Investors could be in line for a hefty gain after InterContinental Hotels Group (IHG) yesterday pledged to add to the £2.75 billion (€4 billion) it has returned to shareholders since its demerger from Six Continents in 2003.
The UK hotelier, which owns the Holiday Inn and Crowne Plaza hotel franchises, declined to discuss the size and timing of the returns, saying that details would be given by February 2007, when it reports its full-year results. Analysts estimated that the returns could be £600-£800 million.
The money will come from its hotel disposal scheme. As part of a restructuring process, IHG has been working to sell off its hotel properties. Since April 2003, it has sold or is selling 175 hotels with a net asset value of about £3 billion, and the group is now focused on earning money from managing and franchising hotels instead of owning them.
IHG's promise of further capital returns comes as the group unveiled pre-tax profits from continuing operations that more than doubled to £131 million. Revenues rose 16 per cent to £394 million, with business continuing to be buoyed by strength in corporate travel.
Room count rose by 3,469 in the first six months to 541,002 and the group is now forecasting net room additions of about 10,000 for 2006 as a whole.
"This has been a good first half for IHG with excellent trading across each of our three operating regions," said Andrew Cosslett, IHG chief executive. "Current trading is healthy and our outlook for the rest of the year remains positive."
Mr Cosslett also rejected concerns that weakening consumer demand in the US would have an adverse effect on business in the second half, saying that forward bookings remained strong.
Revenue per available room has already risen by an average 11.2 per cent as a result of higher room prices in most parts of the world. IHG expects the trend to hold up in the second half.
The view was echoed by analysts, who said IHG's core business was driven by corporate and not leisure demand.
The recent terror alert in the UK also appeared to have few negative effects on business because stranded passengers had to look for overnight accommodation while waiting for delayed flights.
