Hotels group InterContinental today said second-quarter profits would be “substantially lower” than last year after a grim start to 2003.
The group – formed following last week’s demerger of Six Continents – has been hit by the impact of the Gulf war, and more recently, the SARS virus.
Issuing a trading update today, chief executive Richard North described the conditions as some of the worst the industry has ever encountered.
The figures for the three months to 31 March show InterContinental’s Europe, Middle East and Asia business had been most affected by the tough climate.
With US guests staying away, the division’s InterContinental hotels suffered a 9.6% year-on-year drop in revenues per available room during March.
The performance of the group’s UK-based Holiday Inn operation was better, falling 0.1% in the regions, although the lack of US tourists meant the decline for the brand’s London hotels was 9.2% in March.
The performance in the Americas region has proved more resilient, with the InterContinental brand achieving revenues growth of 3.7% last month.
On top of the trading difficulties, InterContinental told the City today that the cost of demerging Six Continents and fighting a takeover approach from leisure entrepreneur Hugh Osmond would be in the region of £129m.
The changes saw Six Continents’ pubs and restaurants business spun off to create a separate business called Mitchells & Butlers.
InterContinental also confirmed details of a previously announced cost reduction programme designed to save at least $100m (£63m) pa.
Around half of the figure will be achieved through staff reductions, with 800 redundancies coming from a global corporate headcount of 2,600.
InterContinental did not say how many of the job losses will be in the UK, although the cutbacks cover all management levels, with 30% of senior management roles set to be removed.
Some of the cuts are likely to come as InterContinental moves its head office to Windsor from the London head office formerly used by Six Continents.
The latest figures from the group dash hopes of a recovery seen in the three months to the end of December. Then, InterContinental said all regions achieved year-on-year revenue growth.
References: EGi News 24/04/03
