At IHG and Choice, profits rise in the fourth quarter

The fourth quarter was kind to both InterContinental Hotels Group and Choice Hotels International.

IHG reported a rise in full-year pretax profit as rates led to a rise in revenue per available room. The company said pretax profit for the year ended December 31 rose to $600 million from $547 million in the previous year as revenue grew 4 percent to $1.9 billion.

RevPAR rose 3.8 percent on a comparable basis, with the strongest growth in Asia and the Americas.

"Looking into 2014, although economic conditions in some markets remain uncertain, forward bookings data is encouraging and we are confident that we will deliver another year of growth," said CEO Richard Solomons.

IHG, like many other hotel operators, continues to shed owned real estate, concentrating instead on managing hotels. It announced the sale of the 383-room InterContinental San Francisco Mark Hopkins (pictured) to a joint venture between affiliates of Woodridge Capital Partners and funds managed by Oaktree Capital Management LP. Cash proceeds from the deal will amount to $120 million.

This sale follows the company's disposal of the InterContinental London Park Lane and an 80-percent interest in the InterContinental New York Barclay.

According to the London Evening Standard, IHG now owns only nine hotels but manages 4697 around the world. "We like to be asset light and brand heavy," Solomons said.

Choice, too, reported strong fourth quarter. The Rockville, Md.-based hotel company reported that its fourth-quarter net income was $27.33 million, up from $24.45 million at the same period last year. Total revenues increased 1 percent year-over-year to $180.7 million, up from $178.31 million.

"We are pleased with our fourth quarter operating results which reflect a continued improvement in the domestic franchise development environment," said Steve Joyce, president and CEO of Choice Hotels International. "Our development results reflect a 14-percent increase in our conversion franchise agreements over the prior year and we expect that the conversion franchise sales environment will continue to improve. In addition, we are optimistic that the new construction environment for our brand segments will gradually improve in 2014 and beyond."

Franchising revenues for the quarter totaled $78.8 million, an increase of 2 percent from the same period of 2012. Domestic system-wide RevPAR increased 1.3 percent from the same period of 2012 as hotel operations in the Northeast and Mid-Atlantic regions as well as hotels near national parks were impacted by the government shutdown. Domestic RevPAR results reflect occupancy and average daily rates increases of 50 basis points and 0.4 percent, respectively.  

The company executed 215 new domestic hotel franchise contracts for the three months ended December 31 compared to 214 new domestic hotel franchise contracts for the same period of 2012.