LONDON (Reuters) - World No.1 hotelier InterContinental Hotels (IHG.L) is keeping a close watch on the effects of global economic turmoil but is yet to see an impact after strong growth in China and more business travellers helped it beat first-half forecasts.
Chief Executive Richard Solomons said it was much too soon to see an effect on the hotel group from the sharp fall in global stock markets amid worries about U.S. and euro zone debt, and said the hotels market often recovered quickly from these setbacks.
He added that world governments needed to a get a grip on these problems, but they were not putting off his customers and he said mid-market hotels, like its own Holiday Inn chain, were pretty resilient to these types of setbacks.
“We will keep a careful eye on things, but we are not seeing any effect yet and as a business we are well placed being largely in the mid-scale market which is fairly resilient,” Solomons told a briefing after half-year results on Tuesday.
The group, home to the Crowne Plaza as well as Holiday Inn and InterContinental brands, did show a dip in trading during July, but Solomons said this was in comparison to a bumper July last year, and the group had just booked a record number of rooms last month in its key U.S. market.
InterContinental shares rose as much as 3.6 percent to 998 pence in early trade but were pulled lower by another sharp fall in the London market. By 10:10 a.m. the stock was the only gainer in the FTSE 100 index .FTSE, up 1.7 percent at 980 pence against a 3.5 percent drop on the wider index.
“Based on the H1 beat we would have expected consensus forecasts to rise 4-6 percent but given the extraordinary environment we suspect that few will want to upgrade at this time,” said analyst James Ainley at brokers Citi.
The hotelier, which runs over 4,400 hotels, posted first-half operating profits up 23 percent at $269 million (164 million pounds) beating a company compiled consensus of $256 million, while half-year sales rose 10 percent to $850 million.
The half-year dividend rose 25 percent to 16.0 US cents.
The group said first-half global revenue per available room (RevPAR), a key industry measure, grew 6.7 percent, with an 8.2 percent rise in the United States and a 12.7 percent rise in China. In July, global RevPAR rose a slightly less 5.6 percent.
Most hoteliers reporting results recently have been generally upbeat like the business travel-focussed Starwood HOT.N and French Accor (ACCP.PA), while Marriott MAR.N was more cautious due to weakness in the conference market.
“With a yield of over 5 percent, a strong balance sheet and a sound business model, InterContinental would look very attractive to our eyes once we reach calmer water,” said analyst Jason Streets at RBS.
Former finance director Solomons stepped up to replace Chief Executive Cosslett who retired for the group at the end of June, and Solomons will be replaced by finance director of healthcare group BUPA Tom Singer in late September. (Reporting by David Jones; Editing by Sophie Walker)