InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — Investor Presentation (June 2022)
56 slides from InterContinental Hotels's investor presentation, June 2022
Slide 1: Investor Presentation
Holiday Inn Glendale, Arizona, United States Investor Presentation May/June 2022
Slide 2: 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 3: A global hospitality leader with 6,000 open hotels and 1,800 in pipeline
A global hospitality leader with 6,000 open hotels and a further 1,800 in the pipeline, and a clear purpose, ambition, strategy and priorities Our Purpose Our Priorities True Hospitality for Good Build loved and trusted brands Our Ambition Customer centric To deliver industry-leading net rooms growt
Slide 4: Strong portfolio of preferred brands, geographically diverse and asset light
Strong portfolio of preferred brands, geographically diverse and asset light Suites Essentials Premium Luxury & Lifestyle (9% system, 10% pipeline) (64% system, 54% pipeline) (15% system, 17% pipeline) (12% system, 19% pipeline) Strong portfolio of brands Owned, Leased Luxury & Managed 10% 157k Mana
Slide 5: IHG is well positioned to benefit from strong industry fundamentals
IHG is well positioned to benefit from strong industry fundamentals Industry Industry • Sector growth outpaced global economy for a Market share • Accelerated net rooms growth from ~3% to 5.6% growth decade pre Covid-191 gains in three years pre Covid-19 System • Opened 291 hotels in 2021; includes
Slide 6: Strong competitive position where branded players are gaining market share
Strong competitive position in an industry where branded players are gaining market share IHG has over 4% share of global With a larger share of the active In an industry where branded room supply pipeline players have gained share Share of global room supply (%) IHG share of global rooms and Global
Slide 7: Why owners choose to partner with IHG
Why owners choose to partner with IHG 7
Slide 8: IHG's System Fund supports brand marketing and revenue delivery system
IHG’s System Fund supports our brand marketing and our revenue delivery system Brands Sources of Income Sources of Spend Marketing & Reservations IHG Rewards Loyalty Programme Assessment ~3.0% of gross rooms revenue Advertising & Marketing Loyalty Assessment ~4.75% IHG Rewards member bill Distributi
Slide 9: Our mix has placed us well to benefit from demand recovery
Our mix has placed us well to benefit from the shape of demand recovery The midscale segments Domestic travel is Groups is toughest Non-urban1 areas represent our largest leading the recovery, area of demand; IHG’s strongly weighting and outpace which is ordinarily lowest exposure outperforming urba
Slide 10: Upper Midscale segment has historically recovered faster than other segments
The Upper Midscale segment, which accounts for ~70% of our rooms in the US, has historically recovered faster than other segments US RevPAR Performance 2008 - 2015 (12m rolling) US Industry Chain Scale RevPAR Change (12m rolling) 65% 45% 25% 5% -15% -35% -55% -75% 1989 1990 1991 1992 1993 1994 1995
Slide 11: Weekly RevPAR performance shows path of recovery by region
Weekly RevPAR performance demonstrates the path of recovery for each of our regions IHG weekly RevPAR performance by region (vs 2019) 20% 0% -20% -40% -60% -80% -100% Americas EMEAA Greater China Group 11
Slide 12: Regional variations in RevPAR; strong ADR improvements
Regional variations in RevPAR; strong ADR improvements Americas monthly RevPAR, Occupancy and ADR (vs 2019) EMEAA monthly RevPAR, Occupancy and ADR (vs 2019) 0 -3 -7 -11 -7 -8 -12 -11 -14 -20 -23 -28 -32 -30 -33 -39 -38 -36 -37 -45 -45 -43 -42 -48 -59 -66 -71 -73 -71 -70 Jan Feb Mar Apr May Jun Jul
Slide 13: US ongoing strength of Leisure with improvement in Business demand
US ongoing strength of Leisure with improvement in Business demand IHG US estate 12 month rolling revenue (vs 2019) 20% 0% -20% -40% -60% -80% -100% Business Leisure 13
Slide 14: Overview of FY 2021 and Our Strategic Objectives
Holiday Inn Glendale, Arizona, United States Overview of FY 2021 and Our Strategic Objectives
Slide 15: 2021: excellent progress
2021: excellent progress RevPAR & Rooms Results • +46% Global RevPAR vs 2020; (29.8)% vs 2019, with • $534m operating profit from reportable segments, Q4 (17.1)% +144% vs 2020 • Further sequential improvement in US, with RevPAR • $75m of recurring cost savings delivered ahead of 2019 levels in Decem
Slide 16: Focus on industry-leading net rooms growth, underpinned by strategic priorities
Focus on industry-leading net rooms growth, underpinned by our strategic priorities Our Purpose: True Hospitality for Good Ambition: to deliver industry-leading net rooms growth Our Priorities: Build loved Customer centric Create digital Care for our people, and trusted brands in all we do advantage
Slide 17: Build loved and trusted brands - More opportunities for guests and owners
Build loved and trusted brands - More opportunities for guests and owners with IHG Existing brands Newer brands Portfolio evolution Luxury Six Senses and Regent: acquisitions to & Lifestyle expand IHG’s luxury presence Organic development of new Luxury & Lifestyle collection brand voco hotels: organ
Slide 18: Breadth of brand portfolio enabling multi-property deals
Build loved and trusted brands - Breadth of brand portfolio enabling multi-property deals Grand Hotel Wien, Austria – signed as a Vignette Collection hotel Penina Resort & Golf, Portugal – signed as a Vignette Collection hotel Dona 18 Filipa Hotel, Portugal – signed as a Vignette Collection hotel vo
Slide 19: Portfolio of two Holiday Inn Resorts, a voco and a Crowne Plaza
Build loved and trusted brands - Portfolio of two Holiday Inn Resorts, a voco and a Crowne Plaza with strategic partner 19 19 Exterior view of Ba Na Hills Entertainment Complex (Phase Two) - due to open in 2026
Slide 20: New brands offer significant fee growth opportunity
Build loved and trusted brands - New brands offer significant fee growth opportunity Date launched/ 2019 2017 2018 2018 2019 2021 acquired Approx further ~15 required Targeting ~225 annual fees of ~20 ~130 at least $50m each; potential Pipeline 33 ~310 ~100 to drive aggregate $300m+ in 164 8 annual
Slide 21: Continued resilience across Essentials and Suites
Build loved and trusted brands - Continued resilience across Essentials and Suites Essentials Suites System1 3,016 1,190 48 315 361 - Pipeline1 645 244 164 156 93 23 Chain Upper Midscale Upper Midscale Midscale Upscale Midscale Midscale scale2 • ~60% occupancy in • Two-thirds of • Outperformance • >
Slide 22: Holiday Inn Express: Category leadership
Build loved and trusted brands - Holiday Inn Express: Category leadership >3,000 Holiday Inn Express hotels; single largest global brand in the industry Holiday Inn Express: Formula Blue • Next generation hotel room and public area designs launched in 2014 • Have continually updated Formula Blue gue
Slide 23: Expanding our Premium and Luxury & Lifestyle offerings
Build loved and trusted brands - Expanding our Premium and Luxury & Lifestyle offerings Premium Luxury & Lifestyle System1 31 404 21 16 21 7 204 1 75 130 Pipeline1 38 96 29 23 33 8 79 5 35 114 Chain Upper Upper Upscale Upscale Upscale Upscale Luxury Luxury Luxury Luxury scale2 Upscale Upscale • Stro
Slide 24: Increased weight of Luxury & Lifestyle
Build loved and trusted brands - Increased weight of Luxury & Lifestyle IHG has developed a well balanced consumer offer Nearly 200 years of Luxury expertise Proportion of signings from higher value across Luxury & Lifestyle across our brands Luxury & Lifestyle hotels is up by 2.5x % of signings fro
Slide 25: Guest and owner proposition for new Vignette Collection brand
Build loved and trusted brands - Guest and owner proposition for our new Vignette Collection brand Compelling owner proposition • Access to world class revenue delivery systems including IHG Rewards • Leading global sales enterprise and revenue management tools to drive additional revenue to hotels
Slide 26: Conclusion of Holiday Inn and Crowne Plaza review
Conclusion of Holiday Inn and Crowne Plaza review Addressed the consistency 151 hotels have left the system 83 hotels with significant investment commitment from owners and quality of the estate 71 hotels retained2 • ~80% of removals in the Americas were in the bottom quartile for metrics including
Slide 27: Delivering an industry leading level of net system size growth
Delivering an industry leading level of net system size growth Acceleration in gross openings… …will lead to stronger net system size growth 7.8% 5.6% 7.1% ~7%+ ~5%+ 4.8% 6.3% ~6%+ 5.4% 4.0% ~4%+ 5.0% 4.5% 3.1% 0.3% 2016 2017 2018 2019 2020 2021 2022E 2023E -0.6% 2016 2017 2018 2019 2020 2021 2022E
Slide 28: Customer centric in all we do
Customer centric in all we do Guests Owners Operating • Updated operating standards to offset Cleanliness • IHG Clean Promise standards higher safety and cleaning costs, and & Safety • New protocols and standards to focus on maximising returns Booking Payment • Case-by-case consideration of • Book N
Slide 29: Customer centric in all we do - Supporting owners to maximise ROI
Customer centric in all we do - Supporting owners to maximise ROI New cost effective prototype with a 15% reduction in building size Focus on efficient In its latest format, now achieving a design and cost ~10% reduction in cost per key across management furniture, fixtures and equipment New prototy
Slide 30: Customer centric in all we do – Transforming loyalty
Customer centric in all we do – Transforming loyalty 100m+ ~50% 20% 9x ~15% members of room nights more spend more likely less points and growing consumed by members than non-members to book direct required to book1 1 achieved through Reward Night Dynamic pricing 30
Slide 31: Create digital advantage - Leveraging technology to drive profits
Create digital advantage - Leveraging technology to drive profits and performance • Completed room inventory reset across ~95%1 hotels • Carried out rate simplification and rate parity initiatives, including centralisation of wholesale distribution Attribute • Enables the ability of attribute pricin
Slide 32: 2030 Responsible Business ambitions and commitments
Care for our people, communities and planet - 2030 Responsible Business ambitions and commitments Champion a diverse Improve the lives of 30 Reduce our energy use and Pioneer the transformation Conserve water and help culture where everyone million people in our carbon emissions in line with to a mi
Slide 33: Conclusions - Confident on future growth prospects
Conclusions - Confident on future growth prospects and our strategic priorities • Strong financial performance with operating profit from reportable segments more than doubling and net debt substantially reducing • Emerging from the pandemic a stronger and more agile business • Hotel development env
Slide 34: Overview of FY 2021 Financial Performance
Holiday Inn Glendale, Arizona, United States Overview of FY 2021 Financial Performance
Slide 35: Financial performance overview
Financial performance overview Results from reportable segments1 Reported Underlying2 FY 2021 FY 2020 FY 2019 FY 2020 FY 2019 % change % change $m $m $m % change % change vs FY 2021 vs FY 2021 Revenue $1,390m $992m +40% $2,083m (33)% +39% (32)% Operating profit $534m $219m +144% $865m (38)% +138% (3
Slide 36: Fee-based business model shows relative resilience as demand returns
Fee-based business model shows relative resilience as demand returns FY 2021 fee revenue: $1,153m, down 24%1 and 23% underlying2 (vs 2019) FY 2021 Group comparable RevPAR growth FY 2021 Group system growth RevPAR (vs 2019) (vs 2019) X 9.4% • 44.0k rooms opened in FY -8.0% • 49.7k rooms removed in FY
Slide 37: Americas: Strength across US franchise estate in Q4
Americas Strength across US franchise estate in Q4 • FY RevPAR up 54% (down 20% vs 2019); US up 54% (down 17% vs 2019) FY 2021 growth in fee revenue drivers1 • Q4 US RevPAR up 76% (down 5% vs 2019) (vs 2019) - Driven by demand in non-urban and leisure markets - Franchised estate down 2% and Managed
Slide 38: Europe, Middle East, Asia & Africa
Europe, Middle East, Asia & Africa Improved trading in markets where travel restrictions have lifted FY 2021 growth in fee revenue drivers1 • FY RevPAR up 35% (down 52% vs 2019); Q4 up 118% (down 33% vs 2019) (vs 2019) • Q4 impacted by differing levels of government-mandated lockdown measures, parti
Slide 39: Greater China: Impacted by localised lockdowns
Greater China Impacted by localised lockdowns FY 2021 growth in fee revenue drivers1 • FY RevPAR up 21% (down 29% vs 2019); Q4 down 17% (down 33% vs 2019) (vs 2019) • Mainland China up 20% (down 25% vs 2019); Q4 down 21% (down 33% vs 2019) 15.9% • Tier 1 RevPAR up 26% (down 35% vs 2019); Q4 down 15%
Slide 40: Delivered $75m of recurring fee business cost savings in FY 2021
Delivered $75m of recurring fee business cost savings in FY 2021 Progression in fee margin1 Efficient cost base Overheads cost base per hotel ($’000) -4.5%pts 54.1% 160 0.1% 1.7% 2.7% 1.6% 3.4% 4.8% 3.1% 4.0% 4.8% 5.6% 10 53.3% 0.3% -0.6% 49.6% 140 0 -10 120 -20 100 34.1% -30 80 -40 60 -50 -60 40 -7
Slide 41: Fee margin by region
Fee margin1 by region Americas Europe, Middle East, Asia and Africa FY 2021 82.2% FY 2021 21.5% FY 2020 70.7% FY 2020 -17.9% FY 2019 77.7% FY 2019 58.6% Greater China Total IHG FY 2021 47.3% FY 2021 49.6% FY 2020 45.5% FY 2020 34.1% FY 2019 54.1% FY 2019 54.1% 1 Fee margin excludes owned, leased and
Slide 42: Strong cash conversion
Strong cash conversion Cash flow FY 2021 ($m) (12) 149 (212) 89 (75) (13) 56 (19) 53 632 648 571 Adjusted System Fund2 Working Exceptional Interest & tax Maintenance Adjusted free Gross System Net Recyclable Deferred Lease Decrease EBITDA1 capital & other cash flow items capex and cash flow Fund cap
Slide 43: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m FY 2021 FY 2020 • Maintenance: relates to owned, Maintenance capex, Maintenance capex (33) (43) leased and managed lease hotels and key money and selective corporate infrastructure Key money1 (42) (64) investments • Key money: used to secure hotel Tota
Slide 44: Significant reduction in leverage
Significant reduction in leverage Bond maturity profile Leverage Shareholder returns • 2022 maturity expected to be • Reduction in net debt : adjusted • 2021 final dividend of 85.9¢ funded through cash balances EBITDA driven by recovery in proposed, equivalent to the • No significant bond maturity u
Slide 45: Highly cash generative business has driven strong shareholder returns
Highly cash generative business has driven strong shareholder returns Ordinary dividend progression 2014-2021 (¢ per share) Final Interim Proposed Final 114 +10% CAGR 104 94 85 86 77 78 71 64 58 52 40 86 30 33 36 40 25 28 2014 2015 2016 2017 2018 20192 20203 20214 Strong free cash flow generation ($
Slide 46: Our strategy for uses of cash remains unchanged
Our strategy for uses of cash remains unchanged Invest in the Sustainably grow Return surplus business to the ordinary funds to drive growth dividend shareholders Objective of maintaining an investment grade credit rating 2.5x – 3.0x Net Debt : Adjusted EBITDA under normalised conditions 46
Slide 47: Q1 2022 Trading Update
Holiday Inn Glendale, Arizona, United States Q1 2022 Trading Update
Slide 48: Q1 2022 Trading Update: very positive start to the year
Q1 2022 Trading Update: very positive start to the year • +61% group RevPAR vs 2021 (attaining 82% of 2019’s level) Trading • +27% ADR vs 2021 (in line with 2019’s level) performance • Net system size +3.4% YOY1 to 885k rooms (6,028 hotels) • 120 hotels signed (16.6k rooms); total pipeline now 278k
Slide 49: Appendices
Hotel X, Vignette Collection, Brisbane, Australia Appendices
Slide 50: Fee Business growth rate analysis vs 2020
Fee Business growth rate analysis vs 2020 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % FY 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in FY 2021 and 31 December rooms available months being FY 2020
Slide 51: Fee Business growth rate analysis vs 2019
Fee Business growth rate analysis vs 2019 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % FY 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in FY 2021 and 31 December rooms available months being FY 2019
Slide 52: Revenue and operating profit FY 2019-21
Revenue and operating profit FY 2019-21 1 Total revenue Total operating profit Actual US$ (m) Full Year Full Year 2021 2020 2019 2021 2020 2019 Franchise and base management fees 683 452 840 - - - Incentive management fees 8 5 13 - - - Fee Business 691 457 853 568 323 663 Owned, Leased & Managed Lea
Slide 53: FY 2019 underlying fee business non-GAAP reconciliations
FY 2019 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating Revenue Revenue Revenue Revenue Revenue Profit Profit Profit Loss Profit $m $m $m $m $m $m $m $m $m $m Per FY 2019 fi
Slide 54: Currency translation
Currency translation Reportable Segments Reportable Segments Reported FY 2021 vs FY 2020 at FY 2020 rates2 FY 2021 at average Jan 2022 rate vs reported FY 20213 Region1 Revenue EBIT Revenue EBIT Americas - $2m - - EMEAA $8m $(1)m $(4)m $1m Greater China $5m $1m $2m $1m Central Overheads $3m $(2)m -
Slide 55: 2021 notable items
2021 notable items Significant items FY 2021 FY 2022 Payroll tax credit Americas $11m $1m Operating loss from three disposed Owned hotels1 Americas $(3)m $- Individually significant Liquidated Damages Greater China $6m - 1 In 2019, the results of three disposed owned hotels were $2m of income 55
Slide 56: Ordinary shares
Ordinary shares Number of shares At 31 December 2021 At 31 December 2020 Opening balance at 1 January 187.7 187.7 Closing balance at 31 December 187.7 187.7 Basic weighted average shares 183.0 182.5 Dilutive potential ordinary shares1 1.1 - Basic diluted average shares 184.1 182.5 1. The effect of t
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