InterContinental slides into red

InterContinental slides into red

InterContinental Hotels, the world’s largest hotel group, has fallen sharply into the red as hotels globally are hit by fewer people travelling in the downturn and fears over swine flu.

The company, which owns the Holiday Inn and Crown Plaza chains, suffered a 25 percent fall in revenue in the quarter ending 30 June. Pretax losses slide to $82m, down from a profit of $145m last year. Earnings were hit by exceptional costs of $175m, including impairment charges on the value of hotel management contracts.

Revenue per available room (RevPAR) fell 18.6 percent, and 16.2 percent over the first half of the year.

InterContinental, which has embarked on a tough cost-saving programme, said it expects to save $80m this year, after cutting costs by $51m in the first half.

The company said bookings from July have not deteriorated further, although it expects the rest of the year to be “tough.”

ADVERTISEMENT

“Trading was very challenging throughout the first half of the year and we expect the remainder of 2009 to be tough,” said Andrew Cosslett, chief executive of the group.

He said he saw no further deterioration in demand, though he said conditions would continue to be difficult into 2010.
“The whole thing hinges on the return of the business traveller. While there has been some strengthening in the leisure market, demand from business travel remains slack,” he said.