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Full Year Results to 31 December 2008

Financial results 2008 2007 % change % change (CER)
Total Excluding
Total Excluding
Continuing revenue $1,854m $1,771m 5% 3% 4% 2%
Continuing operating profit $535m $474m 13% 6% 10% 4%
Total adjusted operating profit $549m $491m 12% 5% 9% 3%
Adjusted continuing EPS 117.8¢ 93.8¢ 26%      
Adjusted total EPS 120.9¢ 97.2¢ 24%      
Total basic EPS2 91.3¢ 144.7¢ (37)%      
Total DPS3 41.4¢ 40.7¢ 2%      
Net debt $1,273m $1,659m        

All figures are before exceptional items unless otherwise noted. See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4. (% CER) = change in constant currency.

  1. excluding $33m of significant liquidated damages
  2. Total basic EPS after exceptional items
  3. The 2007 DPS excludes the 400¢ special interim dividend

Business headlines

  • 34,757 net rooms (237 hotels) added taking total system size to 619,851 rooms (4,186 hotels), up 6%.
  • 98,886 rooms signed, including 25,058 rooms (173 hotels) in the fourth quarter.
  • Global constant currency RevPAR growth of 0.9%. IHG brands outperformed in all major markets.
  • Strong free cash flow generation reduces net debt by $386m to $1.3bn. Long term debt facilities refinanced.
  • Final dividend maintained at 29.2¢, equivalent to 20.2p (+36%). Total dividend up 2% to 41.4¢.
  • Exceptional operating charge of $132m including $19m severance costs and $96m impairment charge.

Recent trading

  • Sharp deterioration in fourth quarter trading. Global constant currency RevPAR down 6.5% in Q4. IHG brands outperformed in each region.
  • January global constant currency RevPAR decline of -12.2%; -11.7% in Americas, -11.8% in EMEA and -14.8% in Asia Pacific. Forward bookings data shows no sign of improvement in levels of demand.
  • January signings of 1,713 rooms (13 hotels); January openings of 3,969 rooms (27 hotels).


  • Open rooms. Currently 85,000 rooms under construction, around 50,000 scheduled to open in 2009.
  • Drive share. The $1bn marketing and reservations system fund has been reprioritised.
  • Holiday Inn relaunch. 350 hotels operating under the new standards; c.220 expected conversions in remainder of Q1 2009. Early results from the first relaunched hotels show a RevPAR uplift of 5% compared to a control group.
  • Reduce costs. Major initiative to reduce costs which will keep 2009 regional and central costs $30m below 2008 levels on a constant currency basis, whilst still investing to support growth.

Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:

“We produced good results in 2008 and comfortably exceeded our three year target to add 50,000 to 60,000 net rooms by the end of 2008 - adding over 82,000 rooms. We opened 20% more rooms than in 2007 and signed almost 100,000 rooms into our pipeline.

“The $1 billion Holiday Inn relaunch is progressing well. We will have almost 600 hotels operating under the new standards by the end of the first quarter and are committed to completing the global programme by the end of 2010. The first relaunched hotels show a strong increase in revenue per available room which is a big motivation for other owners to convert.

“The trading environment is very tough. The sharp deterioration that we reported on last November has continued into 2009 and we see no signs of improvement at this stage. It has been clear for some time that 2009 will be a challenging year and we have taken action to prepare the business, including strict management of cash and a significant reduction in costs. The actions we have taken to move the business to an asset light model with strong brands, scale advantage and leading technology and reservation systems position us well to grow market share in the testing times ahead.”

Americas: RevPAR outperformance across all brands

Revenue performance

RevPAR declined (0.2)% in 2008 with rate growth of 3.6% offset by occupancy declines. In the fourth quarter the industry experienced a sharp deterioration in trading; IHG’s RevPAR declined 7.2% with modest rate growth offset by occupancy declines. In the year, IHG’s brands outperformed their market segments in the US. Continuing revenues grew 2% to $920m. Excluding a $13m liquidated damages receipt in the first quarter, continuing revenues grew 1%.

Operating profit performance

Operating profit from continuing operations increased 3% from $440m to $451m. Continuing owned and leased hotels profit increased $1m to $41m driven by RevPAR growth of 0.8% and an improved performance from the InterContinental San Francisco Mark Hopkins. Managed hotel profit was $51m. Excluding the $13m liquidated damages receipt managed hotel profit declined $3m due to a fall in occupancy rates and a small guarantee payment on a new hotel. Franchised hotels profit increased $1m to $426m driven by 5% growth in royalty fees offset by a $20m reduction in fees received for new signings, changes in hotel ownership and hotels leaving the system.

EMEA: Strong performance in the Middle East

Revenue performance

RevPAR increased 3.6% in the year, driven by strong rate growth of 5.4%; in line with the industry RevPAR performance deteriorated in the fourth quarter, declining 5.3%. Throughout the year the Middle East continued to perform strongly, raising RevPAR by 20.2%. IHG hotels in the UK outperformed the market growing RevPAR by 1.2%. Continuing revenues grew 5% to $518m driven by 36% growth in franchised revenues. Excluding the two liquidated damages receipts totalling $16m, continuing revenues grew 2%.

Operating profit performance

Operating profit from continuing operations increased 28% (25% CER) from $134m to $171m. Excluding the $16m liquidated damages receipts, continuing operating profit increased 16% (13% CER). Continuing owned and leased hotel operations increased $12m to $45m primarily due to the increased contribution from the InterContinental London Park Lane. Excluding a $9m liquidated damages receipt in the second quarter managed hotels profit declined $1m. Strong growth across the Middle East and Europe was offset by a reduced contribution from a portfolio of managed hotels in the UK. Franchised hotel profit increased from $58m to $75m driven by a $7m liquidated damages receipt in the third quarter and an 18% increase in royalty fee income.

Asia Pacific: Solid revenue and profit growth

Revenue performance

RevPAR increased 1.6%. Strong rate and occupancy growth in the first nine months of the year was partly offset by a 6.1% decline in RevPAR in the fourth quarter with most sub-regions impacted by the weaker global economy. Greater China RevPAR declined 14% in the fourth quarter due partly to the impact of supply increases in the major cities. Continuing revenues grew 12% (10% CER) to $290m driven by 10% growth in owned and leased revenues and 14% growth in managed revenues. Excluding a $4m liquidated damages receipt in the third quarter from one contract, franchised revenues were down $2m to $14m.

Operating profit performance

Operating profit from continuing operations grew 8% (13% CER) from $63m to $68m. Owned and leased hotels operating profit increased 19% to $43m. Managed hotels profit grew 20% to $55m. Franchised hotels profit increased 33% to $8m driven by a $4m liquidated damages receipt in the third quarter.

Strengthening Operating System

Revenue delivery to hotel owners through reservation channels and loyalty programmes continued to improve:

  • $7.6bn of rooms revenue, 48% of total rooms revenue, was booked through IHG's channels, up 10%.
  • $5.9bn of rooms revenue, 37% of total rooms revenue, was booked by Priority Club Rewards members, up 13%.
  • Priority Club Rewards members of 42m, up from 37m at the end of 2007.
  • Internet revenues increased from 17% to 20% of total rooms revenue, 86% from IHG’s own websites.

Cash flow and net debt

$641m of cash was generated from operating activities, up $176m on 2007. In addition $83m of cash was generated from disposals including the sale of the Holiday Inn Jamaica for $30m. Capital expenditure of $108m was $78m below 2007 levels. 9.2m shares were repurchased under IHG’s buyback programme at a cost of $139m. The completion of the remaining £30m of the £150m buyback program has been deferred.

This strong focus on cash generation and control of capital expenditure meant IHG’s net debt reduced to $1.3bn at the end of the year, down $386m. This net debt figure includes the $202m finance lease on the InterContinental Boston.

In May 2008 IHG refinanced $2.1bn of long term debt facilities. The new syndicated bank facility consists of two tranches, a $1.6bn 5 year revolving credit facility and a $0.5bn term loan with a 30 month maturity.

Overheads, Tax, Interest and Exceptional items

Regional overheads in the Americas and EMEA were broadly flat. In Asia Pacific, after a further $5m of the previously announced $10m investment to support the launch of the ANA Crowne Plaza brand in Japan and the non-recurrence of a $2m favourable legal settlement in 2007, regional overheads increased by $6m to support the rapid growth in the region. Central overheads decreased $8m to $155m due to the receipt of a $3m insurance settlement and the impact of weaker sterling.

The effective tax rate for 2008 is 23% (2007: 22%); the underlying rate before the impact of prior year items is 39% (2007: 36%). The reported tax rate may continue to vary year-on-year in the foreseeable future due to prior year settlements and other developments. The 2009 tax rate is currently expected to be in the mid to high 20’s. The interest charge for the year increased by $11m to $101m due to higher average net debt in the year as a result of the £709m special dividend payment in June 2007.

The $132m exceptional operating charge includes (i) $35m of the previously announced $60m cost to support the relaunch of the Holiday Inn brand; (ii) $19m severance costs related to the redundancies arising from a review of the Group’s cost base in light of the current economic climate; (iii) $96m impairment charge including $84m relating to goodwill and intangibles in the managed operations and $12m relating to the InterContinental Boston.

Appendix 1: Asset disposal programme detail

  Number of owned hotels Proceeds Net book value
Disposed since April 2003 183 $5.5bn $5.2bn
Remaining hotels 16   $1.7bn

For a full list please visit

Appendix 2: Rooms

  Americas EMEA Asia Pacific Total
Openings 38,198 10,118 11,037 59,353
Removals (20,567) (2,971) (1,058) (24,596)
Net openings 17,631 7,147 9,979 34,757
Signings 60,402 13,348 25,136 98,886

Appendix 3: Financial headlines

Twelve months to 31 Dec $m Total Americas EMEA Asia Pacific Central
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Franchised operating profit 509 489 426 425 75 58 8 6    
Managed operating profit 201 174 51 41 95 87 55 46    
Continuing owned and leased operating profit 129 109 41 40 45 33 43 36    
Regional overheads (149) (135) (67) (66) (44) (44) (38) (25)    
Continuing operating profit pre central overheads 690 637 451 440 171 134 68 63    
Central overheads (155) (163) - - - - - - (155) (163)
Continuing operating profit 535 474 451 440 171 134 68 63 (155) (163)
Discontinued owned and leased operating profit 14 17 14 16 - 1        
Total operating profit 549 491 465 456 171 135 68 63 (155) (163)

Appendix 4: Constant currency continuing operating profit growth before exceptional items.

  Americas EMEA Asia Pacific Total***
Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant Currency** Actual currency* Constant currency**
Growth 3% 2% 28% 25% 8% 13% 13% 10%
Exchange rates GBP:USD EUR: USD
2008 0.55 0.68
2007 0.50 0.73
* US dollar actual currency
** Translated at constant 2007 exchange rates
*** After Central Overheads


Appendix 5: Definition of total gross revenue

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.

Appendix 6: Investor information for 2008 final dividend

  • Ex-dividend Date: 25 March 2009
  • Record Date: 27 March 2009
  • Payment Date: 5 June 2009
  • Dividend payment: Ordinary shares 20.2p per share; ADRs 29.2c per share

For further information, please contact:

Investor Relations (Heather Wood; Catherine Dolton): +44 (0) 1895 512 176
Media Affairs (Leslie McGibbon; Emma Corcoran): +44 (0) 1895 512 425
+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 17 February at JPMorgan 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 3037 9090


US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 9.00am (Eastern Standard Time) on 17 February with Andrew Cosslett (Chief Executive) and Richard Solomons (Finance Director). There will be an opportunity to ask questions.

International dial-in +44 (0)20 7019 0812
US Toll Free 877 818 6787
Conference ID: HOTEL


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 1465

International dial-in +44 (0)20 7970 8448
US Toll Free 877 774 3459



The full release and supplementary data will be available on our website from 7.00 am (London time) on Tuesday 17 February. The web address is

To watch a video of Andy Cosslett reviewing our results visit our YouTube channel at


Notes to Editors:

InterContinental Hotels Group (IHG) [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 4,150 hotels and almost 620,000 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, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®, and also manages the world’s largest hotel loyalty programme, Priority Club® Rewards with 42 million members worldwide.

IHG has more than 1,700 hotels in its development pipeline, which will create 200,000 jobs worldwide over the next few years.

InterContinental Hotels Group PLC is the Group’s holding company and is incorporated in Great Britain and registered in England and Wales.

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.

Last updated 17 Feburary 2009

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