Intercontinental Hotels Group Plc · LSE:IHG
Intercontinental Hotels — Investor Presentation (May 2023)
62 slides from Intercontinental Hotels's investor presentation, May 2023
Slide 1: Investor Presentation May 2023
Investor Presentation May 2023
Slide 2: A global hospitality leader with 6,000+ open hotels
A global hospitality leader with 6,000+ open hotels and a further 1,800+ in the pipeline; driven by clear purpose, ambition, strategy and priorities Our Purpose True Hospitality for Good. Our Priorities Our Ambition To deliver industry-leading growth in our scale, enterprise Build loved CUSTOMER pla
Slide 3: Strong portfolio of preferred brands across segments
Strong portfolio of preferred brands across segments LUXURY & PREMIUM ESSENTIALS SUITES EXCLUSIVE LIFESTYLE PARTNERS SYSTEM SYSTEM SYSTEM SYSTEM SYSTEM 13% 15% 62% 9% 1% PIPELINE PIPELINE PIPELINE PIPELINE PIPELINE 20% 18% 49% 11% 2% 3
Slide 4: Asset light, mainly franchised, and geographically diverse
Asset light, mainly franchised, and geographically diverse System size and pipeline Strong competitive position in an industry where System size: Luxury branded players are gaining <1% 10% 166k 515k market share 28% 72% 18% 57% Upscale/ Upper Midscale/ With a larger share Upscale Upper of the active
Slide 5: Our asset light business model
Our asset light business model Franchised Managed Owned, Leased & Managed Lease 72% 28% <1% Fee revenue: Fee revenue: We record the entire revenue and profit of the hotel in our financial statements. This Royalty Fee: Base Management Fee: ‘asset heavy’ element of IHG’s estate has fixed percentage of
Slide 6: RevPAR, Occupancy and ADR recovery across regions
RevPAR, Occupancy and ADR recovery across regions IHG Group monthly RevPAR, Occupancy and ADR (vs 2019) Americas monthly RevPAR, Occupancy and ADR (vs 2019) 2021 2022 2023 2021 2022 2023 +4 +8 +4 +7 +9 +6 +7 +4 +9 +8 +8 +12 +9 +11 +13 Jan Mar May Jul Sep Nov Jan Mar May +1 +4 +2 +3 Jan Mar May Jul S
Slide 7: Net system size growth delivered through strength of brands and enterprise platform
Net system size growth delivered through strength of brands and enterprise platform Improvement in gross openings . . . . . . resulting in stronger net system size growth 7.8% 5.6% 7.1% 4.8% 6.3% 5.4% 4.0% 4.3% 5.0% 5.6% 4.5% 3.1% 0.3% 2021 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020
Slide 8: Fee margin 210bps ahead of FY 2019, driven by Americas
Fee margin 210bps ahead of FY 2019, driven by Americas 1 Group Americas FY 2022 56.2% FY 2022 84.3% FY 2021 49.6% FY 2021 82.2% FY 2020 34.1% FY 2020 70.7% FY 2019 54.1% FY 2019 77.7% Europe, Middle East, Asia and Africa Greater China FY 2022 52.7% FY 2022 26.4% FY 2021 21.5% FY 2021 47.3% -17.9% FY
Slide 9: FY 2022 strong trading, profitability and returns
FY 2022 strong trading, profitability and returns; excellent further progress strengthening our enterprise platform RevPAR & rooms Profit & returns – FY global RevPAR +37% vs 2021; (3.3)% vs 2019; – $828m operating profit from reportable segments, +55% vs 2021 Q4 global RevPAR +4.1% vs 2019, +9.0% i
Slide 10: Strongly positioned to drive growth and shareholder value
Strongly positioned to drive growth and shareholder value Asset light, Geographic and Well-invested Robust pipeline fee-based, chain scale portfolio and delivering mainly franchised diversification enterprise platform multi-year growth ~70% franchised, ~30% managed, 100+ countries 18 market leading
Slide 11: Returned $14.3bn to shareholders since 2003; uses of cash unchanged
Having returned $14.3bn to shareholders since 2003, our strategy for uses of cash remains unchanged Invest in the business Sustainably grow Return surplus funds to drive growth the ordinary dividend to shareholders Objective of maintaining an investment grade credit rating 2.5x – 3.0x Net Debt: Adju
Slide 12: FY 2022 – Conclusions
FY 2022 – Conclusions a well-invested, high-performing business – RevPAR growth has returned strongly – In Americas and EMEAA, Q4 RevPAR +9% vs pre-pandemic levels; Greater China set to significantly improve in 2023 – Demand recovery initially led by leisure, with business and groups following well
Slide 13: Q1 2023 a good start to the year
Q1 2023 a good start to the year • RevPAR +33% vs 2022 (+6.8% vs 2019) Trading • ADR +11% vs 2022 (+10% vs 2019); occupancy +10%pts vs 2022 (-2%pts vs 2019) performance • Net system size growth +4.2% YOY on an adjusted basis to 915k rooms (6,179 hotels) • 108 hotels signed (16.5k rooms); global pipe
Slide 14: Additional Information
IHG HOTELS & RESORTS Additional Information
Slide 15: Contents: Additional Information
Contents: Additional Information Pages 16-20 Update on our industry and IHG’s positioning Page 21 Update on strategic priorities Pages 22-25 CUSTOMER centric in all we do Pages 26-36 Build loved and trusted BRANDS Pages 37-38 Create DIGITAL advantage Pages 39-40 CARE for our people, communities and
Slide 16: Update on Our Industry and IHG's Positioning
Update on Our Industry and IHG’s Positioning
Slide 17: Current industry forces
Current industry forces Tailwinds Headwinds Further recovery in international, corporate and group travel Reduced air travel capacity and high pricing China re-opening: domestic, inbound, and outbound travel Trends in working practices: Macro-economic hybrid working, bleisure travel, uncertainties d
Slide 18: Attractive long-term industry growth drivers
Attractive long-term industry growth drivers – Demand resiliency is well proven – Industry revenue CAGR of +3.3% from 2000 to 2022 – Outpaced global economic growth in 18 of last 23 years – Further new hotel supply supported by both healthy asset returns and long-term structural growth drivers – Glo
Slide 19: Two structural growth drivers: demand and supply
Two structural growth drivers: demand and supply US industry GFC recovery Supply growth Supply slows, Demand exceeds supply, outpaced demand demand recovers to parity supply growth returns over time 120 100 80 Indexed vs 2007 60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Oc c u
Slide 20: Investing for performance, growth and competitive advantage
Investing for performance, growth and competitive advantage enabling us to deliver on our strategic priorities System Fund IHG – Leveraging scale efficiencies across: – Key Money and Maintenance Capex of ~$150m p.a. that – ~$1bn+ of Opex annually further strengthens the enterprise platform – ~$0.3bn
Slide 21: Update on Strategic Priorities
Update on Strategic Priorities
Slide 22: Being customer centric in all we do
Being customer centric in all we do 22
Slide 23: IHG Hotels & Resorts Masterbrand
IHG Hotels & Resorts Masterbrand strengthening the bond between our masterbrand and our individual hotel brands Guest how you guest MLS Partnership Lollapalooza Driving uplifts in perception and engagement +6 pts +7 pts Aided Awareness Brand Favourability 23
Slide 24: IHG One Rewards
IHG One Rewards our biggest transformation and investment; delivering significant improvements across key metrics The scale and Highlights in importance of loyalty: 2022: 115m+ ~50% +11% points redeemed Faster Earn members of room nights vs 2019 More bonus points across tiers and growing booked by m
Slide 25: Lowering costs and driving efficiencies for our owners
Lowering costs and driving efficiencies for our owners supporting performance and returns Cost to build & renovate Cost to operate – Deployed value engineering to mitigate the impact of – Relaunched lighter touch Daily Room Refresh inflation by 10-20% across furniture, fixtures and housekeeping to s
Slide 26: Building loved and trusted brands
Building loved and trusted brands 26
Slide 27: 18 hotel brands | 6,000+ destinations | One loyalty programme
18 hotel brands | 6,000+ destinations | One loyalty programme EXCLUSIVE PARTNERS LEGEND: New Brand 27
Slide 28: Iberostar Beachfront Resorts
Iberostar Beachfront Resorts long term-commercial agreement for up to 70 hotels (24.3k rooms) Adding Exclusive Partners demonstrates 48 hotels (18.5k rooms) signed into pipeline $40m+ Annual fee revenue by 2027 from strength of IHG Enterprise Platform and (43 open + 5 new build opportunities); curre
Slide 29: Luxury & Lifestyle
Luxury & Lifestyle an industry-leading collection; now 13% of our system and 20% of our pipeline Six Senses Regent InterContinental In 4 years In 5 years World’s largest luxury hotel brand since acquisition, hotel system since acquisition, hotel system with more than 200 open growth of approx. 20% a
Slide 30: Luxury & Lifestyle
Luxury & Lifestyle an industry-leading collection; now 13% of our system and 20% of our pipeline Hotel Indigo Kimpton Vignette Collection System size accelerating to 200 hotels The boutique luxury lifestyle brand First three hotels now open, in next 3 years, doubling in half the continues its global
Slide 31: Premium
Premium uniquely tailored to target upscale customer segments EVEN HUALUXE Crowne Plaza voco The premium wellness-focused Our premium brand, designed Our refreshed premium brand; Our conversion-focused brand now has over 50 open with the Chinese guest in mind, three-quarters of the Americas premium
Slide 32: Essentials
Essentials driving growth at scale Holiday Inn Express Note: as at 30 June 2022 Holiday Inn avid The world’s largest hotel brand, Refreshed estate with a further >200 open and pipeline continuing its category leadership evolved design and format, properties; strong guest and strong growth and a new
Slide 33: avid
avid a brand of scale; an engine of future growth Launched in Americas rooms September 2017 Today, present in 5,353 12,385 open pipeline 24 US states 4 and will be in Americas hotels 34 by 2025 187 2021-2022 social review scores 59 / 145 4.5 avid open pipeline 4.3 US Canada 4.1 key competitor 13 55
Slide 34: Suites
Suites an expanding portfolio across chainscales, in a segment with notable growth potential Candlewood Suites Staybridge Suites Atwell Suites Our Americas-focused midscale Our premium extended stay brand Our newest extended stay extended stay brand with over 365 with a growing global footprint bran
Slide 35: System size
System size by sub-region (at 31 Dec 22) Australia Airport 5% Other JAPAC HK / Macau / Taiwan 8% 2% 7% Tier 1 Urban Japan UK 15% 5% 20% Interstate 22% 14% Tier 4 SEAK 16% 13% France 3% Germany Small Town Tier 3 Suburban 8% / Metro 9% 40% 19% IMEA Other Europe Tier 2 22% 20% 47% Resort 5% Americas EM
Slide 36: Conversions
Conversions growing in importance and future opportunity 2016-2022 share of conversion signings 2020-2022 conversion signings by brand across all IHG brands (excluding Iberostar) 25% InterContinental 4% (12 hotels) Holiday Inn 23% Express Vignette Collection 22% 27% (75 hotels) 4% (12 hotels) Hotel
Slide 37: Creating digital advantage
Creating digital advantage 37
Slide 38: Innovating our technology and distribution platforms
Innovating our technology and distribution platforms ongoing, agile and rapid development Mobile Mobile app Ongoing improvements accounts for revenue1 New IHG.com & to a revamped 58% +30% brand.com websites digital customer experience of all vs 2019 digital bookings 1 in Americas and EMEAA regions.
Slide 39: Caring for our people, communities and planet
Caring for our people, communities and planet 39
Slide 40: Being a responsible business
40 BEING A Our actions as a responsible business are shaped by a culture of strong governance, RESPONSIBLE clear policies and a series of ambitious commitments set out in our Journey to BUSINESS : , Tomorrow 2030 responsible business plan. Our 2030 Journey to Tomorrow plan Key to delivering our stra
Slide 41: FY 2022 Financial Review
IHG HOTELS & RESORTS FY 2022 Financial Review
Slide 42: Financial performance overview
Financial performance overview results from reportable segments 1 Reported Underlying2 FY 2022 FY 2021 FY 2019 FY 2021 FY 2019 % change % change % change % change Revenue3 $1,843m $1,390m +33% $2,083m (12)% +39% (5)%8 Operating profit $828m $534m +55% $865m (4)% +53% (1)%8 Revenue from fee business
Slide 43: Revenue and operating profit 2019-2022
Revenue and operating profit 2019-2022 Total Revenue Total Operating Profit¹ FY FY Actual US$ 2022 2021 2020 2019 2022 2021 2020 2019 Franchise and Base Management Fees 861 683 452 840 - - - Incentive Management Fees 18 8 5 13 - - - Fee Business 879 691 457 853 741 568 323 663 Owned, Leased & Manage
Slide 44: Fee-based business model shows strength as demand recovers
Fee-based business model shows strength as demand recovers FY 2022 fee revenue: $1,449m, up +26% and +28% underlying (vs 2021) 1 2 FY 2022 Group comparable FY 2022 Group system growth RevPAR growth (vs 2021) (vs 2021) RevPAR +36.6% +5.6% (1.3)% X +4.3% Underlying (0.7)% +3.6% Removals Russia Rooms +
Slide 45: Fee business growth rate analysis vs 2021
Fee business growth rate analysis vs 2021 RevPAR growth % Net rooms growth % Underlying Fee Revenue1 2 FY 2022 Comparable Total YoY Available 2 Growth % Comments Hotels that have All hotels that were traded in all open in FY 2022 Aggregate number months being and FY 2021 (incl. of rooms available co
Slide 46: Fee business growth rate analysis vs 2019
Fee business growth rate analysis vs 2019 RevPAR growth % Net rooms growth % Underlying Fee Revenue1 2 FY 2022 Comparable Total YoY Available 2 Growth % Comments Hotels that have All hotels that were traded in all open in FY 2022 Aggregate number months being and FY 2019 (incl. of rooms available co
Slide 47: Americas
Americas record rates; sequential improvement in RevPAR throughout 2022 – FY RevPAR up +29% (up +3.3% vs 2019); US up +25% (up +3.5% vs 2019) FY 2022 growth in fee revenue drivers1 – Q4 US RevPAR up +13% (up +7.8% vs 2019) (vs 2021) – Leisure demand continued to be strongest, with business demand st
Slide 48: US Leisure strength of demand has sustained; Business recovery continued
US Leisure strength of demand has sustained; recovery of Business demand has continued IHG US estate Business and Leisure revenue (vs 2019) 2020 2021 2022 40% Jan Mar Jun Sep Jan Mar Jun Sep Jan Mar Jun Sep Dec 20% 0% -20% Leisure -40% Business -60% -80% -100% 48
Slide 49: US Business ADR sustained above pre-Covid levels
US Business ADR has sustained above pre-Covid levels; occupancy near fully recovered IHG US estate Business revenue (vs 2019) – split of rooms nights and ADR 2020 2021 2022 40% Jan Mar Jun Sep Jan Mar Jun Sep Jan Mar Jun Sep Dec 20% 0% ADR -20% Room Nights -40% -60% -80% 49
Slide 50: US Leisure rates outpaced 2019 levels for 18 months
US Leisure rates have consistently outpaced 2019 levels for 18 months; occupancy has recovered IHG US estate Leisure revenue (vs 2019) – split of rooms nights and ADR 2020 2021 2022 40% Jan Mar Jun Sep Jan Mar Jun Sep Jan Mar Jun Sep Dec 20% 0% ADR -20% Room Nights -40% -60% -80% -100% 50
Slide 51: Europe, Middle East, Asia & Africa
Europe, Middle East, Asia & Africa trading has recovered strongly as travel restrictions lifted FY 2022 growth in fee revenue drivers1 – FY RevPAR up +93% (down (7.5)% vs 2019); Q4 up +65% (up +8.8% vs 2019) (vs 2021) – Variance in performance within the region continued to predominantly reflect the
Slide 52: Greater China
Greater China travel substantially impacted by Covid restrictions FY 2022 growth in fee revenue drivers1 – FY RevPAR down (14)% (down (38)% vs 2019); Q4 down (13)% (down (42)% vs 2019) (vs 2021) – FY Mainland China down (17)% (down (38)% vs 2019); Q4 down (15)% (down (45)% 6.0% vs 2019) – FY Tier 1
Slide 53: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m FY 2022 FY 2021 Key money and maintenance capex Key money 1 (64) (42) • Key money: used to secure hotel signings Maintenance capex (44) (33) • Maintenance: relates to owned, leased and Total (108) (75) managed lease hotels and corporate infrastructure
Slide 54: Cash flow
Cash flow FY 2022 ($m) (43) 5 130 Exceptional 68 cash flow System Working 896 items (315) Depreciation Fund2 capital & other 828 movements3 and Amortisation Interest (108) (35) 1 Dividends and tax Maintenance 565 Gross Net capex and key System Fund Recyclable money (233) Share capex capex buybacks4
Slide 55: FY 2019 underlying fee business non-GAAP reconciliations
FY 2019 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 853 663 337 202 135 73 185 (
Slide 56: FY 2021 underlying fee business non-GAAP reconciliations
FY 2021 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 691 568 149 32 116 58 197 (8
Slide 57: FY 2022 underlying fee business non-GAAP reconciliations
FY 2022 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 879 741 284 153 87 23 199 (1
Slide 58: Ordinary shares
Ordinary shares Number of shares (m) 2022 2021 Opening balance at 1 January 187.7 187.7 Closing balance at 31 December 183.1 187.7 Closing balance excluding treasury shares1 175.6 184.0 Basic weighted average shares (excluding treasury shares) 181.4 183.0 Dilutive potential ordinary shares 1.3 1.1 B
Slide 59: 2022 and 2023 notable items
2022 and 2023 notable items Notable items FY 2022 FY 2023 Payroll tax credits Americas $4m - Individually significant EMEAA $7m - Liquidated Damages Iberostar related costs Central $(5)m $(10-15)m 59
Slide 60: Currency impacts
Currency impacts ($m) Reported FY21 at Reported FY22 at Reported FY22 at Jan Revenue FY21 FY22 AER2 Var. FY22 FY21 AER2 Var. FY22 2023 AER3 Var. Americas 774 773 1 1,005 1,008 (3) 1,005 1,005 0 EMEAA 304 271 33 552 618 (66) 552 519 32 Greater China 116 112 5 86 90 (4) 86 86 0 Central Overheads 196 1
Slide 61: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation may contain projections and forward looking-statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of histori
Slide 62: IHG resorts
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