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IHG to return $1bn to shareholders

- Judy Maxwell (Assistant Editor)
Richard Solomons, CEO of InterContinental Hotels Group

InterContinental Hotels Group, based in the UK with its US headquarters in Atlanta, reported first half year profit of $286m.

That is up 6 percent over the $268m in operating profit it earned in the first half of 2011, according to the company’s report released today. Earnings per share was 95 cents versus 54 cents in the year-ago quarter.

And IHG said it plans to return $1bn to its shareholders in the fourth quarter of 2012.

Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:‘We have delivered good results in the first half with RevPAR growth from all regions through gains in both occupancy and rate. Our brands continue to perform well and we have achieved solid underlying margin growth, resulting in increased profits and strong cash flows.

‘We are increasing the interim dividend by 31 percent reflecting these results, our previously stated intention to rebalance the interim and final dividend payments and our confidence in the future prospects of the business. Consistent with our asset light strategy and our strong track record of returning funds to shareholders, we today announce a $1bn return of capital. This recognizes the expected proceeds from the ongoing disposal of InterContinental New York Barclay and our commitment to maintaining an investment grade credit rating.

‘While the global economic environment remains uncertain, IHG continues to trade well and we are confident that our strategy will deliver high quality growth into the future.’

Total gross revenue from IHG hotels were up 7.3 percent to $10.3bn. RevPAR was 6.5 percent (a 3.5 percent increase), with RevPAR in the US 7.2 percent, up more than 6 percent in the second quarter.

IHG credited the Holiday Inn brand for its RevPAR growth. ‘Holiday Inn continues to outperform, growing RevPAR premiums to the upper midscale segment in the US over the past five years by 6 percent for Holiday Inn and 5 percent for Holiday Inn Express,’ the company said in a statement.

US RevPAR grew 8 percent in the half, in line with the industry. ‘On the same basis, Holiday Inn and Holiday Inn Express grew 8.5 percent and 8.6 percent respectively, significantly outperforming the upper midscale segment up 7.7 percent.

‘We signed 12,751 rooms (110 hotels) and opened 8,974 rooms (75 hotels) into the system in the half. The Holiday Inn brand family accounted for around three quarters of openings and signings in the region in the half, demonstrating the ongoing benefits from the re-launch,’ said the company.

‘Openings included nine hotels for our extended stay hotel brands, Candlewood Suites and Staybridge Suites and a second hotel for the InterContinental brand in Mexico City. Signings included five Hotel Indigo hotels and 19 for our extended-stay brands.’

 

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