Intercontinental Hotels investors book out despite $500m buyback
Shares in InterContinental Hotels fell to a 12-month low on Friday despite booking its best quarter for news signings and openings in a decade, as revenue per available room (revpar) growth slowed.
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Directors announced a $500m special dividend and share consolidation, to celebrate the progress made with the strategic initiatives outlined at the start of the year, including opening the its first of its Avid mainstream brand, and rolling out its upscale Voco chain and luxury Kimpton boutique hotels.
However, global revpar grew 1.0% in the third quarter of the year, down from 3.7% in the first half of the year, with performance in the US impacted by strong prior year demand from the 2017 hurricanes. For the year to date, revpar was up 2.7%.
Americas revpar was flat in the quarter, with all areas apart from the US higher; Europe, Middle East, Asia & Africa were up by a combined 2.5%, led by France, Russia, London, with Middle East and Australia down; Grater China revpar increased 4.8%, slower than the first half due to strong comparable period last year.
There was a 5.1% increase in the number of rooms across the group, known as the net system size, as around 27,000 rooms were signed and roughly 19,000 were opened.
Chief executive Keith Barr hailed Kimpton's accelerating international expansion, with presence secured in 14 countries, Voco is on track for more than 15 signings by year end, ahead of initial expectations, while this week saw the first signing for the recently relaunched Regent Hotels & Resorts brand.
Our first avid hotel is now open and owner demand continues to be strong, with 150 hotels signed across the Americas and the recent launch of the brand in Europe.
More than 95% of hotels are now on IHG Concerto, the new booking platform, with the final locations due to be migrated over the coming weeks, he said.
"Reflecting this rapid implementation of our strategic initiatives and in line with our well-established strategy of returning surplus cash to shareholders, we are today announcing a $500m special dividend with share consolidation, to be paid in early 2019.
"The fundamentals for our industry remain strong. We are confident in the outlook for the remainder of the year and in our ability to deliver industry-leading net rooms growth over the medium term."
IHG shares fell more than 5% on Friday to 3,990p, the first time below £40 in more than a year.
Nicholas Hyett, analyst at Hargreaves Lansdown said: “Revenue per available rooms is a little lower than hoped for, largely as a result of weak occupancy numbers in the US. With IHG rapidly expanding its rate of room growth, including some sizeable acquisitions and new brand launches, lower revenues are far from welcome.
"Having been behind the wider sector in terms of new openings earlier in the cycle, the worry is that IHG is playing catch up just as the market starts to cool.”