* 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."
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.
IHG maintains its focus on enhancing the quality of its portfolio, in conjunction with growth.
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 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.
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 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%.
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 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.
IHG continues to demonstrate the strength of its revenue delivery to hotel owners through its reservation channels and loyalty programme, Priority Club Rewards:
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.
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.
|Number of hotels||Proceeds||Net book value|
|Disposed since April 2003||178||£3.0bn||£2.9bn|
* As at 14 August 2007, post disposal of InterContinental Montreal, announced 12 July 2007
For a full list please visit www.ihg.com/Investors
|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|
|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|
|Continuing operating profit pre central overheads||149||143||111||109||24||18||14||16|
|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|
|Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant currency**|
* Sterling actual currency
** Translated at constant 2006 exchange rates
*** After Central Overheads
|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 www.vismedia.co.uk . 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 www.ihg.com/interims07. 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|
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|
WebsiteThe 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 www.ihg.com/interims07
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 www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com. For the latest news from IHG, 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 ‘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