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UPDATE 3-U.S. business travel lifts Intercontinental Hotels
May 10, 2011 / 6:36 AM / 7 years ago

UPDATE 3-U.S. business travel lifts Intercontinental Hotels

* Q1 operating profit $112 million, vs consensus $106 mln

* Sees pick-up in U.S. business travel, growth in China

* Q1 global RevPAR up 6.9 pct, rises 8.4 pct in U.S.

* Sees $15-$20 million hit from Middle East, Japan

* Shares up 3.4 percent, among top FTSE 100 gainers

(Adds CFO and analyst quotes, background, shares)

By Julie Crust and David Jones

LONDON, May 10 (Reuters) - InterContinental Hotels (IHG.L) lifted first-quarter profit by more than a third, welcoming back the U.S. business traveller and pointing to stronger bookings and higher room rates for the rest of the year.

The world’s biggest hotelier, which operates Holiday Inn, Crowne Plaza as well as InterContinental brands, said the United States posted its highest growth in five years while China was its strongest market with big rises in occupancy and rates.

Hoteliers are reporting more guests as the economic recovery boosts business travel and offsets the impact of earthquakes in Asia and unrest in North Africa and the Middle East, and as occupancy levels rise, room rates are being pushed higher.

Outgoing chief executive Andrew Cosslett was confident about the outlook for the rest of the year and said the group was seeing rising room rates around the world, including the United States which accounts for two thirds of company profit.

The hotelier, which runs around 4,500 hotels, posted operating profits up 35 percent at $112 million for the first three months of 2011, beating a company consensus of $106 million. Quarterly sales rose 9 percent to $396 million.

InterContinental shares rose 3.4 percent to 1,291 pence by 1058 GMT to be among the biggest risers on the FTSE 100 .FTSE, driven by a good performance across the group and in particular by its largely franchised U.S. business.

“It looks like outgoing chief executive Andy Cosslett has timed his exit to perfection with a top-of-the range Q1 to mark his swansong,” said Nigel Parson at Evolution Securities.

Cosslett said in March he would step down on June 30 after six years at the helm and would be replaced by chief financial officer Richard Solomons [ID:nLDE72FO9X].

“Our business remains resilient despite the tragic events in Japan and New Zealand, and the turmoil in North Africa and the Middle East. In the last 12 months ending March, global room demand for the industry has exceeded 2008 pre-recession levels,” said Solomons on a conference call

The group said first quarter global revenue per available room (RevPAR), a key industry measure, grew 6.9 percent, with an 8.4 percent rise in the United States and an 18.8 percent rise in China. In April, there was a slowdown in growth to 4.9 percent, or 6.1 percent when excluding the disrupted markets of Bahrain, Egypt and Japan.

It estimates a $15 million to $20 million impact on operating profit for the full year due to these disturbances from political unrest and natural disasters.

Europe’s biggest holiday tour operator TUI Travel TT.L said increased demand for alternative destinations helped offset the impact of unrest in Egypt and Tunisia [nLDE74909J].


Hotel groups graphic :


U.S. rivals Starwood Hotels & Resorts HOT.N, Host Hotels & Resorts (HST.N) and Hyatt Hotels (H.N) have also reported rises in revenues and earnings in recent weeks benefiting from increased business travel. Marriott MAR.N missed Q1 forecasts but was upbeat for the future [ID:nN28248097].

In February, InterContinental said it would grow its estate by 3-5 percent a year from 2012, revamp its Crowne Plaza chain and sell its flagship InterContinental New York Barclay hotel, which analysts say could raise around $300-$350 million.

Reporting by David Jones and Julie Crust; editing by Paul Hoskins and Elaine Hardcastle

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