InterContinental Hotels, the owner of the Holiday Inn and Crowne Plaza brands, said first-half earnings rose as a resilient US market made up for slowdowns in other regions including the Middle East.
Overll operating profit before one-time items climbed 2.1 per cent to US$344 million, with gains in the Americas driving growth. The Americas region accounts for more than half of InterContinental’s sales.
Profit beat a $332.9m average estimate by seven analysts in a Bloomberg survey. Revenue fell 8.4 per cent to $838m after the company sold properties in Paris and Hong Kong.
In the Middle East, revenue per available room was down 8 per cent due to the ongoing impact of low oil prices, the England-based company said on Tuesday.
“Despite the uncertain environment in some markets, we remain confident in the outlook for the remainder of the year,” said the chief executive Richard Solomons.
Demand for European hotel rooms has been hit by traveller uncertainty in the wake of terrorist attacks in France and an attempted coup in Turkey. Accor, Europe’s biggest hotel operator, said last week that first-half profit fell 4 per cent partly due to its French business.
Operating profit in Europe fell 5.6 per cent to $34m – hurt partly by the sale of the InterContinental Paris Le Grand last year – with revenue per available room in Paris dropping 19.5 per cent. In the Americas, profit rose 6.1 per cent to $313m.
“Favourable economic fundamentals and historically modest levels of new supply in the US continue to support growth in our largest region, where demand continues to be at an all-time high,” InterContinental said.
The company said it is increasing its interim dividend by 9 per cent to 30 cents per share.
The United Kingdom’s vote to leave the European Union may help InterContinental achieve administrative savings, it said.
“With a substantial proportion of our central costs denominated in sterling, we would even benefit at a profit level if the post-referendum sterling exchange rate is maintained,” the company said, noting that only a small portion of its hotels are located in the UK.
InterContinental, which has about 750,000 rooms in about 100 countries, lost its ranking as the world’s biggest hotel company after a wave of consolidation created increasingly large competitors. Marriott International completed its acquisition of Starwood Hotels & Resorts Worldwide this year, and Accor bought the owner of the upscale Fairmont, Raffles and Swissotel brands.
Investors spent $85 billion on hotel deals last year, 50 per cent more than in 2014, according to data compiled by Jones Lang LaSalle. InterContinental conducted talks with financial advisers about whether to sell itself or combine with a competitor, people with knowledge of the matter said in November.
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