IHG rests easy with 17% profit rise

The hotels group has done stonking business in the first half of the year - and it's fairly relaxed about the next few months, too.

by Emma Haslett
Last Updated: 19 Feb 2013
If the leisure sector has been struggling to claw its way toward recovery over the past few months, InterContinental Hotel Group is blissfully unaware. The chain, which also operates (the decidedly less posh) Holiday Inns, has published half-year figures today showing that operating profits rose by 17% to $269m (£164m) in the six months to June, while revenues rose by 6%, to $850m. So altogether not a bad performance. And, unlike the rest of the world, it doesn’t seem terribly concerned about its prospects for the next few months.

Global revenue per room (RevPAR), a key indicator in the hotels sector, grew 6.7% overall, although China was clearly its strongest market: RevPAR grew by 12.7% in the country. To be fair, that’s hardly surprising, given the amount of cash the group has ploughed into its operations in the region, opening 122 new hotels there. Arguably, it could be more forgiven for a faltering performance in Europe and the Middle East – but RevPAR there grew by 4%. Ditto, the US, which is still struggling to recover – but even there, it grew 8.2%.

The popularity of the luxury market could have something to do with its high-class performance. Apparently, its super-swish InterContinental Park Lane was doing particularly brisk business over the last six months: Richard Solomons, the company’s CEO, said the increase in ‘both business and leisure’ travellers meant it was able to raise its room rates. Good news for it: probably less so for those hoping to snap up a bargain. Particularly around the times of the Olympics, when it will pretty much be able to name its price.

Still, the hotel market is a competitive business, and IHG clearly hasn’t been sitting back on its laurels. It attributes some of its success to a spruced-up version of Holiday Inns it launched in the US. It’s also discovered its inner geek, creating a mobile booking site and even smartphone apps, which have collectively managed to add another $10m a month to its revenues.

No surprise, then, that Solomons sounds unconcerned about market pressures which may or may not crop up over the next few months. ‘We look forward with confidence in the currently favourable hotel trading environment,’ he said. Fair play. 

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