Big brand names boosting InterContinental

WHILE you may well have heard of InterContinental hotels, did you know that the group is also responsible for other big brands, including Holiday Inn?

A vast and recognisable footprint helps InterContinental Hotels Group keep the check-in counters ringing, with revenue up 13 per cent at the half year, to $1billion (£830.7million).

A chunk of that growth came from the footprint getting even larger – 30,000 rooms were added. That takes the total number of rooms in the estate to more than 850,000.

Within the group’s global reach, two markets, the Americas and China, are particularly important.

That’s a trend we saw continue in last week’s results. The Americas remain the biggest region for revenue and profit, with longer term growth potential coming from Greater China.

For comparison, the Americas contributed $344million to operating profits – China just $36million.

The potential for growth is huge, and the good news is, growing the business doesn’t cost IHG the earth.

In managed hotels, the group runs the show on behalf of landlords. But for franchisees, IHG licenses a brand to the hotel owner and directs reservations to the property from its global online bookings system.

In both cases, it collects revenues from the hotels without tying up money actually owning the properties.

For all the good points, there are a couple of things to keep in mind.

IHG is particularly exposed to the ups and downs of the economies and political climates it operates in. Political and economic landscapes remain jittery and all this at a time when IHG has a record number of rooms to fill – with even more coming through the pipeline.

Overall though, this doesn’t mean investors should check out of their investment. IHG’s stronghold in the US and China is probably a good thing for the longer term.

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