Almost half of InterContinental Hotels’ (IHG) rooms were occupied last month, despite only 5 per cent of its sites now being closed, compared to a peak of 15 per cent at the height of the coronavirus crisis.
InterContinental generates most of its income through fees, receiving percentages of room turnover from franchisees. This asset-light model and its general bias towards locations that are less dependent on business and international travel have supported its recovery. Ninety-five per cent of its core Americas business is domestic, and July revenue per available room (RevPAR) in that region is expected to be 54 per cent down on last year, compared with 62 per cent in June.
The group was driven into an interim loss both by its revenue decline and $255m (£195m) in exceptional charges, which included $85m in asset write-downs. Free cash flow stabilised over the period, limiting outflows to $66m, while capital expenditure is expected to come down by $100m this year. Management will await more clarity on the state of the market before reconsidering shareholder dividends.
Consensus forecasts are for full-year 2020 earnings per share of 32.81¢, rising to 156.46¢ in 2021.
| INTERCONTINENTAL HOTELS (IHG) | ||||
| ORD PRICE: | 4,152p | MARKET VALUE: | £ 7.58bn | |
| TOUCH: | 4,148-4,154p | 12-MONTH HIGH: | 5,401p | LOW: 2,161p |
| DIVIDEND YIELD: | 0.0% | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | $2.52bn | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 2.28 | 375 | 167 | 39.9 |
| 2020 | 1.25 | -275 | -115 | nil |
| % change | -45 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.33 | ||||
| *Negative shareholders' funds, including intangible assets of $1.32bn, or 723¢ a share | ||||
