The recovery that was evident in InterContinental’s first-half results has continued into the second half. And the new year has started with an 8.4 per cent rise in revenue per available room (RevPAR), which includes 8.2 per cent growth in the group’s important American markets. This compares with 6.2 per cent RevPAR growth last year as a whole and 8 per cent in the final three months.
And InterContinental's bosses are displaying confidence in the outlook with an impressive dividend hike. What’s more, they are showing confidence in conditions for hotel operators by putting the group's New York InterContinental Barclay hotel on the market. Broker Evolution Securities reckons that the sale could help reduce net debt from $743m currently to $500m.
As well as the tail wind of the global economic recovery, InterContinental is benefiting from its own efforts. The $1bn relaunch of its Holiday Inn hotel brand is now almost complete and the results are decent, with RevPAR growth at refurbished hotels running 6 per cent ahead in the US and 5 per cent ahead globally. Management is now looking at refreshing the group's Crowne Plaza hotels.
Broker Panmure forecast that pre-tax profits for 2011 will be $443m, with EPS of 106¢.
| InterContinental Hotels (IHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,351p | MARKET VALUE: | £3.9bn | |
| TOUCH: | 1,350-1,352p | 12-MONTH HIGH: | 1,416p | LOW: 842p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 98¢* | NET DEBT: | 255% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 1.77 | 444 | 131.1 | 40.7 |
| 2008 | 1.90 | 316 | 91.3 | 41.4 |
| 2009 | 1.54 | -64 | 74.7 | 41.4 |
| 2010 | 1.63 | 397 | 101.0 | 48.0 |
| % change | +6 | – | +35 | +16 |
Ex-div: 23 Mar Payment: 3 Jun £1 = $1.6132 *Includes intangibles of $358m, or 124¢ per share | ||||
