* Special dividend of $500 bln, plus $500 bln buyback
* Half-year operating profit $286 mln, consensus $285 mln
* Continues to trade well and confident for future growth
* H1 RevPar up 6.5 percent, July RevPar up 3.8 percent
* Shares up 5.1 pct, top riser in the FTSE 100 index
By David Jones
LONDON, Aug 7 (Reuters) – InterContinental Hotels,
the world’s biggest hotelier, cheered investors by promising to
return $1 billion to them funded from the planned sale of a New
York hotel and added its flagship London Park Lane hotel is set
to be next on the block.
The British-based group, home to the Crowne Plaza, Holiday
Inn as well as InterContinental brands, said it will pay a
special dividend in the fourth quarter costing $500 million, and
also kick off a $500 million share buyback in the same three
months.
Chief Executive Richard Solomons said the return of capital
reflected the planned sale of its New York Barclay hotel, which
analysts expect to fetch around $300 million, as the group
reported a 6 percent rise in half-year profits boosted by good
trading in its two biggest markets, the United States and China.
The hotelier’s strategy to sell hotel assets in return for
management contracts is similar to U.S. peers like Marriott
, and has helped return $8.9 billion, including $1.2 of
ordinary dividends, since the group’s formation in 2003.
The capital return helped boost its shares up 6.5 percent to
1,727 pence by 0933 GMT to be the biggest riser in the FTSE 100
index in a largely flat London stock market.
The group only owns 10 of its 4,500-plus hotels worldwide
with a book value of $1.6 billion, with most of that value being
in its flagship hotels in New York, London, Paris and Hong Kong
which are all expected to be eventually sold.
The year-long sale process of the New York Barclay should be
closed in the next few months, Solomons said, and talks are
under way with one exclusive buyer, which analysts say is likely
to be the Qatari hotel owner Ghanim Bin Saad Al Saad.
Solomons said that once the group opens its second
InterContinental in London in the first quarter of 2013 then it
is likely to sell its Park Lane hotel in return for a management
contract. Analysts estimate its value at over $330 million.
He added this was consistent with the group’s “asset light”
strategy and returning funds to shareholders while still
maintaining the group’s BBB investment grade credit rating.
“Interest will come from high net worth and sovereign wealth
money from the Middle East, Russia and possibly south-east
Asia,” said Robert Seabrook, head of hotel transactions at
property consultant Savills.
“It’s one down from the likes of the Dorchester but is at
the bottom of arguably the best hotel street in London,” he
said.
CONTINUED GROWTH
Solomons said the group reported growth in the half year
across all regions, and both hotel occupancy and room rates
increased and, despite a tough economic environment, the group
was trading well and continued to see growth for the future.
“There might be a little bit of a slowdown in July but that
is for one-off factors and for the medium time, the outlook is
good,” said Solomons. He added one-off factors included the U.S.
July 4 independence day falling in mid-week, and by the end of
July growth rates were back running similar to the half year.
Growth in half year global revenue per available room
(RevPAR), a key industry measure, grew 6.5 percent with the
United States and China ahead 7.2 percent and 9.7 percent,
respectively. In July, global growth slowed by 3.8 percent.
The Olympic Games had seen the group’s 51 London hotels
full, but the effect was “financially neutral” as games guests
replaced regular London visitors, Solomons said.
The hotelier, which operates more than 660,000 rooms in over
4,500 hotels worldwide, posted a 6 percent rise in half-year
operating profit to $286 million, in line with an average
forecast of $285 million in a company-compiled consensus.
Revenue increased 3 percent to $878 million.
The half-year dividend rose 31 percent to 21 U.S. cents
following a decision to rebalance its interim towards one third
of the total for the year.
Results from rival hoteliers such as Marriott and Starwood
have shown signs of a steady industry recovery despite
some weakness in euro zone crisis hit southern European nations
and some slower growth in China.
Solomons added he was confident the group had complied with
all competition laws after Britain’s consumer watchdog, the
Office of Fair Trading, accused the hotelier of price fixing
with two major online travel agents to restrict discounts that
could be offered for hotel rooms.
