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Interim Results 2007


  • Continuing revenue up 12% from £377m to £422m, up 20% at constant currency.
  • Continuing operating profit up 5% from £106m to £111m, up 17% at constant currency.
  • Operating profit including discontinued operations of £116m.
  • Global constant currency RevPAR growth of 7.0%.
  • Total gross revenue* from all hotels in IHG's system up 12% at constant currency to $8.3bn.
  • Franchised operating profit of £122m, up 13% at constant currency. Managed operating profit of £42m, up 2% at constant currency (up 8% excluding one hotel in the Americas.)
  • Adjusted continuing earnings per share up 16% from 19.2p to 22.3p. Basic earnings per share of 32.2p.
  • Interim dividend up 12% to 5.7p.
  • Room count up by 7,430 rooms to 563,676. Room openings of 20,713, room removals of 13,283.
  • Signings up 32% to 54,246 rooms. Development pipeline up by 29,496 rooms to 187,487 (1,414 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:

"The company has had a good first half. Signings continue to run at record levels with almost 55,000 rooms signed into our development pipeline. Strong demand with relatively low levels of new supply is driving up room rates and our brands continue to outperform the market in most of our major regions and geographies. Our outlook for the year is positive."

Increase in development pipeline and rooms open

In the first half a record 54,246 rooms were signed and 7,430 net rooms added, with a closing pipeline of 187,487 rooms, giving IHG further confidence that it will exceed its target of 50,000-60,000 net organic room additions by the end of 2008 from the 30 June 2005 starting position.

  • 54,246 rooms were signed in the first half; 32,220 in the Americas, 9,324 in EMEA and 12,702 in Asia Pacific.
  • 187,487 rooms are now in the pipeline, up 29,496 (19%) since the start of the year, at 1,414 hotels.
  • IHG’s development activity in EMEA gained pace, with 9,324 room signings (51 hotels) and 3,181 room openings.
  • IHG’s development activity in Asia Pacific continues to be successful. In Greater China 32 hotels, 10,370 rooms, were signed in the first half, these were two InterContinentals, 15 Crowne Plazas, six Holiday Inns and nine Holiday Inn Expresses.
  • IHG’s presence in the upscale segment was further enhanced with record signings. InterContinental signings maintained momentum from 2006 with 16 hotels signed (4,597 rooms) including nine in EMEA. The InterContinental pipeline of hotels to be opened now stands at 50. Crowne Plaza signed 39 hotels (12,117 rooms) in the first half, and maintains its position as the fastest growing upscale brand in Asia.

IHG maintains its focus on enhancing the quality of its portfolio, in conjunction with growth.

  • 20,713 rooms opened; 14,727 in the Americas, 3,181 in EMEA and 2,805 in Asia Pacific.
  • 13,283 rooms exited; 9,574 in the Americas, 2,672 in EMEA and 1,037 in Asia Pacific.
  • The room count at the end of the period increased by 7,430 rooms to 563,676, more than double the net room additions in the first six months of 2006.

Americas: strong performance across all brands

Revenue performance

RevPAR increased 6.3% with rate generating all of the increase. InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express each outperformed their market segments, with RevPAR up 9.5%, 7.4%, 4.9% and 7.8% respectively. Staybridge Suites and Candlewood Suites also showed continued growth, with RevPAR up 4.0% and 2.0% respectively,

Operating profit performance

Operating profit from continuing operations increased 12% from $197m to $220m. Continuing owned and leased hotel operating profit improved from $13m to $16m. The improvement was driven by increased occupancy and rate at the InterContinental New York, which benefited from robust market conditions and growth in market share. The InterContinental Boston made a small loss in the first half, as trading continues to improve post its November 2006 opening. Managed hotels profit fell $2m to $25m after a $3m impact from lower ancillary revenues and higher costs at one hotel, and increased revenue investment to support new signings and openings. Franchised hotels profit increased 13% to $209m reflecting RevPAR growth of 6.2%, net room count growth of 4.1%, and higher fees associated with changes in hotel and room count.

EMEA: solid RevPAR and profit growth

Revenue performance

RevPAR increased 8.1%, driven by increased occupancy and 5.4% rate growth. The Middle East continued to perform strongly, growing RevPAR by 15.7%. Continental Europe delivered a RevPAR increase of 6.5%, with slower growth in Germany due to the benefit of the football World Cup last year. In the UK, Holiday Inn and Express by Holiday Inn outperformed their market segment, recording RevPAR growth of 7.9%.

Operating profit performance

Operating profit from continuing operations increased 33% from £18m to £24m. Continuing owned and leased hotel operations improved £2m to £1m after the impact of refurbishments. The performance of the InterContinental Le Grand Paris continued to improve with a 17.8% RevPAR increase. The InterContinental London Park Lane is now fully operational and trading is encouraging. Managed hotels profit was up 12% from £17m to £19m, benefiting from improved underlying trading and retained management contracts on assets disposed. Franchised hotels profit increased from £12m to £14m reflecting RevPAR growth of 6.8% and net room count growth of 4.9%.

Asia Pacific: outperformance in China

Revenue performance

IHG’s market leading positions in the region have led to further strong growth. RevPAR increased 9.1%, mainly driven by rate. InterContinental, Crowne Plaza and Holiday Inn all performed strongly, with RevPAR up 11.1%, 7.9% and 8.4% respectively. Greater China RevPAR increased 6.2%, driven by rate increases.

Operating profit performance

Operating profit from continuing operations was $27m. Owned and leased hotel operating profit increased 7% to $15m, after the impact of refurbishment activity at the InterContinental Hong Kong. Managed hotels profit was stable at $19m. The contribution from the increasing number of hotels under IHG management was offset by integration costs associated with the ANA joint venture in Japan and continued infrastructure investment in China.

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:

  • $3.2bn of rooms revenue booked through IHG's reservation channels, up 21% and representing 46% of total rooms revenue.
  • $2.5bn of rooms revenue from Priority Club Rewards members, up 15% and representing 35% of total rooms revenue.
  • Internet revenues increased from 15.6% to 16.8% of total rooms revenue, 85% of which was from IHG's own websites.

Overheads, Interest and Tax

Total regional overheads increased £1m to £32m, wholly attributable to Asia Pacific after continued infrastructure investment in China. Central overheads increased 3% to £38m, in line with inflation.

The net interest charge of £12m was significantly ahead of last year, driven by the InterContinental Boston finance lease charge and higher bank borrowings.

The effective tax rate applied for the first half of 2007 is 23%. IHG’s tax rate may be more volatile in the immediate future due to changes in tax legislation, tax case law developments and possible settlements of prior year issues but in the longer term is expected, as previously indicated, to trend upwards.

Disposals and returns of funds

In the first half disposal proceeds of £58m were received. This included the sale of IHG’s 33.3% interest in Crowne Plaza London The City for £19m, and the disposal of Crowne Plaza Santiago for £11m. After the period end, IHG’s 74.11% interest in the InterContinental Montreal was sold for £17m. During the period 2.5m shares were repurchased under IHG’s ongoing buyback programme at a cost of £31m. There were 299m shares outstanding at the end of June, 306m on a fully diluted basis. IHG’s net debt at the period end was £872m including the $198m (£99m) finance lease on the InterContinental Boston. During the first half £709m was paid to shareholders by way of a special dividend with share consolidation and the third £250m share buyback was completed. A previously announced £150m share buyback programme will commence in the second half of this year.

Appendix 1: Asset disposal programme detail

Number of hotels Proceeds Net book value
Disposed since April 2003 178 £3.0bn £2.9bn

Remaining hotels*

21 - £0.9bn

* As at 14 August 2007, post disposal of InterContinental Montreal, announced 12 July 2007
For a full list please visit

Appendix 2: Return of funds programme as at 30 June 2007

Timing Total return Returned Still to be returned
£501m special dividend Paid December 2004 £501m £501m Nil
First £250m share buyback Completed in 2004 £250m £250m Nil
£996m capital return Paid 8 July 2005 £996m £996m Nil
Second £250m share buyback Completed in 2006 £250m £250m Nil
£497m special dividend Paid 22 June 2006 £497m £497m Nil
Third £250m share buyback Completed in 2007 £250m £250m Nil
£700m special dividend Paid 15 June 2007 £709m £709m Nil
£150m share buyback Yet to commence £150m Nil £150m
Total   £3.60bn £3.45bn £0.15bn

Appendix 3: Financial headlines

Total Americas EMEA Asia Pacific Central
Six months to 30 June £m 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
Franchised operating profit 122 117 106 103 14 12 2 2    
Managed operating profit 42 43 13 15 19 17 10 11    
Continuing owned and leased operating profit 17 14 8 7 1 (1) 8 8    
Regional overheads (32) (31) (16) (16) (10) (10) (6) (5)    
Continuing operating profit pre central overheads 149 143 111 109 24 18 14 16    
Central overheads (38) (37) - -   - - - (38) (37)
Continuing operating profit 111 106 111 109 24 18 14 16    
Discontinued owned and leased operating profit 5 21 5 3 - 18 - -    
Total operating profit 116 127 116 112 24 36 14 16    

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

Americas EMEA Asia Pacific Total***
Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency**
Growth 2% 12% 33% 39% (13)% -% 5% 17%
Exchange rates USD:GBP EUR:GBP

*   Sterling actual currency
** Translated at constant 2006 exchange rates
*** After Central Overheads

Appendix 5: Investor information for 2007 interim dividend

Ex-dividend Date: 29 August 2007
Record Date: 31 August 2007
Payment Date: 05 October 2007
Dividend payment: Ordinary shares 5.7p per share: ADRs 11.5c per ADR

For further information, please contact:

Investor Relations (Paul Edgecliffe-Johnson; Heather Ward): +44 (0) 1753 410 176
Media Affairs (Leslie McGibbon; Claire Williams): +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 14 August at Cazenove, 20 Moorgate, London, EC2R 6DA. 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 14 August with 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: 10201520

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 10201520#

International dial-in +44 (0)1452 550000
US Toll Free 1866 247 4222


The full release and supplementary data will be available on our website from 7.00 am (London time) on Tuesday 14 August. The web address is

Note to Editors:

InterContinental Hotels Group PLC (IHG) of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is the world's largest hotel group by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, over 3,800 hotels and almost 564,000 guest rooms in nearly 100 countries and territories around the world. IHG 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 33 million members worldwide.

The company pioneered the travel industry’s first collaborative response to environmental issues as founder of the International Hotels and Environment Initiative (IHEI). The IHEI formed the foundations of the Tourism Partnership launched by the International Business Leaders Forum in 2004, of which IHG is still a member today. The environment and local communities remain at the heart of IHG’s global corporate responsibility focus.

IHG 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 IHG, 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 ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘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 Interim Results announcement (PDF format)

Last updated 25 January 2008

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