InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — H1 2011 Earnings Presentation
35 slides from InterContinental Hotels's earnings presentation, Aug 9, 2011
Slide 1: Half Year Results Presentation
Half Year Results Presentation 9 August 2011
Slide 2: 2011 – a strong first half
2011 – a strong first half Preferred brands drive RevPAR Global RevPARº 6.7% Record demand and rising rates ADRº 2.1% Driving market share Gross revenuesº 9% Strong profit growth Operating profit¹ 17% Scale benefits and efficiency Fee-based margins² 0.9%pts Focus on shareholder value Interim dividen
Slide 3: Executive Committee
Executive Committee Keith Barr Angela Brav Kirk Kinsell Jan Smits Tom Conophy Chief Executive Chief Executive President Chief Executive EVP – Chief Greater China Europe Americas Asia, ME & Africa Information Officer Tracy Robbins Tom Singer George Turner Eric Pearson Steve Sickel EVP Human Chief Fin
Slide 4: Financial results
Financial results InterContinental One Thousand Island Lake Resort, China, opened April 2011 4
Slide 5: Financial results
Financial results CER² Change 6 months 6 months $ million Change % % Excluding to 30 June 11 to 30 June 10 LDs³ Turnover 850 772 10% 6% Operating Profit¹ 269 219 23% 17% Interest (32) (31) 3% Profit before tax¹ 237 188 26% Tax rate¹ 28% 28% - Profit after tax¹ 171 135 27% Adjusted EPS¹ 59.2¢ 47.0¢ 2
Slide 6: Group rate growth accelerated in Q2
Group rate growth accelerated in Q2 RevPAR by rate and occupancy Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 20% 20% 15% Global 15% Americas YoY change 10% YoY change 10% 5% 5% 0% 0% -5% -5% Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q1 '10 Q2 '10 Q3 '10 Q4 '10
Slide 7: IHG brands outperform the US industry
IHG brands outperform the US industry IHG RevPAR performance vs. industry - US Total Industry per Smith Travel IHG Comparable RevPAR IHG Total RevPAR 18 16 YoY RevPAR movement (%) 14 12 10 8 6 4 2 0 Total US Holiday Inn - US Holiday Inn Express - US InterContinental - US Crowne Plaza - US Source: IH
Slide 8: Greater China – Q2 RevPAR up 16.2% excluding Shanghai
Greater China – Q2 RevPAR up 16.2% excluding Shanghai Greater China excl Greater China Shanghai Shanghai 20% 15% 10% 19% 19% 16% 14% 5% 8% 0% Q1 Q2 - 26%² -5% Hotels¹: 154 26 128 ¹ Hotels data is for all open hotels, RevPAR data is for comparable hotels. ² Q2 RevPAR decline in Shanghai due to the Wo
Slide 9: Hotel franchising - 12% growth in total franchise fees
Hotel franchising - 12% growth in total franchise fees Total gross revenue $bn¹ (rooms only) Group Royalty drivers 2011 vs. 2010 H1 2011 5.4 -1% Average rooms H1 2010 5 RevPAR 7% H1 2009 4.6 Royalty fees 11% Franchise Fees $m Franchise EBIT $m (margin %) H1 2011 295 H1 2011 248 (84%) H1 2010 264 H1
Slide 10: Hotel management - Continued margin growth
Hotel management - Continued margin growth Total gross revenue $bn¹ (total hotel) Management Fees² $m H1 2011 3.9 H1 2011 166 H1 2010 3.6 H1 2010 152 H1 2009 3.1 H1 2009 121 Managed EBIT² $m (margin %) H1 2011 90 (54%) H1 2010 74 (49%) H1 2009 38 (31%) Based on actual USD ¹Total gross revenue is def
Slide 11: Owned & leased - Profits up over 55%
Owned & leased - Profits up over 55% O&L revenue $m O&L EBIT $m (margin %) H1 2011 277 H1 2011 47 (17%) H1 2010 (12%) H1 2010 246 30 H1 2009 228 H1 2009 19 (8%) O&L EBITDA $m H1 2011 69 Asset disposal adjustments: - H2 ‘10 revenue = $8m, operating profit = $1m H1 2010 54 - H1 ‘11 revenue = $6m, oper
Slide 12: Cash flow
Cash flow 6 months 6 months $ million to 30 June 11 to 30 June 10 EBITDA 320 274 Free cash flow 87 167 Net cash inflow (outflow) (46) 58 Closing net debt (818) (1,019) • Strong financial position • LTM net debt:EBITDA = c.1.4x • Working capital outflow of $190m partly timing • Higher debtors due to
Slide 13: Recycle capital, invest for growth
Recycle capital, invest for growth Recycling Capital ($m) Investing for Growth ($m) Holiday Inn Gwinnett 17 4.7% of Summit Hotel Properties 12 Staybridge Suites Cherry Creek Hotel sourcing agreement Hotel Indigo San Diego 55 Hotel Indigo New York JV 30 Flagship for the brand Holiday Inn Burswood JV
Slide 14: Sustainable growth in dividends
Sustainable growth in dividends Dividends – 2011 interim dividend rebalanced Cash($m): 117 127 118 118 121 c.148² 50 40 30 35.0 29.2 29.2 29.2 ¢ 25.9 20 10 16.0¹ 11.5 12.2 12.2 12.8 9.6 0 2006 2007 2008 2009 2010 2011 ¹2011 interim dividend of 16.0¢ up 25% to rebalance interim:final ratio following
Slide 15: Operating review
Operating review Hotel Indigo Glasgow, Scotland, opened April 2011 15
Slide 16: IHG's journey
IHG’s journey 2003-2007 2008-2010 2011 onwards Restructuring Recession & High quality recovery growth • Asset sales • Proved resilience • Organisation change • Maintained dividend • Rooms target • Holiday Inn relaunch 16
Slide 17: Priorities for high quality growth
Priorities for high quality growth 1. Drive market share • Brand development • New brand innovation • Exploit new customer trends • Deliver brand promises through people 2. Grow margins • Corporate • Hotel 3. Invest for growth 17
Slide 18: Strong foundations for high quality growth
Strong foundations for high quality growth Preferred brands Product People Place Price/ (guest (employee (owner Promotion preference) engagement) preference) (RevPAR premium) Strong foundations Consistent guest Engaged Leading share Largest loyalty experience employees global pipeline programme Focu
Slide 19: Drive market share - Holiday Inn relaunch delivering results
Drive market share - Holiday Inn relaunch delivering results Improved guest satisfaction – JD Power announced Holiday Inn as midscale full service winner – driving financial performance US Holiday Inn 12 month RevPAR index to Americas hotel signings pace accelerating upper midscale segment 52 44 30
Slide 20: Drive market share - Continued brand development
Drive market share - Continued brand Entiredevelopment estate refreshed Phase 2 Stay Real guest service training • Evolving the Stay Real behaviours • 43% hotels completed training to date (81) The Hub at Holiday Inn • Extensive global research • Sociable guests, enjoy interacting • Integrates publi
Slide 21: Drive market share - Continued brand development
Drive market share - Continued brand development Bar Area To Go Cafe All Day Market Media Lounge 21
Slide 22: Drive market share - Crowne Plaza relaunch
Drive market share - Crowne Plaza relaunch A good brand… Change in hotels 2003-2011 • $3.5bn revenues (57) 249 • 4th largest upscale brand 394 • System nearly doubled in <8 years 202 • Pipeline up fourfold to 115 hotels 2003 Openings Removals H1 2011 22
Slide 23: Drive market share - Crowne Plaza relaunch
Drive market share - Crowne Plaza relaunch • A brand with momentum… – 16 openings and 13 signings in H1 2011 Dubai Deira St. Petersburg Lidovsky Istanbul Hangzhou Xanadu Resort Gangzhou City Centre New Delhi Rohini 23
Slide 24: Drive market share - Crowne Plaza relaunch
Drive market share - Crowne Plaza relaunch A brand with significant opportunity – performance gap between Americas and Rest of World H1 2011 Average Daily Rate ($) H1 2011 System and pipeline rooms Rest of World 137 Americas 115 104 0 50 100 ‘000 rooms Americas EMEA Asia Pacific System Pipeline 24
Slide 25: Crowne Plaza relaunch - A multi-year journey
Crowne Plaza relaunch - A multi-year journey 2011 2012 2013 Performance plan for Americas and EMEA Quality improvement (c.40 hotel removals) Invest capital to develop halo locations Launch differentiated brand hallmarks • Accelerated performance plan for H2 2011 – Marketing – investment in promotion
Slide 26: Drive market share - New brand innovation
Drive market share - New brand innovation • New brand innovation embeds long term growth – Growing global demand for hotels – Increased consumer segmentation – Leverage scale benefits for IHG • IHG successes Launch Year Gross Revenues Open hotels Pipeline hotels – Crowne Plaza 1983 $3.5bn 394 115 –
Slide 27: Drive market share - New brand innovation
Drive market share - New brand innovation Growth in system and pipeline •Proven success with Hotel Indigo •Americas launch 2004, global roll-out 2008 60 56 •98 hotels since launch •77 Americas, 21 Rest of World 3 22 38 2004 2008 H1 2011 Open hotels Pipeline hotels •Research into guest and owner offe
Slide 28: Exploit new customer trends – mobile bookings
Drive market share - Exploit new customer trends – mobile bookings Growth in mobile revenues • Exceptional growth in revenues $69.7m – 50%-60% same day check in – 14% ADR premium year to date $36.0m • Advantages – Low cost booking channel $2.7m – Customer always on, always tethered 2009 2010 H1 2011
Slide 29: Drive market share - Deliver brand promises through people
Drive market share - Deliver brand promises through people Build preferred brands through an aligned and engaged organisation Leaders Corporate Frontline Owners • Industry leading employee engagement (owned and managed hotels) – 2010 employee engagement at 73%, up 13%pts in 3 years • People Tools la
Slide 30: Grow margins - Sustainable growth in fee-based margins
Grow margins - Sustainable growth in fee-based margins •Fee-based operating margin up 0.9%pts •Full year constant currency regional and central costs c.$260m Fee based¹ operating profit margin 39.7% 40.6% 35.9% H1 2009 H1 2010 H1 2011 Source: IHG. Actual currency. ¹Adjusted for owned and leased hote
Slide 31: Invest for growth - Harnessing the power of free cash flow
Invest for growth - Harnessing the power of free cash flow Free cash Asset disposals flow Investment grade credit rating Sustainable ordinary Growth investment Capital returns dividend 31
Slide 32: 2011 - Outlook
2011 - Outlook • Positive outlook in uncertain macro environment – Third party industry forecasts 2011 US RevPAR +7.3% to +7.8% – Supply growth low – Japan/Egypt/Bahrain in line with expectations • Net system size – Modest growth in 2011 – Medium term growth of 3% to 5% • Continued focus on efficien
Slide 33: Well positioned for high quality growth
Well positioned for high quality growth • Confident outlook in uncertain macro environment • New management team • Brand development and innovation • Driving returns for IHG and owners • World class people strategy • Strong foundations 33
Slide 34: Q&A
Q&A Crowne Plaza New Delhi Rohini, India, opened June 2011 34
Slide 35: Half Year Results Presentation
Half Year Results Presentation 9 August 2011
InterContinental Hotels Group — H1 2011 Earnings Presentation on 6ix