InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — FY2022 Earnings Presentation
58 slides from InterContinental Hotels's earnings presentation, February 2023
Slide 1: 2022 Full Year Results
IHG HOTELS & RESORTS 2022 Full Year Results
Slide 2: 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 3: Keith Barr, Chief Executive Officer
Keith Barr Chief Executive Officer THG aeccars
Slide 4: FY 2022 profit & returns highlights
FY 2022 Ee 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% in Americas ~ $565m adjusted free cash flow ($571m in 2021) — FY ADR +18% vs 2021, +8% vs 2019; Occupancy +9%pts vs 2021,
Slide 5: Financial Review
FY 2022 Financial Review Paul Edgecliffe-Johnson Chief Financial Officer & Group Head of Strategy
Slide 6: Financial performance overview
Financial performance overview results from reportable segments’ Reported Underlying? FY 2022 FY 2021 FY 2019 FY 2021 FY 2019 % change % change % change % change Revenue® $1,843m $1,390m +33% $2,083m (12)% +39% (9)% Operating profit $828m $534m +55% $865m (4)% +53% (3)% Revenue from fee business $1,
Slide 7: 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) FY 2022 Group comparable FY 2022 Group system growth RevPAR growth (vs 2021) (vs 2021) RevPAR 436.6% 45.6% Underlying +3.6% 9 Removals Russia Rooms 78% exit +8.5%pts : [|
Slide 8: Regional variations in RevPAR; strong and stable ADR recovery
Regional variations in RevPAR; strong and stable ADR recovery IHG Group monthly RevPAR, Occupancy and ADR (vs 2019) Americas monthly RevPAR, Occupancy and ADR (vs 2019) 2021 2022 Jan Mar May Jul Jan Sep Nov cos +4 4g +4 42 43 8 2021 Jan May 2022 Jan Mar May — Jul Sep 46 42 44 19 48 +8 412 Nov Mar +3
Slide 9: 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) — Q4US RevPAR up +13% (up +7.8% vs 2019) - Leisure demand continued to be strongest, with business demand strengthening as the year went on with more corporat
Slide 10: US Leisure strength of demand has sustained; recovery of Business demand 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% on CA -20% Leisure ati Business -60% -80% -100% 10 THG aeccars
Slide 11: Europe, Middle East, Asia & Africa
Europe, Middle East, Asia & Africa trading has recovered strongly as travel restrictions lifted FY 2022 growth in fee revenue drivers’ ~ 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 12: Greater China
Greater China travel substantially impacted by Covid restrictions — FY RevPAR down (14)% (down (38)% vs 2019); Q4 down (13)% (down (42)% vs 2019) = FY Mainland China down (17)% (down (38)% vs 2019); Q4 down (15)% (down (45)% vs 2019) - FY Tier 1 RevPAR down (24)% (down (53)% vs 2019); Q4 down (21)%
Slide 13: Fee margin 210bps ahead of FY 2019, driven by Americas
Fee margin 210bps ahead of FY 2019, driven by Americas Group Americas FY 2022 56.2% FY 2022 84.3% FY 2021 49.6% FY 2021 82.2% FY 2020 FY 2020 FY 2019 54.1% FY 2019 71.7% Europe, Middle East, Asia and Africa Greater China 52.7% FY 2022 FY 2021 FY 2021 47.3% FY 2020 45.5% -17.9% FY 2020 58.6% FY 2019
Slide 14: Net system size growth delivered through strength of brands and enterprise platform
14 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% 4.8% 4.0% 4.3% 7.1% 5.4% ME 5.0% [im 5-6% us 3.1% 0.3% 2021 2016 2017 2018 =2019. 2020. 2021'_~=— 2022 2016 §=62017 «2018
Slide 15: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m FY 2022 FY 2021 Key money and maintenance capex Key money’ (64) (42) + Key money: used to secure hotel signings Maintenance capex (44) (33) + Maintenance: relates to owned, leased and Total (108) (75) managed lease hotels and corporate infrastructure R
Slide 16: Cash flow
16 Cash flow FY 2022 ($m) 68 5 MY Sen wortng Fund? capital & other Eig Depecitin movements Amortisation (43) Ln] Exceptional cash flow items (315) Interest (35) and tax — Maintenance EYatay Gross capex and key System Fund money capex 1 Net Recyclable capex Dividends (233) Share buybacks* (482) FX, l
Slide 17: Having 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 $ So al Sul Objective of maintaining an investment grade credit rating 2.5x - 3.0x Ne
Slide 18: Update on our industry and IHG's positioning
Update on our industry and IHG’s positioning Keith Barr Chief Executive Officer . ee IHG reese
Slide 19: Current industry forces
Current industry forces Further recovery in international, corporate and group travel China re-opening: domestic, inbound, and outbound travel Trends in working practices: hybrid working, bleisure travel, digital nomads Full employment; household incomes and savings remain healthy Lower oil & gas pr
Slide 20: 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 21: Strongly positioned to drive growth and shareholder value
Strongly positioned to drive growth and shareholder value Asset Light, fee-based, mainly franchised ~70% franchised, ~30% managed, <1% owned/leased ~80% of revenue from fee business linked to hotel revenues Long-term structural growth in both demand and supply IHG's average annual growth over the de
Slide 22: 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 23: Update on Strategic Priorities
Update on Strategic Priorities Keith Barr Chief Executive Officer 7 ee IHG reese
Slide 24: Customers: Being customer centric in all we do
Slide 25: IHG Hotels & Resorts Masterbrand
IHG Hotels & Resorts Masterbrand strengthening the bond between our masterbrand and our individual hotel brands Guest how you i) guest ai IHG = HOTELS & RESORTS Driving uplifts in perception and engagement +6 pts +7 pts Aided Awareness Brand Favourability 25 IHG HOTELS & RESORTS
Slide 26: IHG One Rewards
IHG One Rewards our biggest transformation and investment; delivering significant improvements across key metrics | H G ONE The scale and REWARDS importance of loyalty: 15m+ ~50% Faster Earn members of room nights More bonus points across tiers and growing booked by members + more valuable points 9x
Slide 27: Lowering costs and driving efficiencies for our owners
27 Lowering costs and driving efficiencies for our owners supporting performance and returns Cost to build & renovate - Deployed value engineering to mitigate the impact of inflation by 10-20% across furniture, fixtures and equipment (FF&E) categories — Lowered build costs by 3-5% per key for protot
Slide 28: Building loved and trusted brands
SSE. SSERSS EE | SS SS. AAAAARAY SSS, PMS, AAAS EE SS 20H] Building loved and trusted brands
Slide 29: Hotel brands, 6,000+ destinations, One loyalty programme
29 18 hotel brands | 6,000+ destinations | One loyalty programme IHG IHG 4 2s REWARDS HOTELS & RESORTS LUXURY & LIFESTYLE EXCLUSIVE PARTNERS ° { Qe REGENT rence eras NIGNETTE KIMPTON Horek * sees “GES FER ONTNEN Nay teutnume INDIGO IBEROSTAR PREMIUM voco HUALUXE CROWNE PLAZA Il EVEN asuaaana ESSENTI
Slide 30: Iberostar Beachfront Resorts
Iberostar Beachfront Resorts Adding demonstrates and desire for strategic partners to join the IHG system Iberostar Cozumel - Mexico signed into pipeline (43 open + 5 new build opportunities); already added to IHG’s system in 2022; require third-party approvals Iberostar Montego Bay - Jamaica * IBER
Slide 31: Luxury & Lifestyle
Luxury & Lifestyle an industry-leading collection; now 13% of our system and 20% of our pipeline Six Senses In 4 years since acquisition, hotel system growth of approx. 20% and e pipeline more than doubled Boe SIX SENSES Shaharut=Isrdel System § 366 rooms (19 hotels) Pipeline: 2,631 rooms (38 hotels
Slide 32: Luxury & Lifestyle
Luxury & Lifestyle System size accelerating to 200 hotels in next 3 years, doubling in half the time it took to open the first 100 HOTEL INDIGO The boutique luxury lifestyle brand continues its global expansion; expected to be in 20 countries by 2025 KIMPTON JOTELS & RESTAURANTS Hotel Indigo Exeter—
Slide 33: Premium
Premium The premium wellness-focused brand now has over 50 open and pipeline properties Our premium brand, designed with the Chinese guest in mind, reaches milestone of >20 open hotels Our refreshed premium brand; three-quarters of the Americas estate will have been updated by 2025 Il EVEN HUALUXE K
Slide 34: Essentials
Essentials The world’s largest hotel brand, continuing its category leadership and strong growth Fae inn 5S Holiday Inn Expre: mbridge mbot em 326,902k rooms (3,091 hotels) peline: 76,735k rooms (617 hotels) aT % of Size: 23% Refreshed estate with a further evolved design and format, and a new premi
Slide 35: avid: a brand of scale; an engine of future growth
avid avid a brand of scale; an engine of future growth Launched in September 2017 Americas rooms iam! ion Today, present in DA US states and will be in 34 3b25 5,353 12,385 open pipeline Americas hotels 2021-2022 social review scores 20 59 / 145 45 ee open pipeline as US Canada , im 55/132 1/3 30 Me
Slide 36: Suites
Suites Our Americas-focused midscale extended stay brand with over 365 open hotels CANDLEWOOD SUITES Candlewood Suites Nashville South - US 32,753 rooms (368 hotels) eline: 10,268 rooms (124 hotels) Pipeli' 9 Size: 31% Our premium extended stay brand with a growing global footprint MSTAYBRIDGEM eres
Slide 37: 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 Express Vignette Collection 27% (75 hotels) 4% (12 hotels) Hotel Indigo 5
Slide 38: Digital: Creating digital advantage
Slide 39: Innovating our technology and distribution platforms
Innovating our technology and distribution platforms ongoing, agile and rapid development Mobile Mobile app Ongoing improvements accounts for revenue! New IHG.com & to a revamped 58% +30% brand.com websites digital customer experience of all vs 2019 digital bookings Benefits to enjoy when youstay We
Slide 40: Caring for our people, communities and planet
Caring for our people, communities and planet
Slide 41: Being a responsible business: Journey to Tomorrow
4 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 strat
Slide 42: Conclusions
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 - Pricing
Slide 43: Appendices
IHG HOTELS & RESORTS Appendices
Slide 44: Purpose, ambition, strategy and priorities
44 IHG HOTELS & RESORTS 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
Slide 45: Strong portfolio of preferred brands across chain scales
Strong portfolio of preferred brands across chain scales LUXURY & LIFESTYLE SYSTEM ae 13% PIPELINE es ee 20% REGENT IgROOTINENTA KIMPTON NIGNETTE” HOTEL INDIGO PREMIUM SYSTEM ee 15% PIPELINE rs 18% HUALUXE RLGAAARH CROWNE PLAZA Il EVEN SUITES ESSENTIALS SYSTEM SYSTEM PIPELINE PIPELINE ATWELL SUITES
Slide 46: 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 Indexed vs 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Occupancy 63% 60% 55%
Slide 47: 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% -20% Room Nights -40% -60% -80% THG aeccars 47
Slide 48: US Leisure rates have 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% a a -20% ZZ Room Nights -40% -60% -80% -100% 48 THG aec
Slide 49: Fee business growth rate analysis vs 2021
Fee business growth rate analysis vs 2021 RevPAR growth % Net rooms growth % Underlying Fee Revenue’ FY 2022 Comparable Total’ YoY Available? Growth % Comments Hotels that have _Alll hotels that were traded in all open in FY 2022 Aggregate number months being and FY 2021 (incl. of rooms available co
Slide 50: Fee business growth rate analysis vs 2019
Fee business growth rate analysis vs 2019 RevPAR growth % Net rooms growth % Underlying Fee Revenue’ FY 2022 Comparable Total’ YoY Available? Growth % Comments Hotels that have _Alll hotels that were traded in all open in FY 2022 Aggregate number months being and FY 2019 (incl. of rooms available co
Slide 51: Revenue and operating profit 2019-2022
51 Revenue and operating profit 2019-2022 Total Revenue Total Operating Profit’ 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 & Man
Slide 52: 2022 and 2023 notable items
52 2022 and 2023 notable items Notable items FY 2022 FY 2023 Payroll tax credits Americas $4m Individually significant Liquidated Damages EMEAA $7m Iberostar related costs Central $(5)m ~~ $(10-15)m 1H HOTELS & RESORTS
Slide 53: FY 2019 underlying fee business revenue and operating profit
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 54: FY 2021 underlying fee business revenue and operating profit
54 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 16 58 197
Slide 55: FY 2022 underlying fee business revenue and operating profit
55 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 74) 284 153 87 23 199
Slide 56: Ordinary shares
56 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 shares! 175.6 184.0 Basic weighted average shares (excluding treasury shares) 181.4 183.0 Dilutive potential ordinary shares 1.3 11
Slide 57: Currency impacts
Currency impacts (Sm) 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 16 12 5 86 90 (4) 86 86 Oo Central Overheads 19
Slide 58: | H " HOTELS &
| H " HOTELS & RESORTS x 0 HOTEL ott REGENT INTERCONTINENTAL =NIGNETTE KIMPTON INDIGO VOoco CROWNE PLAZA SIX SENSES res BARR * 4 5 ATWELL ISTAYBRIDGER A) iperostan ‘Il EVEN a avid ‘fumes iemencay CANDLEWOOD et erick Holiday Inn sures ONE REWARDS
InterContinental Hotels Group — FY2022 Earnings Presentation on 6ix