Intercontinental Hotels sees increasing momentum in third quarter

Thanks to encouraging current trading trends, InterContinental Hotels Group posted a rise in third-quarter revenue per available room (revpar) and expressed its confidence in the outlook.

Global third-quarter comparable revpar increased 4.8% from the third half of last year at constant exchange rates, thanks to a 3.6% rise in room rates, beating expectations for a 3.9% revpar rise.

When reported at actual exchange rates, however, revpar fell 0.4% compared with the same period in 2014.

At constant exchange rates, revpar was up 4.3% in the Americas, 7.8% in Europe and 7.1% in Asia, the Middle East and Africa. In China, however, it fell 0.7% as occupancy growth was offset by a decline in room rates.

Chief executive Richard Solomons said: “There is increasing momentum across our portfolio of preferred brands. Holiday Inn delivered a record level of room openings, and we are expanding our global luxury footprint, particularly in Greater China where nearly a quarter of our 5k room signings in the region were driven by InterContinental Hotels & Resorts.

“We continue to expand the presence of our newer brands, including our second franchise signing for EVEN hotels in the US, and five signings for our industry-leading boutique brands.”

The Holiday Inn owner said the completion of the sale of InterContinental Hong Kong for proceeds of $929m marks the successful conclusion of its major owned asset disposal programme, with over 95% of its profit now from the fee business.

Bank of America Merrill Lynch, which rates the stock at 'buy', said revpar growth came in ahead of its estimate of 4%.

It said IHG remains operationally well set with a clear strategic agenda to focus on the largest hotel markets of today, with the US around 75% of the mix, as well as the growth markets of the future, with emerging markets around 15% of the mix.

In addition, it pointed to a fee-based business model that has scale, brands and momentum and a rooms pipeline that is 13% of the global pipeline.

At 0912 BST, IHG shares were up 3.6% at 2,394p.