IHG expects profits to take a $15-20m hit in 2011

InterContinental Hotels Group (IHG) has warned that it expects recent events in the Middle East, Japan and New Zealand to negatively impact estimated full-year operating profit by US $15 million to $20 million.

The forecast was part of the current trading update in IHG’s first quarter results announcement, released on May 10.

In the EMEA, IHG reported that revPAR had increased by 3%, including rate growth of 1.6%. RevPAR grew 4.2% excluding Egypt (10 hotels) and Bahrain (two hotels) where the political unrest resulted in significant declines.

In other Middle East markets RevPAR continued to grow, including 7.5% in Saudi Arabia and 2.4% in the United Arab Emirates.

Revenue increased 6% (4% at CER) to $95 million and operating profit increased 10% (5% at CER) to $23 million, attributed to good RevPAR growth at both the owned and leased and franchised hotels.

However, managed operating profit declined $2 million as the impact of unrest in the Middle East offset good growth in fees across Europe, reported IHG.

Overall, IHG reported global revPAR growth of 6.9% and a 23% increase in operating profit for the quarter.

Net profit is up 28% to $69 million thanks to a 9% rise in revenue to $396 million.

Andrew Cosslett, chief executive of IHG PLC, said: “We delivered a strong set of results in the first quarter. Global revenue per available room (RevPAR) grew 6.9%, with 18.8% growth in Greater China and 8.4% in the US, the highest growth in the US since the second quarter 2006.

“We remain confident about the outlook for the rest of the year. Demand for our brands continues to strengthen with both guests and hotel owners. This is driving our performance and reinforcing our industry leading pipeline. We are well positioned to take advantage of the gathering rate momentum we now see around the world.”

Cosslett will leave IHG on June 30 following his resignation in March 2011.

He will be succeeded by Richard Solomans, a board member since 2003 and currently chief financial officer and head of commercial development.