Bearish outlook expected from IHG

Intercontinental Hotels Group is expected to warn of a bearish trading outlook for the rest of the year ahead of its annual results tomorrow.

The company is also expected to insist that its controversial US$1bn programme to modernise and relaunch its Holiday Inn chain is progressing to plan and will be completed by the end of 2010.
The group, which also owns the Crowne Plaza, Intercontinental and Indigo chains, is committed to a $1 billion (?693m) modernisation of the Holiday Inn estate.

Chief executive Andy Cosslett says the upgrade is essential and hopes that the mid-market chain will capture customers looking to save money, according to The Times. Holiday Inn and Holiday Inn Express account for about 70% of the rooms IHG operates. The group also owns the Crowne Plaza, Intercontinental and Indigo chains.

The rebranding is taking place across all 3,000 plus of holiday inns around the world, which IHG mainly manages rather than owns. The bulk of the money needed to pay for the improvements is coming from franchisees. However this has met with opposition, particularly in China where hoteliers have called for a delay due to tight cash flow. The rebranding programme was launched in 2007 before the financial crisis really began.
Martin Jia, the head of the IHG hotel owners association in China, said: “Some of the association’s members believe that the period for rebranding is too short and we will ask Intercontinental’s management if the period for completion can be delayed for one or two years.”
In third quarter results in October, IHG warned of a “sharp deterioration in market conditions”. The group is thought to have seen a continuation of that trend.

The rate at which the company signs new properties to its portfolio is also likely to slow considerably as property owners struggle to raise the credit needed to invest in new hotels.