Intercontinental Hotels Group Plc · LSE:IHG
Intercontinental Hotels — Investor Day (November 2010)
41 slides from Intercontinental Hotels's investor day presentation, Nov 23, 2010
Slide 1: IHG in the Middle East
IHG in the Middle East Kirk Kinsell InterContinental and Crowne Plaza Dubai Festival City 1
Slide 2: IHG is well positioned in the right locations – system
IHG is well positioned in the right locations – system Near East Syria Gulf (25 hotels) (28 hotels) Libya Egypt Total System Rooms Hotels 9,147 30 4,405 16 Saudi Arabia Oman 4,510 22 Saudi (23 hotels) 989 4 305 2 Other 293 2 TOTAL 19,649 76 * Note: IHG manages Israel as part of it’s European operati
Slide 3: The Middle East in the context of EMEA
The Middle East in the context of EMEA Managed & Franchised EBIT¹ Total system (rooms)² Total pipeline (rooms)² 38% 16% 35% 62% 84% 65% Middle East Rest of Europe, Middle East & Africa Source: IHG. ¹EBIT = is 2009 Europe Middle East and Africa region managed and franchised profits. ² Q3 2010 3
Slide 4: Agenda
Agenda • Favourable market dynamics and strong fundamentals • IHG in the Middle East • Highly profitable growth – scaling the opportunity • Summary 4
Slide 5: Favourable market dynamics and strong fundamentals
Favourable market dynamics and strong fundamentals Holiday Inn Cairo Citystars 5
Slide 6: The Middle East region has grown rapidly and is benefiting from favourable tailwinds
The Middle East region has grown rapidly and is benefiting from favourable tailwinds • Large and growing inbound market: 50m+ per year • 50% of arrivals are from within the region (30 cities have >1m people) Middle East GDP ($b) Middle East Population (m) % of World 1.6 2.3 % of World 2.1 2.3 +10% 1
Slide 7: Strong traditional drivers of leisure travel
Strong traditional drivers of leisure travel Historical Sites Religion Egypt Petra Mecca Medina Beach Resorts City Leisure Red Sea Dubai Beirut 7
Slide 8: High business and domestic penetration
High business and domestic penetration Business vs. Leisure International vs. Domestic 36% 41% 64% 59% Business Leisure International Domestic Source: IHG September 2010 YTD 8
Slide 9: The Dubai Model – shifting from oil to tourism and increasing diversification
The Dubai Model – shifting from oil to tourism and increasing diversification Dubai in 1991 Dubai in 2010 • Solid fundamentals support attractive long-term prospects • Diversification away from oil and natural resources Gulf followers: Yas Island – Abu Dhabi Economic Cities – Saudi The Pearl - Qatar
Slide 10: IHG in the Middle East
IHG in the Middle East InterContinental Amman, Jordan 10
Slide 11: IHG's heritage provides strong foundations
IHG‟s heritage provides strong foundations IC Amman IC Dubai CP Bahrain HI Kuwait CP Sheikh SBS City Zayed Dubai Stars 1960 1970 1980 1990 2000 2010 IHG OFFICES Saudi Beirut Cairo Dubai Arabia IC Phoenicia HI Salalah IC Riyadh IC Semiramis HIEX Dubai IC Dubai SBS Yas Beirut Internet City Festival Ci
Slide 12: Strong brand loyalty and guest satisfaction
Strong brand loyalty and guest satisfaction PCR room nights contribution (% and total) PCR contribution by market 1.3m 50% 2008 2010 45% 40% 0.9m 35% 30% 25% 42% 20% 29% 15% 10% 5% 0% Egypt Saudi Arabia UAE 2008 2010 Source: IHG, All data September Year to date. All hotels 12
Slide 13: We have built a stand alone operation to provide leading owner support
We have built a stand alone operation to provide leading owner support OPERATIONS GROWTH ENABLER Hotel Sales & Develop Design & Risk Legal Finance Operations Marketing -ment Engineering Management Human IT • 45 employees in the Dubai office Resources • Semi-autonomous operation 13
Slide 14: IHG has the leading share of system and pipeline
IHG has the leading share of system and pipeline 35000 Pipeline System 30000 25000 20000 Rooms 15000 10000 5000 0 IHG Starwood Accor Hilton Marriott Rotana Rezidor* Millenium Source: IHG Q3 2010; other data is STR Global September 2010. * Rezidor (Carlson) 14
Slide 15: Driving a significant recent ramp-up in pipeline growth
Driving a significant recent ramp-up in pipeline growth IHG System Size and Pipeline by Brand, rooms („000) 35 30 Pipeline 25 20 15 10 5 0 2005 2006 2007 2008 2009 Q3 2010 Source: IHG 15
Slide 16: Building the right brands
Building the right brands Video 16
Slide 17: Iconic, brand defining hotels – Crowne Plaza and Staybridge Suites Yas Island
Iconic, brand defining hotels – Crowne Plaza and Staybridge Suites Yas Island 17
Slide 18: Iconic, brand defining hotels – InterContinental and Crowne Plaza Dubai Festival City
Iconic, brand defining hotels – InterContinental and Crowne Plaza Dubai Festival City 18
Slide 19: Iconic, brand defining hotels – InterContinental Abu Dhabi
Iconic, brand defining hotels - InterContinental Abu Dhabi 19
Slide 20: Iconic, brand defining hotels – Crowne Plaza Sohar, Oman
Iconic, brand defining hotels – Crowne Plaza Sohar, Oman 20
Slide 21: Iconic, brand defining hotels – Holiday Inn Riyadh Al Qasr
Iconic, brand defining hotels – Holiday Inn Riyadh Al Qasr 21
Slide 22: Iconic, brand defining hotels – Holiday Inn Express Dubai Internet City
Iconic, brand defining hotels - Holiday Inn Express Dubai Internet City 22
Slide 23: Rigorous approach to development planning
Rigorous approach to development planning • Market planning analyses supply and demand dynamics • Location planning focuses on site profile, brand fit and upcoming major developments • Owner profiling identifies individuals and organisations with long-term growth potential 23
Slide 24: IHG is well positioned in the right locations – pipeline
IHG is well positioned in the right locations – pipeline Near East Syria Gulf Libya Egypt Total Pipeline Rooms Hotels 3,498 11 3,359 9 Saudi Arabia Oman 2,835 10 Saudi 799 4 468 4 Other TOTAL 10,959 38 * Note: IHG manages Israel as part of it’s European operation, therefore system size and performan
Slide 25: IHG is well positioned in the right locations – total
IHG is well positioned in the right locations – total Near East Syria Gulf Libya Total System Egypt Rooms Hotels Rooms Hotels & Pipeline 9,147 30 3,498 11 4,405 16 3,359 9 Saudi Arabia Oman 4,510 22 2,835 10 Saudi 989 4 799 4 305 2 468 4 Other 293 2 TOTAL 19,649 76 10,959 38 * Note: IHG manages Isra
Slide 26: We have built the right relationships with the right owners
We have built the right relationships with the right owners • Broad base of contacts • Strong loyal owner base • Continued appetite for IHG brands with repeat owners Type of Owners (# Properties owned) 22 21 20 13 High Net Worth Individuals Public/Private Sector Government/Quasi Mega Developer Compa
Slide 27: Excellent owner relationships
Excellent owner relationships Video 27
Slide 28: Winning the War for Talent
Winning the War for Talent • c.23,500 people work in our hotels across MEA • Another c.14,000 people will be needed over the next 3 years • Over 80,000 e-careers applications received in 2010 • Nationalisation important in the MEA war for talent 28
Slide 29: Our people are highly engaged
Our people are highly engaged 85% intend to stay 94% are proud to with the company work for us for the next 2 years 88% would recommend us as a place to work 85% feel happy to come to work at IHG 88% feel the job gives them a real 84% are willing to sense of put in extra effort to achievement get th
Slide 30: IHG is well equipped for the future
IHG is well equipped for the future Trend IHG's Advantage Focused and discerning Increased room supply development strategy Most sophisticated owner – World class management offer asset managers backed by global system power Globally preferred brands offering Heightened brand awareness unique guest
Slide 31: Highly profitable growth – scaling the opportunity
Highly profitable growth – scaling the opportunity Crowne Plaza Muscat, Oman 31
Slide 32: Strong RevPAR growth across the region
Strong RevPAR growth across the region Selected Middle East Markets RevPAR 10 Year CAGR (1999-2009) Middle East Abu Dhabi Amman Beirut Cairo Doha Dubai Jeddah Occupancy Kuwait Average Daily Rate Manama Muscat Riyadh -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% Source: STR Global 32
Slide 33: Highly profitable
Highly profitable $m Middle East financial results (Managed and franchised only) 2009 2010 (forecast) Revenue 60 58 Costs* (13) (14) EBIT 47 44 Margin 78% 76% • Revenue decline partially due to the renewal of some old contracts • No requirement for IHG capital expenditure • Cost increase due to inve
Slide 34: Large and high quality pipeline
Large and high quality pipeline Pipeline by Construction Phase (# of total properties) 6 14 38 18 Pre-Construction Under Construction Pre Opening Total Source: IHG Q3 2010 34
Slide 35: Large and high quality pipeline – Crowne Plaza Dead Sea Resort, Jordan
Large and high quality pipeline – Crowne Plaza Dead Sea Resort, Jordan 35
Slide 36: Large and high quality pipeline – InterContinental Tripoli, Libya
Large and high quality pipeline – InterContinental Tripoli, Libya 36
Slide 37: Significant medium term opportunity
Significant medium term opportunity • A very strong pipeline spread across brands delivering above average profitability September 2010 Current Pipeline Management Fees ($‟000) 30 11 $800 - $1,400 16 9 $600 - $900 22 10 $300 - $600 4 4 $75 - $200 2 4 $150 - $400 74 38 Source: IHG; System size Septem
Slide 38: Our longer term potential
Our longer term potential • Substantial long term opportunity IHG illustrative hotel potential – Significant growth in c.190 midscale segment – Ramp-up in new brand openings (Indigo, Staybridge Suites) c.100 – Attractiveness of frontier markets (Syria, Libya, Iraq) 76 – Franchising growth - Express
Slide 39: Summary
Summary • Global industry tailwinds benefit the Middle East • Regional dynamics will support robust future growth • IHG has a strong heritage and leading position in the region • Key and loyal partnerships with the right owners • Rigorous approach to development in the right locations • Large and hi
Slide 40: Q&A
Q&A InterContinental Taba Heights, Egypt 40
Slide 41: IHG in the Middle East
IHG in the Middle East Kirk Kinsell InterContinental and Crowne Plaza Dubai Festival City
InterContinental Hotels Group — Investor Day (November 2010) on 6ix