InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — FY2009 Earnings Presentation
49 slides from InterContinental Hotels's earnings presentation, Feb 16, 2010
Slide 1: Preliminary Results Presentation 16 February 2010
Preliminary Results Presentation 16 February 2010 1
Slide 2: Overview
Overview 2
Slide 3: 2009 Overview
2009 Overview • Trading environment very challenging • Resilient business model • 2009 priorities delivered – Focus on efficiency – Support hotel performance – Build quality distribution • Business transformation strengthens future prospects 3
Slide 4: Financial Results
——— Pa? rn Ve Tinkas inancial Results ,
Slide 5: 2009 results - strong delivery in a difficult market
2009 results - strong delivery in a difficult market • Global constant currency RevPAR down 14.7% – Fourth quarter decline of 10.9% • Underlying¹ revenue down 16%², EBIT down 32%² • Strong margin performance in core fees business • Record 439 hotels opened (55,345 rooms) • Free cash flow of $377m •
Slide 6: Financial results
Financial results* CER² Change 12 mths 12 mths $ million Change % % Excluding to 31 Dec 09 to 31 Dec 08 LDs³ Turnover 1,538 1,897 (19)% (16)% Operating Profit¹ 363 549 (34)% (32)% Interest (54) (101) 47% Profit before tax¹ 309 448 (31)% Tax rate¹ 5% 23% (18)ppts Profit after tax¹ 294 347 (15)% Adjus
Slide 7: Global occupancy stabilisation
Global occupancy stabilisation Source: IHG 7
Slide 8: Hotel franchising – a robust model
Hotel franchising – a robust model Note: based on actual USD with the exception of group royalty drivers which are calculated at constant exchange rates. Numbers exclude $3m of liquidated damages received in 2009 and $11m received in 2008. ¹Total gross revenue is defined as total room revenue from f
Slide 9: Hotel management - resilient underlying margins
Hotel management - resilient underlying margins 120 (46%)3 Based on actual USD ¹Total gross revenue is defined as total hotel revenue from managed hotels, it is not revenue attributable to IHG. ²Hotel management fees and EBIT exclude the results of leased properties and exclude $22m liquidated damag
Slide 10: Owned & leased – good cost management
Owned & leased – good cost management 50% Based on actual USD. 2007 & 2008 comparatives restated for those hotels previously accounted for as discontinued operations, which were re-presented as continuing operations from H1 2009. All figures exclude hotels where the short lease has expired. ¹Revenue
Slide 11: Exceptional operating charges – P&L impact
Exceptional operating charges – P&L impact Q4 FY 09 Management contract charge (91) (91) Impairment: - Goodwill - (78) - Intangible assets - (32) - Property, plant and equipment - (28) - Other financial assets (14) (14) - On reclassification of hotels from assets held for sale - (45) Total impairmen
Slide 12: Cash flow and balance sheet
Cash flow and balance sheet $ million 12 months to 31 Dec 09 12 months to 31 Dec 08 EBITDA* 472 659 Free cash flow 377 566 Net cash Inflow 205 338 Closing net cash/ (Debt) (1,082) (1,273) • Controlled capital expenditure – Growth $91m (2008: $9m), including $65m for Hotel Indigo San Diego – Maintena
Slide 13: Delivering on key priorities
Delivering on key priorities 1. Focus on efficiency – $50m sustainable regional and central cost savings ($95m total) – $25m further sustainable cost savings in managed and franchised 2. Support hotel performance – +4ppt increase in room revenue delivery to 68% – RevPAR outperformance 13
Slide 14: RevPAR outperformance
RevPAR outperformance Source: IHG; Smith Travel Research 14
Slide 15: Delivering on key priorities
Delivering on key priorities 1. Focus on efficiency – $50m sustainable regional and central cost savings ($95m total) – $25m further sustainable cost savings in managed and franchised 2. Support hotel performance – +4ppt increase in room revenue delivery to 68% – RevPAR outperformance 3. Build quali
Slide 16: Continued growth in system size
Continued growth in system size Source: IHG 16
Slide 17: Building quality distribution
Building quality distribution Source: IHG; Company websites 17
Slide 18: Resilient business model
Resilient business model Source: IHG. Actual currency. Adjusted for owned & leased hotels, individually significant LDs and HPT guarantee payments 18
Slide 19: Performance supported by strong action
Performance supported by strong action • Revenue delivery to hotels improved • Margins maintained in core fees business • Substantial cost savings realised • Good cash generation and reduction in net debt • System developed – quality and quantity 19
Slide 20: Foundations for the future
Foundations for the future 20
Slide 21: Scaleable, cash generative business model
Scaleable, cash generative business model Brand preference RevPAR Reinvestment out-performance Scale Owner efficiencies ROI Higher royalties/ more deals 21
Slide 22: Building brand preference
Building brand preference Brand preference RevPAR Reinvestment out-performance Brand preference Scale Owner efficiencies ROI Higher royalties/ more deals 22
Slide 23: Building brand preference
Building brand preference Brand preference 23
Slide 24: Building brand preference
Building brand preference Guest Experience Our People Responsible Business Financial Returns 24
Slide 25: Guest experience - the remaking of Holiday Inn
Guest experience - the remaking of Holiday Inn • Stronger system quality & scale – 2004 - 2010: c.1,200 hotels removed and c.1,500 added – End 2010: 40% of core Holiday Inns <10 years old • Stronger brand appeal – New brand hallmarks and websites – On track for end 2010 25
Slide 26: Guest experience - relaunch progress
Guest experience - relaunch progress 1 1st Stages Pass Complete relaunch service culture audit training Meet guest satisfaction threshold 26
Slide 27: Guest experience - relaunch progress
Guest experience - relaunch progress 1 1st Stages 77% complete 27
Slide 28: Guest experience - relaunch progress
Guest experience - relaunch progress 1 2 3 1st Stages 2nd Stage Final Stage Install Install 77% brand hallmarks signage complete 28
Slide 29: Guest experience - relaunch progress
Guest experience - relaunch progress 1 2 3 1st Stages 2nd Stage Final Stage Install 77% brand 54% hallmarks 1832 hotels complete 29
Slide 30: Guest experience - the remaking of Holiday Inn
Guest experience - the remaking of Holiday Inn • Stronger system quality & scale – 2004 - 2010: c.1,200 hotels removed and c.1,500 added – End 2010: 40% of core Holiday Inns <10 years old • Stronger brand appeal – New brand hallmarks and websites – On track for end 2010 • Stronger consumer marketing
Slide 31: Guest experience - US relaunched hotels' outperformance
Guest experience - US relaunched hotels’ outperformance Source: IHG 31
Slide 32: Guest experience – brand updates
Guest experience – brand updates QUALITY & SCALE BRAND APPEAL • Record 166 hotels open • “You bring It to Life 2” – staff (12 openings in 2009) engagement programme • 63 hotels in the pipeline • New brand hallmark pilots (37 under construction) for meetings and sound • Record 366 hotels open (20% ro
Slide 33: Building brand preference
Building brand preference Guest Experience Our People Responsible Business Financial Returns 33
Slide 34: Our people - creating engagement
Our people - creating engagement Right Right Right Right Environment Behaviour Activity Performance • Proven link between Recruitment advertisement - China employee engagement and guest satisfaction • Delivers strategy at the front line • Unique approach within the industry • Values embedded across
Slide 35: Our people - delivering performance
Our people - delivering performance • Employee engagement • Continued external recognition – scores up 15% since 2007 – Britain’s most admired hospitality & leisure company • Improved guest satisfaction (3rd yr running) – OSAT up 2%pts since 2007 – Top employer in China 2007, 2008 • Successful IHG e
Slide 36: Building brand preference
Building brand preference Guest Experience Our People Responsible Business Financial Returns 36
Slide 37: Responsible business - our approach
Responsible business - our approach • Increasingly important to global account guests and employees • Key partnerships and innovations – Green Engage driving down energy consumption – InterContinental brand’s partnership with National Geographic – IHG Innovation Hotel – IHG Academies – Oxford Univer
Slide 38: Building brand preference
Building brand preference Guest Experience Our People Responsible Business Financial Returns 38
Slide 39: Financial returns - hotel level: helping our owners
Financial returns - hotel level: helping our owners • Enhanced system delivery – System delivery up 4%pts to 68% – PCR system delivery up 4%pts to 41% and hotel enrolments up 30% – Almost $300m in technology upgrades 2004-2011 – Core CRM and reservation systems transformation • Increased revenue dri
Slide 40: Financial returns - corporate level: improving margins
Financial returns - corporate level: improving margins • Global procurement – Worldwide change in corporate buying discipline – Sustainable savings – Further opportunities to include hotel level spend • Business process management – Driving global scale & efficiency – Offshoring/ shared services str
Slide 41: Scaleable, cash generative business model
Scaleable, cash generative business model Brand preference RevPAR Reinvestment outperformance Scale Owner efficiencies ROI Higher royalties/ more deals 41
Slide 42: Outlook
Outlook 42
Slide 43: Continued strength in absolute demand
Continued strength in absolute demand Source: IHG
Slide 44: Near term outlook
Near term outlook • January trading – Global RevPAR –3.8%* – Americas –7.2%*; EMEA –3.1%*; APAC +11.1%* • Occupancy stabilised, continued rate pressure • 75,000 rooms under construction (>50% to open in 2010) • Financing environment remains challenging * in constant currency 44
Slide 45: Growing global supply share
Growing global supply share Source: Smith Travel Research 45
Slide 46: Excellent long term prospects
Excellent long term prospects • Underlying drivers of market growth intact • Scale players advantaged - IHG advantaged most of all • Exposure to high growth markets, rising guest preference • Hotel owner buy-in • High performance business model driving share and margin growth 46
Slide 47: 47
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Slide 48: Q&A
Q&A 48
Slide 49: Preliminary Results Presentation 16 February 2010
Preliminary Results Presentation 16 February 2010 49
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