InterContinental books global expansion with 1,400 new hotels

INTERCONTINENTAL, the world's largest hotel operator by number of rooms, is pushing ahead with expansion plans that will see its global portfolio of properties rise by nearly one-third within three to four years.

The expansion will see 36 hotels open throughout the UK, creating 3,500 jobs. A spokeswoman for the company said she could not confirm whether these included the construction of the controversial InterContinental Haymarket in Edinburgh's West End, initial plans for which were rejected by the Scottish Government after a public inquiry.

InterContinental and Irish property developer Tiger are thought to be putting together new plans for the five-star establishment, which would be Scotland's first InterContinental-branded hotel. The revised plan is expected to scale down original proposals.

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The global expansion will include new hotels from across the group's brands, which consist of InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge and Candlewood Suites. InterContinental has more than 1,400 hotels in the pipeline, compared with the roughly 4,400 it currently has.

Chief executive Andy Cosslett said the programme would lead to the creation of 100,000 jobs worldwide.

"Hotels provide a quick and flexible way to get people back into work and provide much-needed stimulus to the economy," he said.

His comments came as fresh data showed that Scotland's hotel market remains fragile, with operators still cutting prices to maintain occupancy levels.

PKF, the accountancy group that produces a regular monthly snapshot of the industry, said the Scottish hotel sector had the lowest increase in occupancy recorded for any of the UK regions during February. Scottish rooms' yield – the industry measure of revenue – also fell slightly.

Occupancy in the three- and four-star hotels surveyed rose 2.7 per cent in Scotland, against increases of 3.8 per cent in regional UK, 3.7 per cent in England and 9 per cent in Wales.

Both Edinburgh and Cardiff benefited substantially from the Six Nations rugby competition, but it was more of a mixed picture in Scotland's other major cities. Occupancy in Aberdeen dropped 2 per cent while rooms' yield plunged 9.5 per cent. Occupancy in Glasgow hotels was 3.4 per cent higher, but came at the expense of a 1.3 per cent dip in rooms' yield.

Alastair Rae, PKF'spartner in the hospitality sector, noted that yields in Glasgow were about 10 lower per room per night than in either Edinburgh or Aberdeen.

"Maintaining value is essential for the long-term growth of the sector and the danger of prices dropping too low is that it becomes difficult to increase them and recover past profitability levels when improved trading conditions return," he said.