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First Quarter Results to 31 March 2006

First Quarter Headlines

  • Continuing revenue up 22% from £153m to £186m, up 14% at constant exchange rates.
  • Continuing operating profit up 40% from £30m to £42m, up 27% at constant exchange rates.
  • Total operating profit, including discontinued operations, of £46m.
  • Franchised operating profit up 25% to £55m. Managed operating profit up 36% to £19m.
  • Adjusted earnings per share up 13% from 6.8p to 7.7p.
  • Total gross revenue from all hotels in IHG’s system up 9% to $3.4bn.*
  • Global constant currency RevPAR growth of 11.6%. Strongest growth in Americas, up 13.0%, with continued rate increases.
  • Room count steady at 537,544 rooms. Pipeline up by 8,452 to 116,964.

* 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. Constant exchange rate comparatives shown in appendix 4.

See appendix 3 for analysis of financial headlines.

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

"Results for the quarter were strong, helped by buoyant market conditions around the world and the impact of actions taken during the second half of 2005. These changes included strengthened and refocused development teams, new operating structures and revisions to our marketing approach in key locations. The disposal programme is on track, we remain focused on enhancing the quality of our estate and our pipeline of new hotel signings, the largest in the industry, continues to grow. The outlook for the rest of the year remains positive."

Americas: strong performance across all brands

Revenue performance
RevPAR increased 13.0% with rate generating most of the increase, up 8.4%. InterContinental, Holiday Inn and Candlewood each outperformed their market segments, with RevPAR up 14.5%, 12.5% and 13.0% respectively. Holiday Inn Express, Crowne Plaza and Staybridge Suites also showed continued good RevPAR growth, with 13.8%, 11.9% and 8.6% increases respectively.

Operating profit performance
Operating profit from continuing operations increased 25% from $69m to $86m. Continuing owned and leased profit improved from $2m to $4m, driven by increased rates at InterContinental New York and InterContinental Buckhead, Atlanta, but impacted by pre opening costs at InterContinental Boston. Managed profit was up 38% to $11m, benefiting from retained management contracts on assets disposed. Franchised profit increased 13% to $85m. Including discontinued operations, total operating profit increased from $84m to $87m.

EMEA: RevPAR growth accelerating

Revenue performance
RevPAR increased 8.7%, with all major countries performing well. The Middle East had another outstanding quarter, growing RevPAR by 27.9%. Germany achieved a 3.2% RevPAR gain in the quarter. France delivered a RevPAR increase of 2.3%, benefiting from continued improvement at InterContinental Paris Le Grand. In the UK, the Holiday Inn estate grew RevPAR by 3.0%.

Operating profit performance
Operating profit from continuing operations increased 200% from £1m to £3m. Continuing owned and leased operations generated a loss of £5m, with the improved performance at InterContinental Le Grand Paris, where occupancy increased from 52% to 70%, outweighed by the impact of the closure of InterContinental London for refurbishment. The InterContinental London is now expected to reopen towards the end of 2006. Managed profit was up 33% from £6m to £8m, primarily as a result of retained management contracts on assets disposed. Franchised profit increased 25% from £4m to £5m. Including discontinued operations, total operating profit reduced from £26m to £6m.

Asia Pacific: strong growth

Revenue performance
RevPAR increased 8.8%, mainly driven by rate. Occupancy increased from 70.4% to 72.3%. Crowne Plaza RevPAR increased 11.1%, and Holiday Inn RevPAR 10.4%. Greater China RevPAR increased 8.5%, driven by rate increases as strong demand for IHG’s brands continues.

Operating profit performance
Operating profit from continuing operations increased 18% from $11m to $13m. Owned and leased operating profit increased 33% from $6m to $8m as a result of excellent trading at InterContinental Hong Kong, driven by a nearly 20% rate increase. Managed hotels profit was steady at $8m, after accounting for the cost of increased infrastructure in China.


As previously disclosed, IHG expects that in 2006 regional and central overheads will increase ahead of inflation at constant exchange rates. In the quarter, aggregated regional overheads were up £1m at £16m after continued infrastructure investment in China. Central overheads increased by £3m to £17m. This included the cost of the first phase of new global research aimed at gaining a deeper insight into customers’ brand perceptions across the lodging sector, and further developing IHG’s franchise capability around the world. These projects have been planned for 2006 to inform and direct management decision making and support performance in 2007 and beyond.

Increase in development pipeline size

IHG continues to increase its pipeline, in pursuit of the target of 50,000-60,000 net organic room additions by the end of 2008.

  • 18,131 rooms were signed; 9,975 in the Americas, 1,101 in EMEA and 7,055 in Asia Pacific.
  • 116,964 rooms are now in the pipeline, up 8,452 since the start of the year.
  • IHG’s development activity in China continues to be successful. 11 hotels, 6,470 rooms, were signed in the first quarter, including 2 InterContinentals and the world’s largest Holiday Inn Express.

IHG maintains its focus on enhancing the quality of its portfolio, in tandem with growth.

  • 8,343 rooms opened; 7,140 in the Americas and 1,203 in EMEA.
  • 8,332 rooms exited; 5,922 in the Americas, 2,076 in EMEA and 334 in Asia Pacific. The majority were at IHG’s instigation.
  • The room count at the end of the period remained steady at 537,544. 2,508 net InterContinental and Crowne Plaza rooms were added, enhancing the mix of IHG’s hotel portfolio and the distribution of IHG’s upscale brands.

Disposals and returns of funds

The disposal of 24 hotels in Continental Europe was announced during the first quarter, with a 15 year franchise agreement, for which proceeds of approximately £240m have been received. Seven InterContinental branded hotels in Continental Europe were put on the market in the quarter. The sale of IHG’s shares in FelCor Lodging Trust Incorporated (“Felcor”) was also completed for a total of $191m, generating a gain of £25m, following the renegotiation of IHG’s hotel management agreement with Felcor.

IHG’s returns of funds to shareholders continued in the quarter, with the second £250m share buyback now completed, the third £250m share buyback underway, and £500m proposed to be returned to shareholders on 22 June 2006 via a special dividend. Upon completion of the third share buyback and the £500m special dividend, IHG will have returned £2.75bn to its shareholders since Separation from Six Continents in April 2003.


Appendix 1: Asset disposal programme detail

  Number of hotels Proceeds Net book value
Disposed to date 168 £2.5bn £2.4bn
On the market 7 - £0.4bn
Remaining hotels 22 - £0.9bn

For a full list please visit

Appendix 2: Return of funds programme*

  Timing Total return Returned to date Still to be returned
*To 16 May 2006.        
£501m special dividend Paid December 2004 £501m £501m Nil
First £250m share buyback Completed in 2004 £250m £250m Nil
Second £250m share buyback Completed in 2006 £250m £250m Nil
£996m capital return Paid 8 July 2005 £996m £996m Nil
Third £250m share buyback Underway £250m £20m £230m
£500m special dividend 22 June 2006 £500m - £500m
Total   £2.75bn £2.02bn £0.73bn

Appendix 3: Financial headlines

Q1 £m  Total Americas EMEA Asia Pacific Central
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Franchised operating profit 55 44 49 39 5 4 1 1 - -
Managed operating profit 19 14 6 4 8 6 5 4 - -
Continuing owned and leased operating profit 1 1 2 2 (5) (4) 4 3 - -
Regional overheads (16) (15) (8) (8) (5) (5) (3) (2) - -
Continuing operating profit pre central overheads 59 44 49 37 3 1 7 6 - -
Central overheads (17) (14) - - - - - - (17) (14)
Continuing operating profit 42 30 49 37 3 1 7 6 (17) (14)
Discontinued owned and leased operating profit 4 35 1 7 3 25 - 3 - -
Total operating profit 46 65 50 44 6 26 7 9 (17) (14)

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

    Americas EMEA Asia Pacific Total***
Actual Constant Actual Constant Actual Constant Actual Constant
Growth 32% 22% 200% 200% 17% 17% 40% 27%
Exchange rates USD:GBP EUR:GBP
Q1 2006 1.75 1.46
Q1 2005 1.90 1.44

* Sterling actual currency
** Translated at constant Q1 2005 exchange rates
*** After Central Overheads

For further information, please contact

Investor Relations (Gavin Flynn/Paul Edgecliffe-Johnson): +44 (0) 1753 410 176
  +44 (0) 7808 098 972
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 8.00 am (London time) on 16 May. There will be an opportunity to ask questions.

UK Local Rate: 0800 953 0844
Standard International Dial In: +44 (0) 1452 562 716
Conference ID: 8468828

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 8468828#

UK dial in: 0800 953 1533
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 10am (Eastern Standard Time) on 16 May with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.

International dial-in: +44 (0) 1452 562 716
US Toll Free: 1866 832 0717
Conference ID: 8509756

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 8509756#

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 537,500 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.

Last updated 25 January 2008

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