|Financial results||2009||2008||% change||% change (CER)|
|Total||Excluding LDs1||Total||Excluding LDs1|
|Adjusted operating profit2||$124m||$153m||(19)%||(13)%||(20)%||(14)%|
|Total adjusted EPS2||32.5¢||35.3¢||(8)%|
|Total basic EPS3||23.4¢||32.2¢||(27)%|
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"The trading environment remains challenging. We see signs of occupancy stabilising, but rate is still under considerable pressure across the board.
“Our signings pace remains impacted by the continued scarcity of financing for hotel developments. We are taking action to improve our operating efficiency and support the performance of our hotels; the relaunch of Holiday Inn is gaining pace and continues to make a significant difference to the prospects of our biggest brand.
“The partnership we enjoy with our owners has been a key factor in our system’s resilience through this downturn and underpins our optimism for the future. This unique relationship combined with our global scale, diverse brand portfolio, fee based business model and powerful system positions us to lead the industry when the upturn comes."
RevPAR declined 15.5% in the third quarter with US RevPAR falling 15.7%. Revenues declined 19% to $206m.
Operating profit declined 36% from $129m to $82m. Operating profit in the owned and leased hotels fell from $13m to $3m driven by an overall RevPAR decline of 22.6% and a particularly tough trading environment in New York. Operating profit in the managed business declined by $24m to a loss of $12m in the quarter, driven by a 20.0% drop in RevPAR which resulted in IHG continuing to fund shortfalls to the owner’s priority return on a number of hotels managed for one owner. This operating profit decline is in line with the disclosed sensitivity that a 1% change in RevPAR has a $4m impact on annual operating profit in the Americas managed business. Franchised hotels’ operating profit decreased by 13% to $104m driven by a decline in royalty fees of 10% and a 48% reduction in initial franchising, relicensing and termination fees.
RevPAR declined 15.2% in the third quarter driven primarily by rate. The UK and France saw the smallest declines with RevPAR down 11.2% and 10.2% respectively. Excluding one $7m liquidated damages receipt in the third quarter of 2008, revenues declined 22% to $101m (15% decline at constant exchange rates (CER)).
Operating profit declined 8% (3% CER), excluding the $7m liquidated damages receipt in the third quarter of 2008, to $36m. Owned and leased hotels’ operating profit was down only $2m to $12m with an improved trading environment at the InterContinental Le Grand, Paris and a relatively strong performance at the InterContinental London, Park Lane. A 17.7% RevPAR decline across the European estate drove managed hotels’ operating profit to decrease by $4m to $15m, but margins were held flat at constant currency. Excluding the $7m liquidated damages receipt in the third quarter of 2008, franchised hotels’ operating profit declined by $2m to $16m (6% at CER) driven by a RevPAR decline of 15.4% partially offset by a 6% increase in room count.
RevPAR declined 13.4% driven entirely by rate with occupancy improving by 1.3 percentage points. Greater China RevPAR declined 19.8%, which was four percentage points better than in the second quarter and showed occupancy growth for the first time this year. Excluding one $4m liquidated damages receipt received in the third quarter of 2008, revenues declined 10% to $62m (13% at CER).
Excluding the liquidated damages receipt received in 2008, operating profit increased by 21% (14% CER) from $14m to $17m. Operating profit at owned and leased hotels decreased by $2m to $5m driven by a 22.3% RevPAR decline at the InterContinental Hong Kong. Managed hotels’ operating profit increased by $1m to $18m (0% at CER), with a 13.4% RevPAR decline offset both by the contribution from 12% more rooms and cost benefits from the reorganisation of the region.
The interest charge for the quarter fell $15m to $13m due to a reduction in interest rates and lower average net debt.
Based on the position at the end of the quarter, the tax charge has been calculated using an estimated annual tax rate of 19% (Q3 2008: 25%). The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term.
Growth capital expenditure of $81m included $65m payment on completion of the Hotel Indigo San Diego which opened in July. Maintenance capital expenditure was $15m and, as disclosed previously, the full year amount is expected to be c.$75m, down 25% on 2008 levels.
IHG's net debt was reduced to $1.2bn at the end of the quarter, including the $204m finance lease on the InterContinental Boston. IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.
|Three months to 30 September $m||Total||Americas||EMEA||Asia Pacific||Central|
|* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.|
|Owned and leased operating profit||20||34||3||13||12||14||5||7||-||-|
|Managed operating profit||21||48||(12)||12||15||19||18||17||-||-|
|Franchised operating profit||122||149||104||120||16||25||2||4||-||-|
|Operating profit pre central overheads||135||193||82||129||36||46||17||18||-||-|
|Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**|
|Exchange rates||GBP:USD||EUR: USD|
|2009||0.61: 1||0.70: 1|
|2008||0.53: 1||0.67: 1|
|*||US dollar actual currency|
|**||Translated at constant 2008 exchange rates|
|***||After Central Overheads|
(Alex Shorland-Ball; Catherine Dolton):
|+44 (0) 1895 512 176|
(Leslie McGibbon; Emma Corcoran):
|+44 (0) 1895 512 425|
+44 (0) 7808 094 471
High resolution images to accompany this announcement are available for the media to download free of charge from www.vismedia.co.uk. This includes profile shots of the key executives.
A conference call with Richard Solomons (Chief Financial Officer and Head of Commercial Development) will commence at 9.30am (London time) on 10 November. There will be an opportunity to ask questions.
|International dial-in:||+44 (0)20 7108 6370|
|UK Free Call:||0808 238 6029|
A recording of the conference call will also be available for 7 days. To access this please dial the relevant number below and use the access number 5416.
|International dial-in:||+44 (0)20 7970 8404|
|UK Free Call:||0800 018 1564|
There will also be a conference call, primarily for US investors and analysts, at 12.30pm (Eastern Standard Time) on 10 November with Richard Solomons (Chief Financial Officer and Head of Commercial Development). There will be an opportunity to ask questions.
|International dial-in:||+44 (0)20 7108 6370|
|US Toll Free:||866 692 5726|
A recording of the conference call will also be available for 7 days. To access this please dial the relevant number below and use the access number 5421.
|International dial-in:||+44 (0)20 7970 8273|
|US Toll Free:||877 278 0191|
The full release and supplementary data will be available on our website from 7.00 am (London time) on 10 November. The web address is www.ihg.com/Q3
InterContinental Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, nearly 4,400 hotels and over 640,000 guest rooms in 100 countries and territories around the world. The Group owns a portfolio of well recognised and respected hotel brands including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards with 47 million members worldwide.
IHG has over 1,500 hotels in its development pipeline, which will create 140,000 jobs worldwide over the next few years.
InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales.
IHG offers information and online reservations for all its hotel brands at www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com. For the latest news from IHG, visit our online Press Office at www.ihg.com/media
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