InterContinental Hotels Group said on Wednesday it now expected to exceed its three year plan to open 50,000 to 60,000 additional rooms by the end of 2008.
Andrew Cosslett, chief executive, said that after signing up nearly 22,631 extra rooms during the first quarter of the year, a 25 per cent increase over the signings achieved in the same period of 2006, he was confident of beating the top end of the target range.
Even so, he said, opening on average more than one hotel a day between now and the end of 2008 to hit the target was “still a big challenge”. The group’s development pipeline totals 169,699 rooms in 1,321 hotels, equivalent to 30 per cent of IHG’s existing hotels. Mr Cosslett said the group’s pipeline alone would constitute the ninth largest hotel business in the world.
IHG is the largest hotel operator in the world with brands including InterContinental, Holiday Inn and Crowne Plaza. Over recent years it has been selling hotels in order to concentrate on operating them for other owners.
During the first quarter the group opened over 8,000 rooms but closed 6,300 as part of its drive to improve quality leaving it with net additions of under 2,000.
Profits in the first quarter were affected by the weakness of the dollar against the pound. Richard Solomons, finance director, said a 1 cent move in the exchange rate was roughly equivalent to a £1m move in profits. Revenues per available room, a measure of the profitability of hotels, rose by 7.6 per cent in constant currencies during the quarter, mainly as a result of rate increases, IHG said.
In the quarter group revenues rose 9.6 per cent to £194m, while operating profits excluding exceptional profits on disposals, rose 4.8 per cent to £44m, below analysts best hopes for the period. After higher finance costs, pre-tax profit dipped from £41m to £39m.
Mr Cosslett had little to say, however, about the stake in IHG held by the Barclay brothers, which was recently increased to 8.19 per cent. He said after a meeting with them in January, when they emerged as holders of a 5 per cent stake, there had been no further meetings and no plans had been made for another. “We don’t know what their intentions are,” he said.
The presence of the brothers, who own the Ritz hotel in London and are regarded as acquisitive, has helped to fuel speculation in the company’s shares. In early trading the shares dipped 3p to £12.46.
Mr Solomons said that during the first quarter the group had bought 2.1m of its own shares at a cost of £25.2m and planned to spend another £156m on repurchasing shares. When that was completed, and added to a £700m special dividend to be paid in June and with previous returns of capital to investors, the group would have given £3.6bn back to shareholders since March 2004.