IHG reports 'excellent' growth in 2014

By Carina Perkins contact

- Last updated on GMT

IHG reports 'excellent' growth in 2014

Related tags: Cent, Hotel

IHG has reported strong financial performance in 2014, with the UK outperforming the rest of Europe during the year.

According to the hotel group’s preliminary results for the year to 31 December 2014, revenues dipped 2 per cent to $1.86bn and operating profits fell 3 per cent to $651m due to the disposal of several owned hotels during the year.

However, operating profits rose 10 per cent to $646m on a constant currency basis, while RevPAR increased 6.1 per cent across its global portfolio. Net system size rose 3.4 per cent, with 41k rooms opened and just 18k removed.

The Americas contributed 68 per cent of the group’s operating profits before central overheads, with RevPAR up 7.5 per cent in the US in 2014.

In Europe, ReVPAR rose 5.1 per cent on the back of ADR and occupancy growth in the key markets of the UK, German, Russia and the CIS.

Trading was ‘particularly strong’ in the UK, where RevPAR increased 8.9 per cent with double digit growth in the regions and high single digit growth in London.

IHG reported particularly good growth in its European franchise business, which delivered 11 per cent operating profit growth last year.

The company said it is in the process of transferring most of its UK managed hotels to franchise contracts, which would allow it to ‘accelerate growth’ in the UK.

A total of 21 hotels were transferred in 2014 and the rest will be transferred this year. IHG said it expects UK franchised income to rise by $3m in the medium-term as a result of these changes.

Strategic growth

IHG invested heavily in technology and digital last year, launching mobile check-in and check-out at over 500 hotels, introducing personalisation and redemption offers for its 84m IGH Rewards Club members and establishing a strategic relationship with Amadeus to develop ‘innovative and efficient technology solutions.’

The hotel group said this investment paid off, with 71 per cent of room revenue delivered by direct and indirect channels, including $4bn of digital revenues. Mobile bookings rose 50 per cent to over $900m.

In 2015, IHG intends to continue driving digital innovation, as well as further enhancing its portfolio of preferred brands and delivering strong net system size growth.

“2014 was an excellent year for IHG as we delivered against our long-term winning strategy for high quality growth. We achieved strong RevPAR performance of 6.1 per cent, and our best net system size growth since 2009 of 3.4 per cent, increasing our operating profit on an underlying basis by 10 per cent,” said IHG chief executive Richard Solomons.

“Looking into 2015, we face many macroeconomic and geopolitical uncertainties, but are confident that our strategy for high quality growth coupled with the momentum in the business positions us well for continued strong performance.”

Related topics: Hotels, Trends & Reports, Business

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