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Hotel group warns of "sharp deterioration" in market
The Intercontinental Hotel Group (IHG) reported an operating profit of $153m for the third quarter, an 8% rise on the $138m for the same period in 2007. Andrew Cosslett
The group said that in the three months to the end of September, continuing revenue was up 7% from $453m in 2007 to $486m this year.
But Andrew Cosslett, its ceo, warned there had since been a "sharp deterioration" in the market in October.
He said that "preliminary data" for the month showed a global revPAR decline of 4.5% with a decline of 5.7% in the US.
IHG said during the third quarter, global revPAR had risen 1.6% and the group had added a further 10,081 rooms to its portfolio.
It had also signed for a further 164 hotels with 25,546 rooms, taking its pipeline to 1,773 hotels (243,509 rooms).
IHG's three major regions, the America, EMEA and Asia Pacific, all showed an increase in operating profit.
In the Americas it rose from $124m in 2007 to $129m, in EMEA from $42m to $46m and in Asia Pacific from $14m to $18m.
Mr Cosslett said: "We expect the rate of new room openings to remain strong, reflecting the size and quality of our development pipeline which stands at nearly a quarter of a million rooms (1,773 hotels).
"Around 90,000 new rooms (540 hotels) are under construction, and over half of these are currently expected to open in 2009."
But he added: "In October we have seen a sharp deterioration in market conditions with preliminary data for the month showing a global RevPAR decline of 4.5% with a decline of 5.7% in the US.
"Throughout 2008 we have been controlling costs and capital spending tightly and we are taking the necessary steps to manage both to be below this year's levels in 2009.
"Given the power of our brands, the size and resilience of our pipeline and our leading reservations systems, we are positioned well to continue to outperform the industry."