Holiday Inn owner IHG missed full-year revenue expectations as it was impacted by COVID-19 curbs in China, while a $750 million share buyback did little to cushion a drop in its share price on Tuesday 21 February.
While the tourism industry is gradually recovering from the aftermath of the pandemic, hotel chains have seen an uneven recovery in China as a rise in COVID-19 infections in the final quarter of the year led to indefinite restrictions.
IHG reported full-year revenue of $1.84 billion and a 55% rise in operating profit from reportable segments of $828 million, both of which missed expectations.
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Analysts on average were expecting revenue of $1.89 billion and operating profit of $831 million, according to a company compiled consensus of forecasts.
Shares were down 1.6% at 5,504 pence in morning trading on Tuesday 21 February.
Despite the miss, IHG said it would buy back additional shares worth $750 million after the company completed a share buyback worth $500 million in January.
The company also proposed a 10% rise in final dividend of 94.5 cents.
"While IHG has underperformed peers in the last month with broadly flat performance ... we think the market was expecting a full year beat. However, higher-than-expected buybacks and dividend do offset this," analysts at Jefferies said in a note.
Full year RevPAR - a key measure for a hotel's top-line performance - in Greater China was down 38% from pre-pandemic levels. However, the hotel group said it saw a surge in demand in China over the Lunar New Year festive period in January.
"Now that COVID restrictions have lifted, things have quickly returned to normal, travel for the Chinese New Year was almost back to 2019 levels," chief financial officer Paul Edgecliffe-Johnson said.
Second Half RevPAR Across Regions
The Crowne Plaza, Regent and Hualuxe owner said RevPAR across the regions in the second half of the year exceeded pre-pandemic levels of 2019.
Read More: Holiday Inn Owner IHG Names Company Insider As CFO
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