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Third Quarter and Nine Months Results to 30 September 2004


  Third Quarter Nine Months
30 Sept
30 Sept
change (actual currency)
change (constant currency)
30 Sept
30 Sept 2003
change (actual currency)
change (constant currency)
- Turnover 377 387 (2.6)% 3.5% 1,112 1,095 1.6% 6.9%
- EBItdA 113 117 (3.4)% 4.9% 303 269 12.6% 21.3%
- Operating profit 76 76 - 8.2% 189 151 25.2% 35.9%
Soft Drinks                
- Turnover 186 182 2.2% 2.2% 552 517 6.8% 6.8%
- EBItdA 39 36 8.3% 8.3% 103 97 6.2% 6.2%
- Operating profit 26 27 (3.7%) (3.7%) 66 66 - -
- Turnover 563 569 (1.1%) 3.0% 1,664 1,612 3.2% 6.9%
- EBItdA 152 153 (0.7%) 5.0% 406 366 10.9% 16.9%
- Operating profit 102 103 (1.0%) 4.9% 255 217 17.5% 25.0%
- Profit before tax 97 93 4.3%   240 185 29.7%  
Earnings per share (pence)                
- Basic 11.0 * -   48.0 * -  
- Adjusted 10.0 8.1 23.5%   24.0 15.7 52.9%  
Note: EBItdA, operating profit, profit before tax and adjusted earnings per share are stated before exceptional items. Britvic is operating a 53 week year in 2004 with the additional week falling in the third quarter. Constant currency stated at 2003 exchange rates
* Not stated as no direct comparables

Strong EPS growth and solid constant currency trading performance:

  • Adjusted earnings per share grew by 23.5% in the third quarter and by 52.9% year to date.
  • In constant currency terms, Hotels third quarter turnover was up 3.5% and operating profit up 8.2%, but the weak dollar adversely affected profit in sterling terms.
  • As highlighted previously, the results are also affected by bonus costs in the quarter compared to the same quarter last year when bonuses were not accrued, as well as continuing weakness in certain major Continental European locations.
  • October trading was strong and the full year outlook remains positive and in line with company expectations.

Ongoing progress on strategy with hotel sales on track, return of funds on schedule and refinancing of Group debt

  • The company is well advanced in the sale process of the Americas hotels and encouraging progress is also being made on the sale of the other hotels on the market.
  • Special dividend of £500m planned to be paid 17 December 2004.
  • New £1.6bn syndicated committed banking facility announced on 11 November 2004 to provide more flexible and certain financing with reduced costs. Tender offer launched to buy back €600m Eurobond due 2010 and announcement of the redemption of the remaining £18m sterling bonds due 2007.

Commenting on the results, David Webster, Chairman and Interim Chief Executive, InterContinental Hotels Group PLC said:

"Earnings per share were well ahead in the third quarter, but trading was mixed with the Americas and Asia Pacific delivering another solid quarter of growth whilst Continental Europe experienced weak demand in certain markets. Trading in October was strong and the outlook for the full year remains positive and in line with our expectations.

Our asset disposal programme continues to progress well, and we are on track with returning funds to shareholders and improving the capital structure of the group. The search for a new CEO is well underway. We remain committed to executing our strategy and we are delivering on it.”

Trading and Operating Overview: strong EPS growth and profit growth in Americas and Asia Pacific

  • Adjusted earnings per share up by 23.5% for the quarter driven by reduced debt, lower year-on-year tax rate and the ongoing benefit of the share buyback programme.
  • Hotels operating profit in sterling was flat for the quarter, against strong 2003 comparables:
    • Americas operating profit up 12% from $75m to $84m, driven by strong growth in the managed and franchised businesses as a result of strong RevPAR growth across all brands and the Candlewood brand acquisition. Sterling operating profit was down 2% from £47m to £46m in the quarter.
    • EMEA operating profit down 6% from £36m to £34m, with weak market demand impacting large owned and leased properties in certain locations such as Cannes, Frankfurt and Paris. The UK has continued to grow through the third quarter.
    • Asia Pacific operating profit up 80% from $5m to $9m, against a SARS impacted 2003, with InterContinental Hong Kong gaining market share and strong RevPAR growth in China.
    • Regional and central overheads of £25m, versus £24m in 2003. Full year total overhead forecast still flat year on year at constant currency.
    • As highlighted previously, these results have been impacted by the phasing of bonus costs in the quarter which were not charged in 2003, causing a quarter-on-quarter variance of approximately £10m across regional and central costs.
  • Room revenue delivered to IHG’s hotels through IHG’s reservation channels was up 19.8% to $1.09bn in the third quarter 2004:
    • 37.3% of total rooms revenue delivered through IHG’s channels in the quarter.
    • Internet channel revenue growth of 36.2% in the quarter and an increase in share of web delivery through IHG’s own sites to 80%; internet revenue represented 12.9% of total system revenue for IHG in the quarter.
  • Revenue to IHG’s hotels from Priority Club Rewards members was up 12.2% to $841m in the third quarter 2004:
    • 28.1% of room nights booked by Priority Club Rewards members in the quarter versus 27.6% in the same period in 2003.
  • At a gross level, almost 18,000 rooms (4.5% annualised growth) added to system year-to-date, offset by planned terminations in the US Holiday Inn estate and disposals, to give net growth of 599 rooms.
  • Global pipeline growth of 10.0% from 70,500 rooms at 30 September 2003 to 77,500 at 30 September 2004.
  • Previously announced payment of £51m was made into InterContinental Hotels UK pension fund in October 2004.
  • Improvements in key financial metrics, with annual Return on Capital Employed now up by 1.1% to 5.6% and strong pre-disposal cashflow generation of £146m in the quarter against £123m in same period of 2003.

Strategic overview: hotel sales on track, return of funds on schedule and refinancing of group debt

  • The company is well advanced in the sale process of the Americas hotels and encouraging progress is also being made on the sale of the other hotels on the market.
  • Cost savings on track.
  • £239m of the initial £250m share buyback announced March 2004 is now complete, with 43.9m shares repurchased at an average price per share of £5.44 as of 22 October 2004. Special dividend of £500m planned to be paid 17 December 2004; record date 10 December 2004, as stated in a shareholder circular issued 16 November 2004.
  • New £1.6bn syndicated banking facility announced 11 November 2004, which will provide flexible committed funding for the medium term with reduced financing costs. The facility will be used to fund, inter alia, a repurchase of the €600m Eurobond and the redemption of the outstanding £18m Eurobond due 2007.

Britvic: revenue growth of 2.2% against difficult comparables; continued investment in the business

  • Strong performance in the quarter given the considerably poorer summer weather experienced in 2004 versus last year. As a result of continued investment in the business, operating profit was marginally down, at £26m. During the third quarter, Britvic gained market share.

Current Trading

  • RevPAR growth is still predominantly occupancy-led but with some growth beginning to come from rate as expected at this stage in the recovery. There has been strong growth in individual corporate traveller volumes. October results show strong trading and the full year outlook remains positive and is in line with company expectations.

For further information, please contact:

Investor Relations (Gavin Flynn): +44 (0) 1753 410 176
+44 (0) 7808 098 972
Media affairs (Dee Cayhill/Leslie McGibbon): +44 (0) 1753 410 423
+44 (0) 7808 094 471

Teleconference for Analysts
A teleconference with David Webster (Chairman and Interim Chief Executive) and Richard Solomons (Finance Director) will commence at 9.00 am (London time) on 23 November. 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 Tel: +44 (0)1452 562717
UK dial-in Tel: 0800 073 8968
US dial-in Tel: 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 2157550#

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

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 536,000 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 program, 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.

For the latest news from InterContinental Hotels Group, visit our online Press Office at

Appendix 1: Selected RevPAR performance (comparable, year on year change)
  July August Sept Quarter 3 Oct Ytd (Jan-Oct)
IC O&L 11.4% 10.4% 2.9% 7.9% 6.2% 8.9%
CP NA (system) 5.5% 6.6% 8.8% 6.9% 13.1% 7.9%
HI NA (system) 4.7% 0.3% 10.8% 4.9% 6.5% 5.3%
Express NA (system) 5.6% 1.5% 13.6% 6.5% 8.4% 6.9%
IC O&L (7.4%) (5.0%) (8.6%) (7.0%) 2.3% (0.2%)
HI UK Regions 4.8% 3.0% 3.8% 3.9% (4.3%) 4.5%
HI UK London 17.5% 11.8% 7.9% 12.3% 8.2% 17.2%
Asia Pacific            
IC O&L (v 2003) 53.7% 44.5% 23.0% 37.8% 15.0% 51.8%
IC O&L (v 2002) 25.3% 29.5% 26.9% 27.3% 12.3% 16.3%

Appendix 2: Disposal detail

Total hotels disposed or for sale: 137 hotels, £2.2bn (being net book value plus proceeds on assets sold)

Sold to date: 30 hotels (4,404 rooms), sale proceeds of £337m

Hotel Rooms
IC MayFair, UK 289
IC Central Park South, USA 208
CP Midland Manchester, UK 303
CP Vanuatu, Vanuatu 140
HI South Bend, USA 229
HI Sheffield West, UK 138
HI Middlesbrough/Teeside, UK 134
HI Gatwick Crawley, UK 217
HI Preston, UK 129
HI Newcastle, Aus 72
HI Adelaide, Aus 193
HI Darwin, Aus 183
Posthouse Epping, UK 79
SBS Houston Galleria, USA 93
SBS San Antonio, USA 118
SBS Myrtle Beach, USA 119
SBS Burlington, USA 141
SBS Columbia, USA 118
SBS Atlanta Perimeter, USA 143
SBS Denver, USA 115
SBS Charlotte, USA 117
SBS Austin, USA 121
SBS Auburn Hills, USA 118
SBS Carmel Mountain, USA 116
SBS Fort Lauderdale, USA 141
SBS Portland, USA 117
SBS Boston, USA 133
SBS Sorrento, USA 131
SBS Alpharetta, USA 118
SBS Eatontown, USA 131

Currently on market: 107 hotels, net book value of £1.9bn; estimated 2004 EBIT of approximately £95m; EBItdA of £164m:

20 hotels in the Americas, net book value £505m; estimated 2004 EBIT of approximately £16m; EBItdA of £41m;

Comprising: CP United Nations, New York; IC Miami; IC Chicago; 17 others

12 hotels in EMEA, net book value £256m; estimated 2004 EBIT of approximately £11m; EBItdA of £17m:

Comprising: IC Paris, IC Edinburgh; 10 others

75 hotels in UK, net book value £1.1bn; estimated 2004 EBIT of approximately £68m; EBItdA of £106m:

Comprising: HI Mayfair; HI Kensington; major part of UK portfolio

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Last updated 25 January 2008

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