By Geoffrey Smith
Investing.com -- InterContinental Hotels Group (LON:IHG) said it will buy back another $750 million of stock after the post-pandemic recovery in travel allowed it to post its best results in three years.
The owner of the Crowne Plaza and Holiday Inn hotel chains profited handsomely from consumers putting travel at the top of their list of priorities as the pandemic eased last year: underlying revenue rose 39% as the company was able to put its average room rate up by 18%. That left group revenue down only 8% from 2019, the last full year before the pandemic struck.
Profitability also improved, with adjusted earnings per share up 92% from a year earlier at $2.82 and operating profit up 55% at $828M, despite a $17M headwind from currency effects.
"It's particularly pleasing that in the second half of the year we exceeded 2019 levels for both (Revenue Per Average Room) and profitability," said chief executive Keith Barr. He added that "while there are economic uncertainties, we expect continued strong leisure demand in many markets, alongside further return of business and group travel and the ongoing reopening of China."
China was the only one of the group's main markets not to see a significant rebound in hotel demand last year, as the government reacted to a succession of local outbreaks of COVID-19 with sweeping restrictions on mobility.
In addition to the extra buyback, which will reduce the group's share count by around 1.2% at current prices, the group also raised its final dividend by 10% from 2021 to 94.5c. That gave a total dividend for the year of $1.38, a yield of 2.5%.
IHG stock still fell in early trading in London, however, due to disappointment at the revenue numbers, which were below expectations. By 04:10 ET (09:10 GMT), Intercontinental Hotels stock was down 2.1%, having briefly touched a five-week low at the open.