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Full Year Results to 31 December 2006



  • Continuing revenue up 13% from £713m to £805m, up 13% at constant exchange rates.
  • Continuing operating profit up 16% from £173m to £201m, up 17% at constant exchange rates.
  • Operating profit of £258m, including other operating income and expenses of £27m.
  • Global constant currency RevPAR growth of 9.8%. Total gross revenue* from all hotels in IHG’s system up 9% to £8.3bn.
  • Franchised operating profit up 10% to £235m. Managed operating profit up 27% to £85m.
  • Adjusted continuing earnings per share up 67% from 22.5p to 37.5p. Basic earnings per share of 104.1p.
  • Further £850m return of funds announced, taking total returns to £3.6bn since March 2004.
  • Final dividend up 24% to 13.3p. Total dividend up 20% to 18.4p.
  • Room count up by 18,713 rooms to 556,246. Now expect to exceed 50,000-60,000 net rooms growth target.
  • Signings up 47% to 102,774 rooms. Development pipeline up by 49,479 rooms to 157,991 (1,241 hotels).

* Total gross revenue is defined as total room revenue 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:
"2006 was a successful year for IHG on all fronts. We outperformed the market and saw a record level of signings for IHG brands. We now expect to exceed our growth target of adding 50,000-60,000 rooms on a net and organic basis by the end of 2008. We have strengthened the business and are executing a clear strategy. We have made a good start to 2007 with the opening of InterContinental Los Angeles and the signing of our 125th hotel in China, the Crowne Plaza Sun Palace Beijing. We continue to be very positive about the Company’s prospects.”

Increase in development pipeline and rooms open
IHG continues to increase its development pipeline, and now expects to exceed its 50,000-60,000 net organic room additions target by the end of 2008 from the 30 June 2005 starting position of 537,675.

  • 102,774 rooms were signed in the year; 61,673 in the Americas, 13,321 in EMEA and 27,780 in Asia Pacific.
  • 157,991 rooms are now in the pipeline, up 49,479 (46%) since the start of the year, at 1,241 hotels.
  • IHG’s development activity in Asia Pacific continues to be successful. In Greater China 39 hotels, 16,445 rooms, were signed in the year, including 8 InterContinentals, 5 Crowne Plazas, 13 Holiday Inns and 13 Holiday Inn Expresses. The 125th hotel in China has now been signed in pursuit of IHG's target of having 125 hotels in China open by the end of 2008. IHG also entered into a joint venture with ANA during 2006; 13 ANA owned hotels, 4,937 rooms, entered the IHG system during December, making IHG the largest international hotel operator in Japan.

IHG maintains its focus on enhancing the quality of its portfolio, in tandem with growth. In 2006:

  • 42,841 rooms opened; 26,613 in the Americas, 4,823 in EMEA and 11,405 in Asia Pacific.
  • 24,128 rooms exited; 18,310 in the Americas, 3,642 in EMEA and 2,176 in Asia Pacific.
  • The room count at the end of the year increased by 18,713 rooms to 556,246.

Disposals and returns of funds

In the year, the sale of 31 Continental European hotels was completed for £680m before transaction costs and $191m was received from the sale of Felcor shares. 28.4m shares were repurchased under IHG’s ongoing buyback programme at a cost of £258m. There were 356m shares outstanding at the end of the year, 366m on a fully diluted basis. IHG’s net debt at the period end was £134m including the $186m (£97m) finance lease on the InterContinental Boston. £850m further return of funds was announced today. £700m will be returned via a special dividend with share consolidation and £150m via a further share buyback programme.

IHG continues to own 25 hotels with a book value of £1bn. The InterContinental brand repositioning introduced in 2006 has accelerated the pace of signings and improved guest preference, and recent research confirms its strong growth potential. IHG will consider the need for continued ownership of each of its owned InterContinental hotels once additional brand representation has been identified in its market and financial results are at the right level to maximise value.

IHG’s strategy envisages a reduction in capital intensity and the return of surplus funds to shareholders. Capital investment in new hotel projects will be made where this creates value by accelerating the development of IHG’s brands. Such investment will be funded largely from the proceeds of hotel disposals with a view subsequently to recycling that capital into other projects.

Americas: strong performance across all brands

Revenue performance
RevPAR increased 9.2% 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 10.4%, 10.4%, 7.4%, 10.7% and 7.4% respectively. Staybridge Suites also showed continued growth, with a 7.1% increase. Holiday Inn’s fourth quarter RevPAR growth was lower, in line with the industry, due to the prior year comparable having benefited from Hurricane Katrina displacement.

Operating profit performance
Operating profit from continuing operations increased 18% from $339m to $399m. Continuing owned and leased hotel operating profit improved from $25m to $26m impacted, as expected, by a $6m loss from InterContinental Boston in its opening year. The underlying improvement of $7m was driven by increased occupancy and rate at the InterContinental Atlanta and InterContinental San Francisco, and increased rate at InterContinental New York. Managed hotels profit was up 39% to $50m, benefiting from improved trading in existing operations and retained management contracts on assets disposed. Franchised hotels profit increased 12% to $382m reflecting RevPAR growth of 9.2% and net room count growth of 4%.

EMEA: RevPAR growth accelerating

Revenue performance
RevPAR increased 12.1%, driven by increased occupancy and 8.5% rate growth. The Middle East continued to perform strongly, growing RevPAR by 19.0%. Continental Europe delivered a RevPAR increase of 9.0%, benefiting from continued improvement across the region, particularly in Germany and France. In the UK, Holiday Inn and Express by Holiday Inn performed in-line with the market segment, recording RevPAR growth of 6.3%.

Operating profit performance
Operating profit from continuing operations increased 16% from £31m to £36m. Continuing owned and leased hotel operations were flat at a loss of £5m. InterContinental Le Grand Paris continued to rebuild its business post refurbishment, delivering a 25.8% RevPAR increase. The refurbishment of InterContinental London Park Lane, which impacted 2006 profit versus 2004 by £18m, is largely complete; the hotel reopened in November 2006 and is expected to be fully operational by Spring 2007. Managed hotels profit was up 19% from £31m to £37m, as a result of improved trading and retained management contracts on assets disposed. Franchised hotels profit decreased from £26m to £24m with an underlying trading improvement outweighed by the non-recurrence of the £7m liquidated damages received in 2005.

Asia Pacific: strong growth

Revenue performance
IHG’s market leading positions in the region have led to further strong growth. RevPAR increased 10.2%, mainly driven by rate. InterContinental, Crowne Plaza and Holiday Inn all performed strongly, with RevPAR up 11.5%, 10.3% and 8.5% respectively. Greater China RevPAR increased 12.1%, driven by rate increases.

Operating profit performance
Operating profit from continuing operations increased 33% from $39m to $52m. Owned and leased hotel operating profit increased 55% to $31m as a result of excellent trading at InterContinental Hong Kong, driven by a 31.8% RevPAR increase. Managed hotels profit increased 34% to $39m, driven by good 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:

  • $5.7bn of rooms revenue booked through IHG's reservation channels, 44% of total rooms revenue, up from 41% in 2005.
  • $4.4bn of rooms revenue from Priority Club Rewards members, 34% of total rooms revenue, up from 32% in 2005.
  • Internet revenues increased from 14% to 16% of total rooms revenue, 86% of which was from IHG's own websites.

Overheads and Tax

Asia Pacific regional overheads increased by £4m to £12m after continued infrastructure investment in China. This was balanced by reductions in the Americas and EMEA which left the aggregated regional overheads up £1m at £64m. As previously indicated, central overheads in the fourth quarter were higher than previous periods at £25m, bringing the total for the full year to £81m, an increase of £16m. This included investment in new global research designed to enable higher quality brand development and enhance IHG’s franchising capability going forward. Central overheads in 2007 are expected to increase in line with inflation.

The effective tax rate for 2006 was 24%. IHG’s tax rate is expected in the long term, as previously indicated, to trend upwards.

Appendix 1: Asset disposal programme detail

  Number of hotels Proceeds Net book
Disposed since April 2003 174 3.0bn 2.9bn
Remaining hotels 25   1.0bn

For a full list please visit

Appendix 2: Return of funds programme as at 31 December 2006

  Timing Total return Returned Still to
be returned
501m special dividendPaid December 2004501m501mNil
First £250m share buybackCompleted in 2004250m250mNil
996m capital returnPaid 8 July 2005996m996mNil
Second £250m share buybackCompleted in 2006250m250mNil
497m special dividendPaid 22 June 2006497m497mNil
Third £250m share buybackUnderway250m219m31m
700m special dividendQuarter 2, 2007700mNil700m
150m share buybackYet to commence150mNil150m
Total  3.59bn2.71bn0.88bn

Appendix 3:  Financial headlines

Twelve months to 31 Dec £m TotalAmericasEMEAAsia PacificCentral
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Franchised operating profit 235214 208186242632  
Managed operating profit8567 272037312116  
Continuing owned and leased operating profit2620 1414(5)(5)1711  
Regional overheads(64)(63) (32)(34)(20)(21)(12)(8)  
Continuing operating profit pre central overheads282238 21718636312921  
Central overheads(81)(65) ------(81)(65)
Continuing operating profit201173 21718636312921(81)(65)
Discontinued owned and leased operating profit3096 4122673-11--
Total operating profit231269 221198621042932(81)(65)

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

 AmericasEMEAAsia PacificTotal***
Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency**
Exchange rates USD:GBP EUR:GBP
*Sterling actual currency
**Translated at constant 2005 exchange rates
***After Central Overheads

Appendix 5: Investor information for 2006 final dividend

Ex-dividend Date: 21 March 2007
Record Date:  23 March 2007
Payment Date: 8 June 2007
Dividend payment: Ordinary shares 13.3p per share: ADRs 25.9c per ADR

For further information, please contact:

Investor Relations (Paul Edgecliffe-Johnson; Heather Ward):   +44 (0) 1753 410 176
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 9.30am (London time) on 20 February at InterContinental London Park Lane, One Hamilton Place, Park Lane W1J 7QY. There will be an opportunity to ask questions. The presentation will conclude at approximately 10.30am (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 7863 6164

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 20 February with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.

International dial-in   +44 (0)1452 562716
US Toll Free 1866 832 0717
Conference ID:7492790

A recording of the conference call will also be available for 7 days. To access this please dial the relevant number below and use the access number 7492790#.

International dial-in  +44 (0)1452 550000
US Toll Free1866 247 4222


The full release and supplementary data will be available on our website from 7.00 am (London time) on Tuesday 20 February. The web address is

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 3,700 hotels and 556,000 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.

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

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
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  • Holiday Inn Resort logo
  • Candlewood Suites logo

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