InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — H1 2010 Earnings Presentation
34 slides from InterContinental Hotels's earnings presentation, Aug 10, 2010
Slide 1: Half Year Results Presentation
Half Year Results Presentation 10 August 2010 InterContinental Shanghai Expo, opened April 2010 1
Slide 2: Headlines
Headlines • Strong signs of industry recovery • Occupancy growing, rate stabilising • Driving share of industry revenues – Holiday Inn relaunch on track – 148 hotels opened, 130 hotels signed • Total hotels gross revenue of $8.9bn, up 9% at constant currency • Cost savings on track, continued focus
Slide 3: Financial Results
Financial Results Crowne Plaza Avenue Chicago Downtown, opened January 2010 3
Slide 4: 2010 – return to growth
2010 – return to growth • Global constant currency RevPAR up 3.9% – Second quarter growth of 7.4% • Underlying¹ revenue up 6%², EBIT up 25%² • Strong margin performance in core fees business • Free cash flow of $167m • Net debt reduced to $1.0bn ¹Excluding one individually significant liquidated dam
Slide 5: Financial results
Financial results CER² Change 6 months 6 months $ million Change % % Excluding to 30 June 10 to 30 June 09 LDs³ Turnover 772 726 6% 6% Operating Profit¹ 219 179 22% 25% Interest (31) (28) (11)% Profit before tax¹ 188 151 25% Tax rate¹ 28% 22% (6)ppts Profit after tax¹ 135 118 14% Adjusted EPS¹ 47.0¢
Slide 6: Early signs of rate stabilisation
Early signs of rate stabilisation IHG monthly trends in RevPAR split by rate and occupancy Jul-09 Dec-09 Jun-10 Jul-09 Dec-09 Jun-10 20 20 Global Americas 15 15 10 10 5 YoY change YoY change 5 0 0 -5 -5 -10 -10 -15 -15 -20 -20 Jul-09 Dec-09 Jun-10 Jul-09 Dec-09 Jun-10 20 20 EMEA Asia Pacific 15 15 1
Slide 7: US brand RevPAR outperformance
US brand RevPAR outperformance IHG RevPAR performance vs. industry 5 IHG Industry YoY RevPAR movement (%) 4 3 2 1 0 -1 -2 InterContinental - US Crowne Plaza - US Holiday Inn - US Holiday Inn Express - Candlewood & US Staybridge Suites - US Source: IHG; Smith Travel Research. Note: InterContinental i
Slide 8: UK midscale RevPAR performance
UK midscale RevPAR performance IHG RevPAR performance vs. industry 7 6 YoY RevPAR movement (%) 5 4 3 2 1 0 -1 -2 IHG Industry -3 UK Holiday Inn and Express UK London - Holiday Inn & Express UK Regions - Holiday Inn & Express 8
Slide 9: Hotel franchising – royalty fee growth
Hotel franchising – royalty fee growth Total gross revenue $bn¹ (rooms only) Group Royalty drivers H1’10 vs. H1’09 H1 '10 5.0 Rooms 3% H1 '09 4.6 RevPAR 3% H1 '08 5.6 Royalty fees 8% Franchise Fees $m Franchise EBIT $m (margin %) H1 '10 264 H1 '10 219 (83%) H1 '09 257 H1 '09 206 (80%) H1 '08 309 H1
Slide 10: Hotel management – underlying margin growth
Hotel management – underlying margin growth Total gross revenue $bn¹ (total hotel) H1 '10 3.6 H1 '09 3.1 Managed EBIT² $m (margin %) H1 '10 74 (49%) H1 '08 3.7 H1 '09 38 (31%) 57 (47%)³ Management Fees² $m H1 '10 152 H1 '08 93 (51%) H1 '09 121 H1 '08 181 Based on actual USD ¹Total gross revenue is d
Slide 11: Owned & leased – good cost management
Owned & leased – good cost management O&L revenue $m O&L EBITDA $m H1 '10 270 H1 '10 61 H1 '09 250 H1 '09 48 H1 '08 352 H1 '08 92 O&L EBIT $m (margin %) H1 '10 33 (12%) Asset disposal adjustments: H1 '09 25 (10%) • H2’09 revenue = $18m, operating profit = $2m • H1’10 revenue = $17m, operating profit
Slide 12: Cost savings on target and recycling capital
Cost savings on target and recycling capital Cost savings • H1 regional & central costs of $108m – $9m¹ increase driven by performance based short term incentive costs • Full year: on track to maintain $75m sustainable savings achieved in 2009 – $50m regional & central costs, $25m managed & franchis
Slide 13: Cash flow and balance sheet
Cash flow and balance sheet $ million 6 months to 30 June 10 6 months to 30 June 09 EBITDA* 274 230 Free cash flow 167 60 Net cash Inflow/ (outflow) 58 (21) Closing net debt (1,019) (1,328) • Controlled capital expenditure • Growth $14m net of $17m receipts (H1’09: $3m inflow) • Maintenance $16m (H1
Slide 14: Driving margins through scale and efficiency
Driving margins through scale and efficiency 39 Adjusted underlying group margins % 37 35 33 31 29 27 25 H1 2008 H1 2009 H1 2010 Source: IHG. Actual currency. Adjusted for owned & leased hotels, individually significant LDs, HPT guarantee payments and excludes the benefit in 2009 of non-sustainable
Slide 15: Operating review
Operating review Holiday Inn Express Shanghai Sanlin, opened January 2010 15
Slide 16: IHG's growth strategy to create sustainable value
IHG’s growth strategy to create sustainable value Making best use of our scale to build and grow preferred hotel brands for guests and owners in high value markets “Where we play” “How we win” Markets Powerful and distinct brands Segments Best demand delivery systems Model Aligned and engaged organi
Slide 17: InterContinental repositioning
InterContinental repositioning Growth in system and pipeline Open Hotels Pipeline 71 63 62 62 36 23 26 26 23 21 27 148 149 159 166 168 134 136 135 135 132 137 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 H1 10
Slide 18: Building high quality distribution – recent openings
Building high quality distribution – recent openings InterContinental, Shanghai Expo, China - Only hotel within the Expo site InterContinental Sanya Resort, China - First beachfront resort in China for the brand 18
Slide 19: Building high quality distribution – recent openings
Building high quality distribution – recent openings InterContinental, New York Times Square - Largest new build hotel to open in Manhattan since 2002 InterContinental, Nanjing, China - One of the tallest hotels in the world at 450metres 19
Slide 20: Building high quality distribution – future openings
Building high quality distribution – future openings Upcoming openings: InterContinental Moscow - first InterContinental hotel in Moscow Upcoming openings: InterContinental Suzhou, China 20
Slide 21: Holiday Inn relaunch progress
Holiday Inn relaunch progress 1 2 3 1st Stages 2nd Stage Final Stage Install 87% brand 76% hallmarks 2,585 hotels complete 21
Slide 22: Relaunched hotels continue to outperform
Relaunched hotels continue to outperform As of June 2010, 378 US hotels that had been trading as relaunched hotels for over 1 year were showing a RevPAR outperformance of c.6%pts¹ compared to those that had not yet relaunched. ¹12months to 31 Mar ‘08 vs. 12months to 31 Mar ’10 10 % YoY change in Rev
Slide 23: Hotel Indigo London, Paddington
Hotel Indigo London, Paddington 23
Slide 24: Rapid expansion in the Americas
Rapid expansion in the Americas 34 hotels open Key locations: • New York, Chelsea • San Diego 32 3 3 23 4 2 2 2 2 232 4 33 3 2 9 first half signings Key signings: 652 • New York • New Orleans, French Qtr • Mexico City 47 hotel pipeline Key hotels: • Vancouver 24
Slide 25: Expansion outside the Americas gathering pace
Expansion outside the Americas gathering pace 2 hotels open • Paddington, London • Tower Hill, London 5 first half • Madrid signings • Newcastle, UK • Bangkok • Taipei • (Tower Hill, London) Further 6 • Shanghai on the Bund hotels in • 4 in the UK incl Glasgow and Liverpool pipeline • Hong Kong In n
Slide 26: Winning in China – leading share of system and pipeline
Winning in China – leading share of system and pipeline 100 80 No of rooms ‘000 60 40 Pipeline System 20 0 Source: IHG is IHG data as at 30 June 2010 for branded properties. Other data is STR Global June 2010 26
Slide 27: Winning in China – strong upscale distribution
Winning in China – strong upscale distribution 100 80 No of rooms ‘000 Pipeline 60 40 System 20 0 Source: IHG as at 30 June 2010 27
Slide 28: Outlook
Outlook Hotel Indigo London Tower Hill, opened June 2010 28
Slide 29: Accelerating growth in room demand
Accelerating growth in room demand IHG change in rooms sold 3m to Sept 09 3m to Dec 09 3m to Mar 10 3m to Jun 10 YoY Change in IHG room nights sold 10% 8% 6% 4% (%) 2% 0% -2% -4% -6% -8% Source: IHG – quarterly % change in global rooms sold 29
Slide 30: Midscale segment returned to growth
Midscale segment returned to growth 15% US industry segment quarterly RevPAR growth 10% 5% 0% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 -5% -10% -15% -20% -25% -30% -35% Luxury Upscale Midscale combined Source: Smith Travel Research. 30
Slide 31: Supply growth forecast to slow
Supply growth forecast to slow 4% US industry quarterly supply growth 2% 0% Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Smith Travel forecasts -2% -4% Source: Smith Travel Research. 31
Slide 32: Conclusions
Conclusions • Trading trends positive • IHG well positioned for the upturn • Investment in brands and system paying off • Holiday Inn relaunch delivering results • Leading share of industry pipeline • Focus on efficiency driving margin improvement Driving share of industry revenues 32
Slide 33: Q&A
Q&A Holiday Inn Mumbai International Airport, opened April 2010 33
Slide 34: Half Year Results Presentation
Half Year Results Presentation 10 August 2010 InterContinental Shanghai Expo, opened April 2010 34
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