InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — Investor Presentation (November 2021)
50 slides from InterContinental Hotels's investor presentation, November 2021
Slide 1: Investor Presentation
Holiday Inn Yerevan - Republic Square, Armenia Investor Presentation November 2021
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: Continued focus on industry-leading net rooms growth, underpinned by our strategic priorities
Continued focus on industry-leading net rooms growth, underpinned by our strategic priorities Our Purpose Our Priorities True Hospitality for Good Build loved and trusted brands Our Ambition Customer centric To deliver industry-leading net rooms growth in all we do Our Strategy Create digital advant
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 Strong portfolio of brands Owned, Leased Luxury & Managed 155K 11% Managed Leases 18% Midscale/Upper 96k Asset light and 28% 1% Midscale 35% 97k Total Total Total 67% Pipeline 36
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 285 hotels in 2020; includes
Slide 6: Why owners choose to partner with IHG
Why owners choose to partner with IHG Trust and track record Global Sales organisation Strength of brands • Breadth and depth of brand portfolio • Developed a leading global sales • Includes Holiday Inn Brand Family, enterprise to drive higher quality, lower the largest global hotel brand and cost r
Slide 7: Strong competitive position in an industry 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 8: IHG's System Fund supports our brand marketing and our 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 Club Assessment ~3.0% of gross rooms revenue Advertising & Marketing IHG Rewards Club Point Sales ~4.75% IHG Rewards Club bill Distribution (R
Slide 9: Our mix places us well to benefit from the expected shape of demand recovery
Our mix places us well to benefit from the expected shape of demand recovery The midscale segments Groups is toughest Non-urban1 areas our largest weighting and Domestic travel is area of demand; IHG’s strongly outpacing overall industry leading the recovery lowest exposure outperforming urban RevPA
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) 30% 20% 10% 0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Slide 11: Weekly RevPAR performance demonstrates the path of recovery for each 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% Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 May 21 Jun 21 Jul 21 Aug 21 Sep 21
Slide 12: Improved trading in third quarter; rate in line with 2019
Improved trading in third quarter; rate in line with 2019 IHG monthly RevPAR, Occupancy and ADR (vs 2019) Jan Feb Mar Apr May Jun Jul Aug Sep 0% 1% -4% -10% -14% -14% -18% -18% -22% -23% -22% -13% -18% -19% -18% -21% -20% -23% -23% -22% -26% -31% -37% -41% -47% -53% -54% ADR (%) Occ (%pt) RevPAR (%)
Slide 13: Recovery skewed to domestic leisure markets where restrictions have been lifted
Recovery skewed to domestic leisure markets where restrictions have been lifted IHG Q3 RevPAR (vs 2019) Americas EMEAA1 Greater China Global system mix: 57% 25% 18% 12% -16% 0% -22% -23% -30% -33% -39% -48% -57% -68% -68% -31% -72% -33% UK Asia & Korea South East Cont. Europe Japan Middle East Austr
Slide 14: Americas US domestic leisure rebounds; business improving more recently
Americas US domestic leisure rebounds; business improving more recently IHG US estate 12m rolling revenue (vs 2019) 16% 11% 7% 5% -2% -6% -4% -3% -10% -13% -14% -21% -33% -24% -37% -37% -29% -43% -42% -42% -41% -42% -45% -37% -50% -40% -42% -44% -46% -46% -56% -47% -48% -51% -54% -53% -57% -65% -61%
Slide 15: Cash generative business, driving shareholder returns
Cash generative business, driving shareholder returns • Strong cash flows driving consistent shareholder returns Ordinary dividend progression 2014-2019 (¢ per share) • Total returns of ~$13.6bn since 2003, ~40% from operations Final Interim • $2.4bn ordinary dividend +10% CAGR 114 104 • $11.2bn add
Slide 16: Substantial liquidity maintained with optimised bond maturity profile
Substantial liquidity maintained with optimised bond maturity profile Liquidity profile Bond maturity profile Net debt composition • $2.2bn as at 30 June 2021 • Staggered bond maturity with no $(2,458)m following repayment of £600m significant maturity until Q4 2022 commercial paper at maturity in •
Slide 17: Our strategy for uses of cash remains unchanged
Our strategy for uses of cash remains unchanged Invest in the Restore an ordinary Return surplus business to dividend when funds to drive growth responsible to do so shareholders Objective of maintaining an investment grade credit rating 2.5x – 3.0x Net Debt : Adjusted EBITDA under normalised condit
Slide 18: Overview of H1 2021 and our strategic objectives
Holiday Inn Yerevan - Republic Square, Armenia Overview of H1 2021 and our strategic objectives
Slide 19: Capturing the return of travel; positioning for future growth
Capturing the return of travel; positioning for future growth RevPAR & Rooms Results • (42.6)% Global RevPAR decline vs 2019; (36.3)% in Q2 • Strong profitability rebound from fee-based business model • Rapid improvement in US and Greater China • $188m EBIT from reportable segments • System 884k roo
Slide 20: Focus on industry-leading net rooms growth, underpinned by our strategic priorities
Focus on industry-leading net rooms growth, underpinned by our strategic priorities Our Purpose: True Hospitality for Good Our Priorities: Build loved Customer centric Create digital Care for our people, and trusted brands in all we do advantage communities and planet • Strengthening existing • Supp
Slide 21: Build loved and trusted brands - Expanding and enhancing our portfolio
Build loved and trusted brands - Expanding and enhancing our portfolio to drive growth 2017 2020 • Broadened our brand portfolio with five targeted additions since 2017: - High-quality midscale brand avid launched in 2017 - Acquisition of Regent Hotels & Resorts in March 2018 - Conversion focussed b
Slide 22: Continued resilience across Essentials and Suites
Build loved and trusted brands - Continued resilience across Essentials and Suites Essentials Suites System1 3,004 1,234 38 312 360 - Pipeline1 667 250 175 152 82 19 Chain Upper Midscale Upper Midscale Midscale Upscale Midscale Midscale scale2 • ~65% occupancy in • Rapid progress • Outperformance •
Slide 23: Continue to invest in and grow across Essentials and Suites
Build loved and trusted brands - Continue to invest in and grow across Essentials and Suites New pictures Holiday Inn Express, Beijing Daxing, Greater China Holiday Inn Shanghai Nanjing Road, Greater China Avid hotel, Fort Worth, Texas, United States Dual-branded EVEN Hotel and Staybridge Suites, Ro
Slide 24: Expanding our Premium and Luxury & Lifestyle offerings
Build loved and trusted brands - Expanding our Premium and Luxury & Lifestyle offerings Premium Luxury & Lifestyle System1 19 407 20 14 17 7 206 75 128 Pipeline1 34 102 30 24 34 7 73 32 110 Chain Upscale Upscale Upscale Upscale Luxury Luxury Luxury Upper Upscale Upper Upscale scale2 • Signings pace
Slide 25: Continuing to enhance our Luxury & Lifestyle and Premium offer
Build loved and trusted brands - Continuing to enhance our Luxury & Lifestyle and Premium offer to guests and owners Six Senses Botanique, Brazil InterContinental Sorrento Mornington Peninsula, Australia (to open in November 21) Hotel Indigo Adelaide Markets, Australia voco Edinburgh Haymarket, Unit
Slide 26: Progress on system size quality and pipeline for future growth
Progress on system size quality and pipeline for future growth Focus on quality and removing hotels which aren’t representative of our brand standards Net rooms growth Gross openings Gross exits 5.9% 5.6% 5.2% 4.8% 4.8% 4.3% 4.0% 3.5% 3.4% 3.1% 2.7% 2.2% 1.7% 1.6% 10% 0.1% 10% 9% 8% 7% 7% 8% 6% 5% 5
Slide 27: Rapid progress of the Holiday Inn and Crowne Plaza review
Rapid progress of the Holiday Inn and Crowne Plaza review • ~200 hotels (~10-15% of global estate) under review in Americas and EMEAA, focused on ensuring the health, consistency and quality of the estate reflects the expectations of IHG, our owners and guests • In total, 56 hotels (13.0k rooms) rem
Slide 28: Further rounding out our brand portfolio
Build loved and trusted brands - Further rounding out our brand portfolio 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: organic develo
Slide 29: A strong position in Luxury & Lifestyle to further grow from
Build loved and trusted brands - A strong position in Luxury & Lifestyle to further grow from IHG is already the second largest global player in Luxury & Lifestyle 30 June 2021 – Number of open and pipeline rooms (‘000) 269 • Building upon heritage of InterContinental Hotels & Resorts, the world’s s
Slide 30: A balanced portfolio across different segments of Luxury and Upper Upscale
Build loved and trusted brands - A balanced portfolio across different segments of Luxury and Upper Upscale Upper Luxury Traditional Lifestyle Upper Upscale 30
Slide 31: Guest and owner proposition for our new collection brand
Build loved and trusted brands - Guest and owner proposition for our new 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 • Strong
Slide 32: 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 • Book Now, Pay Later policies Payment • Case-by
Slide 33: Create digital advantage - Continuing to invest in our digital-first approach
Create digital advantage - Continuing to invest in our digital-first approach GRS • Attribute pricing initial pilot conducted in each region in 2020; good progress being made towards full roll-out • Pilots demonstrating to owners the ability to generate maximum value from their hotel’s unique attrib
Slide 34: 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 Reduce our energy use and Pioneer the transformation Conserve water and help culture where everyone 30 million people in our carbon emissions in line with to a mi
Slide 35: Conclusions - Confident in IHG's positioning and growth prospects
Conclusions - Confident in IHG’s positioning and growth prospects • Significant improvement in demand over the course of H1; positive trends continuing through summer; return of corporate travel and groups activity underway; risk of trading volatility still remains • Hotel development environment st
Slide 36: Appendices
Appendices Holiday Inn Yerevan - Republic Square, Armenia
Slide 37: Financial performance overview
Financial performance overview Results from reportable segments1 Reported Underlying2 H1 2021 H1 2020 H1 2019 H1 2020 H1 2019 % change % change $m $m $m % change % change vs H1 2021 vs H1 2021 Revenue3 $565m $488m 16% $1,012m (44)% 14% (44)% Operating profit $188m $52m 262% $410m (54)% 314% (55)% Re
Slide 38: Fee-based business model shows relative resilience as demand returns
Fee-based business model shows relative resilience as demand returns H1 2021 fee revenue: $505m, down 31%1 and 32% underlying2 (vs 2019) H1 2021 Group comparable RevPAR growth H1 2021 Group system growth RevPAR (vs 2019) (vs 2019) 10.8% X • 17.4k rooms opened in H1 • 18.9k rooms removed in H1 Rooms
Slide 39: Americas US occupancy levels recovered to ~70% in June
Americas US occupancy levels recovered to ~70% in June • H1 RevPAR up 28% (down 34% vs 2019); US up 32% (down 30% vs 2019) H1 2021 growth in fee revenue drivers1 • Q2 US RevPAR up 150% (down 23% vs 2019) (vs 2019) - Franchised estate down 19% and Managed estate down 54% (vs 2019) -0.8% - Midscale/Up
Slide 40: Europe, Middle East, Asia & Africa
Europe, Middle East, Asia & Africa Improved trading in markets where travel restrictions have lifted H1 2021 growth in fee revenue drivers1 (vs 2019) • H1 RevPAR down 22% (down 68% vs 2019); Q2 up 179% (down 65% vs 2019) 3.9% • Q2 impacted by differing levels of government-mandated lockdown measures
Slide 41: Greater China recovery led by domestic leisure demand
Greater China Recovery led by domestic leisure demand in Tier 2-4 in Q2 H1 2021 growth in fee revenue drivers1 • H1 RevPAR up 95% (down 26% vs 2019); Q2 up 107% (down 16% vs 2019) (vs 2019) • Mainland China up 100% (down 19% vs 2019); Q2 up 109% (down 8% vs 2019) 19.4% • Tier 1 RevPAR up 101% (down
Slide 42: Strong cash conversion
Strong cash conversion Cash flow H1 2021 ($m) (12) 32 5 (86) (25) (7) (8) (13) 233 (48) 172 147 71 EBITDA1 System Fund2 Working Exceptional Interest & tax Adjusted Maintenance Adjusted free Gross System Net Recyclable Deferred Lease Decrease capital & other cash flow items free cash capex and cash f
Slide 43: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m H1 2021 H1 2020 • Key money: used to secure hotel Maintenance capex, Maintenance capex (9) (32) signings key money and selective • Maintenance: relates to owned, Key money1 (16) (26) investments leased and managed lease hotels and Total (25) (58) corpo
Slide 44: Growth rate analysis vs 2020
Growth rate analysis vs 2020 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % H1 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in H1 2021 and 30 June 2021 rooms available months being H1 2020 (incl vs 20
Slide 45: Growth rate analysis vs 2019
Growth rate analysis vs 2019 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % H1 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in H1 2021 and 30 June 2021 rooms available months being H1 2019 (incl vs 20
Slide 46: Fee margin by region
Fee margin1 by region Americas Europe, Middle East, Asia & Africa H1 2021 79.7% H1 2021 -5.7% H1 2020 -14.3% H1 2020 67.3% H1 2019 57.8% H1 2019 77.3% Greater China Total IHG H1 2021 47.2% H1 2021 44.1% H1 2020 -50.0% H1 2020 20.1% H1 2019 54.5% H1 2019 54.1% 1 Fee margin excludes owned, leased and
Slide 47: Revenue and operating profit H1 2019-21
Revenue and operating profit H1 2019-21 Total Revenue Total Operating Profit Actual US$ H1 H1 2021 2020 2019 2021 2020 2019 Franchise and base management fees 292 224 411 n/a n/a n/a Incentive management fees 4 2 7 n/a n/a n/a Fee Business 296 226 418 236 152 323 Owned, Leased & Managed Leased 29 36
Slide 48: H1 2019 underlying fee business revenue and operating profit non-GAAP reconciliations
H1 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 H1 2019 In
Slide 49: Currency translation
Currency translation Reportable Segments Reportable Segments Reported H1 2021 vs H1 2020 rates2 H2 2020 at 30 June 2021 spot rate vs reported H2 20203 Region1 Revenue EBIT Revenue EBIT Americas $1m $1m $1m - EMEAA $5m $(2)m $1m $(1)m Greater China $5m $2m $3m $2m Central Overheads $1m $(7)m $1m $(1)
Slide 50: 2021 notable items
2021 notable items Significant items H1 2021 FY 2021 Payroll tax credit Americas $5m $8m Individually significant Liquidated Damages Greater China $6m $6m 50
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