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24,000 Rooms, Reports Strong Financial Results Despite Difficult Market Conditions Will Hold Off Major Acquisitions for at Least Six Months |
| December 6, 2001 - Six Continents Hotels, the world's most global hotel
company, today announced strong financial results and a resilient position
for the future, despite difficult market conditions.
In the financial year ending September 30, 2001, Six Continents Hotels' global portfolio grew by 24,000 rooms to 514,000 rooms. The company was particularly strengthened by two valuable acquisitions, according to Sir Ian Prosser, chairman of Six Continents PLC. These included the acquisition of the former Regent in Hong Kong, which is now the Hotel Inter-Continental Hong Kong, giving the five-star brand a high-profile flagship hotel in this key city and enhancing the company's leading position in China. The second key purchase of the year was the acquisition of the 79-strong UK Posthouse chain from Compass Group PLC in April 2001. Sixty-one of these hotels have already been converted to Holiday Inn hotels, ensuring that Holiday Inn is now a leading hotel brand in the UK. Tim Clarke, chief executive, Six Continents PLC said: "In the hotel business our position improved despite obvious trading difficulties. The increase in our system size raised our global system fund to $350 million a year. This is used for marketing, reservations and loyalty programs. Our excellent reservation system continued to support growth in the business, generating over 30 percent of total US mid-scale room nights. Priority Club(R) Worldwide, our loyalty program, grew by almost 20 percent, or 2 million members, to 12.4 million. "Overall, hotel profit rose by 13.6 percent in the year, including the acquisition of Posthouse; excluding that acquisition, profits were up by 3.7 per cent. The Europe, Middle East, and Africa region had a strong year, with profits up by 22.4 percent." He concluded: "We are extracting the benefits from recent investments, and in particular the Allied Domecq (550 pubs) and Posthouse properties we purchased. The strong pipeline in Hotels of 69,000 rooms, and Retail of 700 sites, will underpin organic opportunities for growth in both businesses. "And finally, we have consciously prepared for the downturn, conserving the bulk of our resources should potential opportunities arise that meet our rigorous criteria." Current trading - hotels Within hotels it is clear that in the United States, following the dire trading conditions in the two weeks following the terrorist attacks, there has been some improvement, although trading remains at depressed levels. Within Europe the position is not as clear. It would appear that there has not as yet been any recovery in long haul travel and so trading in upscale hotels has not shown any meaningful improvements since 11 September. Anticipating tough market conditions, Six Continents took decisive action early in the year to reduce costs across the division. Overall profit in the hotel division for the month of October was $30 million less than the previous year. The upscale business across the United Kingdom, United States and France is all now trading at 30-40 percent RevPAR decline, which remains lower than the July figures. This decline is relatively evenly split between rate and occupancy in both the United Kingdom and United States. The US mid-scale business is faring better, with November RevPAR some 16 percent down for Holiday Inn and 5 percent down for Holiday Inn Express. November is the first month where all segments have shown a rate decline. In EMEA the mid-scale business has recently showed occupancy decline not rate decline across most European countries, but overall RevPAR declines are now reaching double digit levels. While there are signs of optimism, particularly with regard to occupancy in the major cities and the United States, we remain cautious over rate trends.
Outlook - hotels
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Six Continents PLC, Kathryn Holland +44 207 355 6515 [email protected] http://www.sixcontinents.com |
In
the hotel business occupancy has declined both as a result of attitudes
to flying and heavy corporate cutbacks on travel.