InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — Investor Presentation (May 2013)
102 slides from InterContinental Hotels's investor presentation, May 2013
Slide 1: May 2013
Great hotels suestslove
Slide 2: InterContinental Hotels Group
InterContinental Hotels Group
Slide 3: IHG's commanding scale
IHG’s commanding scale 4,608 hotels Almost 100 countries 345,000 people 674,024 rooms and territories 1,089 pipeline hotels 2012: $21.2bn +$1bn 175,999 pipeline rooms gross revenues system funds Source: IHG 31 Mar 2013 3
Slide 4: IHG's consistent 10 year track record
IHG’s consistent 10year track record High quality growth – 429k rooms added, 270k rooms removed – 5% share of global industry supply, 12% share of global hotel pipeline – Strengthening existing brands, developing new ones – Unique partnership through IHG Owners Association Driving an asset light bus
Slide 5: IHG's broad geographic distribution
IHG’s broad geographic distribution FY 2012 Operating Profit* Q1 2013 Open Rooms Q1 2013 Pipeline Rooms 11% 9% 9% 11% 31% 43% 15% 15% 63% 67% 18% 8% Americas Europe AMEA Greater China (US, Canada, (UK & Ireland, (Asia, (China, Hong Kong, Latin America Continental Middle East Macau, Taiwan) Caribbean
Slide 6: 2012: Strong fee revenue growth
2012: Strong fee revenue growth Royalty RevPAR X Rooms X Rate 2012 fee revenue¹ growth 16% 8% 6.8% 4% 4% 2012 fee $1,135m² $601m $158m $170m $92m revenue1 Group Americas Europe AMEA Greater China ¹ Fee revenue excludes revenue from owned and leased hotels, managed lease hotels & significant liquidat
Slide 7: Priorities for high quality growth
Priorities for high quality growth “Great Hotels Guests Love” Priorities for high quality growth BEST IN PREFERRED TALENTED CLASS BRANDS PEOPLE DELIVERY RESPONSIBLE BUSINESS PRACTICE INVEST IN GROWTH GROW MARKET SHARE SUSTAINABLE MARGIN GROWTH 7
Slide 8: Driving fee revenue - relaunch driving strong results
Driving fee revenue - relaunch driving strong results • Continued growth in RevPAR premium • Strong increase in signings • Significant reduction in room exits following relaunch completion US Holiday Inn brand family 12 Global Holiday Inn brand month RevPAR index to upper family hotel signings midsc
Slide 9: Strengthen established brands - Crowne Plaza repositioning
Strengthen established brands - Crowne Plaza repositioning • Globally significant brand – $4.0bn*2 brand (19%2 of IHG’s gross revenues) – 390³ hotels open, 99³ in pipeline – Performance gap Americas vs. Rest of World • Significant opportunity to reposition brand Phase 2012 2013 2014 2015 1. Quality
Slide 10: Develop new brands - HUALUXE, EVEN Hotels
Develop new brands - HUALUXE Hotels & Resorts, EVEN Hotels • Strong owner interest - 16 signings to date • 1st 5-star international hotel designed for Chinese travellers • Potential to be in over 100 cities in China long term • Mainstream wellbeing brand with 17m target guests • IHG will invest up t
Slide 11: High quality growth - progressive growth in fee-based margins
High quality growth - progressive growth in fee-based margins • Fee-based operating margin¹ up 2%pts in 2012 – Better than anticipated result – Includes c. 0.5%pt benefit from small one off items • Investment for growth supported by cost discipline and efficiencies – Brand development – Global infra
Slide 12: Harnessing the power of free cash flow
Harnessing the power of free cash flow Free cash Asset disposals flow Investment grade credit rating Growth capital Sustainable ordinary Capital returns investment dividend 12
Slide 13: Well positioned for continued high quality growth
Well positioned for continued high quality growth • Q1 RevPAR up 3.1% with rate up 2.1% – Americas 4.1%, Europe (2.2)%, AMEA 5.5%, Greater China 1.8% – April RevPAR up 6.2% • System size up 1.9% year on year to 674k rooms – Signings of 14k rooms takes pipeline to 176k rooms • Confident outlook in un
Slide 14: 2012 Drivers of fee revenue growth
2012 Drivers of fee revenue growth Hotel Indigo,Tianjin 14
Slide 15: 2012: Strong fee revenue growth
2012: Strong fee revenue growth Royalty RevPAR X Rooms X Rate 2012 fee revenue¹ growth 16% 8% 6.8% 4% 4% 2012 fee $1,135m² $601m $158m $170m $92m revenue1 Group Americas Europe AMEA Greater China ¹ Fee revenue excludes revenue from owned and leased hotels, managed lease hotels & significant liquidat
Slide 16: Strong fee revenue growth - increasing proportion from developing markets
Strong fee revenue growth - increasing proportion from developing markets Split of rooms, openings & pipeline Global fee revenue, net room & by developing & mature markets RevPAR growth indexed to 2009 Developing Mature Fee 50% revenue1 71% Comparable 81% RevPAR2 50% Net system 29% size2 19% System
Slide 17: Good RevPAR growth across all regions in 2012
RevPAR Good RevPAR growth across all regions in 2012 2012 Comparable YoY RevPAR growth by rate and occupancy Occupancy (%) Rate (%) 6.1% 5.4% 5.2% 4.9% 1.2% 4.1% 3.1% 3.2% 1.7% 3.7% 2.0% 2.0% 1.2% 2.3% 0.5% Group Americas Europe AMEA Greater China 17
Slide 18: High quality growth driving market share
Rooms High quality growth driving market share • 2.7% net system growth in 2012 • High quality pipeline - 34k rooms added, 16k removed - 54k rooms signed - 8th consecutive year of growth - 40% under construction - Leading 5% industry supply share - 12% share of active* industry hotel pipeline - >50%
Slide 19: Harnessing the power of free cash flow
Harnessing the power of free cash flow Hotel Indigo, Shanghai on the Bund 19
Slide 20: Harnessing the power of free cash flow
Harnessing the power of free cash flow Free cash Asset disposals flow Investment grade credit rating Growth capital Sustainable ordinary Capital returns investment dividend 20
Slide 21: Growth capital investment - driving future share gains
Growth capital investment - driving future share gains • Medium term growth capital expenditure $100m - $200m per annum – Up to $150m for EVEN Hotels 2013 / 2014 – c.$30m to enhance and retain halo Crowne Plaza assets in 2013 – c.$30m for JV and Equity investments in 2013 • Funded by recycling • Med
Slide 22: Growth capital investment - funded by recycling
Growth capital investment - funded by recycling • $632m from cash disposals from 2007 - 2012 • $353m on growth capital expenditure 2007 - 2012 300 291 279 250 186 227 200 211 150 130 157 100 109 135 $m 50 86 8 0 35 -38 -50 -9 -91 -93 -20 -102 -100 -150 2007 2008 2009 2010 2011 2012 Disposal receipts
Slide 23: Growth capital investment - methodology
Growth capital investment - methodology • Continue to fund through recycling • Returns above risk-adjusted WACC by year 3 • Drives additional fee revenue stream • Accelerates growth • Directed towards strategic priorities: Accelerates scale key market • China JV to establish Holiday Inn 1. $10m pene
Slide 24: Growth capital investment - track record of high returns
Growth capital investment - track record of high returns Q1’ 13 Q1’ 13 Original Current 2012 Open & Open & Type of spend gross capital Gross Pipeline Pipeline Investment invested revenues* hotels rooms Brand 2003 $17m $17m $537m 378 35,520 acquisition Brand 1998-2002 $228m - launch $604m 262 28,362
Slide 25: Sustainable ordinary dividend growth
Sustainable ordinary dividend growth - 2012 interim dividend rebalanced • 16% total dividend growth to 64.0¢ • Rebalance towards one third: two thirds weight for interim and final dividends • Dividend maintained through the downturn Ordinary dividend payments 43.0¢ Final 35.2¢ 39.0¢ 29.2¢ 29.2¢ Inte
Slide 26: Capital returns - strong track record
Capital returns - strong track record • Sustainable ordinary dividend growth of 16% to 64¢ – Dividend maintained through the downturn – >$1bn paid in ordinary dividends since 2003 • $1bn of returns, comprising – $0.5bn special dividend with share consolidation – paid in Q4 – $0.5bn share buyback – $
Slide 27: Capital returns - track record
Capital returns - track record Quantum Year Mode £m $m 2004 Special dividend 501 2004 Share buyback 250 2005 Capital return 996 2006 Share buyback 250 2006 Special dividend 497 2007 Share buyback 250 2007 Special dividend 709 2007 Share buyback 120 £3,573m $6,636m 2012 Special dividend $505m 2012/ Q
Slide 28: Clearly executed asset light strategy
Clearly executed asset light strategy • Reduction in asset intensity of the business $m i. Asset disposals including Britvic since demerger 6,365 ii. Net book value¹ of remaining assets at 31 December 2012 - InterContinental New York Barclay - InterContinental Paris, Le Grand 863 - InterContinental
Slide 29: Strategy
Strategy InterContinental, London Westminster 29 29
Slide 30: IHG's growth strategy to create sustainable value
IHG’s growth strategy to create sustainable value Making best use of our scale to build and grow preferred hotel brands for guests and owners in high value markets “Where we play” “How we win” Markets Preferred brands Segments Best revenue delivery systems Model Aligned and engaged organisation Room
Slide 31: How we win
How we win Hotel Indigo Berlin – Ku’damm 31
Slide 32: Best in class delivery - the power of IHG's system
Best in class delivery - the power of IHG’s system Scale Brand Portfolio Priority Club Web / mobile Rewards >4,6002 hotels 9 preferred 13 languages 153m guests 73m2 members hotel brands 6 language apps annually Revenue Food & Management Beverage 69% room >$4.7bn of F&B World class revenue delivery r
Slide 33: IHG's sales and marketing system - funding the system
IHG’s sales and marketing system - funding the system All hotels contribute c.3.0% of rooms revenue c.4.75% total Other fees for (service contribution fee) + PCR bill + value add services Advertising & Marketing Distribution Priority Club Rewards (c.30%) (Reservations and Channels) (c.40%) (c.30%) $
Slide 34: Best in class delivery - 69% revenue delivery to IHG hotels
Best in class delivery - 69% revenue delivery to IHG hotels $12.0bn $17.5bn 2% 8% 11% 12% 14% 11% 17% 19% Online Travel Agency 12% Global Distribution System 19% Call centres PCR Hotel Direct 44% IHG Websites 31% Hotel Direct 2005 2012 Note: 2011 constant USD rates 34
Slide 35: Best in class delivery - using scale to drive profitable revenue
Best in class delivery - using scale to drive profitable revenue 1. 2. 3. 4. 69%¹ Creating Converting Yielding Retaining Revenue Demand Demand Demand Demand Delivery ¹69% of rooms revenue delivered through IHG channels and by Priority Club Rewards members direct to hotel. 35
Slide 36: Attracting guests to our brands
1. 1 Creating Demand Attracting guests to our brands Mass marketing – Greater China InterContinental & Crowne Plaza brand campaigns – Doubled brand awareness & preference Online marketing – Generated $1.4bn of revenues – Paid: >8m keywords managed – Non-paid: powerful search engine optimisation stra
Slide 37: Turning browsers into buyers
2. Converting Demand Turning browsers into buyers IHG direct websites – >227m visits in 2012 generating $3.4bn in revenue, up 10% – Guest Ratings & Review Mobile – 1st major hotel chain to have apps across all platforms – Booked $330m revenues in 2012 (up from $3m in 2009) Global call centres – 10 c
Slide 38: The right room at the right price
3. Yielding Demand The right room at the right price Price optimisation tool – Industry first, recognised by several awards – Used in >3,000 hotels globally – Average 4.3% RevPAR uplift Revenue management hotel training programmes – >3,800 online training modules in progress – >900 hotels completed
Slide 39: Leveraging Priority Club Rewards
4. Retaining Demand Leveraging Priority Club Rewards Largest hotel loyalty programme – 73m members s at 31 March 2013 Priority Club revenue contribution in 2012 = 41% Our most valuable guests: – Pay more – Stay more – Cost less External recognition - 2012 awards: – “Best Hotel Loyalty Program” from
Slide 40: Talented people - delivering guest experiences through people
Talented people - delivering guest experiences through people • Strengthening our brands through our frontline – 3%pt improvement in engagement in 2012 – Franchisee roll-out • Our winning culture - employer brand external recognition – Sunday Times “Best Big 25 Companies to Work for” – CRF Institute
Slide 41: Creating shared value
Creating shared value - The heart of IHG’s CR Strategy Build competitive advantage Shared Value Business as usual by managing cost & guest initiatives: preference Green Engage, IHG Academy, IHG Shelter in a Storm Programme Create Do positive Societal value-added Charity new value good Control Compli
Slide 42: Corporate Responsibility - industry leading CR programmes
Corporate Responsibility - industry leading CR programmes – Industry leading web tool – Using our hotels to support – Measures energy, water, waste communities in crisis and carbon – IHG shelter fund build up – Up to 25% energy reduction through employee and hotel (c.$90k per hotel p.a.) fundraising
Slide 43: Preferred Brands
Preferred Brands Holiday Inn Express, Phuket 43
Slide 44: Participating where IHG creates value
Participating where IHG creates value Criteria for success % branded Segment IHG participation? revenues Scale System Branded benefits delivery value Super Luxury 4% Luxury/ Upper 34% Upscale Upscale 27% Midscale 28% Economy 7% Some Source: IHG analysis; revenues global STR average 07-12 ,12 month a
Slide 45: IHG has fewer brands, with a narrower focus
IHG has fewer brands, with a narrower focus Open rooms 674k² 663²k 650k¹ 341k² 4505 500k² Pipeline rooms 176k² 135k² 161k¹ 100k² 81k5 38k² 88% 71% 100% 97% 70% 72% Mid- Segment focus upscale - upscale - upscale - economy- midscale upscale luxury luxury luxury midscale 67% 83% 84% 58% 62% 87% Regiona
Slide 46: IHG's portfolio of preferred brands - core
IHG’s portfolio of preferred brands - target guest positioning Brand Positioning Tier Product Brand Launch IHG Involvement “Championing the CORE1 real you” Upper Acquired 1988 - Full Service 1952 1990 Unpretentious, comfor Midscale table, reliable “Championing the real you” Upper Select Service 1991
Slide 47: Portfolio of preferred brands
Portfolio of preferred brands Brand Positioning Tier Product Brand Launch IHG Involvement “Refreshingly local” Neighbourhood Upscale Full Service 2004 Launched story, welcoming, unexpected Chinese business travellers Upscale Full Service 2012 Launched Tradition, rejuvenation, stat us and familiar sp
Slide 48: Building preferred brands - bigger, better, stronger
Building preferred brands - bigger, better, stronger • Bigger – Economies of scale – Enables areas of specialism e.g. Bangkok resorts team • Better – Continuous operational improvement – Our brands are regularly recognised by industry awards • Stronger – First choice amongst guest, owners and employ
Slide 49: Building preferred brands - market segmentation insights
Building preferred brands - market segmentation insights From: Industry definition To: what guests look for Driven by price point: Driven by a COMBINATION of factors: • Luxury • WHO is travelling • Upper Upscale • Upscale • The OCCASION they are travelling for • Upper Midscale • Midscale • Economy •
Slide 50: Strengthen existing brands - insight behind the relaunch
Strengthen existing brands - insight behind the relaunch Emotional Differentiation Consistency Connection $1bn Holiday Inn relaunch 1. 2. 3. 4. 5. Remove Add High 100% Complete Install poorer Quality New Quality Service Hallmarks hotels Hotels Compliance Training 50
Slide 51: Driving fee revenue - relaunch driving strong results
Driving fee revenue - relaunch driving strong results • Continued growth in RevPAR premium • Strong increase in signings • Significant reduction in room exits following relaunch completion US Holiday Inn brand family 12 Global Holiday Inn brand month RevPAR index to upper family hotel signings midsc
Slide 52: Strengthen established brands - significant value created
Strengthen established brands - significant value created New Brand Family architecture – Leverages position as largest hotel brand in the world – Driven by sophisticated segmentation work Driving awareness J.D. Power: ranked highest in Guest Satisfaction among 2011/12: mid-scale full service hotel
Slide 53: Strengthen existing brands - entire estate relaunched
Strengthen existing brands - entire estate Entire relaunched estate refreshed Global Holiday Inn brand family rooms 2003 – 2012 400 66 Number of rooms (‘000s) 300 197 150 200 437 408 100 211 0 Closing Exits Existing New build Conversion Closing system size hotels additions additions system size Dec
Slide 54: Strengthen established brands - Crowne Plaza repositioning
Strengthen established brands - Crowne Plaza repositioning • Globally significant brand – $4.0bn*2 brand (19%2 of IHG’s gross revenues) – 390³ hotels open, 99³ in pipeline – Performance gap Americas vs. Rest of World • Significant opportunity to reposition brand Phase 2012 2013 2014 2015 1. Quality
Slide 55: New hallmarks - leveraging market segmentation work
New hallmarks - leveraging market segmentation work Primary guest need = business productivity - Efficiency - Working productively - Staying connected to the outside world Hallmarks designed to enhance 4 key experience areas 1. Arrival • Mobile check-in/out • Executive ‘go to’ 2. Food & Beverage • Q
Slide 56: Strengthen established brands - global growth
Strengthen established brands - global growth Entire estate refreshed Global InterContinental room Global InterContinental room pipeline 2006- 2012 system 2006- 2012 4 6 (10) 17 Number of rooms (‘000s) Number of rooms (‘000s) (17) 29 57 (9) 50 13 16 Closing Signings Openings Attrition Closing Closin
Slide 57: Strengthen established brands - Strong presence outside the Americas
Strengthen established brands - Strong presence outside the Americas Rooms System Pipeline System 2% 5% 16% 31% 31% 61% 37% 16% Americas Europe AMEA Greater China As at 31 March 2013 57
Slide 58: Develop New Brands
Develop New Brands Hotel Indigo, San Diego Del Mar 58
Slide 59: Develop new brands - the hotel brand development cycle
Develop new brands - the hotel brand development cycle 3 Brand maturity Number of hotels 2 Accelerate growth Build distribution & awareness 1 Time from brand launch 59
Slide 60: Develop new brands - rationale for new hotel brands
Develop new brands - rationale for new hotel brands DEMAND SUPPLY • Consumer needs are evolving and • Hotel owners seek to maximise multiplying market opportunities • Sophisticated and scalable revenue • Natural market limits on single generation systems brand density Grow market share through multi
Slide 61: Develop new brands - IHG's approach to new brand development
Develop new brands - IHG’s approach to new brand development GUEST • Bespoke market research • Future trends identification • Differentiated experience OWNER IHG • Brand management expertise • Create owner/ lender momentum • Growth capital expenditure • Deliver great ROI • Revenue generation systems
Slide 62: Develop new brands - rationale for HUALUXE Hotels & Resorts
Develop new brands - rationale for HUALUXE Hotels & Resorts • 1st 5-star international hotel GUEST designed for Chinese travellers • Strong owner interest OWNER - 16 signings to date • Potential to be in over 100 cities IHG in China long term 62
Slide 63: Develop new brands - rationale for EVEN Hotels
Develop new brands - rationale for EVEN Hotels • Mainstream wellbeing brand with GUEST 17m target guests OWNER • Good conversion brand • IHG will invest up to $150m capex IHG • First signing announced in Q4 2012 63
Slide 64: Develop new brands - proven success
Develop new brands - proven success Proven success with Hotel Indigo Strong growth in system & pipeline • Americas launch 2004, global roll-out 2008 Open hotels • 51 hotels open, 49 in pipeline Pipeline 47 49 • Fastest growing branded boutique in 2012¹ 56 50 51 3 22 External recognition • Hotel Indi
Slide 65: Significant future contribution from new brands
Significant future contribution from new brands • IHG’s gross revenues* in 2012 totalled $21.2bn • 15% of 2012 pipeline is Hotel Indigo, Staybridge Suites, Candlewood Suites and HUALUXE Hotels & Resorts Expected proportion of IHG’s gross revenues* from Hotel Indigo, Candlewood Suites, Staybridge Sui
Slide 66: Where we play
Where we play Holiday Inn Resort, Krabi Thailand 66
Slide 67: Our model for high quality growth
Our model for high quality growth Superior owner Preferred guest proposition experiences delivered 5 1 through people Effective channel 4 2 management Build & leverage scale 3 Strong brand portfolio & loyalty programme Low capital intensity model drives growing cash flow and ROI 67
Slide 68: Favourable lodging market - a significant opportunity
Favourable lodging market - a significant opportunity • Global hotel industry revenues total $430bn¹ – IHG has a 5% share • By 2030 global industry revenues forecast to double – >50% of growth will come from US, China & India • Branded share continuing to grow Share of branded rooms Global industry
Slide 69: A significant opportunity - long term hotel demand drivers
A significant opportunity - long term hotel demand drivers 1. Growing global middle class 2. Increasing airline capacity 3. Ageing developed world population 4. New sources of international travel 5. Growing internet penetration 6. Preference for recognised brands 69
Slide 70: Favourable lodging market - growing global middle class
Favourable lodging market - growing global middle class 2010 - 2030 middle class population growth by economy type COUNTRY CAGR (‘10-30) 1.4bn Developed 1% BRIC 7% 1.1bn Emerging 4% 682m 2010 2020 2030 Source: Oxford Economics Market Strength Index Database 2011 70
Slide 71: The China Opportunity
The China Opportunity Crowne Plaza Zhenjiang 71
Slide 72: IHG is well established as the leading global hotel operator
IHG is well established as the leading global hotel operator IHG System Size and Pipeline by Brand (‘000 rooms) 120 110 100 90 Pipeline 80 70 60 50 40 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: IHG 72
Slide 73: IHG will continue to be the leading global hotel operator in China
IHG will continue to be the leading global hotel operator in China Greater China system & pipeline 120 100 System Pipeline 80 No of rooms ‘000 60 40 20 0 IHG Wyndham Accor Starwood Marriott Shangri La Hyatt Hilton Source: IHG 31 March 2013; Starwood system is reported by the Company as at 31 March 2
Slide 74: Industry leading upscale & midscale distribution
Industry leading upscale & midscale distribution 120 100 Pipeline 58% No of rooms ‘000 80 86% 60 40 System 20 0 Source: IHG 31 March 2013 74
Slide 75: Sustainable growth strategy - high quality growth
Sustainable growth strategy – high quality growth Aligned with “go west” • Clear, focused development strategy Targeting emerging middle development plans class – Tier 2 and Tier 3 cities • Presence* in 101 cities including – All four tier one cities Crowne Plaza Chongqing – 34 out of 38 tier two ci
Slide 76: Unrivalled portfolio in Greater China - Open system
Unrivalled portfolio in Greater China - Open system Total System System System SUIFENHE Rooms Hotels HARBIN MUDANJIANG 9,514 23 SHENYANG 21,772 61 TANGSHAN DANDONG 21,109 65 QINGHUANGDAO HOHHOT BEIJING DALIAN DATONG 9,650 38 ORDOS TIANJIN SHIJIAZHUANG YANTAI JINAN QINGDAO 405 3 YINCHUAN ZHENGZHOU NA
Slide 77: Unrivalled portfolio in Greater China - development pipeline
Unrivalled portfolio in Greater China - development pipeline Pipeline Pipeline DAQING Pipeline Rooms Hotels HARBIN JILIN 10,775 23 CHANGCHUN SHENYANG 18,555 51 ANSHAN 11,710 40 BEIJING PANJIN 6,775 32 TAIYUAN BAODING ORDOS WEIHAI TIANJIN ZHENGZHOUHANDAN QINGDAO 898 7 LUOYANG YANCHENG LANZHOU XUZHOU
Slide 78: China's hotel market is expected to overtake the U.S.
China’s hotel market is expected to overtake the U.S. by 2025 Projected room supply for China Million rooms 10 9.1 9 China 7.5 8 7.8 USA 7 6.1 6.7 6 4.9 5 By 2039 China’s room supply 4 will be: 3 • 4x the size it is today 2 2.3 • Almost 2x the size of the US 1 market today 0 2005 2015 2025 2035 2039
Slide 79: Luxury / upper upscale / upscale is growing fast while midscale remains sizeable
Luxury / upper upscale / upscale is growing fast while midscale remains sizeable 2010 2020 (likely) 2039 (likely) No. of rooms No. of rooms No. of rooms = 2.3m = 4.8m = 9.1m Luxury / Upper Upscale / Upscale Midscale Economy Source: NBS; China Economy Hotel Survey, IHG 79
Slide 80: Significant opportunity for upscale / midscale branded players
Significant opportunity for upscale / midscale branded players China branded¹ rooms share growth Other markets branded¹ rooms share Branded 17% 23% 36% 48% US = 70% UK = 60% Unbranded Continental Europe = 40% 2000 2010 2020 2030 IHG share of China branded¹ rooms 2012 c.10% IHG share China branded ro
Slide 81: Our China share potential
Our China share potential China industry rooms growth IHG illustrative rooms potential c.26% c.48% Maintain c.10% of branded share branded¹ branded¹ 8 7.5m 400 IHG Greater China rooms(‘000) 7 350 China hotel rooms (m) 6 300 3.6m 5 250 4 200 360k 3 2.6m 150 2 0.7m 100 3.9m 1 1.9m 50 61.6k 0 0 2012 20
Slide 82: Why IHG is winning in China
Why IHG is winning in China • Well established as the leading international hotel operator • Broad portfolio of strong brands in key locations • Longest established loyalty programme • The deepest relationships with key strategic partners • The most focused development strategy • Localisation of bra
Slide 83: Appendices
Appendices Holiday Inn, Stratford 83
Slide 84: [Blank Page]
[Blank Page] 84
Slide 85: Financial results
Financial results CER² Change 12 months 12 months $ million Change % % Excluding to 31 Dec 12 to 31 Dec 11 LDs³ Revenue 1,835 1,768 4% 6% Operating Profit¹ 614 559 10% 13% Interest (54) (62) (13)% Profit before tax¹ 560 497 13% Tax rate¹ 27% 24% 3%pts Profit after tax¹ 407 377 8% Adjusted Basic EPS¹
Slide 86: Hotel franchising + 7.6% growth in profits
Hotel franchising + 7.6% growth in profits Total gross revenue $bn¹ (rooms only) Group Royalty drivers 2012 vs. 2011 2012 12.0 Average rooms 1.0% 2011 11.3 RevPAR 5.2% 2010 10.5 Royalty fees 8.4% Franchise Fees $m Franchise EBIT $m (margin %) 2012 653 2012 547 (84%) 2011 609 2011 511 (84%) 2010 558
Slide 87: Hotel management - good margin expansion
Hotel management - good margin expansion Total gross revenue $bn1(total hotel) Management Fees² $m 2012 8.6 2012 368 2011 8.3 2011 349 2010 7.7 2010 333 Managed EBIT² $m (margin³ %) Managed lease revenue and EBIT $m $m 2012 2011 2012 216 (59%) Americas Revenue 34 59 2011 191 (55%) Americas EBIT 0 1
Slide 88: Owned & Leased - rate drives good margin growth
Owned & Leased - rate drives good margin growth O&L revenue $m O&L EBIT $m (margin %) 2012 583 2012 125 (21%) 2011 565 2011 106 (19%) 2010 523 2010 84 (16%) O&L EBITDA $m 2012 164 2011 148 2010 131 Based on actual USD *All charts exclude results from disposed assets: InterContinental Buckhead, Atlan
Slide 89: Free Cash Flow Generation
Free Cash Flow Generation Year Year $m to 31 Dec to 31 Dec 2012 2011 Operating Profit* 614 559 Depreciation Hotel Depreciation 59 64 Non Hotel Depreciation 35 35 Working Capital & Other Movements (26) (31) Movement in System Funds surplus and PCR liability 57 66 Utilisation of provisions (12) (19) N
Slide 90: Uses of Free Cash Flow
Uses of Free Cash Flow Year Year $m to 31 Dec 2012 to 31 Dec 2011 Free Cash Flow 463 422 Investment Capital - Expenditure (20) (93) Investment Capital - Receipts 8 157 Tax paid on disposals (3) (1) Ordinary dividend (174) (148) Special dividend (505) - Pension Contributions* (104) (44) Net Purchase
Slide 91: Managed & Franchised business models - the detail
Managed & Franchised business models - the detail Franchising Managing • One of largest franchisers • One of largest managers • 502,649 franchised rooms • 166,954 managed rooms • Typically owner operators • Typically institutional owners • Standard contract • Tailored contracts • 10 year agreement i
Slide 92: Comparable RevPAR - 3 Months to 31 March 2013 Franchised and Managed
Comparable RevPAR – 3 Months to 31 March 2013 Franchised and Managed Constant US$ Franchised Comparable Managed Comparable Hotels Occ % ADR RevPAR Hotels Occ % ADR RevPAR 2013 Pts 2013 Growth 2013 Growth 2013 Pts 2013 Growth 2013 Growth InterContinental 28 65.0% 0.3% 134.32 1.4% 87.32 1.9% 21 71.0%
Slide 93: Comparable RevPAR - 3 Months to 31 March 2013 Owned & Leased and Total
Comparable RevPAR – 3 Months to 31 March 2013 Owned & Leased and Total Constant US$ Owned & Leased Comparable Total Comparable Hotels Occ % ADR RevPAR Occ % ADR RevPAR 2013 Pts 2013 Growth 2013 Growth 2013 Pts 2013 Growth 2013 Growth InterContinental 3 73.3% 5.9% 222.28 2.2% 163.03 11.2% 68.4% 1.3%
Slide 94: Comparable RevPAR - 12 Months to 31 December 2012
Comparable RevPAR – 12 Months to 31 December 2012 Constant US$ Franchised Comparable Managed Comparable Hotels Occ % ADR RevPAR Hotels Occ % ADR RevPAR 2012 Pts 2012 Growth 2012 Growth 2012 Pts 2012 Growth 2012 Growth InterContinental 26 63.5% 2.6% 127.55 2.9% 81.00 7.4% 21 75.1% 3.2% 205.58 5.7% 15
Slide 95: Comparable RevPAR - 12 Months to 31 December 2012
Comparable RevPAR – 12 Months to 31 December 2012 Constant US$ Owned & Leased Comparable Total Comparable Hotels Occ % ADR RevPAR Occ % ADR RevPAR 2012 Pts 2012 Growth 2012 Growth 2012 Pts 2012 Growth 2012 Growth InterContinental 3 81.4% 0.1% 261.26 7.3% 212.68 7.4% 70.7% 2.7% 181.58 5.0% 128.44 9.1
Slide 96: Current trading - comparable RevPAR growth
Current trading – comparable RevPAR growth Constant US$ Qtr 1 Qtr 2 Qtr 3 Qtr 4 FY Jan Feb Mar Qtr 1 2012 2012 2012 2012 2012 2013 2013 2013 2013 United States: InterContinental 7.6% 10.1% 8.4% 9.4% 8.9% 14.3% 9.6% 3.5% 8.6% Crowne Plaza 6.3% 6.3% 4.8% 5.0% 5.6% 5.6% 7.4% 1.5% 4.5% Holiday Inn 7.7%
Slide 97: 2012 Revenue & Operating Profit
2012 Revenue & Operating Profit Revenue Operating Profit Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Franchised 118 142 151 130 541 101 123 134 108 466 Managed 23 24 23 27 97 12 12 9 15 48 Owned & Leased 40 53 52 54 199 (2) 9 9 8 24 181 219 226 211 837 111 144 152 131 538 Regional Overhead (11) (11)
Slide 98: 2011 Revenue & Operating Profit
2011 Revenue & Operating Profit Revenue Operating Profit Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Franchised 109 135 141 117 502 91 118 123 99 431 Managed 38 32 31 23 124 18 15 10 9 52 Owned & Leased 47 55 50 52 204 (1) 7 7 4 17 194 222 222 192 830 108 140 140 112 500 Regional Overhead (11) (12)
Slide 99: 2010 Revenue & Operating Profit
2010 Revenue & Operating Profit Revenue Operating Profit Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Franchised 98 123 132 112 465 81 107 113 91 392 Managed 29 30 29 31 119 7 6 2 6 21 Owned & Leased 51 62 54 56 223 (2) 6 4 5 13 178 215 215 199 807 86 119 119 102 426 Regional Overhead (14) (12) (14)
Slide 100: Hotel & Room Count at 31 March 2013
Hotel & Room Count at 31 March 2013 Franchised Managed Owned & Leased Total Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms InterContinental 29 8,216 21 8,050 3 1,492 53 17,758 Crowne Plaza 170 44,830 11 3,488 0 0 181 48,318 Holiday Inn 792 137,819 18 5,485 2 922 812 144,226 Holiday Inn Express
Slide 101: Pipeline at 31 March 2013
Pipeline at 31 March 2013 Franchised Managed Total Hotels Rooms Hotels Rooms Hotels Rooms InterContinental 1 220 3 705 4 925 Crowne Plaza 16 3,965 2 270 18 4,235 Holiday Inn 134 18,088 2 441 136 18,529 Holiday Inn Express 344 32,025 0 0 344 32,025 Staybridge Suites 65 6,574 1 197 66 6,771 Candlewood
Slide 102: May 2013
Great hotels suestslove
InterContinental Hotels Group — Investor Presentation (May 2013) on 6ix