Annual Report

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Summary of our

Annual Report and Form 20-F 2018

Annual Report
and Form 20-F 2018

Summary of our Annual
Report and Form 20-F 2018

An overview of 2018

Our business and achievements for the year.

From the Chair

Patrick Cescau, Chair

Our focus in 2018 has been strengthening the execution of our strategy, and laying the foundation for faster growth."

Patrick Cescau
Chair

Chair’s statementPDF 96KB

From the CEO

Keith Barr, Chief Executive Officer

Supported by our people, strategic initiatives and positive industry trends, we are confident in our prospects."

Keith Barr
Chief Executive Officer

CEO’s reviewPDF 84KB

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Financial highlights

Total revenue

$4,337m

2017: $4,075ma (+6.4%)

Revenue from reportable segmentsb

$1,933m

2017: $1,730ma (+11.7%)

Operating profit

$566m

2017: $728ma (-22.3%)

Operating profit from reportable segmentsb

$816m

2017: $758ma (+7.7%)

Total gross revenue in IHG's Systemb

$27.4bn

2017: $25.7bn (+6.6%)

Underlying fee revenue growthb

+6.5%

2017: +4.7%a

Total underlying operating profit growthb

$47m

2017: $56ma +6.2%

Revenue per available room (RevPAR growth)

+2.5%

2017: +2.7%

a restated to reflect the adoption of IFRS 15 (see pages 109 to 113) in the Financial Statements.

b Use of Non-GAAP measures:
In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on page 36, and reconciliations to IFRS figures, where they have been adjusted, are on pages 172 to 175. Total underlying operating profit growth and underlying fee revenue growth are stated at constant currency.

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Our brands

In 2018, we evolved our marketing function to adopt a comprehensive global approach to marketing and brand development activities. This included organising our brands into mainstream, upscale and luxury segments, in order to maximise efficiencies, better focus resources and drive performance.

Overview

Mainstream

Global segment

$115bn

Growth potential to 2025

$65bn

Upscale

Global segment

$40bn

Growth potential to 2025

$20bn

Luxury

Global segment

$60bn

Growth potential to 2025

$35bn

Where we operate

We operate in more than 100 countries globally.

b Use of Non-GAAP measures:
In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on page 36, and reconciliations to IFRS figures, where they have been adjusted, are on pages 172 to 175. Total underlying operating profit growth and underlying fee revenue growth are stated at constant currency.

Our business model

Through our business model, we predominantly franchise our brands and manage hotels on behalf of third-party hotel owners. As an asset-light business, we focus on growing our fee revenues and fee margins, with limited requirements for capital.

4,615

Franchised hotels

(576,979 rooms)

965

Managed hotels

(253,566 rooms)

23

Owned and leased hotels

(5,996 rooms)

Our strategy for high-quality growth

We have a clearly defined strategy designed to drive superior shareholder returns. Our focus is on delivering high-quality growth, which means consistent, sustained growth in cash flows and profits over the long-term. The execution of our strategy is underpinned by a strong culture, talented people and a commitment to the environment and our stakeholders.

Our culture, key stakeholders and doing business responsibly

Our focus on doing business responsibly and the way we interact with our stakeholders, helps create a diverse, healthy and inclusive culture. IHG’s purpose and strategy go beyond a simple hotel stay and shareholder returns; it also includes the impact we have on the environment and the communities we work in.

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