Tuesday, InterContinental Hotels Group Plc (IHG,IHG.L) reported a loss for the second quarter that mainly reflected asset impairment charges. On an adjusted basis, profit fell 26% from last year on sharp decline in revenues across all regions. Further, the largest hotel company by number of rooms noted that its July global constant currency RevPAR decline was 14.4%, and that it expects the remainder of 2009 to be tough.
Second-quarter loss attributable to the equity holders of the parent was $56 million or 19.2 cents per share, compared to profit of $101 million or 34.1 cents per share last year.
On a continuing operations basis, loss was $58 million or 19.9 cents per share, in comparison to prior year's profit of $101 million or 34.1 cents per share.
The latest quarter results included exceptional charges of $130 million, mainly due to non-cash asset impairment charges of $162 million.
Before exceptional items, profit for the quarter was $74 million or 25.4 cents per share, lower than last year's profit of $100 million or 33.8 cents per share.
On average, three analysts polled by Thomson Reuters expected earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.
Pre-tax loss was $82 million, compared to profit of $145 million a year ago, while adjusted pre-tax profit fell to $93 million from $139 million in 2008.
Total second-quarter revenues fell 27.2% to $375 million from $515 million last year. Analysts expected revenues of $412.77 million for the quarter. At constant exchange rates, revenues dropped 21%. Excluding liquidated damages, or LDs, received by IHG in respect of the settlement of franchise contracts, revenue decreased 24% on a reported basis and 20% at constant exchange rates.
Geographically, Americas recorded quarterly revenues of $196 million, down 24% from last year's $258 million, reflecting a 28.8% drop in owned and leased revenues, 45.5% fall in managed revenues, and a 14.2% decline in franchised revenues.
In Europe, Middle East and Africa, or EMEA, revenues for the quarter fell 36.5% year-over-year to $99 million, hurt by 27.9% drop in owned and leased revenues, 45.6% fall in managed revenues, and a 38.7% decline in franchised revenues.
Asia Pacific revenues totaled $50 million, down 27.5% from last year. The region's revenues reflected a 32.4% decline in revenues from owned and leased operations, while managed revenues dropped 21.4% and franchised revenues fell 25%. Central revenues fell 6.3% year-over-year to $30 million.
Global constant currency RevPAR declined 18.6% in the second quarter, and InterContinental noted that its brands outperformed the industry in each of its three regions.
In the quarter, operating loss, including exceptional items, was $68 million, compared to profit of $170 million last year. Adjusted operating profit fell 34.8% to $107 million from $164 million a year ago.
Adjusted operating profit in the Americas fell 35.8% from last year to $86 million, and the drop was 42.4% in EMEA region to $34 million, and 41.7% in Asia Pacific to $7 million, while Central reported an adjusted operating loss of $20 million, narrower than prior year.
For the first six months of fiscal 2009, InterContinental's loss attributable to the equity holders of the parent was $29 million or 10 cents per share, compared to profit of $163 million or 54.9 cents per share a year earlier. Loss for the period from continuing operations was $35 million or 12.1 cents per share, compared to prior year's profit of $163 million or 54.9 cents per share.
Adjusted profit attributable to the equity holders of the parent fell to $118 million or 40.7 cents per share from $169 million or 56.9 cents per share last year. First-half pre-tax loss was $50 million, compared to profit of $232 million a year ago, while adjusted pre-tax profit fell to $151 million from last year's $236 million.
First-half revenues declined 25.5% to $726 million from $974 million a year earlier, reflecting a 24.8% drop in revenues from Americas, 31.4% fall in EMEA, 24.8% decline in Asia Pacific, and a 6.3% drop in Central revenues.
The company noted that the IHG global system, i.e., the number of hotels and rooms which are owned, leased, managed or franchised, increased in the first-half by 117 hotels or 9,849 rooms, with openings of 229 hotels or 26,956 rooms, and removals of 112 hotels or 17,107 rooms.
Andrew Cosslett, Chief Executive of InterContinental Hotels, said, "Trading was very challenging throughout the first half of the year and we expect the remainder of 2009 to be tough."
Further, InterContinental said its Board has proposed an interim dividend per share of 12.2 cents, equivalent to 7.3 pence, same as the prior year. The dividend will be payable on October 2, to shareholders on the register on August 28.
Regarding the recent trading, InterContinental noted that its July global constant currency RevPAR decline was 14.4%, with 14.2% drop in Americas, 15.1% decline in EMEA, and 14.5% fall in Asia Pacific. The company added that forward bookings data, which provides limited visibility, shows no further deterioration in demand, and the month of July benefited from stronger leisure demand. Further, the company said that 2009 regional and central costs are now expected to be around $80 million below 2008 levels comprising at least $40 million of sustainable savings, $20 million of currency benefit and $20 million of non-sustainable savings. IHG expects to achieve sustainable cost savings of between $65 million and $70 million by the end of 2010, representing about 20% reduction compared to 2008 levels. The additional estimated cost to achieve these savings will be about $25 million with about $22 million cash cost.
Regarding the room openings, InterContinental noted that about 90 thousand rooms are under construction, of which about 25 thousand rooms are scheduled to open in the balance of the year. Room removals are still expected to be in the region of 35 thousand for both 2009 and 2010. Cosslett added, "We are on track to open more than 400 hotels this year. We are making good progress with the global relaunch of Holiday Inn and over 1000 hotels have now completed this process. Feedback from relaunched hotels continues to be positive and we are still committed to completing the programme by the end of 2010. The outlook remains challenging, but we are confident that with our fee based business model, substantially reduced cost base, strong financial position and the renewal and refreshment of our brands supported by our system scale, we will outperform the competition and be well positioned for the upturn."
IHG closed Monday's regular trading session at $12.41, down $0.11 or 0.88%.
On the LSE, IHG.L is currently trading at 750.00 pence, down 8.00 pence or 1.06%, on a volume of 630 thousand shares.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.