Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
“We have made a positive start to the year. Our asset disposal programme is progressing well and RevPAR in each of our regions is up year on year. We have seen many encouraging performances across our portfolio including Holiday Inn in the UK, and InterContinental, Staybridge and Candlewood Suites in the US. Priority Club Rewards, our loyalty scheme, continues to grow, as do bookings made through our reservations systems, increasing our delivery to our owners and franchisees. I believe we have many further opportunities to build the business on this solid base.”
International Financial Reporting Standards (IFRS)
This is IHG’s first accounting period under IFRS. Before significant non-trading items, IFRS earnings from continuing operations for the quarter do not materially differ from earnings under UK GAAP. However, under IFRS no depreciation is charged on assets held for sale. In the case of IHG’s disposal programme this represents a £15m saving in depreciation in the quarter.
RevPAR grew 7.6% in a strong market, mainly driven by rate growth. Corporate group business was particularly strong. InterContinental and IHG’s extended stay brands continued to outperform their market segments. The Holiday Inn brand family maintained a significant RevPAR premium to their market segments in the period.
Operating profit increased 35% from $62m to $84m, including an IFRS $7m depreciation benefit from assets held for sale. Improved profitability was driven by RevPAR and margin improvements across the business. InterContinental properties performed well, particularly those hotels in New York, Miami and Buckhead, Atlanta, which opened in November 2004 and is beating management expectations. Profit from managed hotels increased significantly, driven largely by the performance of InterContinental, Staybridge and Candlewood Suites. Franchised business profit saw gains through RevPAR increases and a higher level of fees from franchise sales, with 9,400 rooms signed in the quarter versus 5,200 rooms in Q1 2004.
RevPAR grew 3.1%, with performances varying across different markets. In the UK, Holiday Inn RevPAR grew 5.2%, outperforming the market. Growth was driven by a higher level of business travel and a favourable guest response to recent management initiatives. RevPAR in Continental Europe was flat, although the InterContinental brand experienced some growth, led by InterContinental Le Grand Paris.
Operating profit increased 63% from £16m to £26m. This includes an IFRS £11m depreciation benefit from assets held for sale offset by the negative impacts, totalling approximately £5m, from the refurbishment disruption at the InterContinental London and the receipt of a lower level of liquidated damages than in Q1 2004.
RevPAR grew 8.0%, driven by rate. Strong demand in China and Hong Kong was a major driver of the growth.
Operating profit increased 33% from $12m to $16m, underpinned by the performance of the InterContinental Hong Kong. Profits also grew at managed properties in the region, driven by continued strength in China, Australia and New Zealand.
System and pipeline size
System size increased to 535,200 rooms from 534,200 at 31 December 2004. Net room additions were 3,200, but 2,200 room exits from disposals without flag (400 rooms) and hotels permanently damaged by hurricanes in 2004 (1,800 rooms) reduced the reported increase to 1,000 rooms. 8,500 rooms were added, and 5,300 rooms removed. Key openings in the quarter included InterContinental Aphrodite Hills Resort in Cyprus, InterContinental Abu-Soma Resort in Egypt, Crowne Plaza Helsinki and Crowne Plaza Acapulco.
A high level of pipeline activity was maintained with 12,000 room signings leading to a record pipeline size of 85,300. 75% of pipeline rooms are in IHG’s key markets of US, UK and China.
Revenue delivery to IHG’s hotel owners
Room nights booked through IHG’s reservation channels increased from 35% to 37%, and those booked via Priority Club Rewards from 28% to 29%. Bookings through the Internet have increased over the past year from 12% to 14%, and the proportion of those through IHG’s own websites from 74% to 81%. Priority Club Rewards membership increased by over a million members in the quarter, and now stands at 24.8 million, the largest loyalty scheme in the hotel industry.
Good progress has been made, with 123 hotel disposals announced, including the $34m sale of the Crowne Plaza United Nations announced yesterday morning. The UK estate disposal has been completed and £960m further cash proceeds received, taking to £1.8bn the proceeds since separation.
Operating profit increased 22% to £11m, as a result of management action to improve manufacturing efficiency and reduce costs. Net revenue increased 1% and branded volume 3%. The Ben Shaws acquisition has been integrated, with the Pennine Spring water brand rolled out through Britvic's distribution channels. This acquisition gives Britvic its own spring water brand in this fast growing market segment. The soft drinks market remains competitive, especially in carbonates, though Pepsi has maintained market share in this challenging sector. Britvic’s J2O brand continued to gain market share over the last twelve months.
While the first quarter delivered satisfactory trading, seasonally it is the smallest quarter. Although bookings are ahead of the same time last year, booking lead times remain short. The US, UK and Asia continue to display strong demand, whereas the outlook for Continental Europe remains unpredictable with low visibility.
|Jan||Feb||Mar||Quarter 1||Apr||Ytd (Jan-Apr)|
|IC O&L comparable||11.1%||18.3%||10.9%||13.2%||24.6%||16.5%|
|CP NA (system)||6.7%||7.6%||4.4%||6.0%||17.2%||8.9%|
|HI NA (system)||6.7%||7.3%||5.5%||6.4%||10.1%||7.5%|
|EX NA (system)||9.6%||9.3%||9.6%||9.4%||11.3%||10.0%|
|IC O&L comparable||7.3%||17.3%||(2.4%)||6.4%||24.9%||11.3%|
|HI UK Regions||6.3%||10.3%||(0.7%)||4.9%||18.8%||8.3%|
|HI UK London||12.2%||8.2%||0.4%||6.4%||17.4%||9.2%|
|IC O&L comparable||52.7%||13.7%||17.7%||26.8%||36.9%||29.5%|
|Number of hotels||Proceeds||Net book value||Annual EBItdA forgone||Annual EBIT forgone|
|Disposed to date||123||£1.78bn||£1.81bn|| Approximately
|On the market||22||-||£420m||-||-|
For a full list please visit http://www.ihgplc.com/investors
|Timing||Total return||Returned to date||Still to be returned|
|£500m special dividend||Paid December 2004||£501m||£501m||Nil|
|First £250m share buyback||Completed in 2004||£250m||£250m||Nil|
|Second £250m share buyback||Ongoing||£250m||£128m||£122m|
|£1,000m capital return*||By 8 July 2005||£1,000m*||Nil||£1,000m*|
*The actual capital return will depend on the number of shares in issue at the record date, therefore the currently expected return is an approximation.
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 www.vismedia.co.uk. This includes profile shots of the key executives.
A teleconference with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (London time) on 26 May 2005. There will be an opportunity to ask questions. The conference call will conclude at approximately 9.30 am (London time).
To join us for this conference call please dial the relevant number below by 9.00 am (London time).
|International dial-in||+44 (0)1452 562 717|
|UK dial-in||0800 073 8968|
|US dial-in||1866 832 0732|
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 6226776#
|International dial-in||+44 (0)1452 55 0000|
|UK dial-in||0845 245 5205|
A teleconference with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (New York time) on 26 May 2005. There will be an opportunity to ask questions. The conference call will conclude at approximately 9.30 am (New York time).
|US toll free dial in||1866 832 0732|
|International dial in||+44(0) 1452 562 717|
|UK dial in||0800 073 8968|
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 6303054#
|International dial-in||+44 (0)1452 55 0000|
|UK dial-in||0845 245 5205|
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, more than 3,500 hotels and 535,000 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 Indigo™, and also manages the world's largest hotel loyalty programme, Priority Club® Rewards, with over 24 million members worldwide. In addition to this, InterContinental Hotels Group has a 47.5% interest in Britvic, one of the two leading manufacturers of soft drinks, by value and volume, in Great Britain.
InterContinental Hotels Group offers information and online reservations for all its hotel brands at www.ichotelsgroup.com and information for the Priority Club Rewards programme at www.priorityclub.com.
For the latest news from InterContinental Hotels Group, visit our online Press Office at www.ihgplc.com/media.
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