InterContinental Hotels’ shares struggle ahead of Q3 figures

Worries over the developing Ebola crisis continue to weigh on the hotel industry.

An InterContinental Hotel property
Source: Bloomberg

InterContinental Hotels is due to report its third-quarter figures on Tuesday 21 October. The current market expectations are for adjusted earnings per share of $0.34, and sales for the quarter to come in at $490 million.

So far 2014 has been a tough year for the hotel chain as it has had to contend with a number of issues out of its control. Airlines around the world have struggled, especially in Europe, as passenger numbers have fallen because of worries surrounding Ukraine and Russia and in the area around the Mediterranean. Of course, airline reputations have also come under further scrutiny following the disappearance of a Malaysian airlines plane in Asia, and the shooting down of another over Ukraine. All of this has seen global travel for both business and pleasure diminish, and as a consequence demand for hotel accommodation has suffered.

One of the areas that could still help turn around fortunes is the growth potential available in China. In the US the ratio of population to hotel rooms is 64 and in the UK it is 122, but in China it is 771. This is of course a country with numerous growth issues to tackle but plenty of possibilities.

Shares in InterContinental Hotels are up 4.17% in 2014, arguably better than could be expected. With the situation surrounding Ebola likely to get worse before it gets better, we could see the price come under renewed pressure in the weeks ahead. A look at the chart would add to that negative outlook as the shares could well try to fill the gap back down to 2038p.

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