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InterContinental Hotels sees shares drop due to investment instead of cash

19 February 2014 by
InterContinental Hotels sees shares drop due to investment instead of cash

International hotel group InterContinental Hotels (IHG) has seen its shares fall by more than 4% after it decided to invest funds rather than return cash to shareholders immediately.

Coupled with high investment costs for the year, the move cancelled out the company's 10% profit rise in 2013, which had been bolstered in part by international hotel sales in the US. Shares dropped yesterday to 1958 pence each.

The news comes in light of the group's expansion throughout last year, during which it opened more than 200 hotels, and set out plans for over 400 more. Most of the new development has been concentrated in China, in what Richard Solomons, chief executive of IHG, has described as "a long-term bet".

According to the Financial Times, Solomons explained that "any short-term weakness in China would be offset by longer-term gains", and confirmed that the number of IHG sites in China had risen from 43 to more than 200.

Despite the drop in share price, however, it has been reported that the company stands to make over $2b in cash should it sell flagship hotels in Paris and Hong Kong.

Brands under the British-based IHG umbrella include Crowne Plaza, Holiday Inn and Hotel Indigo, and altogether it counts well over 4,000 rooms across more than 100 countries.

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