InterContinental Hotels Group plc (IHG) shares fell the most in more than 10 months Tuesday after the Holiday Inn owner reported slower-than-expected second quarter revenue thanks in part to a drop in business travel.
InterContinental, which also owns the Crowne Plaza brand, said overall revenue for the three months ending in June rose 2% to $857 million while adjusted earnings per share rose 27% from the same period last year to $1.13. However, the group also said that growth in revenue per available room, or revPAR, a key industry metric, slowed to 1.5% from 2.5% over the same period last year and 2.7% in the first quarter. U.S. revPAR fell 0.4% from last year, the group said, "and was adversely impacted by the timing of Easter."
"My focus is on driving an acceleration in our growth rate, by increasing the resources dedicated behind the highest opportunity markets and segments, strengthening our brand portfolio, building on our leading loyalty proposition, and enhancing our competitive advantage through prioritising digital and technological innovation," said new CEO Keith Barr.
"We will continue to focus on enhancing our cost efficiency to generate funds for reinvestment. This, combined with our cash-generative business model and disciplined approach to capital allocation, will drive superior returns to shareholders," he added. "While we will always face macro-economic and geopolitical uncertainties, we remain confident in the outlook for 2017."
InterContinental shares fell 4.8% in early London trading, the steepest single-day decline since September, to change hands at 4,207 pence each by 09:45 and reducing the year-to-date gain to 14.6%.
Shares in Marriott International Inc (MAR - Get Report) , the world's biggest hotel chain, were also under pressure Tuesday, trading 3% lower in pre-market dealing after the group trimmed its full-year forecast for North American revPar growth to between 1% and 2% from a previous estimate of 1% to 3% in May.
The outlook revision followed stronger-than-expected second quarter earnings of $1.08 per share after the close of trading Monday for the Ritz-Carlton and St. Regis hotel operator, which said overall group revenue rose 48.5% from the same period last year to a forecast-beating $5.8 billion in the three months ending in June.
It also announced a joint venture with Alibaba Group Holding Ltd (BABA - Get Report) that will let Chinese travelers book rooms at the hotel company's 6,200 worldwide properties through Alibaba's travel service website and app, the companies announced Monday.
Alibaba said the deal is aimed at providing travel solutions for China's growing middle class. China's travelers are expected to take an estimated 700 million trips over the next five years, Alibaba said.
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