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LONDON-Travelers are sticking to their travel plans despite a Middle East war, a massive security operation in the UK, new restrictions on hand luggage and extra security checks across Europe, say officials at InterContinental Hotels Group. Chief executive Andrew Cosslett says demand at IHG, the world’s largest hotel operator, remained strong after the UK terror alert and instability in the Middle East this month. The group’s hotels around airports in London and New York had been filled to capacity because of the disruption to flights caused by tight security arrangements.

Revenue per available room rose 11.2% as a result of higher prices, with strong performance coming from the Middle East. But Cosslett does warn that slightly lower profits could be expected in the region in the wake of the conflict in Lebanon. All five of IHG’s Lebanese hotels remain open, one of which is completely full. Overall, “the region remains positive from a business point of view.”

“The traveling public has become somewhat desensitized to the constant threats and tends to stick to travel arrangements,” Cosslett notes. The gap between the public’s initial nervous response to a security situation and their return to the travel market is, he adds, getting “shorter and shorter.”

IHG’s development pipeline of 1,028 hotels and 130,000 rooms means one new hotel was being built every day, Cosslett says. The company aims to add a net total of between 50,000 and 60,000 rooms by the end of 2008. Expansion is being funded via billion-dollar sale-leasebacks. Even so, Cosslett admits that IHG’s expansion program was “a stretch, but we’re confident we’ll meet our target range.” He adds that the industry is benefiting from the fact that hotel demand is outstripping supply.

IHG’s optimism is at odds with the more cautious forecasts of US competitors such as Starwood and Choice Hotels, which have been hit by the deteriorating economic outlook.

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