Join our community of smart investors

Occupancy rates drop at InterContinental Hotels

The hotel group is dealing with a US slowdown and a difficult trading environment elsewhere
Occupancy rates drop at InterContinental Hotels

InterContinental Hotels Group's (IHG) room occupancy rates dropped 0.2 percentage points over its first quarter, as challenging trading conditions in the US and the Middle East applied pressure to the hotel group.

IC TIP: Buy at 4,950p

In a Friday trading update, the group announced that it had added 12,000 rooms to its network, with 24,000 further rooms on the horizon. These include 2,700 rooms from the group’s acquisition of Six Senses. The rate of these additions is the fastest in 12 years.

Overall revenue per average room (RevPAR) was up 0.3 per cent, against a growth rate of 3.5 per cent over the same period last year. RevPAR was up 0.6 per cent in the US, too, but fell 4 per cent in the Middle East, owing to “increased supply and political unrest”. Chinese RevPAR was flat, after having risen 11 per cent in the first quarter of 2018.

Analysts at Bank of America Merrill Lynch forecast earnings per share of 329¢ in 2019, increasing to 358¢ in 2020.