Olympics boost as IHG beats profits forecasts

By Scott Reid and Jamie Grierson
Published on Wednesday 15 February 2012 00:00

THE hotel giant behind the Holiday Inn and Crowne Plaza chains has received an early Olympics boost with its London establishments already 85 per cent booked for this summer’s games.

InterContinental Hotels Group (IHG) – the world’s biggest hotelier – has 51 properties in the city. Its Holiday Inn brand was named as the official hotel provider for the event and will be providing accommodation to athletes and organisers.

As well as opening two hotels overlooking the Olympic Park, under the Staybridge Suites and Holiday Inn names, IHG will be providing accommodation in up to 39 UK locations for the Olympic torch relay.

Yesterday’s update came as the group revealed that revenues per available room (revpar) – a key industry performance measure – dipped 0.7 per cent in the UK in the final three months of 2011.

However, the FTSE 100 listed company, which operates more than 660,000 rooms in some 4,500 hotels worldwide, reported a 9 per cent jump in revenues to $1.8 billion (£1.1bn) in the year to 31 December and a 26 per cent boost in operating profits to $559m. The group 2011 dividend rose 15 per cent to 55 US cents.

Last year, IHG unveiled plans to increase its UK estate by a further 28 hotels from the current total of 269, an expansion that will create up to 3,000 jobs.

The latest results also showed that US revpar was up 6.8 per cent in the fourth quarter, as the world’s biggest economy showed some fightback from the downturn earlier in the year.

Turmoil in the Middle East and North Africa and last March’s earthquake in Japan weighed on the region’s performance, but China enjoyed 7.7 per cent growth in the final quarter as it continued to benefit from a strong economy and business travel.

Keith Bowman, equity analyst at stockbroker Hargreaves Lansdown, said: “Profits have again exceeded forecasts, buoyed by a bounce back in business travel, ongoing growth and expansion in China and a revamp of the group’s Holiday Inn outlets.”

He added: “The London Olympics is expected to further support the group’s geographical footprint as the UK is its biggest European market.”

Ian Rennardson at brokerage Jefferies described the full-year results as solid with a decent outlook statement.

“We expect that a continuing strong performance in the US and Asia will likely lead to 5 per cent plus upgrades to consensus 2012 forecasts,” he added.

IAG chief executive Richard Solomons said that despite the eurozone crisis he was upbeat about the immediate future as people still wanted to travel for business and leisure, while emerging markets were growing strongly.

“We go where the travellers are. We see good momentum in the US economy with economic data there quite positive while China is our fastest growing region and our business there has doubled in the last two years,” he said.

Earlier this month, Sheraton-owner Starwood posted higher-than-expected fourth-quarter earnings. Marriott was due to report its latest figures today.

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