Intercontinental Hotels makes quick start on signings, but union protests wages

InterContinental Hotels Group increased revenue per available room 3.5% in the first quarter and had its best start to the year for new hotel signings in over a decade.

The FTSE 100 group had roughly 800,000 rooms in 5,367 hotels at the end of March, up 4.3% on where it was a year ago and up 2.6% from the end of December.

A net 2,000 rooms were opened, as around 8,000 rooms from 53 hotels were opened in the quarter, including a surge in Greater China, while 6,000 rooms were removed from the estate.

IHG signed up 146 hotels to franchises, which will add 20,000 rooms to the system, with strong starts in the Americas and Greater China.

"Signings for our new mainstream brand, Avid Hotels, continue to exceed our expectations, and now total more than 100 hotels, one every other day since launch," said chief executive Keith Barr.

There were said to be 252,000 more rooms in the pipeline, with roughly 45% under construction.

Barr said there was "strong momentum" across the business and that the focus on driving room growth would continue over the medium term.

As part of his plan to expand in the luxury hotel segment, March saw the acquisition of a 51% stake in Regent Hotels & Resorts while earlier this week IHG struck a deal to rebrand and operate a portfolio of 13 hotels in the UK.

"This will establish IHG as the leading luxury operator in this market, launch our luxury boutique brand Kimpton Hotels & Restaurants in the UK, and establish a position for our new upscale brand, principally focused on conversion opportunities.

He concluded: "The fundamentals for our industry remain strong, we have the right strategy, and we are confident in the outlook for the year ahead."

On Friday, with IHG shares less than 1% higher at 4,640p by 1100 BST, Britain’s biggest trade union, Unite, protested outside the group's annual shareholder meeting, accusing the hotel group of "cheating" its lowest paid workers out of over a year’s wages after not keeping a pledge to pay a "living wage".

Regional officer Dave Turnbull said former CEO Richard Solomon had made the pledge, while the company in 2008 the group signed the UN Global Compact in 2009, which commits it to supporting the principles of freedom of association, the freedom to form and join a trade union and the right to bargain collectively.

“Last year we protested at this same annual meeting over IHG’s broken promises to allow Unite access to its London properties and the living wage pledge," Turnbull said. "This led to a meeting with senior management and a promise to reconsider their position and to reconvene at a later date to agree a way forward. This never happened."

He said the company's excuse that the introduction of the national living wage and pension auto-enrolment had prevented a wider pay increase did not hold water as CEO Barr had been paid £2.1m since starting in July last year – 130 times more than its lowest paid worker.

“Unite is urging IHG to make good on its promises and live up to its commitments. It can start by signing up to a union access agreement to allow Unite into its hotels to talk about the benefits of trade union membership with staff, which is fully in line with the UN Global Compact guidelines.”