By David Jones
LONDON (Reuters UK) - InterContinental Hotels (IHG), the world's largest hotelier, beat forecasts with a 14 percent rise in third-quarter profit on Tuesday but warned it saw a sharp deterioration in October market conditions.
The British-based group, which operates InterContinental, Crowne Plaza and Holiday Inn hotels, added current financial conditions are having an impact on the availability of debt finance and new hotel signings are taking longer to finalise.
The hotelier reflected an existing industry picture of a sharp fall in Revenue per available room (RevPAR), a key industry measure, especially since the end of September as the worldwide slowdown hits business travel and consumer spending.
"In October we have seen a sharp deterioration in market conditions with preliminary data for the month showing a global RevPAR decline of 4.5 percent with a decline of 5.7 percent in the U.S.," said Chief Executive Andrew Cosslett in a statement.
The hotelier, which typically manages or franchises hotels instead of owning them, currently operates over 4,100 worldwide hotels and over 600,000 rooms, and earns nearly 70 percent of its profits in the United States.
Merrill Lynch analyst Ian Rennardson said the results were good as the hotelier outperformed a tough market, but he warned trading is getting tougher and earnings uncertainty remains.
"We retain our underperform recommendation and 550 pence price objective," he said. The shares closed at 540p on Monday, with traders expecting them to open lower.
Revenue per available room grew 1.6 percent at constant currency in the quarter, which the group said was ahead of the industry as it opened 19,000 new rooms in the quarter, and the group said it was well positioned to outperform the market.
The group said continuing operating profits rose to $150 million (96 million pounds) in the three months to September 30, compared to a consensus of $141 million and a range of $128 to 146 million.
Last month, U.S.-based hoteliers Marriott International (MAR) and Sheraton-owner Starwood (HOT) both reported lower third-quarter earnings, cut forecasts for 2008 and warned of tough times ahead in 2009.
InterContinental shares have underperformed London's FTSE 100s by 10 percent this year, which mean the shares trade on 9.8 times 2009 forecast earnings, at a discount to U.S. peers Marriott and Starwood both on around 13 times.
(Reporting by David Jones; Editing by Rupert Winchester)
