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Half Year Results to 30 June 2009

Financial results 2009 2008 % change % change CER
      Total Excluding LDs1 Total Excluding LDs1
Revenue 2 $726m $974m (25)% (24)% (21)% (20)%
Adjusted operating profit 2 $179m $291m (38)% (35)% (41)% (38)%
Total adjusted EPS 2 41.5¢ 58.1¢ (29)%      
Total basic EPS 3 (10.2)¢ 56.0¢ (118)%      
Interim DPS 12.2¢ 12.2¢ -      
Net debt $1,328m $1,623m        

All figures are before exceptional items unless otherwise noted. See appendix 3 and appendix 4 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 5. (% CER) = change in constant currency.

1 Excluding $3m of significant liquidated damages (LDs) receipts in the first half 2009 and $22m in the first half 2008.
2 Hotels previously accounted for as discontinued operations have been re-presented as continuing operations and the relevant comparatives restated.
3 Total basic EPS after exceptional items.


Business headlines

  • Global constant currency first half RevPAR decline of 16.2%, with a second quarter decline of 18.6%. IHG’s brands outperformed the industry in each of its three regions.
  • 9,849 net rooms (117 hotels) added in the first half, taking system size to 629,700 rooms (4,303 hotels), up 5% year on year.
  • 26,956 rooms (229 hotels) added to the system, 17,107 rooms (112 hotels) removed in line with our quality growth strategy.
  • 22,754 rooms (159 hotels) signed, taking the pipeline to 226,248 rooms (1,599 hotels).
  • On track to exceed 2009 targeted cost reductions with first half reported regional and central costs $51m below 2008 levels.
  • Net debt of $1.3bn held broadly flat on the position at 31 December 2008.
  • Interim dividend maintained at 12.2¢, equivalent to 7.3p at the closing exchange rate on 7 August 2009.
  • Exceptional operating charges of $201m include $162m of non-cash asset impairment charges.

Recent trading

  • July global constant currency RevPAR decline of 14.4%; -14.2% Americas, -15.1% EMEA and -14.5% Asia Pacific.
  • Forward bookings data, which provides limited visibility, shows no further deterioration in demand. July benefited from stronger leisure demand.

Update on priorities

  • Reduce costs. 2009 regional and central costs are now expected to be around $80m below 2008 levels comprising at least $40m of sustainable savings, $20m of currency benefit and $20m of non-sustainable savings. The drive to improve efficiency continues and by the end of 2010 compared to 2008 levels, IHG expects to achieve sustainable cost savings of between $65m and $70m, representing a c.20% reduction, net of increases such as inflation and investment in growth. The additional estimated cost to achieve these savings will be c.$25m with a c.$22m cash cost.
  • Open rooms. c.90,000 rooms under construction, c.25,000 of which are scheduled to open in the balance of the year (26,956 rooms opened in the half). Room removals are still expected to be in the region of 35,000 for both 2009 and 2010.
  • Drive share. US RevPAR outperformed the market by 2.7 percentage points (IHG US brands H1 RevPAR decline of 16.0% compared to US industry decline of 18.7%).
  • Relaunch Holiday Inn. 1,040 hotels now operating under the new standards. Results from the first relaunched hotels continue to show RevPAR outperformance of more than 5% compared to a control group.

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

“Trading was very challenging throughout the first half of the year and we expect the remainder of 2009 to be tough.

“We have made good progress on improving efficiency and reducing costs as we make more effective use of our scale. We will continue to invest behind our system to drive revenue and grow market share.

“The continued out performance of our brands around the world is encouraging, as is our signings pace which, despite the continued scarcity of financing for developers, is still averaging around one deal a day. We are on track to open more than 400 hotels this year. We are making good progress with the global relaunch of Holiday Inn and over 1000 hotels have now completed this process. Feedback from relaunched hotels continues to be positive and we are still committed to completing the programme by the end of 2010.

“The outlook remains challenging, but we are confident that with our fee based business model, substantially reduced cost base, strong financial position and the renewal and refreshment of our brands supported by our system scale we will outperform the competition and be well positioned for the upturn.”


Revenue performance

RevPAR declined 15.8% in the first half, with a second quarter decline of 18.0%. In the US, IHG’s brands outperformed the industry by 2.7 percentage points in the first half, driven by the resilience of the midscale brands which represent 80% of IHG’s rooms in this market. Revenues declined 25% to $375m. Excluding one $13m liquidated damages receipt in the first half of 2008, revenues declined 23%.

Operating profit performance

Operating profit declined 40% from $249m to $149m. Excluding the $13m liquidated damages receipt, operating profit declined 37%. A 28.6% decline in RevPAR from owned and leased hotels, partially offset by strong cost control at hotel level, drove the drop in these hotels’ operating profit from $26m to $4m. In the managed business, excluding the $13m liquidated damages receipt in the first half of 2008, a RevPAR decline of 18.4% caused a $34m drop in operating profit to a loss of $9m. This was primarily due to IHG funding shortfalls to the agreed owner’s priority return on a number of hotels managed for one owner. This operating profit decline is in line with the disclosed sensitivity that a 1% change in RevPAR has a $7m impact on annual operating profit across the global managed business, of which some $4m relates to the Americas. Franchised hotels’ operating profit fell by 18% to $177m driven by a 12% decline in royalty fees and an $11m reduction in fees associated with initial franchising, relicensing and termination, partially offset by a 5% increase in room count.


Revenue performance

RevPAR declined 16.4% in the first half, with a second quarter decline of 20.3% reflecting the impact of the movement of Easter from March to April. The Middle East and the UK were the most resilient markets with first half RevPAR declines of 8.5% and 10.7% respectively. Revenues declined 31% (20% at constant exchange rates (CER)) to $186m. Excluding one liquidated damages receipt of $3m in the first half of 2009 and one of $9m in the first half of 2008, revenues declined 30% (18% CER).

Operating profit performance

Operating profit declined 35% (30% CER) from $89m to $58m or 31% (26% CER) excluding the net $6m impact of the two liquidated damages receipts. Owned and leased operating profit almost halved to $10m, primarily due to tough trading conditions at InterContinental Paris Le Grand. Managed hotels’ operating profit declined by $23m to $33m, or by $14m excluding the impact of one liquidated damages receipt in the first half of 2008. Continued growth in fees in the Middle East was offset by the impact of a 25.4% RevPAR decline across the European managed estate and the annualisation of the reduced contribution from a portfolio of hotels in the UK, first reported in the third quarter of 2008. Excluding the $3m liquidated damages receipt in the first half of 2009, franchised hotels’ operating profit declined $8m to $27m (9% at CER) driven by a RevPAR decline of 17.0% being partially offset by a 7% increase in room count.

Asia Pacific

Revenue performance

RevPAR declined 17.9% in the first half, with a second quarter decline of 19.3%. Greater China was the weakest market with a first half RevPAR decline of 21.7%, significantly better than the industry down 33.3% which continues to be impacted by the recent increases in supply, particularly by international brands. Revenues declined 25% (22% CER) to $106m.

Operating profit performance

Operating profit declined 41% (34% CER) from $29m to $17m. Operating profit at owned and leased hotels fell by $9m to $11m primarily reflecting a RevPAR decline of 28.1% at the InterContinental Hong Kong. Managed hotels’ operating profit declined 35% (23% CER) to $17m driven by a 16.5% RevPAR decline.

Strong operating system

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

  • $4.4bn of rooms revenue or 66% of total rooms revenue, was booked through IHG's channels or by Priority Club Rewards members direct to hotel, up 4 percentage points on the first half of 2008.
  • Priority Club Rewards members of 44m, up from 42m at the end of 2008.
  • Internet revenues increased from 19% to 23% of total rooms revenue, 79% from IHG’s own websites.

Interest, tax and exceptional items

The interest charge for the period fell $27m to $28m due to a reduction in interest rates and lower average net debt. Based on the position at the end of the half, the tax charge has been calculated using an estimated annual tax rate of 22% (2008: 28%). The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term. The $162m exceptional impairment charge comprises (i) $57m write down of goodwill and a $32m intangible asset write off, both relating to the Americas managed operation; and (ii) $73m impairment to hotels including $14m in catch-up depreciation resulting from their re-presentation from held for sale to continuing operations.

Cash flow & net debt

$91m of cash was generated from operating activities in the six months to 30 June and $12m of cash was generated from disposals. Growth capital expenditure in the half was $9m and maintenance capital expenditure was $31m. Full year maintenance capital expenditure is still expected to be c.$75m.

IHG’s net debt was maintained at $1.3bn at the end of the first half, including the $203m finance lease on the InterContinental Boston. IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.

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 - $1.6bn

 For a full list please visit

Appendix 2: Rooms

  Americas EMEA Asia Pacific Total
Openings 21,072 2,674 3,210 26,956
Removals (12,414) (2,036) (2,657) (17,107)
Net openings 8,658 638  553 9,849
Signings 15,004 3,781 3,969 22,754

Appendix 3: First half financial headlines

Six months to 30 June $m Total Americas EMEA Asia Pacific Central
  2009 2008* 2009 2008* 2009 2008 2009 2008 2009 2008
* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.
Owned and leased operating profit 25 65 4 26 10 19 11 20 - -
Managed operating profit 41 120 (9) 38 33 56 17 26 - -
Franchised operating profit 209 253 177 215 30 35 2 3 - -
Regional overheads (51) (71) (23) (30) (15) (21) (13) (20) - -
Operating profit pre central overheads 224 367 149 249 58 89 17 29 - -
Central overheads (45) (76) - - - - - - (45) (76)
Operating profit 179 291 149 249 58 89 17 29 (45) (76)

Appendix 4:  Second quarter financial headlines

Three months to 30 June $m Total Americas EMEA Asia Pacific Central
  2009 2008* 2009 2008* 2009 2008 2009 2008 2009 2008

* 2008 comparatives restated for those owned hotels previously accounted for as discontinued operations, now re-presented as continuing operations.

Owned and leased operating profit 18 40 5 16 9 14 4 10 - -
Managed operating profit 21 62 (5) 15 17 35 9 12 - -
Franchised operating profit 112 139 97 118 14 20 1 1 - -
Regional overheads (24) (36) (11) (15) (6) (10) (7) (11) - -
Operating profit pre central overheads 127 205 86 134 34 59 7 12 - -
Central overheads (20) (41) - - - - - - (20) (41)
Operating profit 107 164 86 134 34 59 7 12 (20) (41)

Appendix 5: Constant currency operating profit movement before exceptional items.

  Americas EMEA Asia Pacific Total***
Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant currency**
Exchange rates GBP:USD EUR: USD
2009 0.67:1 0.75:1
2008 0.51:1 0.65:1

*   US dollar actual currency; ** Translated at constant 2008 exchange rates; *** After Central Overheads

Growth/ (decline) (40.2)% (40.2)% (34.8)% (30.3)% (41.4)% (34.5)% (38.5)% (41.2)%

Appendix 6: Investor information for 2009 interim dividend

Ex-dividend Date: 26 August 2009
Record Date: 28 August 2009
Payment Date: 2 October 2009
Dividend payment: Ordinary shares 7.3p per share: ADRs 12.2¢ per ADR

For further information, please contact:

Investor Relations (Alex Shorland-Ball; 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 (Chief Financial Officer and Head of Commercial Development) will commence at 9.30am (London time) on 11 August at Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. 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)203 037 9090

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 11 August with Andrew Cosslett (Chief Executive) and Richard Solomons (Chief Financial Officer and Head of Commercial Development). There will be an opportunity to ask questions.

International dial-in:   +44 (0)20 7108 6370
US Toll Free:   866 692 5726
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 5717.

International dial-in:   +44 (0)207 108 6347
US Toll Free:   866 851 6712


The full release and supplementary data will be available on our website from 7.00am (London time) on 11 August. The web address is

To watch a video of Andrew Cosslett reviewing our results visit our YouTube channel later today 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 4,300 hotels and almost 630,000 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 44 million members worldwide.

IHG has nearly 1,600 hotels in its development pipeline, which will create 140,000 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 11 August 2009

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