InterContinental’s pipeline of new hotels has broken through the 200,000 room barrier, according to the latest figures given at its third quarter results.
Since the start of this year the pipeline has grown by 28% to sit at 201,776 rooms representing 1,533 hotels.
While the credit crunch appears not to have slowed signings, what remains of its disposal programme has seen “the froth taken out”, admitted the company.
The massive pipeline represents more than a third of the existing open rooms in the system. And even with all of the debt market turmoil over the summer months, the company believes it has not lost a single signing as a result of tighter financing conditions.
“There is confidence among owner groups,” said CEO Andy Cosslett during the conference call about the results.
But there was a significant difference in financing at the level of the individual franchisee and for bigger acquisitions. IHG still has 20 hotels on the market worth around £900m. One of the most significant sales is the InterContinental in Atlanta. The deal to sell this asset remains on track, it was claimed, although the more exuberant buyers are no longer to be found.
The big push to transform Holiday Inn under its new look is already underway with 22 prototype hotels open and 200 undergoing renovations, ahead of the official rebranding launch in the spring of next year. The new brand standards are not expected to significantly quicken the pace of exits from the system which have run at about 20,000 rooms a year for the past five years.
In the quarter 6,640 rooms exited the IHG system, mostly in the US. This dragged the net room opening number down to 7,395 but since the June 2005 staring point, 33,396 rooms have been added.
Cosslett said he was confident of hitting the target of 50,000 to 60,000 net rooms additions by the end of 2008.
The operating performance of IHG continues to be robust with revpar increasing on a global basis by 6.1% for the nine months. Continuing operating profit was up 22% to £66m.
But looking at the third quarter in isolation shows a significant slowdown in revpar growth, given that the first half delivered an increase of 7.1%. ABN Amro calculated that the implied revpar growth for the third quarter was 4.1%.
This is a marked slowdown and with a softening outlook for the economies in both the US and the UK, dominant and important markets respectively for IHG, there is likely to be further deterioration in revpar growth performance.