InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — FY2023 Earnings Presentation
40 slides from InterContinental Hotels's earnings presentation, Feb 20, 2024
Slide 1: 2023 Full Year Results
2023 Full Year Results 20 February 2024
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains certain forward-looking statements as defined under United States law (Section 21E of the Securities Exchange Act of 1934) and otherwise. These forward-looking statements can be identified by the fact that they do not re
Slide 3: Elie Maalouf, Chief Executive Officer
Elie Maalouf Chief Executive Officer 3
Slide 4: A year of strong financial performance, impressive openings and excellent signings
FY 2023 A year of strong financial performance, impressive openings and excellent signings; demonstrates the enduring attractions and benefits of our business model RevPAR System Size Profit and Earnings Capital Returns FY global RevPAR 946k rooms (6,363 hotels) 59.3% fee margin1, +3.4%pts $
Slide 5: FY 2023 Financial Review
FY 2023 Financial Review Michael Glover Chief Financial Officer 5
Slide 6: Financial performance overview
Financial performance overview Results from reportable segments FY 2023 FY 20222 Reported Underlying FY 20192 % change % change Revenue 1 $2,164m $1,843m +17% +19% $2,083m Operating profit (EBIT) 1 $1,019m $828m +23% +25% $865m Revenue from fee business 1 $1,672m $1,434m +17% +17% $1,510m2 Operating
Slide 7: RevPAR, occupancy and ADR recovery across regions
RevPAR, occupancy and ADR recovery across regions IHG Group monthly RevPAR, Occupancy and ADR (vs 2019) Americas monthly RevPAR, Occupancy and ADR (vs 2019) 2021 2022 2023 2021 2022 2023 +4 +8 +9 +10 +9 +11 +13 +11+15 +11 +11 +17 +12 +13+13 +11 +18+13+13+16 Jan Mar May Jul Sep Nov Jan Mar May +1 +4
Slide 8: Group RevPAR performance has now normalised
On a YoY basis, after lapping Omicron-impacted comparators in H1, Group RevPAR performance has now normalised Group monthly RevPAR, Occupancy and ADR (vs 2022) 40.8 33.5 27.2 21.7 17.0 15.0 9.9 13.3 8.7 11.6 9.5 10.4 6.3 8.7 5.3 7.2 6.6 4.9 3.1 4.5 4.7 10.0 11.3 10.0 3.1 8.6 6.9 2.7 1.0 5.4 4.3 3.8
Slide 9: Leisure demand sustained; Business and Groups recovery complete
Leisure strength of demand has sustained; Business and Groups demand recovery continued and is now complete IHG total estate Leisure demand performance (vs 2019) 2020 2021 2022 2023 Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul Oct Dec +17% Jan Jan Jan Jan +14% +13% Room Nights +0% ADR FY22 vs FY19 FY
Slide 10: Fee margin expansion +340bps YoY
Fee margin1 expansion +340bps YoY, driven by the completed recovery in EMEAA and Greater China TOTAL IHG Americas FY 2023 59.3% FY 2023 82.2% FY 2022 55.9% FY 2022 84.3% FY 2021 49.5% FY 2021 82.2% FY 2020 34.1% (prior to adoption of IFRS 17) FY 2020 70.7% FY 2019 54.1% (prior to adoption of IFRS 17
Slide 11: Net system size growth of +3.8%
Net system size growth of +3.8%; delivered through strength of brands and enterprise platform Net System Size Growth (FY) Openings mix +9.8% +9.2% +7.7% +7.7% New build Conversion 61% 39% +5.3% +3.8% Net system size growth +2.0% Gross additions +0.8% AMER EMEAA Greater China IHG Total Removals -1.2%
Slide 12: Q4 third strongest quarterly signings performance on record
Q4 had the third strongest quarterly signings performance on record; FY signings up +26%1, supporting future system growth potential Pipeline at Q4 Signings FY Signings 31 December 2023 (rooms) (rooms) (rooms) Americas Americas 9.9k 28.3k 109.2k +26%1 YoY increase in FY signings driven by EMEAA conv
Slide 13: Americas highlights
Americas highlights Trading performance – RevPAR up +7.0% vs 2022 (up +13.0% vs 2019) with occupancy of 68.2% up +1.5%pts and rate +4.6% higher – Q4 RevPAR up +1.5% vs 2022 (up +14.0% vs 2019), with occupancy of 63.9% down -1.0%pt and rate +3.1% higher – Fee margin1 82.2% (84.3% in 2022, 77.7% in 20
Slide 14: EMEAA highlights
EMEAA highlights Trading performance – RevPAR up +23.7% vs 2022 (up +15.4% vs 2019) with occupancy of 70.4% up +7.9%pts and rate +9.8% higher – Q4 RevPAR up +7.0% vs 2022 (up +18.5% vs 2019), with occupancy of 71.5% up +2.2%pts and rate +3.7% higher – Fee margin1 60.5% (52.7% in 2022, 58.6% in 2019)
Slide 15: Greater China highlights
Greater China highlights Trading performance – RevPAR up +71.7% vs 2022 (up +0.7% vs 2019) with occupancy of 61.1% up +19.1%pts and rate +18.0% higher – Q4 RevPAR up +72.0% vs 2022 (down -0.6% vs 2019), with occupancy of 59.5% up +17.6%pts and rate +21.1% higher – Fee margin1 59.6% (26.4% in 2022, 5
Slide 16: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m FY 2023 FY 2022 Key money and maintenance capex Key money 1 (101) (64) – Key money: used to secure hotel signings Maintenance capex (38) (44) – Maintenance: relates to owned, leased and Total (139) (108) managed lease hotels and corporate infrastructur
Slide 17: Cash flow
Cash flow FY 2023 (29) 129% conversion of adjusted ($m) +102 Exceptional earnings into FCF +67 +125 Working cash flow items (326) capital & other 1,086 System movements3 Depreciation Fund2 1,019 (46) and Interest (139) Amortisation and tax (53) Maintenance 819 capex and key Gross System Fund Net mon
Slide 18: Capital allocation approach; further $800m buyback announced for 2024
Continuing our capital allocation approach to routinely return surplus capital to shareholders – further $800m buyback announced for 2024 #1: Invest in the business #2: Sustainably grow the #3: Return surplus funds to drive growth ordinary dividend to shareholders Objective of maintaining an investm
Slide 19: Modelling considerations
Modelling considerations FY24 and near-term: Interest expense Tax rate Capital expenditure Adjusted interest expense1 is expected to Effective adjusted tax rate1 is expected to Key money and maintenance capex in total expected to be increase in FY24 to $155m-$170m be ~27% in FY24 and for the near te
Slide 20: Elie Maalouf, Chief Executive Officer
Elie Maalouf Chief Executive Officer 20
Slide 21: Conclusions
Conclusions A well-invested, high-performing business that drives growth and shareholder value – RevPAR growth +16.1% YoY, +10.9% vs 2019 – Gross system growth of +5.3% YoY; net system growth of +3.8%; pipeline growth of +5.5% – Operating profit from reportable segments1 +23% to $1,019m; adjusted EP
Slide 22: Appendices
Appendices 2023 Full Year Results
Slide 23: Revenue and operating profit breakdown
Revenue and operating profit breakdown Results from reportable segments FY 2023 FY 2022 ‘23 vs ’22 ‘23 vs ‘22 $ change % change Franchise and base management fees $1,304m $1,147m $157m 14% Incentive management fees $168m $103m $65m 63% Central revenue $200m $184m $16m 9% Revenue from fee business $1
Slide 24: Revenue growth rate analysis FY 2023 vs FY 2022
Revenue growth rate analysis FY 2023 vs FY 2022 RevPAR growth % Net rooms growth % Underlying Fee Revenue1 Comparable Total YoY Available Growth % Comments Hotels that have All hotels that were traded in all open in FY 2023 Aggregate number months being and FY 2022 (incl of rooms available compared
Slide 25: Revenue and operating profit 2021-2023 (post-IFRS 17)
Revenue and operating profit 2021-2023 (post-IFRS 17) Total Revenue Total Operating Profit¹ Actual US$ FY 2023 FY 2022 FY 2021 FY 2023 FY 2022 FY 2021 Franchise and Base Management Fees 936 861 683 - - - Incentive Management Fees 21 18 8 - - - Fee Business 957 879 691 787 741 568 Owned, Leased & Man
Slide 26: Revenue and operating profit 2019-2022 (pre-IFRS 17)
Revenue and operating profit 2019-2022 (pre-IFRS 17) Total Revenue Total Operating Profit¹ Actual US$ FY2022 FY2021 FY2020 FY2019 FY2022 FY2021 FY2020 FY2019 Franchise and Base Management Fees 861 683 452 840 - - - - Incentive Management Fees 18 8 5 13 - - - - Fee Business 879 691 457 853 741 568 32
Slide 27: FY 2023 underlying fee business non-GAAP reconciliations
FY 2023 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 957 787 354 214 161 96 200 (
Slide 28: FY 2022 underlying fee business non-GAAP reconciliations
FY 2022 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 879 741 284 153 87 23 184 (1
Slide 29: Net system size growth delivered through brands and enterprise platform
Net system size growth delivered through strength of brands and enterprise platform Net System Size Growth TOTAL IHG Americas (13.3) (6.3) 47.9 946.2 10.4 519.6 911.6 515.5 FY 2022 Openings Exits FY 2023 FY 2022 Openings Exits FY 2023 Europe, Middle East, Asia and Africa Greater China (3.6) (3.5) 24
Slide 30: Ordinary shares
Ordinary shares Number of shares (m) 2023 2022 Opening balance at 1 January 183 188 Closing balance at 31 December 172 183 Closing balance excluding treasury and ESOT shares1 164 175 Basic weighted average shares (excluding treasury and ESOT shares) 169 181 Dilutive potential ordinary shares1 1 1 Ba
Slide 31: Currency impacts
Currency impacts ($m) Reported FY22 at Reported FY23 at Revenue1 FY22 FY23 AER2 Var. FY23 FY22 AER3 Var. Americas 1,005 1,007 (2) 1,105 1,105 - EMEAA 552 554 (2) 677 679 (2) Greater China 87 82 5 161 169 (8) Central Overheads4 199 199 - 221 222 (1) Total IHG 1,843 1,842 1 2,164 2,175 (11) Operating
Slide 32: Asset light, mainly franchised, and geographically diverse
Asset light, mainly franchised, and geographically diverse System size and pipeline Strong competitive position in an industry where System size (rooms): Luxury branded players are gaining 2% <1% 11% 179k 520k market share 28% 70% 19% 55% Upscale/ Upper Midscale/ With a larger share Upscale Upper of
Slide 33: Strong portfolio of 19 preferred brands across chain scales
Strong portfolio of 19 preferred brands across chain scales Having added nine brands to our portfolio since 2015 LUXURY & PREMIUM ESSENTIALS SUITES EXCLUSIVE LIFESTYLE PARTNERS SYSTEM SYSTEM SYSTEM SYSTEM SYSTEM 14% 15% 61% 8% 2% PIPELINE PIPELINE PIPELINE PIPELINE PIPELINE 22% 19% 46% 12% 1% Note:
Slide 34: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands; at FY23, 509 properties in the system; pipeline of 357 more represents future rooms growth of ~50% Six Senses Regent InterContinental In 5 years In 6 years World’s largest luxury hotel brand since acquisit
Slide 35: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands; at FY23, 509 properties in the system; pipeline of 357 more represents future rooms growth of ~50% Vignette Collection Kimpton Hotel Indigo First 16 hotels now open, The boutique luxury lifestyle brand Ope
Slide 36: Premium
Premium Uniquely tailored to target upscale customer segments; at FY23, 524 properties in the system; pipeline of 258 more represents future rooms growth of ~41% voco HUALUXE Crowne Plaza EVEN Our conversion-focused Designed specifically with the Our refreshed premium brand; The premium wellness-foc
Slide 37: Essentials
Essentials Continued opportunity for growth in our core segment; at FY23, 4.4k properties in the system; pipeline of 1.0k more represents future rooms growth of ~24% Holiday Inn Express Holiday Inn Garner avid The world’s largest hotel Refreshed estate with an Our new midscale conversion >200 open a
Slide 38: Suites
Suites An expanding portfolio of extended stay properties across chain scales; at FY23, 733 properties in the system; pipeline of 358 more represents future rooms growth of ~45% Staybridge Atwell Candlewood Holiday Inn Suites Suites Suites Club Vacations Our premium extended stay Our newest extended
Slide 39: Exclusive Partners
Exclusive Partners Demonstrating the strength of the IHG enterprise platform and desire for strategic partners to join our system Iberostar Beachfront Resorts Substantially strengthens our resort and all-inclusive presence Iberostar Selection Hacienda Dominicus – Dominican Rep. System Size: 17,600 r
Slide 40: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation contains certain forward-looking statements as defined under United States law (Section 21E of the Securities Exchange Act of 1934) and otherwise. These forward-looking statements can be identified by the fact that they do not re
InterContinental Hotels Group — FY2023 Earnings Presentation on 6ix