Interactive Investor

InterContinental Hotels optimistic amid US and China upturn

7th May 2021 09:54

Keith Bowman from interactive investor

Loading

Share on

The shares were already trading back at pre-pandemic levels before these results. We assess prospects. 

First-quarter trading update to 31 March

  • Group revenue per available room down 50.6% against 2019 and down 33.7% versus 2020
  • Occupancy of 40%, improving through the quarter
  • 223 hotels or 4% of its estate closed at 31 March

Signs of recovery are emerging at InterContinental Hotels (LSE:IHG) following the most challenging year in the company’s history. 

As anticipated, the rebound in customer demand from the pandemic is coming from the US, its biggest market, and from China. The US is buoyed by a strong vaccination programme while China, being first into the virus crisis, remains agile in its lockdown approach. Improvements in customer demand from the start of the year to March and April have been seen across both the US and China.

Elsewhere, and for its region containing Europe, recent pandemic lockdowns have resulted in demand staying much the same as seen in the second half of 2020. 

More broadly, the hotelier’s management of its outlets continued, with 7,300 rooms added and 9,500 rooms removed. A further 92 hotels were signed. InterContinental franchises its brands to, and manages hotels on behalf of, third-party hotel owners.

In all, management outlook comments pointing to likely volatile trading for the balance of the year offer caution. So does an understandable lack of forward guidance, while an estimated forward price/earnings ratio above the 10-year average also suggests the shares are not obviously cheap.

That said, some signs of recovery are being seen with the rollout of vaccines offering light at the end of the tunnel. For now, and with the share price having almost doubled since pandemic lows in March last year, market consensus opinion currently points to a 'hold'.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox

Sign up for a free research account to get the latest news and discussion, and create your own virtual portfolio.

Free Sign Up