The share price of InterContinental Hotels Group (LSE: IHG) (NYSE: IHG.US) fell 3.5% to 1,975p during early trade this morning despite reporting a positive set of final results, as investors were disappointed by the lack of news on a cash return to shareholders in the form of a share buyback or special dividend.
The company, whose brands include Crowne Plaza and Holiday Inn, posted a nearly 4% increase in revenue to $2.9bn as 237 new hotels were opened in 2013 with a further 444 hotels in the pipeline — the highest number for five years.
Global revenue per room, the industry measure that gives a more rounded expression of what the company is receiving per customer, rose by just under 4%, led by strong performance in the US as hoteliers benefit from improved demand.
2013 profits grew 10% to $668m, ahead of analyst forecasts of $585m.
The chief executive, Richard Solomons, commented:
“2013 marked IHG’s tenth anniversary as a standalone company, and was another year of strong performance. We delivered good underlying growth in revenues and profits, further reduced the capital intensity of the business and continued to generate high returns.”
“Our preferred portfolio of brands, brought to life by talented people and best in class delivery systems, will enable us to continue to drive out-performance in an industry which has compelling long term prospects.”
In today’s results InterContinental reported earnings per share of 95p that will support a dividend per share of 42p. After this morning’s price alteration the shares may therefore trade at 21 times earnings and offer a possible income of around 2%.
Of course, the decision to ‘buy’ — based on those ratings, today’s results, and the wider prospects of the hotel sector — is solely your own decision.
> Mark does not own shares in InterContinental Hotels Group.