IHG reports strong first half despite ‘tough comparables' in the UK

InterContinental Hotels Group (IHG) has reported strong first half financial results, despite "tough comparables" in the UK.

In its financial results for the six months to 30 June 2018, the group reported revenue of $900m (£694m), up 7% on the same period in 2017, while operating profit was up 10% to $406m (£313).

Revpar increased 3% in the Europe, Middle East, Asia and Africa region, driven by rate increase of 1.9%, although the UK was down 0.2% (London was down 1.4%, while the provinces were up 0.6%) when compared with 2017's strong trading results.

In the first half of the year, IHG added 22,000 rooms to its portfolio, an increase of 11%, while 10,000 rooms were removed. The 51% acquisition of Regent Hotels & Resorts completed in July, adding six open and three pipeline hotels to IHG's portfolio, with several new sites under discussion in key gateway cities and resort locations around the world.

The group reported its highest number of signings for 10 years, including 16,800 rooms in Greater China, up 71% year-on-year.

Keith Barr, chief executive of IHG, said: "We've had a strong first half, delivering our best signings performance for a decade. Revpar grew at 3.7%, which together with 4.1% net system size growth, drove underlying operating profit up 8% and underlying earnings per share (EPS) up 25%. This underpins our decision to raise the interim dividend by 10%.

"We've added three new brands in the last year, avid hotels last September, for which we've now signed 130 hotels, Voco in June and Regent Hotels & Resorts in July. Our existing brands continue to strengthen, as demonstrated by the continued global expansion of Kimpton Hotels & Restaurants, with flagship hotels secured for four UK locations, including London, as part of a portfolio deal to rebrand and operate 12 high quality hotels in the UK.

"The fundamentals for our industry are strong, we are confident in the outlook for the balance of the year and in our ability to deliver industry-leading net rooms growth over the medium term."

Of its brands, IHG has signed 130 Avid hotels (82 in H1), with the first on track to open in the third quarter of this year in the US.

It was also confirmed last month that, following the acquisition of the 13-strong Principal portfolio, two new brands would be introduced to the UK, with four Principal hotels set to join its luxury boutique Kimpton Hotels & Restaurants brand and the Principal St David's hotel in Cardiff to become the first UK Voco.

Details of rebranding of Principal hotel portfolio revealed >>

IHG reports UK revpar fall as London business falters >>

IHG launches new upscale brand Voco >>