InterContinental second-half growth slows

By David Jones

LONDON (Reuters) - The world's number one hotelier, InterContinental Hotels (IHG.L), warned that second-quarter growth had slowed, particularly in its key U.S. market, as it met forecasts with a 29 percent rise in first-half profits.

The group, which operates InterContinental, Crowne Plaza and Holiday Inn hotels, said on Tuesday conditions were set to become more challenging in the second-half but added its big expansion of hotel rooms would help offset the downturn.

The hotelier, which earns nearly 70 percent of its profit in the U.S., has suffered along with other U.S. hoteliers from a slowing domestic economy with oil prices rising sharply and airlines cutting back on flights.

"We have seen a slowing of growth in the U.S., but it is not negative. We expect conditions to be more challenging, but we do have new rooms coming on stream," Chief Executive Andrew Cosslett told a half-year results conference call.

Cosslett argued that nearly as much growth was coming from the boost in global room numbers as from the increase in a key industry measure, revenue per available room (RevPAR), which he said had slowed throughout the second-quarter and into July.

"Each day we are opening one new hotel and signing up two into our pipeline," Cosslett added.

The group, which operates just over 4,000 hotels around the world, said RevPar grew by 4 percent in the first-half, and then slowed to 3.4 percent in July, while in the U.S. market growth slowed from 2.4 percent in the first-half to 1.5 in July.

InterContinental shares rose 1.3 percent to 760-1/2 pence by 9:25 a.m., as analysts said results met forecasts while they had expected some warning over tough conditions in the second half.