Weak oil markets and an early Easter have dragged on first-quarter trading at InterContinental Hotels Group (IHG), although the company said today it was adding new rooms at the fastest rate since the financial crash.
The hotelier has a high concentration of properties in oil producing markets in the Americas, and said revenue per available room (RevPar) – a key industry performance indicator – slumped 10.3 per cent in those regions. RevPar in the oil-producing Middle East was down 10.4 per cent.
IHG’s group RevPar was up 1.5 per cent, short of the 2 per cent expected by some City analysts, and caused its shares to lose more than 2 per cent in early trading, making the stock one of the leading fallers on the benchmark FTSE 100 index.
Richard Solomons, chief executive of IHG, whose other brands include Crowne Plaza and Holiday Inn, shrugged off the headwinds, saying: “We have made a good start to the year against the background of weak oil markets and the earlier timing of Easter, which affected several of our markets.”
IHG said in its trading update that it opened 5,000 rooms in the quarter, increasing its estate 2.7 per cent to more than 5,000 hotels, while it had another 220,000 rooms in the pipeline.
“We continued our focus on building and leveraging scale where it matters, signing rooms into our pipeline at the fastest rate since 2008,” Solomons said.
He added that despite “economic and political uncertainty in some markets, current trading trends and the momentum behind our brands give us confidence for the rest of the year.”
IHG, which confirmed its plan to return $1.5 billion (£1bn) to shareholders via a special dividend later this month, said RevPar in Europe was up 1.4 per cent, with strong performances in Germany and Russia offset by a 2.3 per cent decline in France.
Double-digit growth in the French provinces was outweighed by declines in Paris, which came in the wake of the terrorist attack on the French capital late last year.
The InterContinental brand’s drive into mainland China continued, with 6.2 per cent revenue growth in the period, fuelled by extra rooms in major cities.
Meanwhile, internationally, the Holiday Inn brand has “further momentum”, IHG said, with 10,000 extra rooms in the pipeline representing “our best in the quarter for eight years”.