*See appendix 5 for definition. All figures and movements unless otherwise noted are at actual exchange rates and before exceptional items. See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4.
“IHG delivered a good performance in the first quarter of 2008. Growth in revenue per available room (RevPAR) of 3.5% was solid given the adverse impact of the timing of Easter. We increased the number of rooms in our system by over 5,200, more than twice the increase in the first quarter of 2007. We signed over 150 hotels into our development pipeline which now stands at over 1,700 hotels, giving good visibility on future openings.
“We continue to focus on strengthening our brands. The response from our owner community to the Holiday Inn relaunch has been very encouraging and we now have 21 hotels operating with some or all of the elements of the new brand standards and identity ahead of our full roll out which begins in the summer.
“Even in a less certain economic environment our broad market coverage, record pipeline, strong brands and resilient fee based business model position us well for continued growth.”
RevPAR increased 2.3%, driven by rate, with RevPAR growth of 4.6% in the first two months of the year and a 1.2% decline in March due to the timing of Easter. Continuing revenue grew 14% from $201m to $230m, driven by 11% growth in revenues from owned and leased hotels and 16% growth in managed and franchised revenues. Excluding the impact of $13m liquidated damages, continuing revenues grew 8%.
Operating profit from continuing operations increased 20% to $112m. Excluding the impact of $13m liquidated damages, continuing operating profit grew 6%. Continuing owned and leased hotel profit increased by $3m to $7m driven by ongoing improvement in trading at the InterContinental Boston, which opened in November 2006 and 10% RevPAR growth at the InterContinental New York. Managed hotel profit increased $12m to $23m including the liquidated damages, and franchised hotel profit increased $4m to $97m.
RevPAR increased 5.9%, driven by rate, with RevPAR growth of 9.1% in the first two months and 0.8% in March. The Middle East continued to perform strongly, growing RevPAR by 20.2%. Continental Europe grew RevPAR by 5.7%, including a 12.3% increase in France. In the UK, Holiday Inn and Holiday Inn Express outperformed their market segment recording RevPAR growth of 1.5%. Continuing revenues increased 18% driven by 29% growth in managed and franchised revenues.
Operating profit from continuing operations increased £8m to £15m. The contribution from continuing owned and leased hotels increased by £4m to £2m, driven by RevPAR growth of 11.9% at the InterContinental Paris Le Grand and continued improvement in trading at the InterContinental London Park Lane following the completion of its refurbishment in June 2007. Managed hotel profit increased by 38% from £8m to £11m reflecting the increase in number of hotels under management and strong growth in the Middle East. Franchised hotel profit increased from £6m to £7m reflecting 3.8% RevPAR growth and 9.1% net rooms growth.
RevPAR increased 5.1%, driven by rate, with RevPAR growth of 6.1% in the first two months and 3.4% in March. InterContinental and Holiday Inn brand performance were strongest with 7.3% and 9.4% RevPAR growth respectively. Greater China RevPAR increased 3.2%, driven by both occupancy and rate growth. Continuing revenues increased 16% to $72m.
Operating profit from continuing operations increased 31% to $17m. Owned and leased hotel operating profit increased $2m to $10m driven by RevPAR growth of 9.2% at the InterContinental Hong Kong after completion of its rolling refurbishment at the end of 2007. Managed hotel profit increased $5m to $14m driven by the contribution from the increasing number of hotels under IHG management in the region.
In the first quarter aggregated regional overheads increased £1m to £17m and central costs increased £1m to £18m.
Based on the position at the end of the quarter the tax charge on profit from continuing and discontinued operations, excluding the impact of exceptional items, has been calculated using an estimated effective annual tax rate of 29% (Q1 2007: 28%). As previously disclosed, the effective tax rate in 2008 is expected to be in the mid to high 20s and then will trend upwards over time.
As previously announced IHG will make a non-recurring revenue investment of £30m to accelerate implementation of the global relaunch of the Holiday Inn brands, which will be treated as an exceptional item. £3m has been charged in the period.
IHG’s net debt at the period end was £845m, including the $200m (£101m) finance lease on the InterContinental Boston.
1.6m shares were repurchased under IHG’s buyback programme during the first quarter, at a cost of £13m, leaving £87m of the current buyback programme to be completed.
After the period end, IHG sold its 17% interest in the Crowne Plaza Amsterdam City Centre for €18m (£14m) including a €6m (£5m) agreed settlement for the previous management contract and €2m (£1m) repayment of existing loans. IHG will continue to manage the hotel under a new 40 year management contract including renewals.
|Number of hotels||Proceeds||Net book value|
|Disposed since April 2003||181||£3.0bn||£2.9bn|
For a full list please visit www.ihgplc.com/investors
|Net room additions||2,920||1,798||549||5,267|
|Three months to 31 Mar £m||Total||Americas||EMEA||Asia Pacific||Central|
|Franchised operating profit||57||55||49||48||7||6||1||1|
|Managed operating profit||29||19||11||6||11||8||7||5|
|Continuing owned and leased operating profit||11||4||4||2||2||(2)||5||4|
|Continuing operating profit pre central overheads||80||62||56||48||15||7||9||7|
|Continuing operating profit||62||45||56||48||15||7||9||7||(18)||(17)|
|Discontinued owned and leased operating profit||2||1||2||1||-||-||-||-|
|Total operating profit||64||46||58||49||15||7||9||7||(18)||(17)|
|Actual currency*||Constant currency**||Actual currency*||Constant currency**||Actual currency*||Constant
|Actual currency*||Constant currency**|
* Sterling actual currency.
** Translated at constant 2007 exchange rates.
*** After Central Overheads.
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.
|Investor Relations (Heather Wood; Catherine Dolton):||+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.
A conference call with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director) will commence at 9.30 am (London time) on 7 May. There will be an opportunity to ask questions.
|International dial-in:||+44 (0)1452 556 518|
|UK Free Call:||0800 694 8084|
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 43988921#
|International dial-in:||+44 (0)1452 55 00 00|
|UK Free Call:||0845 245 5205|
There will also be a conference call, primarily for US investors and analysts, at 10.00 am (Eastern Standard Time) on 7 May with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.
|International dial-in:||+44 (0)1452 556 518|
|US Toll Free:||1866 966 4782|
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 43989314#
|International dial-in:||+44 (0)1452 55 00 00|
|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 Wednesday 7 May. The web address is www.ihg.com/Q1
InterContinental Hotels Group PLC (IHG) of the United Kingdom [LON:IHG, NYSE:IHG (ADRs)] is one of the world's largest hotel groups by number of rooms. IHG owns, manages, leases or franchises, through various subsidiaries, over 3,980 hotels and more than 590,000 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 37 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.ihg.com/media
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.
Last updated 07 May 2008