UNITED KINGDOM IHG will invest about £500 million to open an additional 37 hotels across the United Kingdom.
Ten of the new hotels will be in London, including two in the 2012 Olympic Village. The bulk of new projects will be flagged Holiday Inn or Holiday Inn Express but there will also be a 5-star InterContinental property in Westminster and Hotel Indigo projects in Edinburgh, Newcastle and Liverpool.
The announcement came as IHG released its third quarter earnings statement, which fell short of analyst expectations. Operating profit fell 7% to US$115 million, short of forecasts that ranged from US$120 million to US$125 million.
IHG says the operating profit fall reflects a US$35 million increase in costs, including a US$25 million rise in expected staff payments under long-term incentive plans. “The quarter saw a return to rate growth for the first time since early 2009, a clear sign that the recovery is gathering pace,” CEO Andy Cosslett says.
Analysts agree. “Results are strong despite noise,” David Loeb, hospitality analyst for RW Baird & Co. says in an investor note. “RevPAR of 8.1% was strong, and October’s 8.1% RevPAR gain is just another sign that the recovery is in full swing. ADR increased 1.8% and occupancy improved 400 basis points. Earnings per share was in line with our estimates, but EBITDA was shy due to higher-than-expected general and administrative costs.