Boston, MA 05/07/2014 (wallstreetpr) – InterContinental Hotels Group PLC (ADR) (NYSE:IHG) plans to sell off more of its hotels around the world even as it considers establishing more in promising markets such as the greater China. The sale of the assets is expected to unlock cash that the company expects to return to shareholders.
The company recently announced strong revenue in the latest quarter supported by high room rates and occupancy. The ongoing streamlining efforts are also having their mark on the company’s financial performance as it curbs runaway operating expenses and costs.
The company announced plans to return to shareholders as much as $750 million that will be given out in the form of dividend. However, continued asset monetization should bring in more cash to support stock repurchases to return greater value to the shareholders and also improve the value of the remaining shares.
The company was bogged down by high expenses and low room occupancy and rates in the past year, but it is now witnessing recovery in key markets such as Europe where the economic conditions are showing signs of big improvement. InterContinental Hotels Group PLC (ADR) (NYSE:IHG) realized 6.1 percent increase in revenue-per-room, in Europe during the 1Q2014 period. The strength noted in European operations was linked to the double-digit growth in Britain. And in China where the company has a significant amount of its expansion projects revenue-per-room jumped 3.9 percent.
The new strategy
InterContinental Hotels Group PLC (ADR) (NYSE:IHG) is confident in enhancing the value for the shareholders given its strategy to sell off hotels and then win back contracts to manage them. The strategy enables the company to maintain revenue stream while keeping away from expenses and costs. The company generated as much as $394 million in 1Q alone following the completion of two hotels in the U.S.
Improving business condition
InterContinental Hotels Group PLC (ADR) (NYSE:IHG) is satisfied with the progress it is making in its leased and owned hotels operations. The company expects the demand for hotel services in the U.S., Europe and China to remain strong for the balance of 2014. The company also expects the demand for prime hotel assets to remain strong so that it can sell off more of its assets and generate more cash to reward the shareholders. The company has returned $13 billion to shareholders over the past 10 years.
