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Third Quarter Results to 30 September 2006

Third Quarter Headlines

  • Continuing revenue up 10% from £183m to £202m, up 14% at constant exchange rates.
  • Continuing operating profit up 13% from £47m to £53m, up 21% at constant exchange rates.
  • Total operating profit, including discontinued operations, of £62m.
  • Franchised operating profit up 3% to £63m, up 7% at constant exchange rates. Managed operating profit up 18% to £20m, up 18% at constant exchange rates.
  • Adjusted earnings per share up 100% from 5.7p to 11.4p.
  • Total gross revenue from all hotels in IHG’s system up 9% to $4.1bn.*
  • Global constant currency RevPAR growth of 8.6%. Strongest growth in EMEA, up 11.6%, mainly driven by rate increases.
  • Room count increased by 2,773 rooms to 543,775 rooms. Pipeline now 143,606 rooms, up 13,506.

* Total gross revenue is defined as total room revenue (i.e. excluding food and beverage) from franchised hotels and total hotel revenue from managed, owned and leased hotels. It is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties. The metric is highlighted as an indicator of the scale and reach of IHG’s brands.
All figures and movements unless otherwise noted are at actual exchange rates and before other operating income and expenses.
See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4.

Commenting on the results and trading, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:

"Trading in the quarter remained strong with all brands performing well around the world. We have now added over 6,000 net rooms since January and we are on track to end the year in the region of 10,000 net rooms up. Our new hotels pipeline continues to grow well and the quality of our new signings is high. Our recent deal with All Nippon Airlines makes IHG the largest international hotel operator in Japan and strengthens our strategic position in Asia. The outlook for the Group remains positive."

Americas: strong performance across all brands

Revenue performance

RevPAR increased 7.5%, driven by rate. All brands performed strongly, with InterContinental up 9.4%, Crowne Plaza up 7.9%, Holiday Inn up 5.9%, Holiday Inn Express up 9.3%, Staybridge Suites up 6.0% and Candlewood Suites up 6.5%. All brands except Staybridge Suites have outperformed the market so far this year.

Operating profit performance

Operating profit from continuing operations increased 17% from $92m to $108m. Continuing owned and leased profit was flat at $4m, impacted by $1.1m pre opening costs at InterContinental Boston, which opened on 6 November 2006. Managed profit was up 86% to $13m, benefiting from retained management contracts on assets disposed. Franchised profit increased 8% to $106m. Including discontinued operations, total operating profit increased from $96m to $111m.

EMEA: RevPAR growth accelerating

Revenue performance

RevPAR increased 11.6%, with all major countries performing well. Middle East RevPAR increased 30.0%, despite the recent conflict in Lebanon. UK Holiday Inn estate RevPAR increased 9.4%, outperforming the market, against 2005 comparables impacted by the London bombings.

Operating profit performance

Operating profit from continuing operations increased 22% from £9m to £11m, after a £1m reduction in regional overheads. Continuing owned and leased operations broke even in the quarter. The InterContinental Le Grand Paris continues to rebuild its business post refurbishment, delivering a 27.3% RevPAR increase. The InterContinental London Park Lane reopened on 6 November 2006. As some bedrooms will not be available until March 2007, the expected profitability from the hotel for 2006 has reduced by £3m, in total £18m lower than the 2004 level. Managed profit was flat at £9m. Franchised profit was flat at £6m, impacted by the loss of income from the South African master franchise IHG cancelled in 2005. Including discontinued operations, total operating profit reduced from £20m to £18m.

Asia Pacific: strong growth

Revenue performance

RevPAR increased 10.5%, mainly driven by rate. InterContinental RevPAR increased 11.2%, Crowne Plaza 9.8%, and Holiday Inn 9.2%. Greater China RevPAR increased 14.3%, outperforming the market, driven by rate increases as strong demand for IHG’s brands continues.

Operating profit performance
Operating profit from continuing operations increased 60% from $5m to $8m. Owned and leased operating profit increased 100% from $2m to $4m as a result of fewer rooms being under refurbishment this year at the InterContinental Hong Kong. Managed hotels profit increased by 50% from $6m to $9m as a result of retained management contracts on assets disposed and the increasing number of hotels under IHG management in China.

Overheads and Tax

As previously disclosed, IHG expects that in 2006 regional and central overheads will increase ahead of inflation at constant exchange rates. In the quarter, aggregate regional overheads reduced £2m to £15m due to timing of costs. Central overheads increased by £3m to £19m. This included further planned investment in global research designed to strengthen brand development and to enhance IHG’s growth capability.

Based on the first nine months, IHG’s 2006 full year tax rate estimate, adjusted for special items, has reduced by 1% to 24%. IHG’s tax rate is likely to be volatile over the next few years but in the long term is expected, as previously indicated, to trend upwards.

Room count and development pipeline size

IHG’s pipeline of new hotels continues to expand.

  • 24,999 rooms were signed in the quarter; 16,776 in the Americas, 2,742 in EMEA and 5,481 in Asia Pacific.
  • Pipeline now stands at 143,606 rooms, up 13,506 in the quarter and 35,069 since the beginning of the year.
  • IHG’s development activity in China continues to be successful. 12 hotels, 4,908 rooms, were signed in the third quarter, with 28 hotels and 13,148 rooms signed since the beginning of the year.

IHG maintains its focus on expanding the distribution of its brands, while enhancing hotel quality.

  • 8,044 rooms opened; 5,314 in the Americas, 1,091 in EMEA and 1,639 in Asia Pacific. 25,415 rooms opened year to date.
  • 5,271 rooms exited; 3,635 in the Americas, 530 in EMEA and 1,106 in Asia Pacific. 19,173 rooms exited year to date.
  • The room count at the end of the quarter was 543,775. 6,242 rooms have been added year to date, positioning IHG well to add in the region of 10,000 rooms by the year end. InterContinental and Crowne Plaza have added 5,246 of these net rooms year to date, enhancing the mix of IHG’s hotel portfolio and the distribution of IHG’s upscale brands.

Disposals and returns of funds

The sale of seven Continental European InterContinental branded hotels to Morgan Stanley Real Estate Funds was completed during September for a total of €634m.

IHG’s net debt at the period end was £116m, including the $186m (£99m) finance lease on the InterContinental Boston.

14.0m shares were repurchased under IHG’s ongoing buyback programme during the third quarter, at a cost of £125m. There were 357m shares outstanding at the end of the third quarter. Since the period end, a further 0.8m shares have been repurchased, at a cost of £8m, leaving £41m of the £250m buyback still to be completed.

Further returns of funds will be made to shareholders in due course, as previously stated. An announcement on timing and quantum of further returns will be made not later than IHG’s preliminary results in February 2007.


Appendix 1: Asset disposal programme detail

  Number of hotels   Proceeds Net book value
Disposed to date 175 3.0bn  2.9bn
Remaining hotels 24 - 1.0bn


Appendix 2: Return of funds programme

  Timing Total return Returned to date Still to be returned
501m special dividend Paid December 2004 501m 501m Nil
First 250m share buyback Completed in 2004 250m 250m Nil
£996m capital return Paid 8 July 2005  £996m £996m Nil
Second 250m share buyback Completed in 2006 250m 250m Nil
£497m special dividend Paid 22 June 2006 £497m £497m Nil
Third 250m share buyback Underway 250m £201m £49m
Total   2.75bn 2.70bn 0.05bn

*To 30 September 2006.

Appendix 3: Financial headlines

Q3 £m Total Americas EMEA Asia Pacific Central
  2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Franchised operating profit 63 61 57 55 6 6 - - - -
Managed operating profit 20 17 7 4 9 9 4 4 - -
Continuing owned and leased operating profit 4 2 2 2 - (1) 2 1 - -
Regional overheads (15) (17) (8) (10) (4) (5) (3) (2) - -
Continuing operating profit pre central overheads 72 63 58 51 11 9 3 3 - -
Central overheads (19) (16) - - - - - - (19) (16)
Continuing operating profit 53 47 58 51 11 9 3 3 (19) (16)
Discontinued owned and leased operating profit 9 17 2 2 7 11 - 4 - -
Total operating profit 62 64 60 53 18 20 3 7 (19) (16)


Appendix 4: Constant currency continuing operating profits before special items for the period.

  Americas EMEA Asia Pacific Total***
Growth 14% 20% 22% 22% 0% 33% 13% 21%

Exchange rates USD:GBP EUR:GBP
Q3 2006 1.87 1.47
Q3 2005 1.79 1.46

* Sterling actual currency
** Translated at constant Q3 2005 exchange rates
*** After Central Overheads


For further information, please contact:

Investor Relations (Paul Edgecliffe-Johnson):  +44 (0) 1753 410 176
   +44 (0) 7808 098 867
Media Affairs (Leslie McGibbon): +44 (0) 1753 410 425
  +44 (0) 7808 094 471

High resolution images to accompany this announcement are available for the media to download free of charge from This includes profile shots of the key executives.

Conference call for Analysts and Shareholders

A conference call with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 09.30am (London time) on 14 November.  There will be an opportunity to ask questions.

UK Local Rate 0845 245 5000
Standard International Dial In +44 (0)1452 562 716
Conference ID: 9543944

A recording of the conference call will be available for 7 days. To access this please dial the relevant number below and use the access number 9543944#

UK dial in 0845 245 5205
International dial-in +44 (0)1452 550 000

US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 11.45am (Eastern Standard Time) on 14 November with Andrew Cosslett (Chief Executive). There will be an opportunity to ask questions.

International dial-in +44 (0)1452 562 716
US Toll Free 1866 832 0717 
Conference ID: 9543957

A recording of the conference will also be available for 7 days. To access this please dial the relevant number below and use the access number 9543957#

International dial-in +44 (0)1452 550 000
US Toll Free 1866 247 4222


Note to Editors:

InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. InterContinental Hotels Group owns, manages, leases or franchises, through various subsidiaries, over 3,600 hotels and 543,775 guest rooms in nearly 100 countries and territories around the world. The Group owns a portfolio of well recognised and respected hotel brands including InterContinental® Hotels & Resorts, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites®, Candlewood Suites® and Hotel IndigoTM, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards.

InterContinental Hotels Group offers information and online reservations for all its hotel brands at and information for the Priority Club Rewards programme at

For the latest news from InterContinental Hotels Group, visit our online Press Office at

Cautionary note regarding forward-looking statements

This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934). These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements often use words such as ‘target’, ‘expect’, ‘intend’, ‘believe’ or other words of similar meaning. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Factors that could affect the business and the financial results are described in “Risk Factors” in the InterContinental Hotels Group PLC Annual Report on Form 20-F filed with the United States Securities and Exchange Commission.

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Last updated 25 January 2008

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