May 8, 2013 / 7:36 AM / 5 years ago

InterContinental Hotels says trading tough in China

LONDON (Reuters) - InterContinental Hotels Group (IHG.L), the world No.1 hotelier, said business in China was struggling under squeezed government spending and a political leadership change, as it posted a 3.1 percent rise in first-quarter global room revenue.

The company, which operates 4,600 hotels worldwide and is home to the Crowne Plaza, Holiday Inn and InterContinental brands, said on Wednesday that its business in China, where the group has big expansion plans, had also been hit by a fall in Japanese tourists and bird flu concerns.

Growth in global revenue per available room (RevPAR) - a key industry measure - rose 3.1 percent overall in the three months to end-March, and was up 4.1 percent in its core North American market.

Rivals such as Starwood HOT.N and Marriott International MAR.N have both recently reported rising demand from a business-led recovery in North America.

Growth in Greater China was a weaker 1.8 percent in the period. Although an improvement on its last quarter, the group said the region continues to be affected by reduced business-led trade during the recent change in political leadership and a broader economic slowdown.

The region declined 2.1 percent in April, although overall group RevPAR grew 6.2 percent.

    Europe in the first quarter was down 2.2 percent, with London trading suffering from increased room supply.

    The firm said it was on track to deliver full-year results in line with expectations.

    Shares in IHG, which have risen over 30 percent in the last year, fell 1 percent in early trade on Wednesday, underperforming the wider FTSE-100 index.

    Reporting by Neil Maidment, Editing by Rosalba O'Brien

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