InterContinental Hotels Group PLC · LSE:IHG

InterContinental Hotels — H1 2015 Earnings Presentation

41 slides from InterContinental Hotels's earnings presentation, Jul 30, 2015

1. Slide 1: Interim Results Presentation 30 July 2015

   Holiday Inn Resort, Bali Interim Results Presentation 30 July 2015 IHG© 1

2. Slide 2: First half highlights and market perspective

   First half highlights and market perspective • Strong underlying financial performance Continued • Growth momentum behind our preferred brands – best first strategic half for signings since 2008 progress • Kimpton integration progressing well • Innovation in loyalty and digital technology • Finalise

3. Slide 3: Financial Review

   Crowne Plaza, Berlin Financial Review Paul Edgecliffe-Johnson CFO IHG© 3

4. Slide 4: Strong underlying financial performance

   Strong underlying financial performance Reported Underlying1 H1 2015 H1 2014 % change % change Revenue $915m $908m 1% 8% Fee revenue2 $626m $600m 4% 9% Fee-based margin 46.8% 45.0% 1.8%pts Operating profit $337m $310m 9% 10% Interest $(43)m $(39)m 10% Tax rate3 30% 33% (3)%pts Adjusted EPS4 87.2¢ 70

5. Slide 5: Resilient fee-based business model

   Resilient fee-based business model RevPAR X Rooms X Royalty Rate H1 2015 fee revenue1 $652m up 9% H1 2015 Group RevPAR growth H1 2015 system growth2 (%) 7.4% 5.1% 4.5% 3.3% 5.8% 1.8%pts 2.8% ADR Occupancy RevPAR Gross Net H1 2015: 4.2% total RevPAR growth H1 2015: 28k rooms opened, 14k rooms removed

6. Slide 6: Business model drives revenue growth in all regions

   Business model drives revenue growth in all regions RevPAR X Rooms X Royalty Rate H1 2015 fee revenue¹ growth (excluding Kimpton) 10.9% 9.1% 9.5% 8.7% 5.1% $22m $6m $3m $1m H1 2015 fee $652m $359m $92m $83m $51m revenue1 Group2 Americas Europe AMEA Greater China ¹ Fee revenue excludes revenue from o

7. Slide 7: The Americas – rate driven RevPAR growth and highest signings in 7 years

   The Americas – rate driven RevPAR growth and highest signings in 7 years H1 Growth in fee revenue drivers1 Comparable RevPAR up 5.4%; rate up 4.2% 9.1% • Americas portfolio at all-time occupancy high of 67.8% 5.4% • US RevPAR 5.6%; record US demand for 52 4.6% consecutive months 2.1% YoY net rooms g

8. Slide 8: Europe – strong performance in UK and Germany

   Europe – strong performance in UK and Germany H1 Growth in fee revenue drivers1 Comparable RevPAR up 5.1% 9.5% • UK 6.1%; UK provinces 8.0% • Germany 5.0% 5.1% YoY net rooms growth 1.2% 1.2% • YoY gross rooms growth 4.4% RevPAR Net rooms Fee revenue Fee revenue1 up 9.5% Total underlying revenue2 up

9. Slide 9: AMEA – solid growth led by Japan and South East Asia

   AMEA – solid growth led by Japan and South East Asia H1 Growth in fee revenue drivers1 Comparable RevPAR up 5.4% 5.4% 5.1% • Japan 12.8%; South East Asia 7.8% 3.1% $22m Total RevPAR up 4.4% YoY net rooms growth 3.1% RevPAR Net rooms Fee revenue • YoY gross rooms growth 6.9% H1 Net rooms growth (k) F

10. Slide 10: Greater China – continued industry outperformance

    Greater China – continued industry outperformance Comparable RevPAR up 1.5% H1 Growth in fee revenue drivers1 • Mainland China 4.8%; Hong Kong (9.2)%; Macau (12.1)% 10.9% • 4.8%pts ahead of the industry 9.5% $22m Total RevPAR down 2.4% 1.5% • Mix impact from tier 2 and 3 cities YoY net rooms growth

11. Slide 11: Capital allocation – disciplined approach maintains flexibility and maximises returns

    Capital allocation – disciplined approach maintains flexibility and maximises returns Efficient balance • 2.0 to 2.5x net debt / EBITDA sheet with an investment grade • Towards top end in favourable economic conditions credit rating • 2.2x at 30 June, 2015 Disposal of major • InterContinental Paris

12. Slide 12: Capital expenditure – increased system funded capital following Amadeus announcement

    Capital expenditure – increased system funded capital following Amadeus announcement H1 2015 Maintenance • Hotel maintenance capex reducing in line Maintenance capex $27m with asset intensity capex & key money Key money $19m • Key money deployment weighted towards Total $46m H2 in line with openings

13. Slide 13: Highly cash generative business

    Highly cash generative business • Net capital expenditure of $109m covered ~2x by underlying cash from operations • Cash flow generated by operations, disposals, and efficient balance sheet • Proposed interim dividend of 27.5¢, 10% growth $m 800 Cash inflows Cash outflows 616 600 192 457 389 400 369

14. Slide 14: Operating Review

    Hotel Indigo, Bangkok Wireless Road Operating Review Richard Solomons IHG© CEO 14

15. Slide 15: Our winning strategy will drive future growth

    Our winning strategy will drive future growth Value creation: superior shareholder returns Value creation: Superior shareholder returns Winning Model Targeted Portfolio Attractive markets Highest opportunity segments Managed & franchised model • Scale and efficiency of operations Disciplined • Inves

16. Slide 16: Our commercial strategy supports the winning model to deliver a leading guest experience

    Our commercial strategy supports the winning model to deliver a leading guest experience Create & Deliver a Consistent & Differentiated In-Hotel Experience Grow & Make Direct the GRS Deepen Relationships Preferred Way with High-Value to Book Guests IHG© 16

17. Slide 17: Holiday Inn Brand Family – Brand re-fresh has driven market out-performance

    Holiday Inn Brand Family – Brand re-fresh has driven market out-performance • $1bn global brand re-fresh announced in 2007 Largest ever • Re-launched 3,300 hotels, opened 1,500, and removed 1,100 global brand since programme started re-fresh • Reduced average hotel age to less than both Hampton Inn

18. Slide 18: Holiday Inn Brand Family – Only global mainstream brand

    Holiday Inn Brand Family – Only global mainstream brand • Top two largest global brands across all segments • Holiday Inn >100k rooms outside the US, more than 4x nearest competitor • Holiday Inn Express doubled non-US presence since 2007 Holiday Inn brand family global Non-US Holiday Inn brand fami

19. Slide 19: Holiday Inn Brand Family – Guest experience innovations and brand extensions

    Holiday Inn Brand Family – Guest experience innovations and brand extensions • Next generation public area which offers unmatched solution for guest’s business and leisure needs Holiday Inn open lobby • Nearly 30 already open in Americas • 17 launched across six markets in Europe; delivering 8pts in

20. Slide 20: Holiday Inn Brand Family – Global growth and design innovation

    Holiday Inn Brand Family – Global growth and design innovation Holiday Inn Makkah, Saudi Arabia Holiday Inn Express Formula Blue Room, Salt Lake City Holiday Inn Open Lobby, Frankfurt, Germany Holiday Inn Club Vacations, Las Vegas IHG© 20

21. Slide 21: Boutique portfolio – Developing on our leading position

    Boutique portfolio – Developing on our leading position • Leading boutique footprint with 128 hotels open and 79 in the pipeline Market leading position • Existing strength in the US with significant overseas growth potential • Non-US position expected to double in 3 to 5 years • Transitioning Kimpt

22. Slide 22: Boutique portfolio – Landmark signings and openings in H1

    Boutique portfolio – Landmark signings and openings in H1 Hotel Monaco, a Kimpton Hotel, Pittsburgh Palladian, a Kimpton Hotel, Seattle Hotel Indigo, Helsinki Hotel Indigo, Bali IHG© 22

23. Slide 23: Crowne Plaza – Growing scale and making business travel work

    Crowne Plaza – Growing scale and making business travel work • 9% annual room growth outside of US • Doubled non-US presence over last 10 years; added more rooms than any other brand in the upscale segment Growing scale • Driving re-brand opportunities; 30% of total signings in last 3 years • Larges

24. Slide 24: Crowne Plaza – Market leading global growth

    Crowne Plaza – Market leading global growth Panama Airport Guangzhou Zengcheng, China Potsdamer Platz, Berlin Battersea, London IHG© 24

25. Slide 25: Enhancing IHG Rewards Club to develop deeper lifetime relationships

    Enhancing IHG Rewards Club to develop deeper lifetime relationships Dream Plan Book Stay Share • Completed first phase roll out of new CRM capability allowing Innovating to hotels teams to offer a more individual service drive personalisation • Next phase of CRM capability to include more personalis

26. Slide 26: Enhancing IHG Rewards Club to develop deeper lifetime relationships

    Enhancing IHG Rewards Club to develop deeper lifetime relationships Dream Plan Book Stay Share • Our most loyal members are personal advocates for our brands and desire extra level of status recognition • Spire Elite meets this need for recognition and builds a special New top tier rewards relations

27. Slide 27: Our approach to technology

    Our approach to technology Dream Plan Book Stay Share Insight into guest needs across the entire Guest Journey • Know the market and leverage current trends to enhance the guest experience • Understanding needs of different demographics, e.g. Boomers vs. Millennials • Own the ‘stay’ experience • Foc

28. Slide 28: Amadeus strategic relationship will deliver industry defining guest reservation system

    Amadeus strategic relationship will deliver industry defining guest reservation system Dream Plan Book Stay Share Revolutionising • Cloud based community model – a first for the sector the industry’s • Next generation and fully integrated solution to deliver more technology personalisation and a sup

29. Slide 29: Stay.com collaboration marks another industry first to enhance the guest journey

    Stay.com collaboration marks another industry first to enhance the guest journey Dream Plan Book Stay Share • Collaboration with digital travel service stay.com to enhance Compelling guest journey from dream to stay digital content • Users can explore destinations and create personalised travel thro

30. Slide 30: Leading digital innovation driving growth in our direct channel revenue

    Leading digital innovation driving growth in our direct channel revenue Dream Plan Book Stay Share Driving • Continue to grow digital revenue, our lowest cost channel direct channel – Tracking at over $4bn per annum growth – H1 up $220m YOY, more than any other channel • Launched content rich websit

31. Slide 31: Lowest price promise gives guest clear incentive to book direct

    Lowest price promise gives guest clear incentive to book direct IHG© 31

32. Slide 32: Continue to innovate mobile solutions to enhance guest experience and drive delivery

    Continue to innovate mobile solutions to enhance guest experience and drive delivery Dream Plan Book Stay Share • IHG translator app made available on Apple WatchTM Market • Real time bill viewing added to leading Mobile check-in and check-out mobile services • IHG guest request launched, allowing g

33. Slide 33: Conclusion

    Conclusion Compelling long-term industry tailwinds Strategic progress and growth of our portfolio of preferred brands Innovating across digital technology and loyalty programme Completion of asset-light transition delivers highest quality of earnings Well positioned to drive profitable future growth

34. Slide 34: Q&A

    Staybridge Suites, Midvale, Utah Q&A IHG© 34

35. Slide 35: Appendices

    EPIC Hotel, a Kimpton Hotel, Miami Appendices IHG© 35

36. Slide 36: Foreign exchange translation exposure

    Foreign exchange translation exposure $8m impact from currency translation in H1 For 1%pt difference in full year group RevPAR growth between constant and actual exchange rates, we expect a $4m impact on reported fee business operating profit1 RevPAR movement summary at constant exchange rates (CER)

37. Slide 37: Underlying operating profit adjustments (CER)

    Underlying operating profit adjustments (CER) H1 2015 H2 2015 FY 2015 FY 20141 Adjustments following Kimpton acquisition $3m $(6)m $(3)m Refurbishment of InterContinental New York Barclay $(2)m $(4)m $(6)m US healthcare claims $(4)m $(2)m $(6)m Total Americas $(3)m $(12)m $(15)m $(6)m InterContinent

38. Slide 38: Kimpton accounting considerations

    Kimpton accounting considerations Acquisition fully consolidated from 16 January 2015 Fair value of assets and liabilities acquired of $441 million: • $193 million brand value • $71 million management contracts to be amortised over 30 years; c.$2.4m p.a. • $167 million goodwill • $10 million other 2

39. Slide 39: Hotel franchising

    Hotel franchising Total gross revenue $bn¹ (rooms only) Group royalty drivers H1 2015 YoY Average H1 2015 6.8 rooms 4.0% H1 2014 6.5 RevPAR 5.1% H1 2013 6.1 Royalty fees 9.4% Franchise Fees² $m Franchise EBIT $m (margin %) H1 2015 383 H1 2015 324 (85%) H1 2014 357 H1 2014 300 (84%) H1 2013 332 H1 20

40. Slide 40: Hotel management

    Hotel management Total gross revenue $bn1(total hotel) Management Fees² $m H1 2015 4.2 4.7 H1 2015 177 210 H1 2014 4.4 H1 2014 181 H1 2013 4.1 H1 2013 171 Managed EBIT² $m (margin %) Reported managed lease revenue and EBIT $m $m H1 2015 H1 2014 H1 2015 100 114 (54%) Americas revenue 22 21 Americas E

41. Slide 41: Hotel owned & leased

    Hotel owned & leased O&L revenue $m O&L EBIT $m (margin %) H1 2015 147 H1 2015 31 (21%) H1 2014 140 H1 2014 29 (21%) H1 2013 136 H1 2013 28 (21%) Reported O&L revenue O&L EBITDA $m and EBIT from disposals ($m) $m 2015 2014 H1 2015 39 InterContinental Paris Revenue 30 52 InterContinental Paris EBIT (

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