InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — H1 2007 Earnings Presentation
43 slides from InterContinental Hotels's earnings presentation, Aug 14, 2007
Slide 1: IHG Interim Results 2007
IHG Interim Results 2007 14th August 2007 1
Slide 2: Agenda
Agenda Financial Operating Overview Q&A Review Review 2
Slide 3: Strong performance in H1 2007
Overview Strong performance in H1 2007 ? Total hotels gross revenue* up 12% in constant currency to $8.3 billion ? 7.0% global RevPAR growth - outperformance in major markets ? Continuing EBIT** up 5%, up 17% at constant currency ? Room count up 7,430; 20,713 openings, 13,283 removals ? 54,246 rooms
Slide 4: Drivers of H1 growth
Overview Drivers of H1 growth ? Strong global demand for hotel rooms, and low new supply, driving continued room rate increases ? Occupancy levels remain strong in US, and continue to increase in EMEA and Asia Pacific ? Room count growth starting to deliver increased revenues 4
Slide 5: Senior management changes
Overview Senior management changes ? Two new senior management appointments, both internal ? Peter Gowers: Chief Executive, Asia Pacific – Effective 1 November 2007 – Currently EVP, Chief Marketing Officer ? Kirk Kinsell: President Europe, Middle East & Africa – Effective 1 September 2007 – Currentl
Slide 6: Agenda
Agenda Financial Operating Overview Q&A Review Review 6
Slide 7: Financial Highlights
Financial Review Financial Highlights ? Continuing revenue up 12% to £422 million, up 20% in constant currency ? Total** adjusted EBIT* of £116 million ? Continuing EBIT* up 5% to £111 million, up 17% in constant currency ? Total** adjusted earnings per share* of 23.2p ? Adjusted continuing earnings
Slide 8: Group results still reflect impact of asset disposals
Financial Review Group results still reflect impact of asset disposals 6 mths 6 mths £ million Change % to 30 June 07 to 30 June 06 Turnover 445 499 (11)% EBITDA* 146 160 (9)% Operating Profit* 116 127 (9)% Interest (12) (1) nm** Profit before tax* 104 126 (17)% Tax rate* 23% 25% -2%pts *Before exce
Slide 9: Continuing business better reflects performance
Financial Review Continuing business better reflects performance 6 mths 6 mths CER Change £ million Change % to 30 June 07 to 30 June 06 % Turnover 422 377 12% 20% EBITDA* 140 133 5% 20% Operating Profit* 111 106 5% 17% Interest (12) (1) nm** Profit before tax* 99 105 (6)% Adjusted earnings per 22.3
Slide 10: Regional performance
Financial Review Regional performance 6 mths 6 mths CER** £ million Change % to 30 June 07 to 30 June 06 Change % Americas 111 109 2% 12% EMEA 24 18 33% 39% Asia Pacific 14 16 (13)% (-)% Central Overheads (38) (37) (3)% (5)% Continuing Operating Profit* 111 106 5% 17% Continuing EBITDA 140 133 5% 20
Slide 11: RevPAR outperformance in all key business areas
Financial Review RevPAR outperformance in all key business areas 2007 RevPAR change, IHG key business areas vs. segment 12% IHG Segment 10% 8% 6% 4% 2% 0% InterContinental - US Crowne Plaza - US Holiday Inn - US Holiday Inn Express - Holiday Inn & Express InterContinental - All brands - China US - U
Slide 12: Hotel franchising – High margin fee growth continues
Hotel franchising – Financial Review High margin fee growth continues Total gross revenue £bn* (rooms only) Drivers of gross revenue change, % H1'07 2.5 H1’07 vs H1’06 48% 52% H1’06 H1’06 vs H1’05 23% 77% 2.3 H1’05 vs H1’04 H1'05 2.0 (6%) 106% Avail. Rooms RevPAR Franchise fees £m Franchise EBIT £m
Slide 13: Hotel management - Operating profit growth continues
Hotel management - Financial Review Operating profit growth continues Total gross revenue £bn* (total hotel) Drivers of gross revenue change, % H1'07 1.5 H1’07 vs H1’06 17% 12% 17% 39% 32% H1’06 vs H1’05 (1)% 24% 10% 66% H1’06 1.3 H1’05 vs H1’04 (6)% 35% 14% 58% H1'05 1.0 Avail. RevPAR F&B Transfers
Slide 14: Continuing owned and leased estate – Margins increasing
Continuing owned and leased estate – Financial Review Margins increasing O&L revenues £m Drivers of revenue change, % 119 adjusted* H1'07 H1’07 vs H1’06 38% 16% 46% 141 108 adjusted* H1’06 vs H1’05 (10)% 80% 30% H1'06 108 H1’05 vs H1’04 35% 41% 24% 98 adjusted* H1'05 109 Rate Occupancy F&B O&L EBITD
Slide 15: Total Group cash flow
Financial Review Total Group cash flow 6 mths 6 mths 12 mths £ million to 30 June 07 to 30 June 06 to 30 June 07 Operating Profit* 116 127 220 Depreciation - Hotel depreciation 20 23 40 - Non hotel depreciation 10 10 21 Working capital & other movements (31) (32) (6) Net interest paid & similar char
Slide 16: Uses of cash flow
Financial Review Uses of cash flow 6 mths 6 mths 12 mths £ million to 30 June 07 to 30 June 06 to 30 June 07 Free cash flow 77 81 190 Investment capital expenditure - Expenditure (40) (24) (104) - Receipts 58 352 450 Share repurchases/special dividend (738) (608) (887) Ordinary dividend (47) (46) (6
Slide 17: Capital recycling – active asset management
Financial Review Capital recycling – active asset management H1 2007 disposals £m ? Crowne Plaza Blackfriars - 33.3% interest ? InterContinental Singapore - 10% interest ? Crowne Plaza Santiago - 100% interest ? Other JV disposals and loan repayments – IC Chicago - 15% stake – IC Warsaw - 33% stake
Slide 18: Capital recycling – active asset management
Financial Review Capital recycling – active asset management Assets on the market Hotels NBV (£m) ? InterContinental Atlanta 1 ? Holiday Inn at Disneyland Resort Paris 1 64 ? Staybridge Suites Denver - Cherry Creek 1 64 Remaining assets ? Flagship InterContinentals 4 669 ? Other owned & leased asset
Slide 19: Investment capital expenditure
Financial Review Investment capital expenditure Refurbishment expenditure: £15m including: ? InterContinental London and Hong Kong Investment capital expenditure: £25m including: ? Equity investment in InterContinental San Francisco, Moscone Centre ? Inducements: 11 Holiday Inn conversions; one Inte
Slide 20: Returning cash to shareholders
Financial Review Returning cash to shareholders ? £3.5bn returned to shareholders since 2004 ? 2007 interim dividend raised by 12% to 5.7p per share ? £150m share buyback remaining to complete ? Operating free cash flow will be used to enhance shareholder value Shares acquired/ % of share base at Am
Slide 21: Agenda
Agenda Financial Operating Overview Q&A Review Review 21
Slide 22: Growth in room count gaining momentum
Operating Review Growth in room count gaining momentum Room count change during H1 2007 +7,430 +1.3% (13) 21 564 556 Dec-06 Openings Exits Jun-07 Rooms ‘000 22
Slide 23: Signings growing on all brands
Operating Review Signings growing on all brands 60 50 40 Rooms signed '000 30 20 10 - H1 2004 H1 2005 H1 2006 H1 2007 Holiday Inn Holiday Inn Express InterContinental Crowne Plaza Candlewood Staybridge Suites Indigo 23
Slide 24: Pipeline continues to grow around the world
Operating Review Pipeline continues to grow around the world 200 180 160 Pipeline rooms ‘000 140 120 100 80 60 40 20 - Dec'02 Jun'03 Dec'03 Jun'04 Dec'04 Jun'05 Dec'05 June'06 Dec '06 Jun'07 Americas Asia Pacific EMEA 24
Slide 25: Signings and openings strongly correlated
Operating Review Signings and openings strongly correlated 110 2006 90 2005 70 2004 '000 rooms 50 2003 2002 2001 2006 30 2005 2003 2004 10 -10 Gross openings Signings 2 years earlier 25
Slide 26: InterContinental gaining momentum
Operating Review InterContinental gaining momentum 70 65 60 '000 rooms 55 50 45 40 Jun'03 Jun'04 Jun'05 June'06 Jun'07 Pipeline Room count 26
Slide 27: InterContinental signings, record hotel pipeline
Operating Review 16 InterContinental signings, record 50 hotel pipeline Stockholm Dresden Marseille Kiev Chicago Porto Los Angeles Milan Belgrade Suzhou Tripoli Ras El Khaimah Shanghai Danang Hua Hin Queenstown Signings for six months ending 30 June 2007 27
Slide 28: InterContinental signings
Operating Review InterContinental signings InterContinental Duomo, Milan InterContinental Century City, LA 28
Slide 29: InterContinental signings
Operating Review InterContinental signings InterContinental Stockholm InterContinental Marseille 29
Slide 30: InterContinental signings
Operating Review InterContinental signings InterContinental Porto InterContinental Belgrade InterContinental Dresden InterContinental Queenstown 30
Slide 31: InterContinental signings
Operating Review InterContinental signings InterContinental Hua Hin InterContinental Suzhou 31
Slide 32: Crowne Plaza building momentum
Operating Review Crowne Plaza building momentum 110 100 90 80 '000 rooms 70 60 50 40 Jun'03 Jun'04 Jun'05 June'06 Jun'07 Pipeline Room count 32
Slide 33: Driving growth
Operating Review Driving growth Target Goal By end 2008: Faster growth by Net, organic growth of making IHG’s brands 50,000 - 60,000 rooms the first-choice for guests and hotel owners RevPAR X Rooms X Royalty rate 33
Slide 34: H1 2007 growth drivers - Americas
Operating Review H1 2007 growth drivers - Americas 20% HoH RevPAR growth HoH Net rooms growth 15% +79% rooms 10% growth +20.7% RevPAR growth 5% 0% Total InterContinental Crowne Plaza Holiday Inn & Extended stay Indigo Express 34
Slide 35: Future growth drivers - Americas
Operating Review Future growth drivers - Americas 40000 H1 2007 Room count increase H1 2007 Pipeline signings 30000 20000 10000 0 Total InterContinental Crowne Plaza Holiday Inn & Extended stay Indigo Express 35
Slide 36: H1 2007 growth drivers - EMEA
Operating Review H1 2007 growth drivers - EMEA 15% HoH RevPAR growth HoH Net rooms growth 10% 5% 0% -5% -10% Total InterContinental Crowne Plaza Holiday Inn & Express 36
Slide 37: Future growth drivers - EMEA
Operating Review Future growth drivers - EMEA 12000 H1 2007 Room count increase H1 2007 Pipeline signings 10000 8000 6000 4000 2000 0 -2000 Total InterContinental Crowne Plaza Holiday Inn & Express 37
Slide 38: H1 2007 growth drivers - Asia Pacific
Operating Review H1 2007 growth drivers - Asia Pacific 40% HoH RevPAR growth HoH Net rooms growth 30% 20% 10% 0% Total InterContinental Crowne Plaza Holiday Inn & Express 38
Slide 39: Future growth drivers - Asia Pacific
Operating Review Future growth drivers - Asia Pacific 20000 H1 2007 Room count increase H1 2007 Pipeline signings 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Total InterContinental Crowne Plaza Holiday Inn & Express 39
Slide 40: Growth in revenue delivery from booking systems
Operating Review Growth in revenue delivery from booking systems 40% Total Gross Revenue $8.3bn, +12% 30% % revenue contribution 46% direct IHG channels revenue contribution 20% 10% 0% Travel agent Web Call Centres Priority Club Rewards Revenue booked +19% +25% +20% +15% % growth 40
Slide 41: Conclusions
Conclusions ? IHG continues to grow strongly around the world ? RevPAR currently driving the majority of growth ? Industry continuing to benefit from favourable tailwinds ? Increasing preference for IHG's brands driving increased signings ? High pipeline growth lays foundations for stronger room gro
Slide 42: Agenda
Agenda Financial Operating Overview Q&A Review Review 42
Slide 43: IHG Interim Results 2007
IHG Interim Results 2007 14th August 2007 43
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