London: InterContinental Hotels, the world’s biggest hotelier, reported early signs of a recovery led by its luxury hotels and Asia as it beat forecasts with a 15% rise in first-quarter profit.
The British group, which operates the InterContinental, Crowne Plaza and Holiday Inn brands, said on Tuesday it had turned confident over its outlook but tempered that with words of caution that hotel room rates were still under pressure.
Other global hoteliers are seeing a pickup in demand as slow recovery tempts consumers back into travelling again. The economic downturn has caused many businesses to trim their travel budgets, but much of that is at the more expensive end of the market.
Chief executive Andrew Cosslett said business travel was returning, mainly at the luxury hotels, which were hardest hit by the recession but said he expected the group’s large mid-market Holiday Inn chain to benefit as the year progressed.
“With this strengthening of our core business and the early signs of recovery in the market, we are feeling confident about the outlook and our ability to grow market share,” Cosslett said in a first-quarter results statement.
InterContinental shares had edged up 0.1% to £11.07 by 0745 GMT in a lower London market, with the small gain reflecting its caution compared to its big United States-based rivals.
“The outlook statement strikes a note of caution and says the occupancy has shown growth but that rates remain under pressure and visibility is limited,” said analyst Ian Rennardson at broker Bank of America Merrill Lynch.
Room Occupancy Up
The hotelier, which runs more than 650,000 rooms in almost 4,500 hotels worldwide, said revenue per available room (RevPAR), a key industry measure, rose 0.2% in the first quarter and then saw a rise of 5.2% in April.
Finance director Richard Solomons said this was the group’s first rise in RevPAR for 18 months, driven by improving room occupancies, with Asia and particularly China leading the rebound. However, he said room rates were under pressure in many markets.
“The luxury end and Asia are leading the recovery, while we are seeing a good trend at the much more resilient mid-scale Holiday Inn chain,” Solomons said at a results briefing.
The hotelier, which typically manages or franchises hotels instead of owning them, and earns 70% of its profit in the United States, is heavily reliant on its mid-market Holiday Inn chain.
The British hotelier posted operating profits of $83 million for the first three months of 2010 beating a $79.2 million consensus from a Reuters survey of six analysts, while quarterly revenue rose 3% to $362 million.
InterContinental’s US rivals were upbeat last month with Marriott International and Sheraton-owner Starwood Hotels & Resorts beating first-quarter forecasts due to a recovering US hotel market.
Shares in InterContinental have more than doubled from a low of 434 pence in March 2009 on recovery hopes with its shares trading on 19.1 times 2010 forecast earnings, but still at a discount to US rival Marriott on 32.2 times.