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Robust Q4 for UK hotels boosts IHG in Europe

21 February 2017 by
Robust Q4 for UK hotels boosts IHG in Europe

InterContinental Hotel Group's UK hotels enjoyed a ‘robust' fourth quarter, which helped to boost the hospitality giant's comparable revpar in Europe.

That's according to the company's preliminary financial results for the year to 31 December 2016, which saw a 4.9% fall in revenue to just under £1.4b ($1.7b) and a 4% rise in operating profit to £569m ($707m).

In the UK, there was a 2.6% increase in comparable revpar, with a 4.6% rise in the fourth quarter boosted by a strong year end for tourist arrivals and leisure travel generally, IHG said.

Germany saw even stronger revpar growth of 6.8% in the year thanks to a favourable trade fare calendar. But there was a 0.5% decline in revpar across the rest of Europe as a result of "challenging trading conditions" in France, Turkey and Belgium.

On an underlying basis, revenue was up 1% and operating profit was flat in Europe, IHG said. Franchise profit grew 8%, driven by revpar up 2.0% and rooms growth of 2.8%. Managed profit declined by 22% due to, among other factors, difficult trading conditions for IHG's hotels in Paris.

Overall, the group reported a global increase in revpar of 1.8%, with strong net room growth of 8.8% in greater China and 40,000 room openings, of which 90% were in IHG's priority markets.

Meanwhile, a cloud-based guest reservation system remains on track to be rolled out this year.

Speaking about the results, IHG's chief executive Richard Solomons said: "Our results clearly demonstrate our strong operational performance and the success of IHG's long-term strategy, which have delivered a 9.5% increase in underlying profit and a 23% increase in underlying EPS. Our cash generative business model underpins our decision to announce a $400 million special dividend and to propose an 11% increase in the total dividend for the year.

"We continued our focus on enhancing the long-term sustainability of our competitive advantage by evolving our brand portfolio and by driving innovation in our digital and loyalty offer. We rolled out new formats across our Holiday Inn Brand Family which deliver significant uplifts in guest satisfaction and improved returns for owners, built momentum for our Hualuxe and Even Hotels brands, and took Kimpton Hotels & Restaurants and Hotel Indigo into new markets. We also strengthened our loyalty proposition through initiatives including ‘Your Rate' helping to drive a 16% increase in member enrolments.

"The fundamentals for the hospitality industry remain compelling. Despite the uncertain environment in some markets, we remain confident in the outlook for the year ahead, as well as our ability to deliver sustainable growth into the future."

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