InterContinental Hotels reported today that first-quarter net profit fell to $27 million, from $62 million a year ago.
The company took a charge of $26 million in the quarter for pension costs and the relaunch of its Holiday Inn brand. Revenue dropped to $342 million, from $56%448 million last year, while revenue per available room fell 13.6% in constant currency terms.
Commenting on the results and trading, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"As expected the start to the year has been very challenging for the industry. Occupancy showed signs of stabilization in the quarter, but room rates, which held up well during 2008, declined under the pressure of a very competitive market. Our brands continue to perform strongly across all three of our regions, and in the U.S. our RevPAR outperformance has improved further from the last quarter of 2008, mostly as a result of our portfolio bias to midscale hotels, primarily Holiday Inn.
"The lack of liquidity in the lending markets has slowed our deal pace but we still signed 76 hotels in the quarter. We also opened close to 100 hotels, more than in the same period last year. This opening program combined with our continued removal of underperforming hotels is driving up the quality of our estate. We are continuing to invest in our business with the major focus being the relaunch of Holiday Inn. We now have over 700 relaunched hotels in the system and remain committed to completing the program by the end of 2010. Feedback from relaunched hotels continues to be positive, with RevPAR outperformance in line with expectations.
"Our strong balance sheet and long term bank facility provide a strong platform for our capital light, cash generative, fee based model. The outlook remains tough but we are taking decisive action on costs without compromising our ability to continue to grow market share.'
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