(Adds company, analyst comments, details, shares)
By Esha Vaish
Feb 21 InterContinental Hotels Group (IHG)
beat 2016 profit forecasts, helped by demand in the
Americas, and announced a $400 million special dividend for
shareholders that sent its stock to a record high.
The company, which runs over 5,000 hotels in about 100
countries under brands such as Crowne Plaza, Holiday Inn and
InterContinental, said on Tuesday it also expected a pick-up in
demand from oil industry customers this year as recovering crude
prices reduce the squeeze on that sector.
IHG was harder hit than some rivals in 2016 by an oil
industry slump as 14 percent of its U.S. rooms are in
oil-producing states, higher than an average of about 10 percent
for big U.S. hotel chains.
Hotel groups worldwide are grappling with an uncertain
economic outlook, a drop in travel to Europe following a series
of deadly attacks and competition from online rental companies
such as Airbnb that have prompted some of them to merge.
However, IHG has repeatedly said it plans to go it alone,
focus on business customers to head off the challenge from the
likes of Airbnb and expand via a cheaper fee model, where it
franchises and manages hotels rather than owning them.
Steve Clayton, fund manager for the HL Select UK Shares
fund, said the strategy seemed to be paying off.
"Few stocks offer the same combination of capital-lite
growth potential and the ability to keep throwing cash back to
investors. Hotels are a cyclical sector, but IHG's
managed/franchised operating model smoothes out a lot of the
volatility, keeping its cash generation qualities intact," he
At 0950 GMT, IHG shares were up 0.8 percent at 3,908 pence,
after touching a new high of 4,029 pence.
IHG's operating profit rose 4 percent to $707 million last
year, ahead of analysts' estimate of about $695 million
according to a company-compiled consensus.
Revenue per available room (RevPAR), a key industry measure,
grew 1.7 percent year-on-year in the three months through
December, faster than the 1.3 percent in the third quarter.
RevPAR was helped by higher room rates and record occupancy
levels, while profit was boosted by higher returns from its fee
business, IHG said.
The total dividend was up 11 percent to 94 cents a share.
IHG said it would hand out the special dividend to shareholders
over the second quarter and undertake a share consolidation.
(Reporting by Esha Vaish in Bengaluru; Editing by Mark Potter)