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Third Quarter Results to 30 September 2009

Third Quarter Results to 30 September 2009

Financial results 2009 2008 % change % change (CER)
      Total Excluding LDs1 Total Excluding LDs1

All figures are before exceptional items unless otherwise noted. See appendix 2 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 3. (% CER) = change in constant currency.

1 excluding $11m of significant liquidated damages (LDs) receipts in the third quarter 2008.

as at the first half results, operations previously accounted for as discontinued were re-presented as continuing. Comparatives have been restated.


total basic EPS after exceptional items.

Revenue2 $401m $496m (19)% (17)% (17)% (15)%
Adjusted operating profit2 $124m $153m (19)% (13)% (20)% (14)%
Total adjusted EPS2 32.5¢ 35.3¢ (8)%      
Total basic EPS3 23.4¢ 32.2¢ (27)%      
Net debt $1,159m $1,351m        

Business headlines

  • Global constant currency third quarter RevPAR decline of 15.2%.
  • 11,386 net rooms (87 hotels) added in the quarter increasing total system size to 641,086 rooms (4,390 hotels) (an increase of 5% from 30 September 2008).
  • 15,571 rooms (117 hotels) added to the system, 4,185 rooms (30 hotels) removed in line with our quality growth strategy.
  • 16,645 rooms (99 hotels) signed, taking the pipeline to 218,181 rooms (1,513 hotels).
  • Operating profit benefited by $10m from a reassessment of likely payments under certain incentive plans.
  • Exceptional operating costs of $44m include a $21m non-cash goodwill write down and $18m of severance costs.

Recent trading

  • October global constant currency RevPAR decline of 13.5%, -14.5% Americas, -12.7% EMEA and –9.9% Asia Pacific, reflecting weaker comparables in the prior year period.

Update on priorities

  • Reduce costs. Continued focus on improving operational efficiency. IHG remains on track to achieve savings in regional and central costs of around $80m in the full year 2009 of which at least $40m will be sustainable savings. As previously announced, by the end of 2010 compared to 2008 levels, IHG expects to achieve sustainable cost savings of between $65m and $70m.
  • Open rooms. Currently 80,000 rooms under construction. Around 10,000 rooms scheduled to open in the balance of the year (42,527 rooms opened year to date).
  • Drive share. IHG's brands outperformed the market by 4.5 percentage points in fastest growing APAC region and US RevPAR outperformed by 1.2 percentage points.
  • Relaunch Holiday Inn. 1,378 hotels operating under the new standards (41% of the total estate). Consumer marketing campaign launched globally.

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

“The trading environment remains challenging. We see signs of occupancy stabilising, but rate is still under considerable pressure across the board.

“Our signings pace remains impacted by the continued scarcity of financing for hotel developments. We are taking action to improve our operating efficiency and support the performance of our hotels; the relaunch of Holiday Inn is gaining pace and continues to make a significant difference to the prospects of our biggest brand.

“The partnership we enjoy with our owners has been a key factor in our system’s resilience through this downturn and underpins our optimism for the future. This unique relationship combined with our global scale, diverse brand portfolio, fee based business model and powerful system positions us to lead the industry when the upturn comes.”


Revenue performance

RevPAR declined 15.5% in the third quarter with US RevPAR falling 15.7%. Revenues declined 19% to $206m.

Operating profit performance

Operating profit declined 36% from $129m to $82m. Operating profit in the owned and leased hotels fell from $13m to $3m driven by an overall RevPAR decline of 22.6% and a particularly tough trading environment in New York. Operating profit in the managed business declined by $24m to a loss of $12m in the quarter, driven by a 20.0% drop in RevPAR which resulted in IHG continuing to fund shortfalls to the 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 $4m impact on annual operating profit in the Americas managed business. Franchised hotels’ operating profit decreased by 13% to $104m driven by a decline in royalty fees of 10% and a 48% reduction in initial franchising, relicensing and termination fees.


Revenue performance

RevPAR declined 15.2% in the third quarter driven primarily by rate. The UK and France saw the smallest declines with RevPAR down 11.2% and 10.2% respectively. Excluding one $7m liquidated damages receipt in the third quarter of 2008, revenues declined 22% to $101m (15% decline at constant exchange rates (CER)).

Operating profit performance

Operating profit declined 8% (3% CER), excluding the $7m liquidated damages receipt in the third quarter of 2008, to $36m. Owned and leased hotels’ operating profit was down only $2m to $12m with an improved trading environment at the InterContinental Le Grand, Paris and a relatively strong performance at the InterContinental London, Park Lane. A 17.7% RevPAR decline across the European estate drove managed hotels’ operating profit to decrease by $4m to $15m, but margins were held flat at constant currency. Excluding the $7m liquidated damages receipt in the third quarter of 2008, franchised hotels’ operating profit declined by $2m to $16m (6% at CER) driven by a RevPAR decline of 15.4% partially offset by a 6% increase in room count.

Asia Pacific

Revenue performance

RevPAR declined 13.4% driven entirely by rate with occupancy improving by 1.3 percentage points. Greater China RevPAR declined 19.8%, which was four percentage points better than in the second quarter and showed occupancy growth for the first time this year. Excluding one $4m liquidated damages receipt received in the third quarter of 2008, revenues declined 10% to $62m (13% at CER).

Operating profit performance

Excluding the liquidated damages receipt received in 2008, operating profit increased by 21% (14% CER) from $14m to $17m. Operating profit at owned and leased hotels decreased by $2m to $5m driven by a 22.3% RevPAR decline at the InterContinental Hong Kong. Managed hotels’ operating profit increased by $1m to $18m (0% at CER), with a 13.4% RevPAR decline offset both by the contribution from 12% more rooms and cost benefits from the reorganisation of the region.

Interest and tax

The interest charge for the quarter fell $15m to $13m due to a reduction in interest rates and lower average net debt.

Based on the position at the end of the quarter, the tax charge has been calculated using an estimated annual tax rate of 19% (Q3 2008: 25%). The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term.

Cash flow & net debt

Growth capital expenditure of $81m included $65m payment on completion of the Hotel Indigo San Diego which opened in July. Maintenance capital expenditure was $15m and, as disclosed previously, the full year amount is expected to be c.$75m, down 25% on 2008 levels.

IHG's net debt was reduced to $1.2bn at the end of the quarter, including the $204m 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: Rooms

  Americas EMEA Asia Pacific Total
Openings 10,983 1,711 2,877 15,571
Removals (2,856) (557) (772) (4,185)
Net openings 8,127 1,154 2,105 11,386
Signings 8,950 1,681 6,014 16,645

Appendix 2: Financial headlines

Three months to 30 September $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 20 34 3 13 12 14 5 7 - -
Managed operating profit 21 48 (12) 12 15 19 18 17 - -
Franchised operating profit 122 149 104 120 16 25 2 4 - -
Regional overheads (28) (38) (13) (16) (7) (12) (8) (10) - -
Operating profit pre central overheads 135 193 82 129 36 46 17 18 - -
Central overheads (11) (40) - - - - - - (11) (40)
Operating profit 124 153 82 129 36 46 17 18 (11) (40)

Appendix 3: 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**
Growth (36.4)% (36.4)% (21.7)% (17.4)% (5.6)% (11.1)% (19.0)% (20.3)%
Exchange rates GBP:USD EUR: USD
2009 0.61: 1 0.70: 1
2008 0.53: 1 0.67: 1
* US dollar actual currency
** Translated at constant 2008 exchange rates
*** After Central Overheads

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.

UK Q&A Conference Call:

A conference call with Richard Solomons (Chief Financial Officer and Head of Commercial Development) will commence at 9.30am (London time) on 10 November. There will be an opportunity to ask questions.

International dial-in: +44 (0)20 7108 6370
UK Free Call: 0808 238 6029
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 5416.

International dial-in: +44 (0)20 7970 8404
UK Free Call: 0800 018 1564

US Q&A conference call

There will also be a conference call, primarily for US investors and analysts, at 12.30pm (Eastern Standard Time) on 10 November with 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 5421.

International dial-in: +44 (0)20 7970 8273
US Toll Free: 877 278 0191


The full release and supplementary data will be available on our website from 7.00 am (London time) on 10 November. The web address is

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, nearly 4,400 hotels and over 640,000 guest rooms in 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 47 million members worldwide.

IHG has over 1,500 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.

Download the full Third Quarter Results to 30 September 2009 PDF (0.23Mb)

Last updated 25 January 2008

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