Energy industry slowdown hurts InterContinental revenue growth

InterContinental Hotels (IHG) saw slower growth in room rates in the third quarter as the slump in the oil industry continued to affect bookings in some US states and security concerns hurt demand in France, Belgium and Turkey.
IHG, which also owns the Holiday Inn brand, has been worse hit than some of its peers by spending cuts related to the oil slump because 14 percent of its rooms in the US are in oil-producing states. That compares with an average of about 11 percent for big hotel chains in the US.
IHG said on Friday that growth in revenue per available room (RevPAR), a key industry measure, eased to 1.3 percent in the three months through September at its hotels worldwide, from 2.5 percent in the second quarter.
Hoteliers also face rising competition from online holiday rental startups such as Airbnb, just as attacks in Europe have hurt travel demand.
IHG, which runs more than 5,000 hotels under the Crowne Plaza, Holiday Inn and InterContinental brands, said RevPAR from those rooms in oil-producing US states fell 7.3 percent from a year earlier, compared with a 6.3 percent drop in the second quarter.
The hotel industry has seen a wave of acquisitions as the sector tries to fend off competition from online booking rivals, including rival Marriott’s purchase of Starwood Hotels & Resorts Worldwide. IHG, however, has indicated that it plans to go it alone, but expand its brands globally including in Greater China where it saw its best ever third quarter and RevPAR rose 0.9 percent from a year ago.
IHG’s shares, which have gained 30 percent in the past year, were down 1.6 percent at 3173 pence at 0918 GMT.
Panmure Gordon has a “hold” rating on IHG as security concerns weigh on corporate and leisure travel spending.
“We struggle to see any upcoming catalysts for further share price appreciation,” Panmure Gordon analyst said in a note, adding a bid could change that.
Europe accounts for only 1.2 percent of IHG’s global revenues but is feeling the effects of attacks this year in France, Belgium and Turkey, CFO Paul Edgecliffe-Johnson told reporters.
Overall revenues from Europe were flat in the third quarter but RevPAR dropped about 25 percent in France as demand was hit following the Nice attack, he said.

Source: Arab News