- Revenue per available room (revPAR) still well below pre-pandemic levels in most markets
- New luxury brand will be revealed in the coming weeks
Shares in InterContinental Hotels' (IHG) initially headed south on the morning of its half-year results, although they eventually retraced, as the hotel chain revealed an operating profit of $138m (£99.2m), compared with a loss of $233m at the same point last year.
The reopening of international travel helped the group to recover demand in the first six months of the year, with revenue per available room (revPAR) up by a fifth compared with 2020. But it is still tracking well below pre-pandemic levels, down 43 per cent against 2019.
IHG noted that recovery had developed further in Greater China, where revPAR was only 16 per cent behind pre-pandemic trading in the second quarter. The Americas came in second, down 26 per cent, with European and Middle Eastern markets lagging 65 per cent behind.
That has not stopped the group from reviewing and growing its portfolio, having opened 132 new locations in the half and signed 203. Management has also removed 102 hotels in the period, following the strategic review of its Holiday Inn and Crowne Plaza brands.
Alongside its results, IHG announced the launch of a new luxury brand in the coming weeks, as it moves to target a segment of the market that appears to be recovering at pace. Management envisions that the brand will attract more than 100 hotels over the next decade.
Currently, only 84 out of its 5,994 hotels are closed, compared with 300 at the beginning of the year. Net debt has remained relatively static, falling back slightly by 2 per cent to $2.46bn. But as the sustainability of business travel remains in question, and a successful vaccine rollout in much of Europe fails to rejuvenate IHG hotels, we prefer to stay on the sidelines. Hold.
|INTERCONTINENTAL HOTELS (IHG)|
|ORD PRICE:||4,615p||MARKET VALUE:||£8.46bn|
|TOUCH:||4,614-4,617p||12-MONTH HIGH:||5,568p||LOW: 3,697pp|
|DIVIDEND YIELD:||nil||PE RATIO:||na|
|NET ASSET VALUE:||*||NET DEBT:||£2.41bn|
|Half-year to 30 Jun||Turnover (£bn)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|*Negative shareholders' funds, including $1.25bn in intangible assets, or 681¢ a share, £1=$1.38|