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First Half Results to 30 June 2006


  • Continuing revenue up 16% from £340m to £394m, up 12% at constant exchange rates.
  • Continuing operating profit up 30% from £82m to £107m, up 25% at constant exchange rates.
  • Total operating profit, including discontinued operations, of £127m.
  • Franchised operating profit up 14% to £117m. Managed operating profit up 39% to £43m.
  • Adjusted continuing earnings per share up 132% from 8.2p to 19.0p.
  • Interim dividend up 11% from 4.6p to 5.1p.
  • Total gross revenue* from all hotels in IHG’s system up 14% to £4.1bn.
  • Global constant currency RevPAR growth of 11.2%.
  • Room count up by 3,469 rooms to 541,002. Full year 2006 forecast net room additions in the region of 10,000.
  • Development pipeline up by 21,588 rooms to 130,100 (1,028 hotels). 80% expected to open by end 2008.

* 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:

"This has been a good first half for IHG with excellent trading across each of our three operating regions, and RevPAR outperformance in all our key profit generators. We have made good progress on our asset disposal programme and remain fully focused on increasing the number of hotels that carry our brands. We continue to attract strong interest from owners and partners, both new and existing, and for the first time we now have over 1,000 new hotels in the development pipeline across the world. Current trading is healthy and our outlook for the rest of the year remains positive."

Americas: strong performance across all brands

Revenue performance
RevPAR increased 11.5% with rate generating most of the increase. InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express and Candlewood each outperformed their market segments, with RevPAR up 11.1%, 15.1%, 9.9%, 12.3% and 11.2% respectively. Staybridge Suites also showed continued good RevPAR growth, with a 9.4% increase.

Operating profit performance
Operating profit from continuing operations increased 21% from $164m to $199m. Continuing owned and leased operating profit improved from $12m to $15m. This improvement was driven by increased occupancy and rate at the InterContinental Atlanta, and increased rates at InterContinentals in New York, San Francisco and Montreal, but was impacted by $1.3m pre opening costs at InterContinental Boston, scheduled to open in November. Managed profit was up 42% to $27m, benefiting from improved trading in existing operations and retained management contracts on assets disposed. Franchised profit increased 14% to $185m driven by increased total gross revenue. Including discontinued operations, total operating profit increased from $181m to $202m.

EMEA: RevPAR growth accelerating

Revenue performance
RevPAR increased 11.5%, driven by increased occupancy and 8.5% rate growth. The Middle East continued to perform strongly, growing RevPAR by 23.1%. Continental Europe delivered a RevPAR increase of 7.2%, benefiting from continued improvement across the region, particularly in Germany, Holland and Spain. In the UK, Holiday Inn and Holiday Inn Express outperformed their segment, growing RevPAR by 4.1%.

Operating profit performance
Operating profit from continuing operations increased 6% from £16m to £17m. Continuing owned and leased operations generated a loss of £2m, a £1m improvement on the prior period, with the enhanced performance at InterContinental Le Grand Paris, where occupancy increased by 12.1%, outweighing the impact of the closure of InterContinental London Park Lane for refurbishment. The InterContinental London Park Lane is on track to reopen towards the end of 2006. Managed profit was up 31% from £13m to £17m, as a result of improved trading and retained management contracts on assets disposed. The current Middle East conflict may result in a slightly lower level of managed profitability in the second half. Franchised profit decreased 25% from £16m to £12m with an underlying trading improvement outweighed by the non recurrence of the £7m liquidated damages received in 2005. Including discontinued operations, total operating profit reduced from £73m to £36m.

Asia Pacific: strong growth

Revenue performance
RevPAR increased 9.3%, mainly driven by rate. InterContinental, Crowne Plaza and Holiday Inn all performed strongly, with RevPAR up 10.5%, 9.8% and 7.9% respectively. Greater China RevPAR increased 12.8%, driven by rate increases as strong demand for IHG’s brands continues.

Operating profit performance
Operating profit from continuing operations increased 42% from $19m to $27m. Owned and leased operating profit increased 56% from $9m to $14m as a result of excellent trading at InterContinental Hong Kong, driven by a 19.1% average rate increase. The final phase of refurbishment of the InterContinental Hong Kong will take place in the second half. Managed hotels profit increased 19% to $19m, driven by improved trading and retained management contracts on asset disposals.

Strengthening Operating System

IHG continues to demonstrate the strength of its revenue delivery to hotel owners through its reservation channels and loyalty programme, Priority Club Rewards.

  • $3.0bn of rooms revenue booked through IHG's reservation channels, 48% of total rooms revenue, up from 43% in H1 2005.
  • $2.1bn of rooms revenue from Priority Club Rewards members, 34% of total rooms revenue, up from 32% in H1 2005.
  • Internet revenues increased from 15% to 17% of total rooms revenue: 86% from IHG's own websites.

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 first half, aggregated regional overheads were up £2m to £31m after continued infrastructure investment in China. Central overheads increased by £5m to £37m. This included investment in new global research designed to enable higher quality brand development and enhancing IHG’s franchise capability going forward. Further investment in these projects will be made in the second half of 2006.

Based on the first half, IHG’s tax rate is now expected to be approximately 25% for 2006. 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.

Increase in development pipeline size and rooms open

IHG continues to increase its development pipeline, in pursuit of the target of 50,000-60,000 net organic room additions in the period to the end of 2008 from a 30 June 2005 starting position of 537,675.

  • 40,994 rooms were signed in the first half; 28,574 in the Americas, 2,535 in EMEA and 9,885 in Asia Pacific.
  • 130,100 rooms are now in the pipeline, up 21,588 since the start of the year. This represents 1,028 hotels.
  • IHG’s development activity in China continues to be successful. 16 hotels, 8,240 rooms, were signed in the first half, including four InterContinentals, one Crowne Plaza, seven Holiday Inns and four Holiday Inn Expresses.

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

  • 17,371 rooms opened; 13,681 in the Americas, 2,131 in EMEA and 1,559 in Asia Pacific.
  • 13,902 rooms exited;10,565 in the Americas, 2,405 in EMEA and 932 in Asia Pacific. The majority were at IHG’s instigation.
  • The room count at the end of the period increased by 3,469 rooms to 541,002. 2006 year end room count expected to have increased in the region of 10,000.

Disposals and returns of funds

The disposal of 24 hotels in Continental Europe was announced during the first half, with a 15 year franchise agreement, for which £240m proceeds have been received. The sale of seven InterContinental branded hotels in Continental Europe placed on the market during the first half was announced in July 2006 with management contracts of up to 50 years, with £440m proceeds expected to be received during the third quarter of 2006. The sale of IHG’s shares in FelCor Lodging Trust Incorporated (“Felcor”) was also completed in the first half for a total of $191m, generating a gain of $44m, following the successful renegotiation of IHG’s hotel management agreement withFelcor.

IHG’s returns of funds to shareholders continued in the quarter, with the second £250m share buyback now completed, the third £250m share buyback well underway, and £497m returned to shareholders on 22 June 2006 via a special dividend. Upon completion of the third share buyback, IHG will have returned £2.74bn to its shareholders since Separation from Six Continents in April 2003. £174m of share repurchases remained to be completed at the half year.

IHG's net debt at the period end was £320m. Disposal proceeds in excess of £400m will be received in the second half. Further returns of funds will be made to shareholders in due course. 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 22 - £0.9bn

For a full list please visit

Appendix 2: Return of funds programme as at 30 June 2006

  Timing Total return Returned 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 £76m £174m
Total   £2.74bn £2.57bn £0.17bn

Appendix 3: Financial headlines

Six months to 30 June £m Total Americas EMEA Asia Pacific Central
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Franchised operating profit 117 103 103 86 12 16 2 1    
Managed operating profit 43 31 15 10 17 13 11 8    
Continuing owned and leased operating profit 15 9 9 7 (2) (3) 8 5    
Regional overheads (31) (29) (16) (15) (10) (10) (5) (4)    
Continuing operating profit pre central overheads 144 114 111 88 17 16 16 10    
Central overheads (37) (32)             (37) (32)
Continuing operating profit 107 82 111 88 17 16 16 10 (37) (32)
Discontinued owned and leased operating profit 20 71 1 9 19 57 0 5

Total operating profit 127 153 112 97 36 73 16 15 (37) (32)

Appendix 4: Constant currency continuing operating profits before other operating income and expenses.

  Americas EMEA Asia Pacific Total***
Actual curr-
Constant curr-
Actual curr-
Constant curr-
Actual curr-
Constant curr-
Actual curr-
Constant curr-
Growth 26% 21% 6% 9% 60% 45% 30% 25%
Exchange rates USD:GBP EUR:GBP
H1 2006 1.80 1.46
H1 2005 1.87 1.46

* Sterling actual currency
** Translated at constant H1 2005 exchange rates
*** After Central Overheads

Appendix 5: Investor information for 2006 interim dividend

Ex-dividend Date: 30 August 2006
Record Date: 01 September 2006
Payment Date: 05 October 2006
Dividend payment: Ordinary shares 5.1p per share: ADRs 9.6c per ADR

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.

Presentation for Analysts and Shareholders

A presentation with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.30 am (London time) on 22 August at JPMorgan Cazenove, 20 Moorgate, London, EC2R 6DA. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.30 am (London time).

There will be a live audio webcast of the results presentation on the web address The archived webcast of the presentation is expected to be on this website later on the day of the results and will remain on it for the foreseeable future. There will also be a live dial-in facility

International dial-in +44 (0)20 7138 0836

US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 10.00am (Eastern Standard Time) on 22 August with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.

International dial-in +44 (0)1452 562719
US Toll Free 1866 832 0717
Conference ID: 3607939

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 3607939#

International dial-in +44 (0)1452 550000
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 3,650 hotels and 540,000 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.

Download full Interim Results announcement (PDF format)

Last updated 25 January 2008

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