Intercontinental Hotels 1Q Profit Down 56 Pct
The Associated Press
05/12/09 - 04:21 AM EDT
ROBERT BARR
LONDON (AP) InterContinental Hotels Group PLC, whose chains include Crowne Plaza and Holiday Inn hotels, reported Tuesday that first quarter net profit fell 56 percent to $27 million, hit by weaker consumer spending during the recession and strong competition, which depressed room charges.
The profit figure included exceptional costs of $21 million for a final payment to the U.K. pension fund and $5 million for the relaunch of Holiday Inn. Revenue was down 24 percent to $342 million.
Intercontinental Hotels shares rose 5 percent to 691 pence on the London Stock Exchange.
"Good results against a terrible backdrop," said James Ainley, analyst at Panmure Gordon & Co.
Revenue per available room (RevPAR) was down 13.6 percent on a constant currency basis, but Ainley said that was better than the results for Intercontinental's rivals.
"Costs are still being removed, whilst a steady flow of new rooms continue to come on stream," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
"On the downside, the group's exposure to the U.S. economy remains considerable, whilst trading across the industry remains on a downward trajectory. On balance, and allowing for a near halving in the share price since the credit crisis begun back in mid 2007, current consensus opinion denotes a neutral investment stance," Bowman said.
Intercontinental said operating profit from continuing operations in North America declined 46 percent to $60 million. Revenue on a comparable basis declined 26 percent to $170 million, with RevPAR down 13.5 percent, though Intercontinental said its U.S. hotels, concentrated in the mid-price range, were outperforming the industry average.
Trading in China was particularly weak, with RevPAR down 20 percent, while the Middle East was the company's most resilient market, with revenue per room falling 11.5 percent.
Intercontinental suggested that the slump in demand may be bottoming out, but that competition was intense.
"Occupancy showed signs of stabilization in the quarter, but room rates, which held up well during 2008, declined under the pressure of a very competitive market," said Andrew Cosslett, the group's chief executive.
"The outlook remains tough but we are taking decisive action on costs without compromising our ability to continue to grow market share," he added.
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