InterContinentals Inhospitable Conditions – US-FOREX.US
The green shoots appearing in the wider economy seem to be steering clear of the hotel industry. A recovery for the industry may be two years away, Andrew Cosslett, the chief executive of Intercontinental Hotels, said on Tuesday as the company posted a net loss of 56 million for the second-quarter after writing down the value of some of its recession-hit businesses.”Business travelers remain elusive,” Cosslett said. “We can’t see anything in our numbers at the moment to suggest we’ve hit the bottom. It could be a couple of years before we get back to the levels we were at.” He added that the rest of the year was going to be “very challenging.” Shares of InterContinental Hotels
, which operates the Holiday Inn, Crowne Plaza and Staybridge Suites brands on a managed and franchised basis, fell 1.4%, or 10.50 pence , to 747.50 pence in London.InterContinental’s quarterly loss follows a profit of 101 million in the same period a year ago. Impairment charges totalling 162 million and a 27% slump in revenues contributed to the loss.At the start of the recession the Buckinghamshire-based company benefited from business travelers trading down but it has recently been hit by aggressive promotions launch by luxury hotels, especially during the weekends. “[Cosslett] is being very cautious as there is very little sign of business travel recovering,” said Wyn Ellis, an analyst with Numis Securities in London. “Stock markets are getting more positive about the economic turnaround, but we will probably see a lag before the hotel industry recovers.” He added that the next twelve months would be tough going, but at least in the fourth quarter the comparisons with last year’s performance would be less striking, as it was in that period a year ago that the market really began to weaken.
The firm seems to be coping well, given the challenging circumstances. “InterContinental has done a terrific job in cutting costs,” Ellis said. InterContinental said it expected to save a total of 80 million this year, after cutting costs by 51 million in the first half.”[InterContinental] continues to do well on room openings and expanding their market share despite being hurt at the moment,” Ellis added.
The company may also benefit from its U.S. focus. In a client note, analysts at Credit Suisse said the firm remained their “preferred European large cap hotel stock” because of its U.S. exposure, “where recovery is likely to be earlier. We believe that the risk to consensus estimates is now on the upside.”
The Associated Press contributed to this article.