Revenue per available room rose 11.2% as a result of higherprices, with strong performance coming from the Middle East. ButCosslett does warn that slightly lower profits could be expected inthe region in the wake of the conflict in Lebanon. All five ofIHG's Lebanese hotels remain open, one of which is completely full.Overall, "the region remains positive from a business point ofview."

"The traveling public has become somewhat desensitized to theconstant threats and tends to stick to travel arrangements,"Cosslett notes. The gap between the public's initial nervousresponse to a security situation and their return to the travelmarket is, he adds, getting "shorter and shorter."

IHG's development pipeline of 1,028 hotels and 130,000 roomsmeans one new hotel was being built every day, Cosslett says. Thecompany aims to add a net total of between 50,000 and 60,000 roomsby the end of 2008. Expansion is being funded via billion-dollarsale-leasebacks. Even so, Cosslett admits that IHG's expansionprogram was "a stretch, but we're confident we'll meet our targetrange." He adds that the industry is benefiting from the fact thathotel demand is outstripping supply.