LONDON: InterContinental, the world’s biggest hotelier, cheered investors by promising to return US$1 billion to them partially funded from the planned sale of a New York hotel as it posted a rise in profits boosted by trade in the United States and China.
The British-based group, home to the Crowne Plaza, Holiday Inn as well as InterContinental brands, said it will pay a US$500 special dividend in the fourth quarter of this year, and also kick off a US$500 million share buyback in the same three months.
Chief executive Richard Solomons (photo) said the return of capital reflected the expected sale of its New York Barclay hotel, which analysts expect to fetch US$300 million, and was in line with its strategy to sell hotel assets in return for management contracts.
He added the InterContinental Park Lane, in London, is likely to be the next hotel for sale.
The group reported a 6% rise in half-year operating profits with growth across all its regions and from increased hotel occupancy and also room rates.
“While the global economic environment remains uncertain, Intercontinental continues to trade well and we are confident that our strategy will deliver high quality growth into the future,” Solomons said in a statement today.
Growth in global revenue per available room (RevPAR), a key industry measure, grew 6.5% with the United States and China ahead 7.2% and 9.7%, respectively. In July, global growth slowed by 3.8%.
The hotelier, which operates more than 660,000 rooms in over 4,500 hotels worldwide, posted a 6% rise in half-year operating profit to US$286 million, in line with an average forecast of US$285 million in a company-compiled consensus.
Revenue increased 3% to US$878 million.
The half-year dividend rose 31% to 21 US cents following a decision to rebalance its interim towards one third of the total for the year.
Results from rival hoteliers such as Marriott and Starwood have shown signs of a steady industry recovery despite some weakness in euro zone crisis hit southern European nations and some slower growth in China.