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LONDON-Hotels group InterContinental has issued a profits warning saying second results would be “substantially” worse than last year.

The group, formed following the demerger last week of Six Continents, has been badly affected by the war in Iraq and then the SARS virus. Chief executive Richard North described the conditions as some of the worst the industry has ever encountered.

Worst hit was InterContinental’s Europe, Middle East and Asia business. With US visitors choosing not to travel, the division suffered a 9.6% fall in revenues per room during March. The fortunes of the UK-based Holiday Inn were similarly hit with London reporting a 9.2% fall in guests. In America, performance held up better and the InterContinental brand achieved revenue growth of 3.7% for the month.

The company has also estimated the cost of the demerger and fighting off a takeover bid by Hugh Osmond at £129 million ($205.5 million).

Some of these costs will be recoupted from cost-cutting programme designed to save £63 million ($100 million) a year. Some savings are expected from job cuts and some from a move of headquarters from London to Windsor.

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