The City checks out of InterContinental after new hotels growth plan disappoints

Investors checked out of InterContinental Hotels Group on Tuesday after the Holiday Inns owner posted a profits jump but unveiled a major new growth plan that will mean no special dividend is paid this year.

The accommodation giant behind 5300 hotels said it intends to roll out its lower-priced US brand avid globally, launch one new brand before the end of 2018, buy luxury boutiques operators, and expand its franchise offer in China.

Finance chief Paul Edgecliffe-Johnson called it an “ambitious and aggressive growth plan”. It is the first major strategy outlined by new chief executive Keith Barr.

IHG expects to make $125 million (£89 million) in annual savings by 2020 to reinvest in the business.

However, it warned: “Given this investment to drive growth, no additional capital return will paid in calendar year 2018.”

FTSE 100 firm IHG was one of the biggest fallers on the blue-chip index following the update. The shares dived 245p, or more than 5%, to 4452p.

Details of the plan came as IHG, which is behind the Crowne Plaza chain, revealed pre-tax profits rose 14.7% to £678 million in the year to December 31.

It was boosted by revenue per room growth of 2.7%. London revenues per room increased 4.3%.

Barr said the firm is “positive in the outlook for the year ahead”.