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Intercontinental Hotels upbeat after strong first quarter; shares edge higher

Prices rose by 1.9% and occupancy was up 1.0%, though progress was hampered by the timing of the Easter weekend

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IHG is going upmarket

Intercontinental Hotels Group PLC (LON:IHG) shares rose on Friday as the FTSE 100-listed firm reported a good start to the year and expects to meet its target of US$125mln of cost savings by 2020.

"In the first quarter we delivered RevPAR growth of 3.5%, net system size growth of 4.3% and our best signings pace for eleven years,” said Keith Barr, chief executive.

READ: IHG expands luxury footprint with acquisition of 51% stake in Regent Hotels and Resorts for US$39mln

Prices rose by 1.9% and occupancy was up 1.0%, though progress was hampered by the timing of the Easter weekend which affected RevPAR [revenue per room] growth in the Americas and Europe.

IHG strengthened its presence at the luxury end of the hotels market this week with the acquisition of 13 hotels in the UK from Foncière des Régions to be rebranded Kimpton.

Alongside the 51% stake in Regent Hotels acquired in March, this will establish it as the leading luxury hotel operator, said Barr.

Avid hotels, the new mainstream brand, is also growing ahead of expectation with the total now more than 100, with on average, one added every other day since launch.

“The fundamentals for our industry remain strong, we have the right strategy, and we are confident in the outlook for the year ahead."

In lunchtime trading in London, IHG shares were 0.5% higher at 4,641p.

China progress very welcome

Nicholas Hyett, equity analyst at Hargreaves Lansdown said: “China left the rest of the group in the dirt this quarter, with a particularly strong performance in Hong Kong and Macau.

“The currencies of the two autonomous territories are pegged to the US dollar, and with that declining relative to the renminbi, it’s boosted visitors from mainland China. That’ll come as a relief after a tough period in both territories. China’s a major target market for the group, so progress here is very welcome.”

He added: “Elsewhere performance was steady, although US growth in particular slowed relative to the last quarter of 2017 -  perhaps a little disappointing, but probably explained by the timing of Easter.

“Pipeline growth shows little sign of slowing, and assuming RevPAR growth can also be maintained, that should provide steady growth for years to come.”

-- Adds share price, analyst comment --

Quick facts: Intercontinental Hotels

Price: 3473 GBX

LSE:IHG
Market: LSE
Market Cap: £6.35 billion
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