IHG profits dip as it continues to sell hotels

InterContinental Hotels Group (IHG) has reported an 8% drop in operating profit for the first half of the year as it looks to continue disposing of its owned hotels.

The hotel group still saw an operating profit of US$310 million for the six months, while its revenue dipped 3% to US$908m.

During the period the hotel offloaded some of its owned hotels and had an impact of US$3m from managed leases, while a heavy receipt for liquidated damages also impacted its figures.

Richard Solomons, chief executive of IHG said: “We remain committed to reducing the asset intensity of the business, completing two asset disposals in the half, and good progress is being made with the strategic review of our remaining owned hotels.”

Last month the group sold its property in London’s Westminster, which will reopen in September as a Conrad Hotel.

The hotel group has also offloaded the Aphrodite Hills Resort in Cyprus to Thomson, which will be rebranded to a Sensatori.

Without exceptional items the group saw a 6% increase in underlying operating profit to US$301 million for the six-month period, where revenue went up 4% to US$788m.

Its RevPAR increased the most in the Americas region, by 6.7%, followed by 4.9% growth in Europe; 3.7% in AMEA and 4.3% in Greater China.

IHG now has 4, 732 hotels with more than 693,000 rooms, with a pipeline of 1, 175 hotels and 187,000 rooms.

“We have achieved a strong first half performance, with our preferred brands continuing to drive good momentum through the second quarter. With underlying operating profit2 up 6% and solid net system growth, our long-term winning strategy is delivering results. This has given us the confidence to increase the interim dividend by 9%,” said Solomons. “We have had our best half for signings in six years, underpinning our future growth prospects and demonstrating owners’ preference for our brands.”

In the first half of the year IHG opened the first of its hotels under the EVEN wellness brand, while its mobile bookings have gone up 47% year-on-year and a new deal was signed with Amadeus to improve its customer experience.

Solomons added: “During the half we completed our US$500m share buyback programme and in July we paid a US$750 million special dividend, continuing our long track record of returning funds to shareholders. Looking ahead, whilst several of our key markets continue to experience some political or economic uncertainty, we are encouraged by current trading trends.”