IHG results point to positive outlook for hotel sector

IHG results point to positive outlook for hotel sector

The prospects for the hotel industry remain good despite economic and political uncertainty, according to the boss of InterContinental Hotels Group.

Chief executive Richard Solomans was speaking as the group reported an 11% rise in underlying annual profits to $650 million in 2015.

Global revenue per available room was up by 4.4% as room rates rose by 3.1% over 2014. Capacity increased by 4.4% before the acquisition of Kimpton Hotels.

Plans to introduce the industry’s first cloud-based booking system is on track to start in 2017, the company said.

This came as the company reported that 40% of its digital traffic is coming from mobile devices, delivering gross revenue of $1.2 billion against less than $50 million five years ago.

Total digital revenue was up by more than $0.4 billion year-on-year to $4.2 billion.

Solomans said: “Through effective online distribution management we grew our direct digital revenue more than any other channel, and building on our track record of innovation we are on course to begin the roll out of a next generation cloud based guest reservation system in 2017.

“Looking into the medium term, despite economic and political uncertainty in some markets, the prospects for the hotel industry remain good and the strength of our business model gives us the confidence to propose a 10% increase in total dividend for the year."

He added: "Our strong momentum in 2015 was driven by a clear strategy and disciplined execution. We delivered our highest room openings since 2009, our best signings since 2008, 11% underlying profit growth and 19% underlying EPS growth.

“Our high quality, fee based, business continues to generate significant operating cash flows following the completion of our major asset disposal programme. 

“Reflecting this and our on-going focus on delivering shareholder value, we today announce a $1.5 billion special dividend, which will take total funds returned since 2003 to $12 billion.

“We have strengthened our brand portfolio, adding Kimpton Hotels & Restaurants into the IHG family and accelerating signings across our mainstream and extended stay brands.”


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