Market Report: InterContinental feels benefits of encouraging third-quarter statement

Investors checked into InterContinental Hotels Group after an encouraging third-quarter statement.

Revenue per available room the Holiday Inn and Crowne Plaza owner grew 4.8 per cent as a strong showing in Europe helped offset a decline in China. That may be down from the 5.8 per cent growth in the first-half, but it was better than analysts’ 3.8 per cent prediction. IHG, up 7 per cent at 2,471p, has finished its sell-off of properties, including the InterContinental Hong Kong for $929m (£603m), and is now a hotel manager rather than hotel owner.

That means returning cash to shareholders – a decision on which is due in February. Some analysts think investors could pocket as much $1.5bn, which is equivalent to a sixth of the company’s market value. IHG could spend some of the cash on a merger, especially as it is under pressure from the activist US shareholder Marcato Capital Management to do so.

It played down rumours of a deal with Starwood Hotels earlier this year, but has kept its counsel on speculation of a tie-up with Fairmont Raffles, whose historic hotels include the Savoy in London.

IHG’s rise was not enough to push the FTSE 100 into positive territory. The blue-chip index finished 7.2 points lower at 6,345.13.

A downgrade to “underperform” from Credit Suisse left the drug maker AstraZeneca down 3 per cent at 4,024.5p and in need of a boost, while the iPhone chipmaker Arm Holdings slid 12.5p to 963p ahead of Wednesday’s third-quarter results.

A third suitor has entered the bid battle for FTSE 250 group Al Noor Hospitals, which climbed 15p higher to 1,180p. Fellow Abu Dhabi-based VPS Healthcare is the latest to join the fray, pitting itself against the Lodon-listed NMC Health, which rose 11.5p to 781.5p, and South Africa’s Mediclinic, whose £1.36bn bid was approved last week by Al Noor’s board.

Aveva picked up 89p to 2,097p as Berenberg upgraded the engineering software group to “buy” and raised its target price to 2,450p.

Genel Energy, the oil firm run by ex-BP chief Tony Hayward, dropped 19p to 316.25p after it cut annual production guidance.