Holiday Inn owner’s growth slows a year after hurricane rush
Intercontinental Hotels group investors are set for a bumper payout from the firm.
Intercontinental Hotels Group saw a greater return on its rooms in the third quarter, but growth was comparatively slow after last year’s performance was boosted by hurricanes.
The group, which owns a range of brands including Holiday Inn, also announced a 500 million US dollar (£383.5 million) special dividend on Friday, to be paid out to shareholders in 2019.
Revenue per available room (RevPAR), a key industry metric, grew by 1%.
This was lower than the year-to-date growth of 2.7%, due to strong demand during the same period last year when hurricanes and tropical storms battered the US. RevPAR in the US was down 0.5%.
In the UK, RevPAR was up 1.1%, with growth coming from London, where demand from leisure guests helped boost profitability by 3.6%.
Shares in the company dropped 7.3% in morning trading.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Revenue per available rooms is a little lower than hoped for, largely as a result of weak occupancy numbers in the US.
“With IHG rapidly expanding its rate of room growth, including some sizeable acquisitions and new brand launches, lower revenues are far from welcome.
“Having been behind the wider sector in terms of new openings earlier in the cycle, the worry is that IHG is playing catch-up just as the market starts to cool.”
The size of the company’s rooms network was up 5.1% year on year to a total of 826,000 rooms. This included the acquisition of a 51% stake in Regent Hotels & Resorts for 39 million US dollars (£29.9 million).
Chief executive Keith Barr said: “The fundamentals for our industry remain strong. We are confident in the outlook for the remainder of the year and in our ability to deliver industry-leading net rooms growth over the medium term.”