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IHG’s Greater China RevPAR Up 29.4% in H1 2010

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InterContinental Hotels Group has reported that RevPAR in the Asia Pacific region increased 13% in the first half 2010, with second quarter growth of 16.1%.

Greater China was the strongest performing region with RevPAR growth of 29.4%, boosted by the Global Expo in Shanghai where RevPAR grew by an impressive 48.4%. Revenues increased 29% to $137m (25% CER).

Operating profit in the region increased 106% to $35m (94% CER). Franchised hotels’ operating profit increased $1m to $3m. Managed hotels’ operating profit grew 76% to $30m (65% CER) primarily driven by 31.2% RevPAR growth across IHG’s managed operations in Greater China and 12% rooms growth across the region. Operating profit at owned and leased hotels increased 27% to $14m reflecting RevPAR growth of 16.5% at the InterContinental Hong Kong.

Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said, “Trading strengthened as the first half progressed with global RevPAR up 3.9% overall and 7.4% in the second quarter. Asia is leading the recovery with Greater China reporting RevPAR up 29.4% in the half. As anticipated, occupancy drove RevPAR increases, with business travellers returning in greater numbers. Rates are now stabilising across the world, with most markets seeing rate growth towards the end of the first half. The economic environment does remain uncertain, however, with short booking windows and limited visibility.”

“During the downturn we worked closely with our owners to reduce costs, drive revenue and build the strength of our system and brands. In the first half we signed 130 hotels and opened 148, despite the tough financing environment. The quality of these new hotels is exceptionally high, particularly in China where both our pipeline and system of open hotels are skewed towards more upscale developments. We have now completed the relaunch of nearly 2,600 Holiday Inn hotels worldwide out of a total of 3,400, and the performance of these hotels continues to meet or beat our expectations.”

The Americas

RevPAR in the Americas increased 2.2% in the first half 2010, with second quarter growth of 5.8%. In the US, Holiday Inn and Holiday Inn Express outperformed their segments by 1.4 and 0.4 percentage points respectively, reporting RevPAR growth of 0.1% at Holiday Inn (including 3.2% for Q2) and 0.4% at Holiday Inn Express (including 3.6% for Q2). Revenues increased 5% to $393m.

Operating profit increased 20% from $149m to $179m. Franchised hotels’ operating profit grew 6% driven by a royalty fee revenue increase of 8%. In the managed business, operating profit of $13m compares to a loss of $9m in 2009 which included a $19m charge for priority guarantee shortfalls. Owned and leased hotels’ operating profit of $4m was flat on 2009 reflecting RevPAR growth of 5.9% offset by a $3m reinstatement of depreciation on hotels classified as held for sale in the first half of 2009.

EMEA

RevPAR in the EMEA region increased 4% in the first half, with second quarter growth of 7.2%. Performance was strongest in Germany where RevPAR grew 16.5% whilst mixed trading conditions across the Middle East led to a 4.8% RevPAR decline in that region. RevPAR growth of just 1.2% in the UK was due primarily to previously contracted lower rate business. Revenues increased 3% to $192m (4% CER). Excluding one liquidated damages receipt of $3m in 2009, revenues increased 5% to $192m (5% CER).

Excluding the impact of the $3m liquidated damages receipt in 2009, operating profit grew 5% to $58m (9% CER). On this same basis franchised hotels’ operating profit grew $1m to $28m driven by a 4% increase in room count offset by a $2m reduction in initial franchising, relicensing and termination fees. Managed hotels’ operating profit declined by $1m to $32m, with growth in Europe being offset by difficult trading in certain parts of the Middle East. Owned and leased hotels’ operating profit grew $5m to $15m driven by 15.0% RevPAR growth at InterContinental Park Lane and 13.1% growth at InterContinental Paris Le Grand.

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