IHG slides on higher costs despite profit

Biggest hotel company posts 10% rise in 2013 profit

The biggest hotel company by number of rooms posted a 10% rise in 2013 profit. But this was overshadowed by a failure to announce a return for shareholders as well as higher-than-expected anticipated costs for 2014. Shares in the UK-based InterContinental Hotels Group fell as a result.

IHG said that hotel refurbishments in Asia and the Middle East, Paris and New York would increase capital expenditure to $385 million in 2014, more than analysts had forecasts, while hotel and room closures would reduce operating profit by $9 million.

The news agency Reuters reports that IHG’s strategy of managing hotels they have sold to developers has helped it to return around $9.6 billion to shareholders over 10 years. Some analysts had expected the trend to continue following the sale of the group’s stake in its New York Barclay hotel for $240 million.

The IHG share price fell by 4.3% on Tuesday despite a rise in pre-tax profit to $600 million and a 4% increase in revenue to $1,903 million.

“Last year marked IHG’s 10th anniversary as a standalone company, and was another year of strong performance,” chief executive Richard Solomons said. “We delivered good underlying growth in revenues and profits, further reduced the capital intensity of the business and continued to generate high returns. […] We opened 237 hotels and signed a further 444 hotels into our pipeline, the highest number for five years, thereby reinforcing our already strong brand distribution platform and with it the promise of further high quality growth.”

Reuters / TTG Digital

[pictured: Holiday Inn Hamburg – City Nord; image TAS KG]

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