Questor share tip: InterContinental Hotels a buy on growth prospects IHG said the $350m special dividend would be worth 87.1p a share. The payment will be made alongside the normal interim dividend on October 4, which was increased by 10pc to 23c. The bullish arguments for the future of the hotel industry are similar to the airline sector. The global population is rising significantly, which means more people are travelling and new markets such as China are developing rapidly. Indeed, as part of IHG's strategy to focus on the "most attractive markets" the company says it sees the greatest opportunity for growth of any single country. Its strategy has been to enter the market early, to develop its relationship with key local third party owners and grow its presence rapidly. China currently has 659,000 branded hotel rooms, and IHG is the largest international hotel company, with more than 61,000 rooms across its brands and more than 50,000 in the planning phase or under construction. International travellers are important, but expansion is geared to China's domestic travellers who tend to favour branded hotels. In some high-end hotels, domestic travellers account for half of all demand. Some analysts reckon the Chinese market could be as large as the US in terms of rooms in a decade or two. It was a rebound in the US market that sent IHG's revenues up 7pc to $936m and operating profits up 20pc to $338m. One of the most important figures for hoteliers is RevPAR, or revenue per available room. Over the first six months of the year, RevPAR rose 3.4pc, including an acceleration in the second quarter to 4pc. In the Americas division, RevPAR rose 4.7pc. This is a positive direction in the group's most significant business, which last generated almost 80pc of operating profit. RevPAR in China was essentially flat, probably down to its slight economic slowdown. This is not a concern, as the potential here is enormous. Even tired old Europe showed signs of life. RevPAR increased 0.4pc, with a 0.5pc rate decline over the six months. However, in the second quarter RevPAR increased 2.2pc and room rates rose 0.3pc. IHG shares are trading on a 2013 earning multiple of 19.7, falling to 18.2. This is certainly not cheap but it is justified by earnings prospects. With a prospective yield this year of 2.3pc, not including the special payment, Questor thinks the shares are a buy.