Intercontinental Hotels Group has met market expectations with its full-year results, but warned of a sharp deterioration in final quarter trading with no improvement in the foreseeable future.
The group, which operates Holiday Inn and Crown Plaza, said the “very tough” market pushed profits down by 32 per cent last year and gave warning that demand was unlikely to pick up in 2009. It announced pre-tax profit of $302 million for 2008, down from $444 million in the year earlier, on revenues up 4.7 per cent at $1.85 billion.
Andrew Cosslet, chief executive of InterContinental, said: “The trading environment is very tough. The sharp deterioration that we reported on last November has continued into 2009 and we see no sign of improvement at this stage.
“It has been clear for some time that 2009 will be a challenging year and we have taken action to prepare the business, including strict management of cash and a significant reduction in costs,” he added.
IHG, the world’s largest hotel operator by number of rooms, said that RevPAR fell 6.5% in the fourth quarter, compared with a rise of 1.6% in the previous quarter and a 4% rise in the first half.
Cost cutting will keep regional and central costs $30 million in 2009 below last year. Cosslett said the company has already cut 120 managerial positions, reduced travel and entertainment expenses and implemented a salary freeze.
He noted that the group’s large presence in the midscale market would benefit as customers traded down. He said the company had not seen “any material deterioration” in attrition rates in its development pipeline, despite concerns that some planned hotels would struggle to be built as developers struggle to get finance.
The group operates about 4,100 hotels worldwide, and a total of approximately 600,000 rooms.