InterContinental beats City forecast as profits rise 34%

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The Independent Online

InterContinental Hotels, the world's biggest hotel operator by number of rooms, beat City forecasts for its 2011 profits and accompanied that with a bumper dividend increase.

"You can call this a great British success story," Richard Solomons, chief executive, said. We are the largest hotel group in the world, based in Britain but the UK accounts for just 5 per cent of our revenues."

He is excited about the impact of the Olympics and the Queen's Jubilee on UK hotels, with two new Holiday Inn and Staybridge sites opening at Stratford, East London, and IHG offering more than 50 hotels in the capital.

Mr Solomons said: "We are now 80 per cent booked for the games. It's not just London hotels and there has been a good knock-on effect to further, out-of-town hotels."

London's InterContinental Park Lane remained one of the star performers last year, with revenues per available room up by 7.3 per cent in 2011 against the group figure of 6.2 per cent. But China and the US remain the drivers, with revenue per available room growing by 10.7 per cent and and 7.5 per cent, respectively.

IHG plans to launch two new brands of hotel this year, one for each of those regions. Mr Solomons is playing it close to his chest which position in the market they will take, although it seems likely the US brand will be mass market and the Chinese upmarket.

He hopes to reproduce the success of Hotel Indigo, the group's boutique hotels label, which has gone from zero to 100 planned hotels in seven years.

The only major weak points in 2011 were Egypt and Bahrain, which were hit by civil unrest, and Japan, where the economy was still recovering from the tsunami.

Pre-tax profits rose 34 per cent to $532m (£338m) on revenues up 9 per cent to $1.8bn. The dividend is up 15 per cent to 55 cents a share.

Revenues and room rates in January were stronger than in the final quarter of 2011.