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Third Quarter Results to 30 September 2010

Third Quarter Results to 30 September 2010

Financial results 2010 2009 % change % change CER

All figures are before exceptional items unless otherwise noted. See appendices 2 and 3 for analysis of financial headlines.
Constant exchange rate comparatives shown in appendix 4. (% CER) = change in constant currency.

1 – total basic EPS after exceptional items.
Revenue $421m $401m 5% 6%
Operating profit $115m $124m (7)% (8)%
Total adjusted EPS 27.1¢ 32.5¢ (17)%  
Total basic EPS1 35.8¢ 23.4¢ 53%  
Net debt $801m $1,159m    


  • Total gross revenue² from all hotels in IHG’s system of $5.1bn, up 13% at constant currency.
  • Global constant currency third quarter RevPAR growth of 8.1%, driven by occupancy growth of 4.0 percentage points and rate growth of 1.8%.
  • 7,149 rooms (51 hotels) added, 5,856 rooms (47 hotels) removed. Total system of 657,954 rooms (4,507 hotels), up 3%.
  • 13,690 rooms (88 hotels) signed, taking the pipeline to 198,141 rooms (1,293 hotels).
  • Third quarter operating profit increased 14% and year to date operating profit increased 19% excluding the impact of performance based long term incentive costs.
  • Net debt of $801m, down $358m on 30 September 2009 and $291m on 31 December 2009.
2 See appendix 5 for definition


Recent trading

  • October global constant currency RevPAR growth of 8.1%; 8.0% Americas, 6.1% EMEA and 12.3% Asia Pacific.

Business Update

  • Drive revenue share: The relaunch of Holiday Inn is close to completion with 2,815 hotels operating under the new standards, 82% of the total estate. By the end of the programme, around 750 new Holiday Inn brand family hotels will have opened, 635 underperforming hotels will have been removed and over 3,000 hotels will be operating to the new standards – a complete refresh of the global Holiday Inn estate. The relaunched hotels are outperforming strongly – in the US, third quarter RevPAR for hotels relaunched for more than one year increased 8%, 6 percentage points higher than non-relaunched hotels.

    The global roll-out of Hotel Indigo continues with 6 signings in the quarter and 20 in the year to date, including high priority markets like Bangkok and Taipei. The first Hotel Indigo in Asia opens in Shanghai later this year. The total Hotel Indigo pipeline is now 59 hotels, 13 outside the Americas.

    We continue to drive up the quality of the estate. We are on track to open around 40,000 rooms this year and have 75,000 new rooms under construction. Year to date 14,877 rooms have been removed. Total 2010 removals are expected to be in the region of 35,000 rooms as the Holiday Inn relaunch enters its final stages.

  • Focus on efficiency: Revenue growth and efficiency have driven year to date operating margins in the fee business² up over one percentage point. We are on track to deliver the sustainable savings identified in 2009. Year to date regional and central costs of $182m are in line with 2009 levels before the impact of performance based incentive costs.

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

"The quarter saw a return to rate growth for the first time since early 2009, a clear sign that the recovery is gathering pace. Global RevPAR was up 8.1% with Greater China RevPAR increasing 24.4% and Europe, Middle East and Africa RevPAR grew at its fastest pace for two years.

"In the Americas, where RevPAR growth in the important midscale segment started to accelerate, the sharpest improvement was seen in our Holiday Inn brand family with guests staying more and paying more at the relaunched hotels. The wider benefits of the relaunch are clear with Holiday Inn signings in the US up on 2009.

"The attractiveness of our system and brand strength is reflected in our leading 17% share of the global pipeline of new build hotels, our re-entry into the priority Hawaii market with Holiday Inn and an alliance with Las Vegas Sands Corp to bring The Venetian and Palazzo Resorts into the InterContinental system.

"While visibility is still limited, business confidence and corporate profitability remain positive and, with supply anticipated to stay below historic levels, industry trends look favourable. With over 1,200 hotels in our development pipeline we expect to create over 160,000 new jobs in the next few years. We are focused on driving share, improving margins while investing behind growth and creating value for shareholders. Our balance sheet is in excellent shape and we continue to generate significant cash flow."


Revenue performance

RevPAR increased 6.7% in the third quarter, driven mainly by occupancy with rate improving by 0.8%. Revenues increased 4% to $215m; excluding the impact of the disposal of InterContinental Buckhead Atlanta revenues increased 8%.

Operating profit performance

Operating profit increased 28% from $82m to $105m. Franchised operating profit grew 9% driven by RevPAR growth of 6.2% and rooms growth of 2.5%. In the managed business, operating profit of $2m compares to a loss of $12m in 2009 which included a $12m charge for priority guarantee shortfalls. Owned and leased operating profit grew $1m to $4m reflecting RevPAR growth of 7.3% partly offset by the loss of profits from InterContinental Buckhead Atlanta.


Revenue performance

RevPAR increased 9.7% in the third quarter, with rate improving by 3.1%. Of our major markets, performance was strongest in Germany where RevPAR grew 22.2% and, despite continuing mixed trading conditions, RevPAR in the Middle East grew 5.4%. UK RevPAR growth of 6.7%, driven by a rate increase of 3.6%, marked a strong improvement on second quarter RevPAR growth of 3.4%. Revenues increased 4% to $105m (11% CER).

Operating profit performance

Operating profit declined by $1m to $35m (increased 3% CER). Franchised operating profit grew 6% to $17m (13% CER) driven by a 10% increase in royalty fee revenue. Managed operating profit declined by $2m to $13m ($1m CER) due to the timing of payments under guarantees. Owned and leased operating profit grew $1m to $13m ($2m CER) driven by 13.7% RevPAR growth at InterContinental Park Lane and 8.8% growth at InterContinental Paris Le Grand.

Asia Pacific

Revenue performance

RevPAR increased 12.0% in the third quarter, with 4.1% growth in rate. Greater China was the strongest performing region with RevPAR growth of 24.4%, boosted by the World Expo in Shanghai where RevPAR grew 88.6%. Revenues increased 19% to $74m (16% CER).

Operating profit performance

Operating profit increased 18% to $20m (18% CER). Franchised operating profit declined by $1m to $1m. Managed operating profit grew 11% to $20m (6% CER) driven by 13.5% RevPAR growth and 10% rooms growth across the region. Operating profit at owned and leased hotels increased 20% to $6m reflecting RevPAR growth of 7.5% at InterContinental Hong Kong.

Regional and central costs, interest and tax

Third quarter regional and central costs of $74m are up $35m on 2009 levels due to performance based incentive costs, including a $25m year on year impact of re-assessments of likely payments under long term incentive plans.

The interest charge for the period increased $3m to $16m as the impact of lower levels of average net debt was offset by a higher average cost of debt following the issuance of a seven year £250m bond in the fourth quarter of 2009.

Based on the position at the end of the third quarter, the tax charge has been calculated using an estimated annual tax rate of 26% (Estimated annual tax rate at Q3 2009: 19%).

Cash flow & net debt

Net debt of $801m (including the $206m finance lease on the InterContinental Boston) is down $291m on the position as at year end 2009 due to higher operating profits, improved working capital, $135m receipts including $105m from the disposal of the InterContinental Buckhead Atlanta and reduced capital expenditure of $69m.


Appendix 1: Rooms

  Americas EMEA Asia Pacific Total
Openings 4,295 980 1,874 7,149
Removals (3,462) (1,757) (637) (5,856)
Net openings / (removals) 833 (777) 1,237 1,293
Signings 7,502 2,351 3,837 13,690

Appendix 2: Third quarter financial headlines

Three months to 30 September $m Total Americas EMEA Asia Pacific Central
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Franchised operating profit 131 122 113 104 17 16 1 2 - -
Managed operating profit 35 21 2 (12) 13 15 20 18 - -
Owned and leased operating profit 23 20 4 3 13 12 6 5 - -
Regional overheads (29) (28) (14) (13) (8) (7) (7) (8) - -
Operating profit pre central overheads 160 135 105 82 35 36 20 17 - -
Central overheads (45) (11) - - - - - - (45) (11)
Operating profit 115 124 105 82 35 36 20 17 (45) (11)

Appendix 3: Year to date financial headlines

Nine months to 30 September $m Total Americas EMEA Asia Pacific Central
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Franchised operating profit 350 331 301 281 45 46 4 4 - -
Managed operating profit 110 62 15 (21) 45 48 50 35 - -
Owned and leased operating profit 56 45 8 7 28 22 20 16 - -
Regional overheads (84) (79) (40) (36) (25) (22) (19) (21) - -
Operating profit pre central overheads 432 359 284 231 93 94 55 34 - -
Central overheads (98) (56) - - - - - - (98) (56)
Operating profit 334 303 284 231 93 94 55 34 (98) (56)

Appendix 4: Third quarter constant currency operating profit movement before exceptional items

  Americas EMEA Asia Pacific Total***
  Actual currency* Constant currency** Actual currency* Constant currency** Actual currency* Constant
Actual currency* Constant currency**
Growth 28% 27% (3)% 3% 18% 18% (7)% (8)%
Exchange rates GBP:USD EUR:USD
2010 0.65 0.77
2009 0.61 0.70
* US dollar actual currency
** Translated at constant 2009 exchange rates
*** After central overheads

Appendix 5: Definitions

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.

Operating margins in the fee business are adjusted for owned and leased hotels, individually significant liquidated damages payments, HPT guarantee payments and excludes the benefit in 2009 of non-sustainable incentive compensation cost savings.

For further information please contact:

Investor Relations
(Heather Wood; Catherine Dolton):
+44 (0) 1895 512 176
Media Affairs
(Leslie McGibbon, Giles Deards):
+44 (0) 1895 512 425
+44 (0) 1895 512 275

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 9 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 5447.

International dial-in: +44 (0)20 7970 4982
UK Free Call: 0800 018 2365

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 9 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 Dial-in: +1 517 345 9004
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 5458.

International dial-in: +44 (0)20 7108 6286
US Free Call: 866 851 2569


The full release and supplementary data will be available on our website from 7.00am (London time) on 9 November. The web address is To watch a video of Richard Solomons 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 franchises, leases, manages or owns, through various subsidiaries, over 4,500 hotels and more than 650,000 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 52 million members worldwide.

IHG has over 1,200 hotels in its development pipeline, which we expect to create 160,000 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.

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Last updated 09 November 2010

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