The world's largest hotelier, InterContinental Hotels, met market forecasts with a 22 percent rise in quarterly profit and shrugged off worries about the impact of financial market turmoil on the lodging industry.
The British-based group, which operates InterContinental, Crowne Plaza and Holiday Inn hotels, said on Tuesday that operating profit at continuing operations rose 22 percent to 66 million pounds ($137.4 million) in the three months to September 30, meeting an average forecast of 66 million by five analysts.
We haven't seen any impact (of financial market trouble) on our pipeline ... The mood is cautiously optimistic and our business remains unaffected by any wider economic issues, Chief Executive Andrew Cosslett told reporters.
Corporate rate negotiations look encouraging at this stage and we don't see any change in the activity levels in our hotels ... This is good progress, more than half way to top our target and we remain on track to exceed that target by the end of 2008.
The group said in August it was confident it will exceed its 3-1/2 year target to open 50,000 to 60,000 net new rooms by the end of 2008.
The company, which operates more than 3,800 hotels globally, said on Tuesday it had signed up 29,379 rooms in its fiscal third quarter, up 18 percent from a year ago, and its development pipeline rose 28 percent since the start of the year to 201,776 rooms.
The hotelier, which earns over 70 percent of its profit in the United States, said revenue per available room, a key measure of hotel performance, rose 5.6 percent in America as InterContinental and Crowne Plaza outperformed market segments.
Asia Pacific region showed the strongest performance with 8.6 percent growth in revenue per available room.
By 0905 GMT, InterContinental shares were down 0.9 percent to 1,041p after rising as high as 1,072p.
The shares have recovered strongly from a year low of 913-1/2 pence in late September.
Revenue per available room growth decelerated in the third quarter versus first half in all three of the group's key regions, Citigroup analyst Leslie Zarka said.
In light of nine months of 2007, we believe the group is likely to slightly exceed our FY07 forecasts in terms of signings and pipeline. However, the impact on earnings is unlikely to materialize until 2009.
Despite its solid growth and positive comment on the outlook, analysts said the continued weakness in the dollar may hit profits, while the boom in the U.S. lodging industry appears to slow down on weakening consumer credit market.
Last month both Marriott International and Starwood Hotels reported lower quarterly earnings and expected future earnings below Wall Street expectations, heightening concerns of a slowdown in the booming industry.
InterContinental has sold 179 hotel assets worth 3 billion pounds since April 2003 to become largely a manager or franchiser like its three big U.S. rivals, Hilton, Starwood and Marriott.
The group now owns 20 hotels and said it is progressing well with its plan to sell further three, including one in Atlanta and the other at Disney in Paris.
The hotelier, the subject of bid speculation since the Barclay Brothers built up a 10 percent stake, said its recent meeting with the investors had been on good terms and received no indication of their investment purpose.
We met with representatives of Barclay Brothers as a part of investor road show we did in October. It was no more than that. It had conversions about our strategy and progress that we are making and then we left in good terms, Cosslett said.
(Editing by Quentin Bryar, Paul Bolding)