IHG posts bang-up interim results, reveals more on Barclay sale and rewards shareholders7 Aug, 2012 By: David Eisen
Owners of InterContinental Hotels Group stock are happy today. The hotel operator said it plans to return $1 billion to stockholders funded from the imminent sale of the InterContinental New York Barclay and planned disposal of the InterContinental Park Lane hotel in London, which is set to be put on the block next.
InterContinental will pay a special dividend in the fourth quarter costing $500 million, and also begin a $500-million share buyback in the same three months.
The hotel operator posted a 6-percent rise in half-year operating profit to $286 million; revenue increased 3 percent to $878 million.
CEO Richard Solomons said the return of capital reflected the planned sale of its New York Barclay hotel, which has been rumored to be on the block for some time now, but a specific buyer was never identified.
However, that has now changed. Word is that discussions are under way with Qatari hotel owner Ghanim Bin Saad Al Saad; the sale of the hotel hotel could bring in $300 million, analysts expect.
InterContinental's actions are well in line with other hotel operators who, more and more, seek to shed their owned real estate in favor of obtaining management contracts as a means for revenue and growth.
Reuters reports that InterContinental's sale of hotel assets has helped the group return $8.9 billion, including $1.2 of ordinary dividends, since the group's formation in 2003.
The capital return helped boost its shares up 6.5 percent. Of its 4,500-plus hotels worldwide, InterContinental owns only 10 of them and likely will continue to sell them off as buyers become present.
Solomons told Reuters that once the group opens its second InterContinental in London, in the first quarter of 2013, it will look to sell the Park Lane property, with the provision it stay on as manager.
Rising demand in emerging markets such as China, which accounts for about 10 percent of revenue, is helping InterContinental boost profits. About 30 percent of the company’s global expansion over the next three to five years will be in the region, Bloomberg reports. InterContinental's first-half revenue per available room rose 9.7 percent in Greater China, where InterContinental opened the world’s largest Holiday Inn in April. In the Americas, RevPAR grew 7.1 percent.
In addition, after InterContinental was accused of price fixing in collusion with two online travel agencies by Britain's consumer watchdog Office of Fair Trading, Solomons said he was confident the group had complied with all competition laws.
External Source : Bloomberg, Reuters, The Guardian