InterContinental share price: Hotel group pressing ahead with expansion in China

on Dec 4, 2013
Updated: Oct 21, 2019
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iNVEZZ.com, Wednesday, December 4: UK-based InterContinental Hotels Group (LON:IHG), the largest hotel chain in the world based on room numbers, plans to open “at least the same” number of hotels in China in 2014 as this year despite slower growth in room revenue, according to Chief Executive Officer Richard Solomons. The hotel operator, also known as IHG, has opened 17 hotels in mainland China, Hong Kong, Macau and Taiwan, or Greater China, in the first nine month of this year, Solomons told Bloomberg yesterday in an interview in Shanghai.

IHG’s share price has been about 0.1 percent lower this morning, with the stock trading at 1,891p, valuing the group at some £4.9 billion.
IHG, which operates the Crowne Plaza, Holiday Inn and InterContinenal franchises, has 200 hotels with over 62,000 rooms open in China and a further 179 in the pipeline. China is already IHG’s second largest market after the US and is likely to exceed it in room numbers by 2025, Solomons said while on a British trade mission to the Asian country on Sunday.

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InterContinental, which first entered China in 1984, has seen China’s hotel market slow down recently after the Communist government banned officials from spending money reserved for meetings on luxury accommodation in a bid to soothe public discontent over the wasting of funds.
“We are not cutting back at all in terms of what we are doing here. Government is not a huge piece of our business. As a good operator, if one piece of business is less, you go for another piece,” Solomons told Bloomberg.

IHG’s revenue per available room (RevPAR) in Greater China rose 0.7 percent year on year in the third quarter, slowing from 4 percent annual growth in the equivalent period of 2012, the group said last month. Total third-quarter RevPAR rose by 3.3 percent, below the 3.9 percent logged in the third quarter of last year (UK Earnings round-up: CSR, G4S disappoint, Blinkx shines).

Solomons, who travelled on the trade mission to the the world’s second-largest economy with British Prime Minister David Cameron, said IHG was “bullish about China”.
“In the long term it’s a very attractive market,” he said.
The London Evening Standard quoted David Cameron as saying on the same trade mission: “IHG’s plans to double the number of their hotels across China over the next five years is a great example of how British businesses can benefit from China’s growing middle class.”

Solomons said in May that InterContinental Hotels planned to expand to 100 Chinese cities from 70 cities in the next three to five years (InterContinental Hotels Eyes Expansion in China).
Back then, he also highlighted that the company was “well placed” in two key areas of China’s market, with its upscale Intercontinental and mainstream Holiday Inn brands even if there are a lot of new hotel entrants.
**As of 8:43 UTC buy InterContinental shares at 1,889p**
**As of 8:43 UTC sell InterContinental shares at 1,887p**

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