By David Jones and Matthew Scuffham
LONDON, Aug 10 (Reuters) - Business travellers flocked back
to boost profit at upmarket InterContinental Hotels while
Europe's top holiday firm TUI Travel said profit will be hit as
Britons cut back vacation spending.
The world's biggest hotelier said trading strengthened
through the first half, driven by Asia and especially China, as
its guests took more of its 650,000-plus rooms and started to
pay higher rates in July in signs of a growing recovery.
But package holiday group TUI Travel was hit first by a
volcanic ash cloud closing airspace and then June's emergency
British budget which heralded public spending and job cuts,
forcing many into rethinking their summer plans.
InterContinental was upbeat after room occupancy levels rose
through the first half and room rates turned positive in July,
reflecting the strong results from hotel rivals Marriott and
Starwood in the United Sates.
The British group, which operates the InterContinental,
Crowne Plaza and Holiday Inn brands and earns two-thirds of its
profits in the United States, said it had opened 148 hotels and
signed up 130 hotels despite the tough financing environment.
The hotelier, which is heavily reliant on its mid-market
Holiday Inn, said that 2,600 Holiday Inns have been relaunched
out of its 3,400 worldwide outlets in a $1 billion programme.
"We have a positive trading outlook, the high end corporate
traveller is driving this and is not going to disappear even if
the economies of Europe are difficult," Chief Executive Andrew
Cosslett told Reuters in an interview.
Shares in InterContinental lost 4.8 percent to 10.70 pounds
by 1353 GMT after nearly tripling from a low of 434 pence in
March 2009, while TUI Travel fell 9.1 percent to 205p.
Analyst Ian Rennardson at house broker Bank of America
Merrill Lynch said the hotelier had seen a good quarter but kept
his underperform recommendation due to pressures ahead, while
other analysts said InterContinental looked overvalued and was
hit by the fall in TUI Travel.
"H1 results show a mainly occupancy-led recovery is gaining
momentum. We leave our forecasts unchanged as we are nervous
about macro economic conditions, now forecast fewer rooms on
average and expect staff costs to rise as recovery continues,"
The group, which runs over 4,500 hotels worldwide, posted
operating profit of $219 million for the first half of 2010
beating a $209 million consensus from a Reuters survey of 10
analysts, while the half-year dividend rose 5 percent to 12.8 US
cents a share.
The group said revenue per available room (RevPAR), a key
industry measure, rose 3.4 percent in the half-year and by 7.4
percent in the second quarter, and July was ahead 8.1 percent
with occupancy levels and room rates both positive.
In a sign of more international travel, German airliner
Lufthansa reported July passenger traffic rose 16.4 percent in
terms of revenue per seat per kilometre flown.
However, TUI Travel, in which Germany's TUI AG holds a
controlling stake of 57.5 percent, said airspace closures hit
bookings and cost it 105 million pounds and warned full-year
profits will be at the lower end of expectations.
"The strong booking trends experienced up until the volcanic
ash disruption in mid-April and the subsequent rebound in early
May were not sustained throughout the early summer period," said
Chief Executive Peter Long.
"This was particularly marked in the UK source market, where
trading was affected by further airspace closures, good weather
and post election uncertainty regarding the emergency budget,"
Analysts forecast for full-year EBIT (earnings before
interest and tax) range between 439 million and 495 million
pounds, according to a Thomson Reuters I/B/E/S poll of 18
InterContinental's Cosslett said financing for new hotels in
North America for its hotel owners was still tough, but the
hotelier has the largest pipeline in the industry which rose to
1,302 hotels, with China leading the way with 148 in the
pipeline in addition to 130 already opened.
(Editing by Louise Heavens and David Cowell)