INTERCONTINENTAL HOTELS Group, the world’s largest provider of hotel rooms, climbed to an all-time high after announcing a plan to return $1 billion to shareholders through a special dividend and share buyback.
The owner of the Holiday Inn chain gained 8.3 per cent in London, leading the FTSE 100. That is the highest price since the Denham, England-based company first sold shares to the public in April 2003.
InterContinental plans to pay a one-time dividend costing $500 million in the fourth quarter, and will distribute the same amount in a share buyback programme starting in that period, the company said in a statement yesterday.
InterContinental raised its first-half dividend to 21 cents a share from 16 cents after operating profit excluding exceptional items climbed 6 per cent to $286 million.
Rising demand in emerging markets such as the greater China region, which accounts for about 10 per cent of revenue, is helping InterContinental boost profits. About 30 per cent of the company’s global expansion over the next three to five years will be in the region. The Americas account for about half of InterContinental’s revenue.
InterContinental’s strategy is to return capital to shareholders by selling assets and it has paid out $8.9 billion since going public in 2003. The hotelier plans to sell the New York Barclay hotel this year and the London Park Lane in 2013.
The $1 billion return to shareholders “recognises the expected proceeds” from the sale of the New York Barclay, chief executive Richard Solomons said in the statement.
The hotelier is in exclusive talks with a prospective buyer and expects to close a deal in “coming months”, chief financial officer Tom Singer said on a conference call with reporters.
The shareholder payments are not contingent on the sale, he added.
First-half revenue per available room, a measure of room rates and occupancy known as revpar, rose 9.7 per cent in greater China, where InterContinental opened the world’s largest Holiday Inn in April.
In the Americas revpar increased 7.1 per cent. – (Reuters)