FTSE 100 hotel chain operator raised its dividend by 11% after 23% growth to underlying eps
Companies: Intercontinental Hotels Group
InterContinental Hotels Group has raised its dividend by 11% after the FTSE 100 company reported an impressive 23% increase in underlying earnings for the year to 31 December.
The Group, which operates hotel chains like Holiday Inn and Hotel Indigo, reported $1.72bn (-4.9%) in gross revenue, £1.38bn in fee revenue (+2.3%), operating profit of $707m (+4%) and adj. EPS of 203.3¢ (16.2%).
Despite revenues falling Yoy, the firm posted a 23% increase in underlying EPS. This is because 95% of IHG's profit comes from the fee business, which saw a marginal increase YoY, and because of improved margins.
"High quality business model, continuing margin growth and low capital intensity drives operating cash flows"
The firm reported strong underlying revenue growth driven by both RevPAR (revenue per available room) and rooms, with its "global comparable" RevPAR up 1.8% (Q4: 1.7%), and record occupancy levels.
As a result, management announced that $400m will be returned to shareholders in the form of a special divi in Q2, with the total divi now 94.0¢/share. The firm said the 11% increase reflected its confidence in long-term sustainable future growth.
CEO Richard Solomons said Tuesday's results clearly demonstrated the strength and success of IHG's long-term strategy, with the firm's "cash generative business model" underpinning the decision to announce a $400m special dividend and an 11% increase in total dividend.
He went on to say that the firm was enhancing its long-term sustainability and competitive advantage by evolving its brand portfolio and by driving digital innovation and loyalty:
"We rolled out new formats across our Holiday Inn Brand Family which deliver significant uplifts in guest satisfaction and improved returns for owners, built momentum for our HUALUXE and EVEN Hotels brands, and took Kimpton Hotels & Restaurants and Hotel Indigo into new markets. We also strengthened our loyalty proposition through initiatives including 'Your Rate' helping to drive a 16% increase in member enrolments."
According to Mr Solomons, the fundamentals of the industry remain "compelling", despite uncertainty in some markets.
Shares in IHG jumped 2% as the market opened on Tuesday.