Forget about that videoconference – it seems business travel is back. The InterContinental Hotel Group, the world’s largest hotel chain and owner of Holiday Inn and Crowne Plaza, has announced an impressive profit hike of 22% for the first half of the year: it chalked up $219m (£140m), from $179m last year. Hotel bookings are always a fairly good barometer of how business is doing (even though some would argue that tough times are exactly when you need to be seeing your customers face-to-face). So the fact that business leaders are travelling the world again is good news all round. And it's also good for IHG, of course - though like many businesses, it's having trouble with the banks at the moment...
The best measure of how a hotel is doing is its revenue per available room (revpar) – and IHG’s is looking positive. In the company’s 650,000 rooms in 4,500 hotels across the world, 'revpar' has jumped from 0.2% in the first quarter of this year to 7.4% in the last three months. The company’s $1bn revamp of its Holiday Inn chain is apparently having a positive effect, particularly now three quarters of the group’s 3,400 US hotels have been relaunched. The brand’s 50 hotels in London are also doing well, with revenues up by 6% to $77m. That may be partly down to long-term refurbishment works at the Savoy and the Four Seasons, which are pushing well-heeled regulars to the likes of IHG’s Park Lane hotel instead.
But Andrew Cossett, the group’s chief executive, says IHG isn’t out of the woods yet. Its franchise model means that it relies on hotel owners and developers to construct new buildings, and at the moment, he says, they're not getting the finance they need. At the moment, it has 197,431 rooms waiting to be rebuilt or ‘converted’ to one of its brands – less than the 200,895 it had in May, but still enough to worry about. So, for now at least, IHG is just going to have to hope banks rekindle their enthusiasm for lending. But these are inevitably big, risky projects; as finance director Richard Solomons put it: ‘in our sector it’s quite tough’.
Still, with both the group’s premium brands and Holiday Inn all outperforming the rest of the industry, IHG has more to celebrate than most. And the good news is that all thanks to you lot. Give yourselves a pat on the back.
(Seasoned travellers might also want to check out Traveller's Tales, the blog written for MT by Begbies Traynor boss Nick Hood. It's terrific, even if we do say so ourselves)
In today's bulletin:
Slowdown in big ticket sales points to more economic gloom
Shareholders buzzing as International Power seals French connection
Is IPO plan just pie in the Skype?
Business travel is back, says InterContinental
FSA workers jump before Osborne pushes them