Belfast Telegraph

UK Website Of The Year

Hotels giant IHG's shares drop amid US and European bookings slowdown

Published 21/10/2016

The firm said revenue per available room grew 1.3% in the third quarter
The firm said revenue per available room grew 1.3% in the third quarter

Shares in Intercontinental Hotels Group (IHG) slumped on Friday, as a slowdown in European and American bookings knocked revenue growth.

The company said revenue per available room, which is the sector's preferred measure, grew 1.3% in the third quarter, compared to 2.5% over the previous quarter.

The news sent IHG shares near the bottom of the FTSE 100. IHG was trading lower by more than 1.5% or 50p to 3175p.

A number of IHG's American hotels are concentrated in oil producing markets, which have been impacted by the slide in oil prices. Revenue per available room fell 7.3% in those markets, compared to 2.5% growth in the rest of the region.

In Europe, "ongoing challenging conditions" led to revenue declines in countries including France, Turkey and Belgium - all of which have seen tourist demand slow following terror attacks.

Across Europe, revenue per available room growth was flat.

However, chief executive Richard Solomons maintained a positive view, saying that while revenue growth has slowed "the fundamentals for the sector, and particularly for IHG, remain compelling".

Hargreaves Lansdown equity analyst Nicholas Hyett commented: "There's nothing inherently ugly in today's results, they're just a little disappointing.

"That's the problem with being a successful and rapidly growing company: people start to have expectations.

"Exposure to North American oil producing regions continues to hurt, despite the fact that the group should now be seeing easier comparatives here as we pass the point where lower oil prices kicked in last year.

"Oil also seems to be playing a part elsewhere, with a poor performance in the Middle East weighing down the whole Asia, Middle East and Africa region."

He added: "It's not all bad news though. With 50% of group and 40% of European central costs in sterling, as well as 70% of group debt, the lower pound should prove a benefit, even if a stronger US dollar undermines revenue growth."

Press Association

Read More

From Belfast Telegraph