InterContinental Hotels Group said it saw few signs of recovery in the hotel sector and warned it could take two years for trade to return to previous levels after it swung into a pre-tax loss of $50m (£30.3m) for the first half.
The world’s largest hotel group measured by number of rooms said that while occupancy levels were stablising, room rates remained under pressure as rival operators fought for customers with deep discounting.
“While the first furore of optimism might start to hit the business world in general, I think it’s going to be some time for the hotel industry because we are a lag industry,” said Andrew Cosslett, chief executive of the group, which owns the InterContinental, Crowne Plaza and Holiday Inn chains.
Mr Cosslett said much would depend on the return of the business traveller. While there has been some strengthening in the leisure market, he said demand from business travel remained slack.
“There is a lot of activity in the leisure market but it’s generally a price-driven purchase and the business traveller is obviously more robust in terms of the price and premiums we get,” he said.
“When the business travellers start to move back in more numbers, then we will see more structure in stability and rates.”
Like its peers, IHG – which mainly manages or franchises hotels instead of owning them, and earns 70 per cent of its profit in the US – has been hard hit by the recession-related fall in global travel from leisure and business guests.
For the six months to end-June, revenue fell 25 per cent to $726m. Operating profits were $179m, compared with $291m in 2008, although after a $201m charge related to a write-down on the values of some of its hotels, the group saw a $50m pre-tax loss.
Revenue per available room, a key industry measure, was down 16.2 per cent in the first half at constant currency rates, and 18.6 per cent in the second quarter, underlining the tough conditions for the sector.
In response, IHG has vowed to ramp up cost-cutting. Costs for 2009 will be cut by $80m from 2008 levels, a $10m increase on the target announced in May.
Before the exceptional charges, earnings per share were 41.5 cents, down 29 per cent. The interim dividend is maintained at 12.2 cents.
The shares fell 30p to 728p.
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