InterContinental Hotels Falls as Room Revenue Growth Rate Slows
(Bloomberg) -- InterContinental Hotels Group Plc owner of the the Holiday Inn and Crowne Plaza brands, fell after the company said the rate of revenue-per-room growth slowed in the third quarter.
Revenue per available room, a measure of occupancy and rates known as revpar, rose 1.3 percent compared with a 4.8 percent increase in the same period in 2015, the Denham, England-based company said in a statement on Friday. The profitability measure rose by 2.5 percent in the U.K and 0.9 percent in China.
InterContinental fell as much as 2.3 percent, the most in almost a month, and was trading at 3,178 pence at 8:30 a.m. in London trading.
“The medium-term outlook for the industry is deteriorating, with consumer confidence and security concerns weighing on corporate/leisure travel spending,” Panmure Gordon & Co. analyst Anna Barnfather wrote in a note to clients. “As such, we struggle to see any upcoming catalysts” for further share price gains without a bid for the firm or a further movement in the exchange rate between the dollar and the pound.
Terrorist attacks have deterred tourists from travelling to Europe, where sales were flat in the period. France, Belgium and Turkey, which have all suffered attacks by Islamic militants, had “significant” declines in revpar, InterContinental said.
“We remain focused on executing our commercial strategy to drive competitive advantage,” Chief Executive Officer Richard Solomons said in the statement. “This includes broadening the footprint of our global portfolio of brands, across which we drove our highest signings for eight years, including our best ever third quarter performance for Greater China.”
InterContinental has benefited from increased travel as Chinese tourists spend more time and money overseas and the global economy grows. International tourist arrivals are set to rise 4 percent in 2016, after reaching a record 1.2 billion last year, according to the United Nations World Tourism Organization.
More than half of InterContinental’s rooms are in the U.S., where revpar rose 1.4 percent, driven by record levels of industry demand. The company bought U.S. boutique chain Kimpton Hotels last year, which helped expand its reach into the country’s upscale segment.