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InterContinental profits slashed by a third

Horeca

InterContinental Hotels, the group spun off from Six Continents in April this year, has reported profits down by nearly 32% during the six months to 30 June.Hotel operating profits fell by 31.7% to £86m, against £126m during the equivalent period last year.But the drop was partly the result of currency fluctuations. In dollar terms the fall was only 23.6%.

While operating profit in the Americas remained steady at $134m (£84m), in Europe, the Middle East and Africa there was a £25m drop to £30m because of the fall in US visitors and the depressed eurozone economy.

In Asia Pacific, operating profit was down by $15m (£9.4m) to just $5m (£3.1m), the result of the Sars outbreak. Hotels turnover fell by 8.1% to £708m, from £770m in the first half of 2002.

InterContinental’s chief executive, Richard North, said: “Trading conditions in the first six months of this year have been as bad as anyone in the global hospitality industry can remember.

“Against this background we are focusing on the elements that we can control: namely revenue generation, reducing overhead costs and lowering capital intensity. We are beginning to deliver against these areas and are positioning ourselves for recovery when it comes.”

He added that the group still saw no signs of a sustained recovery in trading and was not convinced there had been an upturn in demand from business travellers in the USA.

Revpar fell in London There had been some improvement in revenue per available room (revpar) in the UK regional hotels, but Wester Europe remained “uncertain”.While Asia Pacific was recovering from Sars, it was “yet to regain all the ground lost.”

The company said it was on track to make $61m (£38m) of cost savings this year. It has also sold several hotels, generating proceeds of £227m since June.

In the UK regions, InterContinental’s Holiday Inn hotels increased revpar by 1.3% during the six-month period.

But in London, revpar fell by 8.5%. The company said this reflected the chain’s “bias towards the airport market” and the reduction in US visitors.

It claimed Holiday Inn UK was still performing better than its competitors., both in London and the regions.

While operating profit in the Americas remained steady at $134m (£84m), in Europe, the Middle East and Africa there was a £25m drop to £30m because of the fall in US visitors and the depressed eurozone economy.

In Asia Pacific, operating profit was down by $15m (£9.4m) to just $5m (£3.1m), the result of the Sars outbreak. Hotels turnover fell by 8.1% to £708m, from £770m in the first half of 2002.

InterContinental’s chief executive, Richard North, said: “Trading conditions in the first six months of this year have been as bad as anyone in the global hospitality industry can remember.

“Against this background we are focusing on the elements that we can control: namely revenue generation, reducing overhead costs and lowering capital intensity. We are beginning to deliver against these areas and are positioning ourselves for recovery when it comes.”

He added that the group still saw no signs of a sustained recovery in trading and was not convinced there had been an upturn in demand from business travellers in the USA.

Revpar fell in London There had been some improvement in revenue per available room (revpar) in the UK regional hotels, but Wester Europe remained “uncertain”.While Asia Pacific was recovering from Sars, it was “yet to regain all the ground lost.”

The company said it was on track to make $61m (£38m) of cost savings this year. It has also sold several hotels, generating proceeds of £227m since June.

In the UK regions, InterContinental’s Holiday Inn hotels increased revpar by 1.3% during the six-month period.

But in London, revpar fell by 8.5%. The company said this reflected the chain’s “bias towards the airport market” and the reduction in US visitors.

It claimed Holiday Inn UK was still performing better than its competitors., both in London and the regions.

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