Support Skift’s Independent JournalismMake a Contribution Now
The world’s largest hotel group yesterday hit back at claims that it unlawfully colluded with online travel agents to fix the prices of its rooms as it posted bumper half year results.
It emerged yesterday that if the allegations are proven, InterContinental Hotels Group (IHG) could be in line for a record fine of up to pounds sterling 115m.
IHG, which owns Holiday Inn, was formally fingered by the Office of Fair Trading last week for a practice that the group claims is an ‘industry standard’.
The firm has been the subject of a complex investigation since September 2010.
Chief executive Richard Solomons said that the practice is not unusual, though insisted the firm is cooperating fully with the OFT probe.
‘We take competition law very seriously,’ said Solomons yesterday as he announced a 38pc climb in pre-tax profits to pounds sterling 181m for the first six months of the year.
It also announced plans to return pounds sterling 640m to investors through a special dividend and a share buyback scheme that will start later this year. It also raised the standard dividend by 31pc to 13.4p per share.
The hotel firm, which is the world’s largest by number of rooms, was bolstered by a major expansion in China where revenues were up almost 10pc on a year earlier.
In Asia InterContinental has found its premium brands in high demand and it has sought to rebalance its business to cash-in on booming growth in those areas.
IHG has previously sought to protect its operations in troubled eurozone economies by reorganising its regional units there.
Despite the Olympics, IHG which is managing the athlete’s village, says its hotels are only slightly fuller than they would be in a typical year. Occupancy during the Games is around 90pc, according to the group.
‘It’s very normal that business is reduced,’ said Solomons about the negative impact of the Olympics on custom not linked to the games.
The OFT threat did not overshadow the trading update as investors sent the shares up 103p to 1725p.
A 300 page ‘statement of objection’ was served on IHG last week, outlining the OFT’s accusations.
However, Expedia is not liable to a fine because it has opted to cooperate with the probe and will receive lenient treatment.
The OFT confirmed that InterContinental could be in line for a fine of up to 10pc of its global revenues, equal to just shy of pounds sterling 115m, if culpable.
The OFT also hinted that the practices under scrutiny could be widespread in the hotels business.
(c)2012 Daily Mail (London). Distributed by MCT Information Services.