UPDATE 2-InterContinental H1 up as business traffic returns

* H1 operating profit $219 million, vs forecast $209 mln

* Says H1 RevPAR up 3.9 percent, Q2 up 7.4 percent

* Business travellers returning in increasing numbers

* Room rates now stabilising across the world

* Half-year dividend up 5 percent at 12.8 cents

(Rewrites with analyst comment and further details)

By David Jones

LONDON, Aug 10 (Reuters) - InterContinental Hotels (IHG.L), the world's biggest hotelier, reported a recovery in the hotel market helped by the return of the business traveller as it beat forecasts with a 22 percent rise in first-half profit.

Chief executive Andrew Cosslett said on Tuesday trading strengthened as the first half progressed, with Asia leading the recovery, especially China. Room occupancy was higher, with business travellers returning in increasing numbers, he said.

"Rates are now stabilising across the world, with most markets seeing growth towards the end of the first half. The economic environment does remain uncertain, however, with short booking windows and limited visibility," Cosslett said in a first-half results statement.

The British hotelier, which runs more than 650,000 rooms in over 4,500 hotels worldwide, posted operating profits of $219 million for the first half of 2010 beating a $209 million consensus from a Reuters survey of ten analysts, while the half-year dividend rose 5 percent to 12.8 US cents a share.

The group said revenue per available room (RevPAR), a key industry measure, rose 3.4 percent in the half-year and by 7.4 percent in the second quarter, while overall group revenue for the half-year increased 6 percent to $772 million.

Analyst Ian Rennardson at house broker Bank of America Merrill Lynch said the hotelier had seen a good quarter but kept his underperform recommendation due to pressures ahead.

"H1 results show a mainly occupancy led recovery is gaining momentum. We leave our forecasts unchanged as we are nervous about macro economic conditions, now forecast fewer rooms on average and expect staff costs to rise as recovery continues."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a comparison graphic with global rivals see r.reuters.com/qut93n <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The British group, which operates the InterContinental, Crowne Plaza and Holiday Inn brands, and earns two-thirds of its profits in the United States, said it had opened 148 hotels and signed up 130 hotels despite the tough financing environment.

The hotelier, which is heavily reliant on its mid-market Holiday Inn, said that 2,600 Holiday Inns have been relaunched out of its 3,400 worldwide outlets in its $1 billion programme.

InterContinental's U.S. rivals have reported strong second quarters as corporate business improved, with Marriott International (MAR.N) and Sheraton-owner Starwood Hotels & Resorts (HOT.N), beating forecasts and raising 2010 estimates [ID:nN14166533] [ID:nN22214924].

Shares in InterContinental have nearly tripled from a low of 434 pence in March 2009 on recovery hopes and have outperformed the FTSE 100 index .FTSE by over 25 percent this year, with its shares trading on 19.4 times 2010 forecast earnings, but still at a discount to U.S. rival Marriott on 31.7.

InterContinental shares closed on Monday at 1,124 pence, valuing the group at 3.2 billion pounds. (Editing by Louise Heavens)