InterContinental sees RevPAR growth accelerate in Q2

Crowne Plaze, Regent and Holiday Inn owner InterContinental saw its bottom line shrink by 10% in the first half due to the planned reduction of its so-called System Fund surplus, though underlying profits improved by 12% due to solid margin improvements and an acceleration in RevPAR growth in the second quarter.

Reportable revenues rose 7% year-on-year to $1.11bn in the six months to 30 June, while gross revenues – which include revenues generated by franchised, managed and owned/leased hotels – improved by 6% to $16.1bn.

The company said that annual RevPAR (or revenue per available room) growth was 3.2% in the second quarter, picking up from 2.6% in the first, helped by improving conditions in the US where RevPAR growth turned positive at 3.3% (Q1: -0.3%). That helped to offset a deterioration in trading in Greater China where second-quarter RevPAR declined 7.0%, compared with 2.5% growth three months earlier.

InterContinental ended the half with a global estate of 955,000 rooms across 6,430 hotels, opening 18,000 new rooms across 126 new hotels during the period.

Operating profit from reportable segments improved to $535m, up from $479m the year before, with the fee margin rising 1.8 percentage points to 60.6%.

However, headline operating profit totalled $525m for the half, down from $584m the year before, which includes a System Fund and reimbursables loss of $10m, compared with a profit of $87m previously

IHG announced in May that it would make changes to its System Fund arrangements to improve "hotel owners economics", which reduced the fees that owners pay into the Fund and reimbursed owners when guests use their loyalty points.

"With thanks to our teams around the world, we are making great progress on the delivery of our strategic priorities and the clear framework to drive future value creation that we set out in February," said chief executive Elie Maalouf.

"RevPAR growth accelerated in the latest quarter, reflecting a strong US rebound in Q2 and the breadth of our global footprint, and development activity continues to increase."