InterContinental Expansion Under Threat After Room Bookings Tumble

guardian.co.uk:

InterContinental Hotels Group has warned of a “sharp deterioration” in trading in the past six weeks and hinted that rising numbers of its franchisee hotel owners may be dropping out of development projects.

Andy Cosslett, chief executive of the world’s largest hotels business, said the three months to end-September had been “solid” but was immediately followed by a marked decline. “October opened with trading substantially down. It remained down for the rest of the month, although the trend did not become worse.”

He said preliminary data suggested IHG’s global revenue per available room, a key measure for the industry, had declined 4.5% in October and by 5.7% in the US, where 60% of IHG’s hotels are located. Of its brands, upmarket InterContinental was the worst hit, with less impact on its cheaper names such as Holiday Inn.

“Forward bookings are down versus last year,” Cosslett said. “While visibility remains limited, it is pretty clear now that the environment is going to remain tough for some time to come.”

Reflecting the worsening trading conditions, Cosslett said the group had frozen its share buyback programme “as we focus on prudent management of the balance sheet, given the lack of visibility on the economy and our future trading”. Continue reading…

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