In its H1-2010 results report, Intercontinental Hotels (LON:IHG) said it has benefited from its strategy to cut costs, drive revenue and build its brands during the period. In the first half, group revenues were up 6% at US%$772m, operating profits grew further, jumping 22% compared to H109 to US$219m, while EPS (adjusted earnings per share) rose 23% to US$0.47.
However despite the strong figures, group chief executive Andrew Cosslett cautioned that “economic environment does remain uncertain ... with short booking windows and limited visibility”.
Investors decided to look past the figures, sending the shares down 4.5 percent in late morning trade.
"During the downturn we worked closely with our owners to reduce costs, drive revenue and build the strength of our system and brands ... These efforts put us in great shape to increase share in what is now a rising market,” Cosslett added.
"Trading strengthened as the first half progressed with global Revenue per Available Room (RevPAR) up 3.9% overall and 7.4% in the second quarter.”
According to Intercontinental, Asia is leading the recovery in its markets, with Greater China reporting RevPAR up 29.4% in the first half.
Importantly, the company has focused its expansion efforts on China, where it has opened new high-quality hotels. “In China both our pipeline and system of open hotels are skewed towards more upscale developments,” Cosslett stated.
In H1, the FTSE100 hotel operator signed-up a further 130 hotels and opened 148, furthermore the company highlighted that it has now re-launched nearly 2,600 Holiday Inns, from a total of 3,400, and the brands performance “continues to meet or beat” expectations.
In light of its strong first half performance, Intercontinental decided to increase its interim dividend by 5% to US$12.8.