InterContinental in recovery mode

The group’s smallest market, Asia Pacific, is showing the most promising signs of growth. The region, which accounts for 18 per cent of revenue, experienced a 29 per cent increase in first-half sales and operating profits more than doubled to US$35m (£22m). Greater China, where the group operates 132 hotels, is of particular excitement and InterContinental, which is primarily focused on managing hotels owned by other groups, sign management deals for 19 new Chinese hotels during the half year.

Signing up new hotels was not quite so easy in InterContinental’s biggest market, the Americas, which accounted for two thirds of first-half operating profit. Very tough financing conditions and economic uncertainty means less hotels are being developed and the pipeline of hotels waiting to open in the America has fallen by 138 to 935. The group-wide pipeline is down by 136 hotels to 1,302.

In the Americas revenue rose 5 per cent and operating profits grew by 20 per cent. In Europe, the Middle East and Africa, which accounted for a fifth of first-half profits, revenue was up 3.2 per cent and profits were flat.

The group managed to sell the Holiday Inn Lexington during the year which help bring net debt down from $1.3bn to $1bn and the balance sheet has been further strengthened since the half-year end with the sale of InterContinental Buckhead in Atlanta for $105m.

Broker Evolution Securities expects full-year adjusted pre-tax profits of $306m and EPS of 72.7¢ (2009: $309m/99.4¢).

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