Share price


-20.00p / -0.61% / View details

Third Quarter Results to 30 September 2005

Key Highlights

  • Continuing Hotels operating profit up 22% from £46m to £56m*.
  • Hotels managed and franchised operating profit up 18% from £66m to £78m*.
  • Group operating profit reduced from £102m to £87m*, due to disposals of owned hotels. Hotels operating profit of £64m and Soft Drinks operating profit of £23m. Special item costs of £9m, reflecting property damage from fire and natural disasters.
  • 8.8% RevPAR growth across IHG’s hotels. Strongest trading in Americas, with continued rate increases.
  • 16,100 pipeline signings. Pipeline of signed rooms now at 95,000, by far the largest in the industry.
  • 1,700 net rooms added to room count in the quarter, 5,200 added year to date. 8,300 rooms opened in the quarter, 25,200 year to date, up 40% year on year. 6,600 room exits, 20,000 year to date, as focus on improving rooms quality continued.
  • Reservation channel revenue delivery up 17% to $1.3bn, year to date up 17% to $3.7bn.
  • Intention to float Britvic announced.
  • Adjusted earnings per share up 15% from 10.1p to 11.6p in the quarter.

All figures and movements at actual exchange rates and before special items.
*See appendix 4 for analysis of financial headlines.

Current trading

RevPAR continues to be primarily rate led. The Americas, UK Holiday Inn, Middle East and China continue to show good RevPAR growth. The full year outlook remains positive and in line with company expectations.

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

“We are seeing good progress being made against IHG's strategy, in particular encouraging growth in our development pipeline and, more recently, the announcement of our intention to float Britvic. Our hotel operating system continues to strengthen with the number of room nights we deliver to our hotels on the rise. Trading in two of our key markets, the US and the UK remained strong and we saw RevPAR growth in each of our three regions. Sadly, we have witnessed further destructive events around the world but we can be proud of the way our people have responded."

Americas: strong performance across the business

Revenue performance
RevPAR increased 11.0% in the quarter, with all brands performing strongly. Rate growth generated most of the increase, though occupancy continued to rise. Corporate rate business and corporate groups remained strong. InterContinental showed strong RevPAR growth, with a 28% increase. Holiday Inn showed 10.0% RevPAR growth, outperforming its market segment.

Operating profit performance
Operating profit from continuing operations increased by 15% from $82m to $94m in the quarter. Continuing owned and leased profit grew from $1m to $6m, driven by strong trading in New York and San Francisco. Managed and franchised profit was up 13% to $105m, driven by RevPAR increases and fees from increased franchise sales. Investments in additional development headcount and technology led to an increase in regional overheads. The trading impact from hurricanes was broadly neutral.

EMEA: continued out-performance in UK market

Revenue performance
RevPAR increased 5.2% in the quarter, albeit there were considerable variances in performance across geographic markets. Holiday Inn UK RevPAR was up 1.8%, all rate driven, continuing its market out-performance. The terrorist attacks in London had some impact on occupancy, particularly from leisure demand, but this now appears to be recovering gradually. France, where RevPAR was up 3.1%, saw continued improvement at the reopened InterContinental Le Grand Paris, but declines at the now sold InterContinental Paris. Germany saw recent RevPAR declines reverse, with a 3.7% gain in the quarter, driven by both occupancy and rate. The Middle East saw RevPAR increase 18.6%, driven by rate growth.

Operating profit performance
Operating profit from continuing operations increased 89% in the quarter from £9m to £17m. Continuing owned and leased profits were up 75% from £4m to £7m, driven by continued improvement at InterContinental Le Grand Paris. Managed profit was up 125% from £4m to £9m, as a result of retained management contracts on assets disposed. Franchised profit was marginally down by £1m to £6m, as a result of foreign exchange movements and the termination of IHG’s South African master franchise. The regional overhead declined marginally.

Asia Pacific: strong growth year to date

Revenue performance
RevPAR increased 0.6% in the quarter. Mainland China RevPAR increased 10.2%, driven by rate increases as strong demand for IHG brands continues. Performances elsewhere in the region were mixed.

Operating profit performance
IHG continues to experience strong demand in the region, particularly in China. Operating profit from continuing operations year to date was up 15% from $20m to $23m. Owned and leased operating profit fell $1m to $1m in the quarter, as a result of fewer rooms being available at the InterContinental Hong Kong due to refurbishment. Managed hotels profit decreased $1m to $6m in the quarter, after investment in expanding management resources and infrastructure to support the development growth in the region, particularly China. The regional overhead decreased marginally in the quarter.

Increase in pipeline size and room count

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

  • 16,100 rooms were signed, of which 12,300 rooms were in the Americas, 1,100 in EMEA and 2,700 in Asia Pacific. 43,300 rooms have been signed in the year to date.
  • 95,000 rooms are now in the pipeline, up nearly 12,000 (14%) since the start of the year.
  • IHG’s development activity in China continues to gain pace. There are 47 hotels open, with a further 34 in the pipeline, an increase of seven in the quarter.

IHG’s room count continues to grow, despite a focus on removing poorer quality rooms.

  • IHG’s room count increased by 1,700 rooms to 539,400. 8,300 rooms opened, of which 3,900 were new build. Two new InterContinentals and eight Crowne Plazas opened, further increasing the distribution of IHG’s upscale brands.
  • 6,600 rooms exited, of which 4,400 were in the Americas. 2,200 rooms exited in EMEA, 1,400 of which were related to the termination of IHG’s South African master franchise, and 600 from sales by IHG without flag.

Strong year to date performance

Continuing Hotels trading has been strong across each of IHG’s three regions year to date, with revenues up 14% to £696m and operating profit up 28% to £147m. Investment in China and development resources has been increased, though total overheads are still expected to be approximately flat for the full year.

Returns to shareholders

IHG has now returned nearly £2bn to shareholders since Separation in April 2003, with £1.2bn returned so far in 2005. A further £323m is yet to be returned via IHG’s ongoing share buyback programme. Following the receipt of proceeds from the IPO of Britvic, further cash returns will be made to shareholders. The timing of these returns will be considered in the light of market conditions and satisfactory progress being made on the intended divestment of further non core hotel assets.


Since the period end, the disposal of the InterContinental Paris and a portfolio of nine hotels in Australasia has been completed. Proceeds of approximately £380m have been received. IHG remains committed to further disposals when the time is right, and the retention of up to £1.0bn of its current hotel portfolio.

Britvic intention to float announced

The intention to proceed with a flotation of Britvic was announced on 14 November 2005, and a circular was posted to shareholders on 16 November 2005.

Comparative third quarter performance was impacted by the non recurrence of 2004’s extra trading week, as a result of which revenues decreased from £186m to £174m, and operating profit from £26m to £23m.

Britvic’s strong track record of innovation continued, with J2O, Tango Clear, Pepsi Max Twist and Fruit Shoot further increasing their market share, particularly in off premises sales.

Appendix 1: Asset disposal programme detail

  Number of hotels   Proceeds Net book value Annual EBItdA foregone* Annual EBIT foregone*
Disposed to date** 140 £2.2bn  £2.2bn £193m £132m
On the market 4 - £43m - -
Remaining hotels 53 - £1.5bn - -

*Based on EBItdA and EBIT in the last full year before disposal. An analysis of EBIT and EBItdA foregone is provided in the supplementary information.
** Holiday Inn Ghent sold since date of last announcement

For a full list please visit

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
Second £250m share buyback Ongoing £250m £177m £73m
£996m capital return Paid 8 July 2005  £996m £996m  Nil
Third £250m share buyback Yet to commence £250m - £250m
Total   £2.25bn £1.92bn £0.32bn

Appendix 3: Continuing operations

The 2004 full year profit analysed between discontinued and continuing operations is available in the supplementary information slides which are available on our website at

Appendix 4: Financial headlines
Q3 £m Total Americas EMEA Asia Pacific Central
  2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
Managed and franchised operating profit 78 66 59 51 15 11 4 4    
Continuing owned and leased operating profit 11 5 4 - 7 4 - 1    
Regional overheads (17) (14) (10) (6) (5) (6) (2) (2)    
Continuing hotels operating profit pre central overheads 72 57 53 45 17 9 2 3    
Central overheads (16) (11)             (16) (11)
Continuing hotels operating profit 56 46                
Discontinued owned and leased operating profit 8 30 - 3 3 25 5 2    
Total Hotels operating profit 64 76 53 48 20 34 7 5 (16) (11)
Soft drinks operating profit 23 26                
Group operating profit pre special items 87 102                
Special items (9) (5)                
Group operating profit post special items 78 97                

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 22 November. There will be an opportunity to ask questions.

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

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 2070837#

UK dial in 0845 245 5205
International dial-in +44 (0)1452 550000

US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 10am (Eastern Standard Time) on 22 November 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 

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 2076272#.

International dial-in +44 (0)1452 550000
US Toll Free  0845 245 5205


The full release and supplementary data will be available on our website from 7.00 am (London time) on 22 November 2005. The web address is

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 announcement in PDF (95K)
Download the supplementary slide information in PDF (258K)

Last updated 25 January 2008

Find out more about our brands

IHG logo

  • InterContinental Hotel & Resort logo
  • Kimpton logo
  • Hualuxe Hotels and Resorts logo
  • Holiday Inn logo
  • Holiday Inn Express logo
  • Staybridge Suites logo
  • Hotel Indigo logo
  • Even Hotels logo
  • Crowne Plaza logo
  • Holiday Inn Club Vacations logo
  • Holiday Inn Resort logo
  • Candlewood Suites logo

*IHG® Rewards Club not applicable to Kimpton® Hotels & Restaurants; to be included at a future date.