IHG Profits Surge In First Quarter

　　Despite ongoing challenges in Europe, IHG, number one in HOTELS ranking of the world’s biggest hotel companies, on Wednesday reported a surge in first-quarter 2012 profits based on strong growth in the United States and China.

　　Net profit for Q1 more than doubled to US$154 million, from US$69 million a year earlier, and was boosted by an exceptional tax credit. Revenue rose 3.3% to US$409 million.

　　Operating profit, a key measurement, rose 5.3% to US$118 million, beating consensus estimates, while RevPAR increased 7% (7.7% in the Americas and 12% in China).

　　Approximately 7,100 rooms entered the IHG system during the quarter, while 4,300 rooms exited. Fully, 9,300 rooms were added to the pipeline, which now stands at approximately 175,000 rooms (26% of existing room count and 15% of the global pipeline). China represents 30% of the pipeline, and including planned openings, IHG has a presence in 36 of the 38 tier 2 cities in the country.

　　"Our resilient business model, our exposure to high-growth economies and strong balance sheet all make us confident that we will continue to deliver high-quality growth and strong results in 2012 and beyond," Chief Executive Richard Solomons said.

　　"Clearly there is economic turmoil going on, but we look at Europe as a very important part of our business. Five of the 10 largest economies of the world are in Europe. With relatively low supply growth and increasing demand we have seen some pretty healthy numbers, certainly in April," Solomons added.

　　David Loeb, analyst with R.W. Baird, Milwaukee, noted that RevPAR growth of 7% beat its forecast of 5.6%; clean EPS of US$0.26 was ahead of its US$0.25 and EBITDA missed slightly (US$141 million vs. Baird"s US$144 million). “IHG"s pipeline remains best in class despite modest growth in the quarter,” Loeb reported. “Slightly weaker-than-expected owned and leased margins and a slower ramp to franchise unit growth contributed to the EBITDA shortfall. European RevPAR headwinds experienced in 4Q11 appear to be moderating slightly in 2012, though still a laggard with 2.6% RevPAR growth in the quarter.”