30 advanced to $269 million from $219 million a year earlier, the Denham, England-based company said in a statement today. That compared with the $254 million average estimate of six analysts in a Bloomberg survey.
InterContinental, the world’s largest hotel group by rooms, gets about half its sales from the Americas, where revenue per available room, a measure of room rates and occupancy, rose 7.6 percent in the first six months of 2011. The company is keeping a watch on the “uncertain economic outlook,” Chief Executive Officer Richard Solomons said in the statement.
“We’re feeling reasonably confident about the second half,” Solomons said in an interview with Bloomberg Television’s Owen Thomas. “We’re well placed to deal with the market if there is a downturn” in the U.S., he said, adding that Asia is the company’s fastest growing market.
InterContinental fell 0.2 percent to 961 pence at 8:40 a.m. in London. The stock has fallen 23 percent this year.
“Although we remain cautious over the medium-term, we would expect some upgrades,” Greg Johnson, an analyst at Shore Capital, said in a note today, adding that the results showed “strong progress.” He reiterated his “sell” rating on the hotel company, citing a slowing U.S. economy.
The hotelier said revpar rose 6.7 percent worldwide, 8.2 percent in the U.S. and 13 percent in Greater China.
InterContinental, which also owns the Crowne Plaza and Indigo lodging brands, said revenue advanced 10 percent in the first half to $850 million. InterContinental reiterated a goal of “modest” growth in its scale this year, by number of rooms, with annual medium-term growth of 3 percent to 5 percent from 2012.
“Whilst we continue to monitor the uncertain economic outlook, we look forward with confidence in the currently favorable hotel trading environment of record demand and low supply growth in many markets,” Solomons said in the statement.
The hotel company raised its interim dividend 25 percent to 16 cents a share.
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