BUCKINGHAMSHIRE, England (

TheStreet

) -- Shares of

InterContinental Hotels

(IHG) - Get Report

fell sharply Tuesday morning despite the hotelier's return to profitability.

The operator of InterContinental, Crowne Plaza and Holiday Inn hotels increased its dividend by 5% to 12.8 cents per share.

Investors seemed unimpressed. American depositary receipts of InterContinential slid 6.5% in morning trading on Tuesday. The sell-off was likely a result of improving performance already being priced into the hotelier's shares. The stock was up 25.7% year-to-date at the close of trading Monday.

Global revPAR, or revenue per available room, grew 3.9% in the first half of the year, including a 7.4% jump in the second quarter. Strengthened demand was attributed to a pickup in business travel and growth in China, and the trend is likely to continue. RevPAR in July jumped 8.1% worldwide, led by a 15% increase in its Asia Pacific region, 10% growth in Europe, the Middle East and Africa, and 6.4% growth in the Americas.

RevPAR in Asia led the recovery, said CEO Andrew Cosslett, with Greater China revPAR up 29.4% in the first half of the year.

Occupancy, revPAR and average daily room rates have suffered across the hotel sector since 2008 amid the global financial crisis.

As occupancy rates continued to recover and business travelers returned to the market, rates stabilized across the world, Cosslett added. He cautioned that "the economic environment does remain uncertain, however, with short booking windows and limited visibility."

The typical recovery cycle in the hotel industry begins with a return in demand, Hudson Securities analyst Robert A. LaFleur told

TheStreet

last week when discussing quarterly results from industry rival

Hyatt Hotels

(H) - Get Report

. Higher demand then re-inflates occupancy rates to a point where hoteliers can comfortably raise rates. That provides a compounding effect to revPAR recovery, or what LaFleur calls "the double whammy," of increasing occupancy

and

room rates concurrently.

"Despite concerns in the broader market about economic recovery, its sustainability and the possibility of a double dip, we're not seeing evidence in hotels that the recovery is running out of gas," he said. "In many ways it's accelerating."

Hyatt, which beat earnings expectations but missed top-line estimates for the second quarter,

grew revPAR nearly 10% in the second quarter

, including an increase of 6.8% at North American properties and 21.4% at international locations. Occupancy rose to 74.5%.

>>Hyatt Misses, Poised to Improve

Starwood Hotels & Resorts

(HOT)

reported

a healthy uptick in business travel bookings

for the second quarter, and said recovering occupancy rates will help drive future earnings.

>>Hotel Winners: Starwood, Marriott and Host

Lodging real estate investment trust

Host Hotels & Resorts

(HST) - Get Report

, which owns and operates hotels under the Four Seasons, W and Ritz-Carlton brands, said revPAR

jumped 8.1% in its fiscal second quarter

thanks to higher prices paid by business travelers.

>> Host Earnings Set Tone For Lodging REITs

Similarly,

Marriott International

(MAR) - Get Report

said last month it enjoyed the benefit of increased business travel bookings coupled with higher revPAR and daily room rates for the

first time in nearly two years

in its recent quarter.

Wyndham Worldwide's

(WYN)

reported system-wide revPAR actually declined 1.2% last quarter, but sales momentum across the company's three business segments -- lodging, vacation rentals and vacation ownership -- helped push total revenues up 5% year-over-year to $963 million, easily beating expectations for sales of $940.2 million.

RevPAR rose in June, the company said, and it continued to see "meaningful improvement" during the first three weeks of July. That strengthening led Wyndham to raise its revPAR expectations for 2010 to growth as much as 3%, compared with its previous estimates for flat or a 3% decline in revPAR.

Marriott forecast revPAR growth between 4% and 6% this year, while Starwood expects growth in the key metric to jump between 7% and 9%. InterContinental did not provide specific revPAR guidance.

InterContinental's revenue surged 9.3% year-over-year to $410 million in the recent quarter. Profits came in at $87 million for the three months ended June 30, compared with a year-earlier loss of $56 million, easily topping analyst expectations for a profit of $71 million on revenue of $377.1 million.

-- Reported by Miriam Marcus Reimer from New York.

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