US business travel lifts InterContinental Hotels
London, May 10, 2011
InterContinental Hotels lifted first-quarter profit by more than a third, welcoming back the US business traveller and pointing to stronger bookings and higher room rates for the rest of the year.
The world's biggest hotelier, which operates Holiday Inn, Crowne Plaza as well as InterContinental brands, said the United States posted its highest growth in five years while China was its strongest market with big rises in occupancy and rates.
Hoteliers are reporting more guests as the economic recovery boosts business travel and offsets the impact of earthquakes in Asia and unrest in North Africa and the Middle East, and as occupancy levels rise, room rates are being pushed higher.
Outgoing chief executive Andrew Cosslett was confident about the outlook for the rest of the year and said the group was seeing rising room rates around the world, including the United States which accounts for two thirds of company profit.
The hotelier, which runs around 4,500 hotels, posted operating profits up 35 per cent at $112 million for the first three months of 2011, beating a company consensus of $106 million. Quarterly sales rose 9 per cent to $396 million.
InterContinental shares rose 3.4 per cent to 1,291 pence by 1058 GMT to be among the biggest risers on the FTSE 100, driven by a good performance across the group and in particular by its largely franchised US business.
"It looks like outgoing chief executive Andy Cosslett has timed his exit to perfection with a top-of-the range Q1 to mark his swansong," said Nigel Parson at Evolution Securities.
Cosslett said in March he would step down on June 30 after six years at the helm and would be replaced by chief financial officer Richard Solomons.
"Our business remains resilient despite the tragic events in Japan and New Zealand, and the turmoil in North Africa and the Middle East. In the last 12 months ending March, global room demand for the industry has exceeded 2008 pre-recession levels," said Solomons on a conference call.
The group said first quarter global revenue per available room (RevPAR), a key industry measure, grew 6.9 per cent, with an 8.4 per cent rise in the United States and an 18.8 per cent rise in China. In April, there was a slowdown in growth to 4.9 per cent, or 6.1 per cent when excluding the disrupted markets of Bahrain, Egypt and Japan.
It estimates a $15 million to $20 million impact on operating profit for the full year due to these disturbances from political unrest and natural disasters.
Europe's biggest holiday tour operator TUI Travel said increased demand for alternative destinations helped offset the impact of unrest in Egypt and Tunisia.
US rivals Starwood Hotels & Resorts, Host Hotels & Resorts and Hyatt Hotels have also reported rises in revenues and earnings in recent weeks benefiting from increased business travel. Marriott missed Q1 forecasts but was upbeat for the future.
In February, InterContinental said it would grow its estate by 3-5 per cent a year from 2012, revamp its Crowne Plaza chain and sell its flagship InterContinental New York Barclay hotel, which analysts say could raise around $300-$350 million. – Reuters