LONDON - InterContinental Hotels, the world's biggest hotelier, said it was too early to forecast a recovery as trading conditions remained challenging after posting a 19 percent fall in third-quarter operating profit.
The group, whose brands include InterContinental, Crowne Plaza and Holiday Inn, said on Tuesday that adjusted operating profit fell to $124 million from $153 million a year ago.
InterContinental, which manages or franchises hotels instead of owning them and earns 70 percent of its profit in the United States, has seen profits impacted as businesses hit by the global financial crisis cut back on travel expenditures.
Chief Executive Andrew Cosslett said the environment remained difficult with room rates falling as a result of a greater dependence on leisure travellers.
We see signs of occupancy stabilising but rate is still under considerable pressure across the board, he said.
InterContinental, which runs more than 641,000 rooms in 4,390 hotels worldwide, said revenue per available room (RevPAR), a key industry measure, fell by 15.2 percent in the third quarter.
In October, the rate of decline had slowed to 13.5 percent, reflecting a weaker comparative period in the previous year.
Chief Financial Officer Richard Solomons said it was too early to call the bottom of the hotel market as the group gave a more downbeat assessment of prospects than that delivered by some of its competitors in recent weeks.
There's no question that it's going to stay challenging and there's no question that there's rate pressure. With a lack of forward bookings and visibility it's hard to be definitive, he told reporters on a conference call.
However, Solomons said InterContinental remained on track to open 400 new hotels this year, creating 25,000 jobs, and to cut costs by about $80 million.
We're positive that we're in a good place to lead the industry when it does turn up. Activity's lower than it was but there's still a lot going on, he said.
Millennium & Copthorne said last week that the worst of the recession may be over as its rate of revenue decline slowed but warned it could take more than two years for trading to recover to the levels seen in 2007.
Starwood Hotels & Resorts and Marriott International (MAR.N) have also said recently that the hotel industry had overcome the worst of its troubles and was commencing a slow climb to recovery.
Shares in InterContinental, which have risen by 10 percent over the last two weeks as hopes of a recovery grew, were down 0.9 percent to 835 pence at 1130 GMT.
We remain cautious on the outlook for the group, said analyst Mark Brumby at brokerage Astaire Securities. Occupancy levels may be stabilising but the switch from business to leisure customers has depressed rates. (Editing by Julie Crust, David Holmes and Karen Foster) ($1=.5960 Pound)