Holiday Inn owner posts profits surge and unveils plans to boost growth
IHG reported a 14.7% surge in bottom-line pre-tax profits to 678 million US dollars (£485.4 million) for 2017.
The owner of hotel chains Holiday Inn and Crowne Plaza has outlined plans to make savings of 125 million US dollars (£90 million) to reinvest in new brands and acquisitions as it posted a hike in annual earnings.
InterContinental Hotels Group’s recently appointed chief executive, Keith Barr, praised a “strong performance” last year and unveiled a new strategy to speed up growth, with plans to launch a new premium brand in 2018.
IHG hopes the new chain will take a slice of the lucrative premium priced market, while it also aims to take its recently launched mainstream brand, avid hotels, global, having already signed up 75 hotels across the US since September.
It will likewise look to tap into the high luxury market with targeted small acquisitions of brands to develop and grow.
We are announcing a series of new initiatives that build on our well-established strategy and will drive an acceleration in our growth rate Keith Barr, IHG chief executive
Details of the plans came as IHG reported a 14.7% surge in bottom-line pre-tax profits to 678 million US dollars (£485.4 million) for 2017, while underlying earnings lifted 8% to 759 million US dollars (£544 million).
IHG said its revenues per available room – a key industry measure – lifted 2.7% over 2017 and was 4% higher in the fourth quarter.
Mr Barr, who was promoted to the top role last July, said: “In recent years, we have built a powerful and effective enterprise which has … driven strong performance across our 5,300 hotels.
“We are announcing a series of new initiatives that build on our well-established strategy and will drive an acceleration in our growth rate.”
As well as investing in new brands, the group will also boost its loyalty programme and look to increase its online and digital capability.
The results showed that in the UK, revenue per available room rose 4.5%, but tumbled 1.7% in the fourth quarter as it saw a fall in demand from US guests and failed to match the previous year’s strong performance.
But the boost from US tourism to the UK in the first half helped overall European operating profits rise 12% to 84 million US dollars (£60 million).
Shares fell 4% after the results.