Hotel groups are under pressure following a warning from Millennium and Copthorne Hotels about signs of a slowdown among its business customers.
The company said nine month profits rose 13.3% to £101.9m excluding one-off gains, such as a £33.8m gain from land sales in Kuala Lumpur. Chairman Kwek Leng Beng said:
Trading in the current period is positive, although we are noticing more caution among business customers, reflecting anxiety about events affecting the Eurozone.
The news sent its shares 21.2p lower to 411.8p. Intercontinental Hotels is down 18p to £11.04 ahead of its results on Tuesday, with Credit Suisse repeating its neutral rating on the business. The bank said there were signs that US room rates were growing more strongly than Europe, which could put its revenue assumptions for Intercontinental at risk. Other concerns mentioned by the bank included:
Asset disposals – we estimate a disposal value of $350m for the New York Intercontinental Barclay – which if postponed could instead lead to a $100m capital expenditure outflow.
China – Intercontinental has the leading Chinese hotel pipeline – which will likely be under scrutiny given heightened investor concerns about the Chinese growth/property outlook.
