Intercontinental Hotels Group Plc · LSE:IHG
Intercontinental Hotels — Investor Presentation (December 2023)
69 slides from Intercontinental Hotels's investor presentation, December 2023
Slide 1: Investor Presentation December 2023
Investor Presentation December 2023
Slide 2: A global hospitality leader with 6,200+ open hotels
A global hospitality leader with 6,200+ open hotels and a further 1,900+ in the pipeline; driven by clear purpose, ambition, strategy and priorities Our Purpose True Hospitality for Good. Our Priorities Our Ambition To deliver industry-leading growth in our scale, enterprise Build loved CUSTOMER pla
Slide 3: 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% 18% 47% 12% 1% Note:
Slide 4: 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: Luxury branded players are gaining 2% <1% 10% 172k 517k market share 28% 70% 18% 56% Upscale/ Upper Midscale/ With a larger share Upscale Upper of the act
Slide 5: Our asset light business model
Our asset light business model Franchised Managed Exclusive Partners Owned, Leased & Managed Lease 70% 28% 2% <1% Fee revenue: Fee revenue: Fee revenue: We record the entire revenue and profit of the hotel in our financial Royalty Fee: Base Management Fee: We receive marketing, statements. fixed per
Slide 6: 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 +8 +18 +4 +1 +4 +2 +3 +4 +9 +10 +9 +11 +13 +11 +15 +12 +13+13 +11 Jan Mar May Jul Sep Nov Jan Mar May +7 Jan Mar
Slide 7: Net system size growth: delivered through strength of brands and enterprise platform
Net system size growth: delivered through strength of brands and enterprise platform Improvement in gross openings . . . . . . resulting in stronger net system size growth 7.8% 5.6% 7.1% 4.8% 6.3% 5.4% 4.0% 4.3% 5.0% 5.6% 4.5% 3.1% 0.3% 2021 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 202
Slide 8: Q3 2023 net system size growth of +4.7% YOY
Q3 2023 net system size growth of +4.7% YOY (+2.0% YTD); delivered through strength of brands and enterprise platform Net System Size Growth (YOY) Net System Size Growth (YTD) +10.0% +8.4% +8.1% Gross additions +6.2% +5.5% +6.3% +4.7% +3.9% +5.0% +4.9% +2.9% +3.3% +3.1% Net system size growth +2.0%
Slide 9: Q3 signings up +16% YTD; development activity robust
Q3 signings up +16% YTD; development activity robust Pipeline at Q1 Signings Q2 Signings Q3 Signings YTD Signings 30 September 2023 Americas 5.4k 7.9k 5.1k 18.4k Americas 106.8k EMEAA EMEAA 5.2k 4.8k 4.8k 14.8k 79.3k Greater China Greater China 5.9k 5.0k 6.9k 17.8k 106.4k TOTAL 16 .5 k 17.7k 16 .8 k
Slide 10: HY 2023 fee margin 330bps ahead of HY 2022
HY 2023 fee margin 330bps ahead of HY 2022, driven by recovery in EMEAA and Greater China TOTAL IHG Americas HY 2023 58.8% HY 2023 81.9% FY 2022 55.9% FY 2022 84.3% HY 2022 55.5% HY 2022 82.8% FY 2021 49.5% FY 2021 82.2% FY 2020 See note FY 2020 70.7% FY 2019 See note FY 2019 77.7% Europe, Middle Ea
Slide 11: An attractive industry and a strong business model
An attractive industry and a strong business model that drives growth and shareholder value Attractions of our industry Strengths of IHG business model Enduring structural growth drivers of expanding Well-invested High-value geographic GDP, rising middle class, and people’s inherent portfolio and an
Slide 12: $15bn returned to shareholders since 2003
$15bn returned to shareholders since 2003, and our strategy for uses of cash generated remains unchanged Rolling share buybacks routinely expected to return surplus capital Invest in the business Sustainably grow Return surplus funds to drive growth the ordinary dividend to shareholders Objective of
Slide 13: Q3 2023 conclusions
Q3 2023 conclusions A well-invested, high-performing business that drives growth and shareholder value – RevPAR growth +10.5% YOY, +12.8% vs 2019 – Gross system growth of +6.2% YOY; net system growth of +4.7% YOY; pipeline growth of +5.1% YOY – Cash generation funding growth investment and ~$1bn of
Slide 14: A strong first half across financial results, openings and signings
HY 2023 A strong first half across financial results, openings and signings; demonstrates the enduring strength and attractions of our business model RevPAR System Size Profit and Earnings Capital Returns – H1 global RevPAR – System 925k rooms (6,227 hotels) – 58.8% fee margin1, +3.3%pts – $277m FCF
Slide 15: Additional Information
IHG HOTELS & RESORTS Additional Information
Slide 16: Contents: Additional Information
Contents: Additional Information Page 17 Update on Our Industry and IHG’s Positioning Pages 18-19 Current industry forces and long-term growth drivers Page 20 Investing for performance, growth and competitive advantage Page 21 Update on Strategic Priorities Pages 22-25 Being CUSTOMER centric in all
Slide 17: Update on Our Industry and IHG's Positioning
Update on Our Industry and IHG’s Positioning
Slide 18: Current industry forces
Current industry forces Tailwinds Headwinds Further recovery in international, corporate and group travel Reduced air travel capacity and high pricing China re-opening: domestic, inbound, and outbound travel Trends in working practices: Macro-economic hybrid working, bleisure travel, uncertainties d
Slide 19: Attractive long-term industry growth drivers
Attractive long-term industry growth drivers – Demand resiliency is well proven – Industry revenue CAGR of +3.3% from 2000 to 2022 – Outpaced global economic growth in 18 of last 23 years – Further new hotel supply supported by both healthy asset returns and long-term structural growth drivers – Glo
Slide 20: Investing for performance, growth and competitive advantage
Investing for performance, growth and competitive advantage enabling us to deliver on our strategic priorities System Fund IHG – Leveraging scale efficiencies across: – Key Money and Maintenance Capex of ~$150m p.a. that – ~$1bn+ of Opex annually further strengthens the enterprise platform – ~$0.3bn
Slide 21: Update on Strategic Priorities
Update on Strategic Priorities
Slide 22: Being customer centric in all we do
Being customer centric in all we do 22
Slide 23: IHG Hotels & Resorts Masterbrand
IHG Hotels & Resorts Masterbrand strengthening the bond between our masterbrand and our individual hotel brands Guest how you guest MLS Partnership Lollapalooza Driving uplifts in perception and engagement +6 pts1 +7 pts1 Aided Awareness Brand Favourability 1 Data as of December 2022 23
Slide 24: IHG One Rewards
IHG One Rewards One year since our biggest transformation and marketing investment; delivering significant improvements across key metrics Richer Benefits Faster Earn Exceptional Choice New, customer-preferred More bonus points across tiers Unique options to personalise benefits that members value +
Slide 25: Lowering costs and driving efficiencies for our owners
Lowering costs and driving efficiencies for our owners supporting performance and returns Cost to build & renovate Cost to operate – Deployed value engineering to mitigate the impact of – Relaunched lighter touch Daily Room Refresh inflation by 10-20% across furniture, fixtures and housekeeping to s
Slide 26: Building loved and trusted brands
Building loved and trusted brands 26
Slide 27: IHG Hotels & Resorts brand portfolio
27 IHG HOTELS & RESORTS LUXURY & LIFESTYLE 0 Seater REGENT INTERCONTINENTAL NIGNETTE KIMPTON INDIGO PREMIUM voco CROWNE PLAZA I EVEN ESSENTIALS if. Garner avid SUITES i EXCLUSIVE PARTNERS. * IBEROSTAR IHG 4] ReWaros
Slide 28: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands; contributed 26% of H1 2023 signings, increasing the pipeline mix and the future system mix Global system Luxury & Lifestyle and pipeline mix pipeline represents high future % growth of system size SYSTEM G
Slide 29: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands; growth will be driven across all regions and brands Luxury & Lifestyle system size by region – H1 2023 Luxury & Lifestyle portfolio growth 123k rooms across 479 hotels open rooms (last bar showing open + p
Slide 30: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands Six Senses Regent InterContinental In 4 years In 5 years World’s largest luxury hotel brand since acquisition, hotel system since acquisition, hotel system with more than 200 open growth of >40% and growth
Slide 31: Luxury & Lifestyle
Luxury & Lifestyle Driving high-value growth through an industry-leading collection of brands Vignette Collection Kimpton Hotel Indigo First four hotels now open, The boutique luxury lifestyle brand System size accelerating to 200 hotels, 21 in the pipeline, and sizeable continues its global expansi
Slide 32: Premium
Premium Uniquely tailored to target upscale customer segments voco HUALUXE Crowne Plaza EVEN Our conversion-focused Designed specifically with the Our refreshed premium brand; The premium wellness-focused premium brand has already Chinese premium guest in mind, three-quarters of the Americas brand n
Slide 33: Essentials and Suites
Essentials and Suites Evolution of our midscale, upper midscale, and extended stay brand portfolio 1952 1991 2017 2023 NEW BRAND Essentials Upper midscale Upper midscale Midscale Midscale full service select service new build conversion 1997 2003 2008 2019 Suites Upscale Midscale Timeshare Upper mid
Slide 34: Essentials and Suites
Essentials and Suites Continued volume growth; as at H1 2023, 5.1k properties in the system; 1.4k in the pipeline, representing ~27% future system growth Essentials portfolio growth Suites portfolio growth open rooms (last bar showing open + pipeline) open rooms (last bar showing open + pipeline) 68
Slide 35: Essentials
Essentials Continued opportunity for growth in our core segment; as at H1 2023, 4.4k properties in the system; pipeline represents future growth of ~25% Holiday Inn Express Holiday Inn avid The world’s largest hotel brand, Refreshed estate with a further >200 open and pipeline continuing its categor
Slide 36: Launching a new best-in-class midscale conversion brand
Launching a new best-in-class midscale conversion brand Redefining the midscale market with a differentiated proposition Scale of opportunity Clear positioning midscale upper midscale – Targeting sizeable existing midscale supply; 9.5k hotels (705k rooms), representing $14bn in annual hotel revenue
Slide 37: avid
avid a brand of scale; an engine of future growth Launched in Americas rooms September 2017 Today, present in 5,353 12,385 open pipeline 24 US states 4 and will be in Americas hotels 34 by 2025 187 2021-2022 social review scores 59 / 145 4.5 avid open pipeline 4.3 US Canada 4.1 key competitor 13 55
Slide 38: Suites
Suites An expanding portfolio of extended stay properties across chain scales, in a segment with significant growth potential; pipeline represents future growth of ~45% Staybridge Atwell Candlewood Holiday Inn Suites Suites Suites Club Vacations Our premium extended stay Our newest extended stay bra
Slide 39: Exclusive Partners
Exclusive Partners Demonstrating the strength of the IHG enterprise platform and desire for strategic partners to join the IHG system Iberostar Beachfront Resorts Our 18th brand substantially grows our resort and all-inclusive presence Iberostar Selection Hacienda Dominicus – Dominican Rep. System S
Slide 40: System size as at June 2023
System size as at 30 June 2023 By sub-region Other JAPAC Airport Australia 2% HK / Macau / Taiwan 8% Urban Japan 5% 7% 15% 6% United Kingdom Tier 1 Interstate 21% 20% South East Asia Tier 4 14% and Korea 16% 13% France South West 3% Asia Germany Tier 3 Small Town 3% 9% 8% / Metro 19% Suburban Middle
Slide 41: New brands offer significant fee growth opportunity
New brands offer significant fee growth opportunity Targeting annual fees of at least $50m each; potential to drive aggregate $300m+ in annual fee income Date launched/ 2019 2018 2018 2017 2021 2019 acquired Approx ~5 further required ~14 ~90 ~228 Pipeline 39 ~87 ~297 11 58 146 Open 23 9 52 21 61 35
Slide 42: Conversions
Conversions growing in importance and future opportunity 2016-2022 share of conversion signings 2020-2022 conversion signings by brand across all IHG brands (excluding Iberostar) 25% InterContinental 4% (12 hotels) Holiday Inn 23% Express Vignette Collection 22% 27% (75 hotels) 4% (12 hotels) Hotel
Slide 43: Creating digital advantage
Creating digital advantage 43
Slide 44: Innovating our technology and distribution platforms
Innovating our technology and distribution platforms Driving value for our owners and IHG through ongoing, agile and rapid development Attribute Upsell: ‘Better View’ and ‘Bigger Room’ Mobile now available in 5,000+ hotels accounts for >50% of all digital bookings Downloads, users, bookings and reve
Slide 45: Caring for our people, communities and planet
Caring for our people, communities and planet 45
Slide 46: Being a responsible business: Journey to Tomorrow
BEING A Our actions as a responsible business are shaped by a culture of strong governance, RESPONSIBLE clear policies and a series of ambitious commitments set out in our Journey to BUSINESS : , Tomorrow 2030 responsible business plan. Our 2030 Journey to Tomorrow plan Key to delivering our strateg
Slide 47: Providing a community solar offering for hotel owners
Providing a community solar offering for hotel owners Industry-leading offering helps IHG hotels transition to renewable energy and decrease hotel owners’ electricity costs by up to 10% – First hotel company to provide owners a community solar offering – Supporting the development of clean energy –
Slide 48: HY 2023 Financial Review
IHG HOTELS & RESORTS HY 2023 Financial Review
Slide 49: Financial performance overview
Financial performance overview Results from reportable segments H1 2023 H1 20222 H1 20192 Reported Underlying % change % change Revenue $1,031m $840m +23% +27% $1,012m Operating profit $479m $377m +27% +30% $410m Revenue from fee business $799m $659m +21% +24% See note 2 Operating profit from fee bu
Slide 50: US Leisure, Business and Groups demand
US Leisure strength of demand has sustained; recovery of Business and Groups demand has continued IHG US estate Leisure demand performance (both charts vs 2019) 2020 2021 2022 2023 Jan Mar Jun Sep Jan Mar Jun Sep Jan Mar Jun Sep Jan Mar Jun +14% +16% Room Nights +4% +7% ADR HY2022 HY2023 HY2022 HY20
Slide 51: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m HY 2023 HY 2022 Key money and maintenance capex Key money 1 (64) (35) • Ke y m o n e y: used to secure hotel signings Maintenance capex (16) (15) • Ma in t e n a n c e : relates to owned, leased and Total (80) (50) managed lease hotels and corporate in
Slide 52: Cash flow
Cash flow HY 2023 ($m) 34 140 (158) nil 513 System 479 Depreciation Working Exceptional (138) Fund2 and capital & other cash flow (19) (8) Share amortisation movements3 items (80) Dividends Interest buybacks and tax including Maintenance 277 transaction Gross Net (166) capex and key costs System Fun
Slide 53: Revenue and operating profit breakdown
Revenue and operating profit breakdown Results from reportable segments H1 2023 H1 2022 ‘23 vs ’22 ‘23 vs ‘22 FY 2022 $ change % change Franchise and base management fees $625m $533m $92m 17% $1,147m Incentive management fees $73m $37m $36m 97% $103m Central revenue $101m $89m $12m 13% $184m Revenue
Slide 54: Revenue growth rate analysis HY 2023 vs HY 2022
Revenue growth rate analysis HY 2023 vs HY 2022 RevPAR growth % Net rooms growth % Underlying Fee Revenue1 Comparable Total YOY Available Growth % Comments Hotels that have All hotels that were traded in all open in HY 2023 Aggregate number months being and HY 2022 (incl of rooms available compared
Slide 55: Revenue and operating profit 2021-2023 (post-IFRS 17)
Revenue and operating profit 2021-2023 (post-IFRS 17) Total Revenue Total Operating Profit¹ HY FY HY FY Actual US$ 2023 2022 2022 2021 2023 2022 2022 2021 Franchise and Base Management Fees 456 406 861 683 - - - - Incentive Management Fees 7 7 18 8 - - - - Fee Business 463 413 879 691 379 342 741 56
Slide 56: Revenue and operating profit 2019-2022 (pre-IFRS 17)
Revenue and operating profit 2019-2022 (pre-IFRS 17) Total Revenue Total Operating Profit¹ FY FY Actual US$ 2022 2021 2020 2019 2022 2021 2020 2019 Franchise and Base Management Fees 861 683 452 840 - - - - Incentive Management Fees 18 8 5 13 - - - - Fee Business 879 691 457 853 741 568 323 663 Owne
Slide 57: HY 2023 underlying fee business non-GAAP reconciliations
HY 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 463 379 161 92 74 43 101 (44
Slide 58: HY 2022 underlying fee business non-GAAP reconciliations
HY 2022 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating $m Revenue Profit Revenue Profit Revenue Profit Revenue Loss Revenue Profit Fee business 413 342 121 63 36 5 89 (41)
Slide 59: Net system size growth (YOY)
Net system size growth delivered through strength of brands and enterprise platform Net System Size Growth (YOY) Group Americas (5.3) (13.1) 20.5 516.3 55.5 925.3 882.9 501.2 HY 2022 Openings Exits HY 2023 HY 2022 Openings Exits HY 2023 Europe, Middle East, Asia and Africa Greater China (3.1) (4.7)
Slide 60: Net system size growth (YTD)
Net system size growth delivered through strength of brands and enterprise platform Net System Size Growth (YTD) Group Americas (7.3) 21.0 925.3 4.2 (3.3) 516.3 911.6 515.5 FY 2022 Openings Exits HY 2023 FY 2022 Openings Exits HY 2023 Europe, Middle East, Asia and Africa Greater China (2.8) (1.2) 12
Slide 61: Ordinary shares
Ordinary shares Number of shares (m) 2023 2022 Opening balance at 1 January 183.1 187.7 Closing balance at 30 June 177.7 187.7 Closing balance excluding treasury shares1 170.2 184.0 Basic weighted average shares (excluding treasury shares) 173.0 183.6 Dilutive potential ordinary shares1 1.1 1.0 Basi
Slide 62: Currency impacts
Currency impacts ($m) Revenue Reported HY22 HY22 at HY23 AER2 Var. Reported HY23 HY23 at HY22 AER2 Var. Americas 471 471 - 537 538 (1) EMEAA 239 232 7 309 320 (11) Greater China 36 34 2 74 79 (5) Central Overheads3 94 93 1 111 112 (1) Total IHG 840 830 10 1,031 1,049 (18) Operating Profit Americas 3
Slide 63: FY 2022 Financial Review
IHG HOTELS & RESORTS FY 2022 Financial Review
Slide 64: Financial performance overview
Financial performance overview Results from reportable segments 1 Reported Underlying2 FY 2022 FY 2021 FY 2019 FY 2021 FY 2019 % change % change % change % change Revenue3 $1,843m $1,390m +33% $2,083m (12)% +39% (5)%8 Operating profit $828m $534m +55% $865m (4)% +53% (1)%8 Revenue from fee business
Slide 65: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m FY 2022 FY 2021 Key money and maintenance capex Key money 1 (64) (42) • Key money: used to secure hotel signings Maintenance capex (44) (33) • Maintenance: relates to owned, leased and Total (108) (75) managed lease hotels and corporate infrastructure
Slide 66: Cash flow
Cash flow FY 2022 ($m) (43) 5 130 Exceptional 68 cash flow System Working 896 items (315) Depreciation Fund2 capital & other 828 movements3 and Amortisation Interest (108) (35) 1 Dividends and tax Maintenance 565 Gross Net capex and key System Fund Recyclable money (233) Share capex capex buybacks4
Slide 67: 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 23 199 (1
Slide 68: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements This presentation may contain projections and forward looking-statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of histori
Slide 69: IHG brand logos
IHG sesorrs e ees REGENT * Il EVEN IBEROSTAR 0 INTERCONTINENTAL 4f Holiday Inn NIGNETTE Garner KIMPTON avid HOTEL INDIGO ATWELL SUITES VOco qISTAYBRIDGER ne | ) fe) CROWNE PLAZA (5) CANDLEWOOD SUITES REWARDS,
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