
InterContinental Slides Despite Growth
BUCKINGHAMSHIRE, England (
) --
InterContinental Hotels
(IHG) - Get Report
posted disappointing third-quarter earnings as costs came in higher than expected.
InterContinental said Tuesday its operating profit in the period ended Sept. 30 fell 7% to $115 million. The decline reflected a $35 million jump in quarterly costs, the bulk of which was paid to staff under the hotelier's long-term incentive plan.
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"Although RevPAR trends are tracking ahead of expectations, the impact of higher than expected
long-term incentive plan costs are likely to cap any upside," noted Citigroup analysts. "This may disappoint the market after recent upgrades at industry peers."
Investors voiced their disapproval, bidding American depositary receipts of InterContinental down 6.1% to trade at $18.40 at midday.
The operator of InterContinental, Crowne Plaza and Holiday Inn hotels said global revPAR, or revenue per available room -- a closely watched metric in the hotel industry -- jumped 8.1% in the recent quarter, driven by occupancy growth of 4 percentage points and rate growth of 1.8%.
In the current quarter, global revPAR grew 8.1% in October, including 8% in the Americas, 6.1% in Europe, the Middle East and Africa and 12.3% in its Asia Pacific region.
InterContinental's adjusted quarterly earnings per share fell 17% to 27.1 cents, slightly ahead of expectations for 26 cents per share.
Hotel peers
Hyatt Hotels
(H) - Get Report
,
Starwood Hotels & Resorts Worldwide
(HOT)
and
Wyndham Worldwide
(WYN)
recently posted better-than-expected quarterly results.
Hyatt grew comparable revPAR by 6.9% year-over-year, and said improved demand, and higher levels of corporate and group business helped drive its improved performance at convention and business hotels in particular.
Starwood's worldwide revPAR increased 10% year-over-year in the third quarter. Systemwide revPAR for same-store hotels, or hotels open at least one year, grew 9.1%.
>>Starwood Beats, Guides Higher
Wyndham grew revPAR by 6.7% in the quarter, and said its improved quarterly report was buoyed by a recovering economy and tighter cost controls. That led the company to raise its outlook for 2010.
>>Wyndham Beats, Forecasts In Line
Marriott International
(MAR) - Get Report
, which swung to a third-quarter profit, boosted by stronger corporate and leisure travel demand, posted results that were in line with analysts' expectations.
Shares of Hyatt added 0.8% Tuesday while Starwood fell 1%, Wyndham 0.4% and Marriott 0.9%.
-- Written by Miriam Marcus Reimer in New York.
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