InterContinental Hotels Group PLC · LSE:IHG

InterContinental Hotels — FY2003 Earnings Presentation

15 slides from InterContinental Hotels's earnings presentation, 2004

  1. Slide 1: Richard North, Chief Executive

    Richard North Chief Executive 32

  2. Slide 2: Driving Returns and Free Cash Flow

    Driving Returns and Free Cash Flow Driving revenue Improved ROCE and Reduced overhead costs Free Cash Flow Lower capital intensity 33

  3. Slide 3: Driving Revenue – Levers to Pull

    Driving Revenue – Levers to Pull Four main levers to pull: z Improving the proposition of our BRANDS z Strengthening our PRICING STRUCTURES z Building retention with our LOYALTY PROGRAMMES z Increasing the reach and efficiency of our SYSTEM DELIVERY 34

  4. Slide 4: Driving Revenue – Highlights

    Driving Revenue – Highlights z BRAND Investment Total Membership of Priority Club Rewards 19.2 z New PRICING STRUCTURES 15.6 z PRIORITY CLUB REWARDS up 23% to 19 million members † PCR members spent $2.7 billion in our hotels in 2003 Dec 2002 Dec 2003 35

  5. Slide 5: Driving Revenue – Highlights: System Delivery

    Driving Revenue – Highlights Percentage of Total SYSTEM DELIVERY Bookings via IHG Web Sites z Up further 2.6 percentage 7.0% points z $1.3bn of business booked 4.5% through our 15 call centres z Call centre revenue up 5% on call volumes down 6% z Revenue via own websites up 50% to 7% of total bookin

  6. Slide 6: Reducing Overhead Costs: Comparison to Targets

    Reducing Overhead Costs Comparison to Targets z Exceeded actual saving target in 2003 Target $40 million Actual Savings $76 million z Exceeded our target of annualised savings by 31 December 2003 Target $75 million Actual Savings $110 million z Now increasing overall savings target by 31 December 20

  7. Slide 7: Overheads - 2004

    Overheads - 2004 z Calendar 2004 costs will be impacted by various cost pressures, including: † New business and initiatives † Increased depreciation on our IT infrastructure † Inflation and exchange rates † Payment of bonuses z 2004 gross costs anticipated to be marginally down on 2003 at constant

  8. Slide 8: Reducing Overhead Costs: 2004 Forecast versus 2002 Actual

    Reducing Overhead Costs 2004 Forecast versus 2002 Actual z $65million less at constant exchange rates after z Incremental investment in IT, sales and marketing z New Business z Underlying inflation 39

  9. Slide 9: Lower Capital Intensity: Owned & Leased Estate

    Lower Capital Intensity Owned & Leased Estate No of HOTELS No of ROOMS NBV 1,000s £billion Americas 28 9.8 0.8 EMEA 129 26.3 2.5 Asia Pacific 14 3.2 0.4 Total 171 39.4 3.7 40

  10. Slide 10: Lower Capital Intensity – Significant Asset Disposal Process

    Lower Capital intensity – Significant Asset Disposal Process z Decision criteria includes… † Importance for brand representation † Importance to build critical mass distribution within a market † Future capital expenditure requirements † Ability to earn superior returns † State of the local market †

  11. Slide 11: Lower Capital Intensity - Asset Disposals

    Lower Capital Intensity - Asset Disposals DISPOSALS COMPLETED DISPOSALS PLANNED 21 hotels sold with proceeds over Number of further opportunities £270m identified These include: These include: Sold outright to hotel operator † IC Central Park South † MayFair £113m † IC George Edinburgh † CP Manchest

  12. Slide 12: Lower Capital Intensity: Capital Expenditure

    Lower Capital Intensity Capital Expenditure 700 Hotels : Capital Expenditure 600 500 400 £m 300 200 100 0 YE Sept 2001 YE Dec 2002 * YE Dec 2003 YE Dec 2004 43 * 12 months

  13. Slide 13: Britvic

    Britvic z Successful renegotiation of the Exclusive Bottling Agreement with Pepsi † For an additional 15 years z Opportunity for initial public offering between 1 January 2005 and 31 December 2008 44

  14. Slide 14: Current Trading

    Current Trading z Conditions steadily improving in Americas and the UK z Asia Pacific is substantially recovered since SARS scare z Continental Europe remains difficult exacerbated by the weakness of the US dollar 45

  15. Slide 15: Driving Returns and Free Cash Flow

    Driving Returns and Free Cash Flow Driving revenue z System delivery up 2.6%age points z Holiday Inn market share increasing in UK Improved ROCE and Reduced overhead costs Free Cash z Exceeded actual cost reduction targets by $36m Flow Lower capital intensity z Raised £270m from disposals z Announce

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