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Highlights
- Intercontinental Hotels Group has returned to profitability for the year ended 31 December 2021 amid the recovery in the business.
- The company’s reported revenue was above the market expectations with recovery in the key performance indicator like revenue per available room (RevPAR).
FTSE100 listed global hospitality company Intercontinental Hotels Group Plc (LON: IHG), which manages hotels in over 100 countries, has returned to profitability in 2021 amid the recovery in the business.
In its business update for the year ended 31 December 2021, the owner of well-known hotel chains like Crowne Plaza and Holiday Inn reported a 21% rise in total revenue at USD 2,907 million. Driven by the ease in travel restrictions and higher vaccination rates, there was strong demand for staycations and resort stays. The company returned to the profitability path and reported an operating profit of USD 494 million at the group level compared to a loss of USD 153 million in 2020.
IHG’s reported revenue was above the market expectations with recovery in the key performance indicators like revenue per available room (RevPAR), which was 70% of 2019 levels, and improvement in occupancy rates to 53% of 2019 levels during the period.
The encouraging performance of the company led the management to announce the resumption of dividend pay-outs with a proposal of a final dividend of 85.9 cents per share for the first time since 2019. The recommencement of dividend policy indicates recovery in the company’s business and a positive outlook towards future earnings.
Is it the right time to invest in stock?
The upbeat business performance suggests that the company has already been through the worst and is showing a gradual recovery from the Covid-19 pandemic impact. Key performance metrics like RevPAR and occupancy rates for the upcoming quarters can give a clearer picture of the company’s growth path. Further improvement in these key metrics will indicate the company’s strength of business performance and capability to deliver consistent profitability.
Moreover, the decision to pay dividends sends out a strong message that the company’s management is optimistic about future business prospects and performance.
Recent stock performance
(Image Source: Refinitiv)
After the result announcement, the company’s stock witnessed good buying interest and currently trades at GBX 5,068, up by 3.68% on 22 February 2022 at 10:45 am GMT+1, with a market cap of £8,994 million. The current dividend yield of the stock stands at 1.9%. The stock has given a year-to-date return of 6.00% to its shareholders.
