InterContinental’s first-half room revenue inches up
InterContinental Hotels has reported a slightly increased first-half room revenue, but a drop in business travellers in China and protests in Hong Kong have dented demand in the region.
The figures
The FTSE100 group, which owns brands including Holiday Inn and Crowne Plaza, said revenue per available room (RevPAR) rose 0.1 per cent during the first half of 2019.
RevPAR was down 0.3 per cent in Greater China for the same period, but Europe, the Middle East, Asia and Africa saw a 0.2 per cent increase.
First-half operating profits were $457m (£375m), a 14 per cent increase on the $401m reported for the same period last year.
The group announced an interim dividend of 39 cents per share.
Why it’s interesting
In a first-half in which the group opened a record number of new rooms, demand has not kept pace.
InterContinental has been looking to Asia for growth and while it is succeeding in adding to its portfolio – including signing two landmark properties in Beijing and Hong Kong – this decline in demand is not the news they wanted.
In the results, the group blamed “ongoing political disputes” in Hong Kong coupled with lower demand corporate business for the slowdown in Greater China, but said that leisure business remained resilient.
This has failed to reassure investors however, with InterContinental’s shares dropping 2.4 per cent to 5,162p, down from 5,289p at yesterday’s close.
What InterContinental said
Chief executive Keith Barr said InterContinental has made “significant progress” in a “slower RevPAR growth environment”.
“The investments we are making behind our strategic initiatives are driving accelerated rooms growth and position us well to achieve industry leading, sustainable net system size growth over the medium-term,” he continued.
“Whilst there are always macro-economic and geo-political uncertainties in some markets, our broad geographic spread and the resilient, cash-generative nature of our business gives us confidence in the outlook for the balance of the year.”
Barr also said he was “proud” of the group’s pledge to switch all of its hotels to using “bulk-size bathroom amenities in an effort to reduce waste and protect the environment.”
Main image credit: Reuters