InterContinental to return $400m to investors as it unveils special divi and 11 per cent rise in its total dividend
InterContinental Hotels Group is approaching 2017 with confidence after dishing up a chunky pay-out for investors in its yearly results.
The firm, which runs hotels under brands including Crowne Plaza, Holiday Inn and InterContinental, reported a slightly better-than-expected yearly profit rise and said it will be returning $400m (£322m) to investors via a special dividend and share consolidation.
The figures
Overall revenue fell 4.9 per cent year-on-year to $1.72bn, which was just shy of analysts' forecasts of $1.74bn.
Adjusted operating profit rose 9.5 per cent to $702m and on a reported basis, it increased four per cent to $707m.
Revpar – revenue available per room – the main metric used by the industry, increased 1.8 per cent and IHG said occupancy had reached record levels in 2016.
IHG said it would hike its annual dividend by 11 per cent to $0.94 and return $400m to shareholders by the end of June this year in the form of a special dividend.
Shares rose two per cent in early trading and at the time of writing were up 1.42 per cent to 3,933p.
Why it's interesting
It has been a bit of a bumpy year for the tourism industry as a whole, with a raft of attacks hampering business in France and Turkey, as well as resorts in north Africa.
The latest results from IHG are nothing if not bullish as the hotelier's boss noted that despite the "uncertain environment in some markets", the group remained confident in the outlook for the year ahead, as well as its ability to deliver "sustainable growth in the future".
Growth in China as well as new hotel deals have provided welcome boosts for the hotel chain.
What the company said
Richard Solomons, chief executive of InterContinental Hotels, said:
Our results clearly demonstrate our strong operational performance and the success of IHG's long-term strategy, which have delivered a 9.5 per cent increase in underlying profit and a 23 per cent increase in underlying EPS.
Our cash generative business model underpins our decision to announce a $400 million special dividend and to propose an 11 per cent increase in the total dividend for the year.
What the analysts said
Steve Clayton, fund manager for the HL Select UK Shares fund, said: "IHG’s brand portfolio and managed/franchised model is strong in America and Asia, especially China where they are the leading branded hotel operator. The business has faced a headwind from exposure to oil-producing regions, where demand is weaker, but even so, has continued to push revenues ahead."
He added: "Hotels are a cyclical sector, but IHG’s managed/franchised operating model smoothes out a lot of the volatility, keeping its cash generation qualities intact."