Share price


-29.00p / -0.87% / View details

Fourth Quarter and Full Year Results to 31 December 2004


  Fourth Quarter
12 months
31 Dec 2004
31 Dec 2003
change (actual currency)
change (constant currency)
31 Dec 2004
31 Dec 2003
proforma m
change (actual currency)
change (constant currency)
- Turnover 386 392 (1.5)% 3.2%   1,498 1,487 0.7% 5.9%
- EBItdA 98 88 11.4% 17.8%   401 357 12.3% 20.4%
Operating profit 62 49 26.5% 36.9%   251 200 25.5% 36.1%
Soft Drinks                  
- Turnover 154 157 (1.9)% -   706 674 4.7% -
- EBItdA 25 27 (7.4)% -   128 124 3.2% -
Operating profit 14 17 (17.6)% -   80 83 (3.6)% -
- Turnover 540 549 (1.6)% 1.7%   2,204 2,161 2.0% 5.6%
- EBItdA 123 115 7.0% 13.2%   529 481 10.0% 16.0%
- Operating profit 76
66 15.2% 22.9%
  331 283 17.0% 24.5%
Profit before tax 69 59 16.9% -   309 244 26.6% -
Earnings per share (pence)                  
- Basic (6.7) * - -   42.1 * - -
- Adjusted 8.5 5.2 63.5% -   32.5 20.8 56.3% -

Note 1: EBItdA, operating profit, profit before tax and adjusted earnings per share are stated before exceptional items. * Not stated as no direct comparables
Note 2: 2004 :$ exchange rate of 1.82; fourth quarter :$ exchange rate of 1.84

Strong results for 2004 and further strategic progress towards managed & franchised business model

  • Strong results with Hotels operating profit up 26% (36% in constant currency) to 251m in the year and 27% (37% in constant currency) to 62m in the fourth quarter, as recovery continued in the US, the UK and Asia Pacific:
    • Adjusted earnings per share increased by 56% to 32.5p in the year and by 63.5% to 8.5p in the fourth quarter.
    • Final dividend raised by 6%, to 10.0p per share from 9.45p in 2003.
  • Continued strengthening of brand value proposition to franchisees and owners:
    • RevPAR outperformance in many segments, with strength in the UK and in US InterContinental and Crowne Plaza.
    • Further brand innovation programmes successfully introduced.
    • Rooms revenue delivered through reservation channels and Priority Club Rewards up 23% and 18% respectively.
    • 16% pipeline growth to 82,900 rooms, the largest of any major hotel company.
  • Asset sale programme progressing well with c. 750m sold or under contract already, at prices slightly ahead of net book value, including majority of US portfolio. Significant majority of sales converted to management contracts. Furthermore:
    • Sale of 73 UK hotels for a price of 1bn before transaction costs, with attractive management contracts; net asset value of 1.02bn (see separate announcement today).
  • To date 767m of funds returned to shareholders, of 1bn announced:
    • Further 1bn return of funds announced today (see separate announcement).

David Webster, Chairman, InterContinental Hotels Group PLC commented on results for the year and trading:

"These results show strong trading for last year and the outlook for 2005 is positive. Our excellent portfolio of brands continues to out perform the market in many key locations. The agreed sale of our UK portfolio announced today for 1billion and the promise of a return of a further 1billion to shareholders demonstrates we are firmly on track with our strategy. I am delighted to welcome Andrew Cosslett, our new Chief Executive and I look forward to the business continuing to move ahead strongly."

Andrew Cosslett, recently joined Chief Executive, InterContinental Hotels Group PLC, commented:

"I am delighted to have joined a great business with a world class family of brands. We continue to deliver on our strategy of focusing on managing and franchising as the latest asset sale and conversion today shows. I look forward to working with my colleagues as we build our position as the leading hotel brand owner in this exciting growth industry."

Trading and Operating Overview: continued strong performance

  • Group operating profit up 17%; adjusted earnings per share up 56% aided by the low tax charge and the ongoing benefit of the share buyback programme.
  • Hotels operating profit up 26%; 36% on a constant currency basis:
    • Americas operating profit up 13% from $262m to $296m, driven by continued strong RevPAR gains in New York and 9% profit growth in franchise business; sterling profit up 1% after the impact of the weaker US dollar. Our upscale brands performed well with InterContinental and Crowne Plaza gaining share and Crowne Plaza adding more new hotels this year than at any time in the last 5 years. Holiday Inn and Express continued to maintain both market share and a solid RevPAR premium to their segments.
    • EMEA operating profit up 29% from 92m to 119m, driven by market share gains in the UK, the ongoing recovery of the Le Grand InterContinental, Paris and growth across all business models. As previously disclosed, performance was helped by high levels of liquidated damages of 4m in the first half of 2004.
    • Asia Pacific operating profit up 105% from $19m to $39m, driven by the strong performance in China and of the InterContinental Hong Kong versus weak comparables of the SARS-affected 2003. Operating profit has now recovered to 2002 levels.
    • Total 2004 overheads (including regional and central costs) flat on 2003 at constant currency, in line with forecast.
  • More than 24,000 rooms were added to our system globally in the year demonstrating the continued attraction of our brands to owners. After IHG-initiated action against non-performing owners or low quality hotels, system size reduced by a net 2,000 rooms.
  • Global hotel pipeline growth of 16% from 71,200 rooms at 31 December 2003 to 82,900 at 31 December 2004; now the largest of any major hotel company.
  • Rooms revenue generated for hotels in IHG's system through reservation channels up 23% from $3.3 bn to $4.0bn, strengthening brand and value proposition to franchisees and owners:
    • 38% of total rooms revenue now generated through reservation channels versus 35% in 2003.
    • Internet bookings up 44%, to $1.4bn. Web delivery through IHG's own sites increased to 81% from 77% in 2003; internet revenue now represents 13% of total system revenue for IHG (10% in 2003).
  • Revenue generated for IHG hotels by Priority Club Rewards members up 18% year on year from $2.7bn to $3.2bn:
    • 30% of system rooms revenue now generated by Priority Club Rewards members versus 29% in 2003.
    • 23.7 million members, up 23% year on year, and the largest of any hotel loyalty programme.
  • Effective P&L tax rate for 2004 of 16% and cash tax rate of 11%. P&L and cash tax rates for 2005 expected to be materially higher (c. 30%) as the disposal programme continues and a higher share of profits are earned in the US.
  • Capital expenditure remained under tight control with full year 2004 spend (actual and deferred) for Hotels of 225m (187m cash spend) against forecast of 250m and 2003 spend of 299m. 2005 hotels capital expenditure is expected to be c. 220m, excluding 38m deferred 2004 spend, but including the significant renovation and relaunch of the InterContinental London. This project is expected to have a c. 10m impact on operating profit in 2005.

Strategic overview: continued progress on brands, sales of assets and conversion to management contracts and return of funds

  • Further brand innovation programmes successfully introduced (e.g. Crowne Plaza Sleep Advantage, Holiday Inn Nickelodeon). Launch of Hotel Indigo brand with 1 open and 3 now in pipeline. Global roll out of Express by Holiday Inn brand continues, with launch in China.
  • Continued asset sales with associated management and franchise contracts:
    • Approximately 750m of assets sold or under contract, at values slightly ahead of net book value, including majority of US portfolio in two transactions with HPT and Strategic Hotels Corporation.
    • Sale of substantially all of the UK estate agreed with LRG Acquisition Limited (a consortium consisting of Lehman Brothers Real Estate Partners, Government of Singapore and Realstar Asset Management) for 1bn. Continuing brand distribution secured on significant majority of hotels with conversion to management contracts for 20 years duration and 2 extension options of 5 years each. Expected management fees from these contracts are expected to be in the order of 12m in the first full year, with additional performance related fees to follow in the future.
    • The remaining 360m of hotel assets on the market include 85m in the Americas and the InterContinental Paris which is progressing well.
    • In total, more than 1.75bn of hotels sold of more than 2.1bn announced for disposal with contracts retained on 88% of hotels sold.
  • Ongoing commitment to returning funds to shareholders, with 767m returned to date:
    • Initial 250m share buyback announced March 2004 is now complete, with 45.6m shares repurchased at an average price per share of 548p.
    • Special dividend of 501m paid 17 December 2004.
    • Second buyback programme of 250m has commenced with 2.5m shares purchased to date for 16.5m at an average price per share of 647p.
    • Further 1bn return of funds announced today. Details of a capital restructuring and the proposed method of returning funds will be contained in a circular to be sent to shareholders in due course. Subject to receipt of shareholder approval, completion of disposal transactions and there being no material adverse change in market conditions it is planned to complete the capital restructuring by the end of June 2005 and to return funds to shareholders as soon as practicable thereafter.
    • With 2bn committed to be returned, IHG has now delivered to shareholders funds equivalent to 80% of the market capitalisation at Separation in April 2003.
    • Final dividend raised by 6%, to 10.0p per share from 9.45p in 2003.
  • IFRS reporting will take effect from our 2005 Q1 results announcement and details of expected changes will be included in the presentations accompanying this release, including 2004 quarterly results in IFRS format. A conference call for Q&A on this issue will be held on 11 March 2005 (details below).

Britvic: turnover up 5%; market share gains; profits affected by investment in the business and poor weather

  • Turnover up 5% from 674m to 706m for the full year with volume up 2%, a strong performance against an exceptional 2003 result. Gains in volume and value share in carbonates, adult and fruit drinks, with J2O and Fruit Shoot performing particularly well. J2O now largest and fastest growing adult soft drink and Fruit Shoot number one children's fruit drink in take-home market.
  • Operating profit down 4% for the year, while fourth quarter profit was down to 14m from 17m in 2003. The profit performance was impacted by continued investment in existing and new brand extensions, investment in IT and business infrastructure of more than 5m, pension costs in the fourth quarter, and the poorer weather in 2004 (management estimate that the exceptional weather in 2003 enhanced profits by 5m in that year). Underlying profit growth remains strong at more than 10% p.a. from 2002 - 2004.
  • 2005 has started positively with volume increases over the previous year; several key initiatives in place to drive profit growth in 2005 including new brand initiatives for Tango and Robinsons and tight cost controls.
  • Capital expenditure in 2004 was 70m, in line with forecast, including the acquisition of Ben Shaw's water business and significant investment in systems and business processes. Capital expenditure is expected to reduce to 50-60m in 2005.

Hotels Current Trading

  • Encouraging performance in US:
    • Express, Holiday Inn showing rate growth; Crowne Plaza RevPAR growing strongly driven by strong meeting segment performance; InterContinental strong in key cities (e.g. New York).
  • UK and London showing strong RevPAR growth, driven by corporate segment.
  • Continued weakness in some Continental European markets (e.g. France, Benelux); Germany showing positive signs.
  • IHG's powerful position in the Middle East continues to deliver positive results.
  • InterContinental Hong Kong had a good start to the year with double-digit RevPAR growth; mainland China also strong.
  • Booking lead times remain short but forward bookings well up on 2004.

View the full announcement in pdf format.

For further information, please contact:
Investor Relations (Gavin Flynn, Paul Edgecliffe-Johnson): +44 (0) 1753 410 176
+44 (0) 7808 098 972
Media Enquiries (Leslie McGibbon): +44 (0) 1753 410 425
  +44 (0) 7808 094 471

Presentation for Analysts and Shareholders
A presentation with David Webster (Chairman), Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.30 am (London time) on 10 March 2005 at Crowne Plaza London - The City. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.30 am (London time).

Presentation for Media
A presentation with David Webster, Andrew Cosslett and Richard Solomons will commence at 11.30 am (London time) on 10 March 2005 at Crowne Plaza London - The City. There will be an opportunity to ask questions. The presentation will conclude at approximately 12.15 pm (London time).

There will be a live audio webcast of the results presentation on the web address The webcast of the presentation is expected to be on this website later on the day of the results and will remain there for the foreseeable future.

Q&A Call
There will be a call, primarily for US investors and analysts, at 2.30pm (London time) on 10 March 2005 with David Webster and Richard Solomons available to answer questions on the results.

International dial-in +44 (0)1452 562716
UK dial-in 0800 073 8967
USA dial-in 1866 832 0717

There will be a call at 9.00am (London time) on 11 March 2005 with Richard Solomons and Ralph Wheeler (Financial Controller) available to answer questions on the impact on IHG's financial reporting of IFRS.

International dial-in +44 (0)1452 562716
UK dial-in 0800 073 8967
USA dial-in 1866 832 0717

Appendix 1: Selected RevPAR performance (comparable, year on year change)

  Oct Nov Dec   Q4 Jan 2004 (Jan-Dec)
IC O&L 6.2% 1.4% 8.0%   5.1% 7.7% 8.1%
CP North America 10.6% 5.3% 6.1%   7.5% 6.2% 7.9%
HI North America 6.5% 5.1% 5.4%   5.8% 6.6% 5.3%
Express North America 8.3% 10.8% 8.1%   9.1% 9.6% 7.3%
IC O&L 2.3% 7.6% 8.0%   6.1% 4.7% 1.0%
HI UK Regions (4.3%) 7.7% 2.5%   1.7% 4.5% 4.7%
HI UK London 8.2% 12.1% 9.1%   9.8% 13.4% 16.0%
Asia Pacific              
IC O&L 15.0% 31.6% 27.4%   24.0% 52.7% 46.7%

Appendix 2: Disposal detail

Total hotels disposed or for sale: 137 hotels, 2.1bn (being net book value plus proceeds on assets sold)

Sold to date: 121 hotels (23,000 rooms), sale proceeds of 1.75bn

Currently on market: 16 hotels, net book value of 360m; 2004 EBIT of approximately 12m; EBItdA of 24m:

5 hotels in the Americas, net book value 85m; 2004 EBIT of approximately nil; EBItdA of 6m;

Comprising: InterContinental San Francisco; 4 others

11 hotels in EMEA, net book value 275m; 2004 EBIT of approximately 12m; EBItdA of 18m:

Comprising: InterContinental Paris, Crowne Plaza Brussels , 4 others in Europe, InterContinental Edinburgh, 4 others in UK & Ireland

Appendix 3: Assets sold since previous quarterly announcement not disclosed separately:

Holiday Inn Swansea
Holiday Inn Plymouth

In total 2 assets with proceeds of 7m and associated Revenue of 5m, EBItdA of 1m and EBIT of 1m

Appendix 4: Investor information for 2004 final dividend

Ex-dividend Date: 30 March 2005

Record Date: 1 April 2005

Payment Date: 3 June 2005

Note to Editors:

InterContinental Hotels Group PLC of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world’s most global hotel company and the largest by number of rooms. InterContinental Hotels Group owns, manages, leases or franchises, through various subsidiaries, more than 3,500 hotels and 534,000 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 more than 23 million members worldwide. In addition to this, InterContinental Hotels Group has a controlling interest in Britvic, the second largest soft drinks manufacturer in the UK.

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

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.