REG - Interco. Hotels Grp - 2022 First Quarter Trading Update

Intercontinental HotelsAnnouncement

06/05/2022 07:00

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RNS Number : 5347K  InterContinental Hotels Group PLC  06 May 2022

 

 

 

6 May 2022

InterContinental Hotels Group PLC

2022 First Quarter Trading Update

 

Highlights

 

 ●    Q1 group RevPAR up 61% vs 2021 and attaining 82% of 2019's level
 ●    Average daily rate up 27% vs 2021 and in line with 2019
 ●    Americas and EMEAA saw sequentially improved trading in February and March
      after a challenging January
 ●    Greater China trading in March impacted by tightening of localised travel
      restrictions
 ●    Gross system size growth of +4.9% YOY, +0.7% YTD; opened 6.6k rooms (45
      hotels) in Q1, broadly similar to 2021
 ●    Net system size growth of +3.4% YOY (adjusted for Holiday Inn and Crowne Plaza
      removals in 2021), +0.5% YTD
 ●    Global system of 885k rooms (6,028 hotels); 68% across midscale segments, 32%
      across upscale and luxury
 ●    Signed 16.6k rooms (120 hotels) in Q1, ~15% more than 2021 and 2020; global
      pipeline increased to 278k rooms

Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said:

 

"We've seen very positive trading conditions in the first quarter with travel
demand continuing to increase in almost all of our key markets around the
world. The high level of demand we have seen for leisure travel continues to
drive increased rates and occupancy. We also continue to see a return of
business and group travel, further supporting RevPAR improvements in many of
our key urban markets. As occupancy levels rise and due to the strength of our
brands, our hotels are seeing increased pricing power; in March, our hotels in
the US achieved leisure rates up by more than 10% on 2019 levels and rate
across the whole of the US business was 4% ahead. Trading in Greater China
continues to be impacted by restrictions put in place to control rising Covid
cases.

 

Our strategic focus on strengthening and expanding our brand portfolio
continues to drive growth. We signed 17 thousand rooms into our development
pipeline in the first quarter, 15% more than in 2021. Our pipeline of
278 thousand rooms increased 2.4%. Of the 120 hotels signed, there was a
particularly strong performance in the Americas with a near-doubling of
signings from 39 to 73. Luxury & Lifestyle brands now account for around
20% of all signings, and following the completion of our quality review in
2021 there were 52 signings across the Holiday Inn brand family and 14 for
Crowne Plaza, together up 22% on last year. Our net system size is expanding,
and we are pleased with the progress towards our ambition of delivering an
industry-leading level of net rooms growth."

 

Regional performance

 

Americas

Q1 RevPAR was down 8% vs 2019 (up 58% vs 2021). US RevPAR was down 6% vs 2019.
Across the region, occupancy was close to 60%, down 6%pts on 2019, whilst rate
was up 1%. Holiday Inn Express and our Extended Stay brands exceeded 2019
levels of RevPAR. Demand was boosted by a strong Spring Break vacation period,
with leisure rooms revenue 10% higher than 2019 for the quarter overall.
Leisure demand is expected to remain strong in the coming quarters. Together
with growth in corporate bookings and more group activity and events
returning, this should support further progress in both occupancy and rate.

 

Gross system size growth was +2.7% YOY, with 2.2k rooms (23 hotels) opened in
the quarter. Net system size growth was 1.2% YOY on an adjusted basis (for the
Holiday Inn and Crowne Plaza removals that occurred over the balance of 2021,
driven by last year's review of the estates of these two brands). 7.8k rooms
(73 hotels) were added to the pipeline, representing a further sequential
improvement in the signings pace and exceeding the Q1 signings back in 2019.

 

EMEAA

Q1 RevPAR was down 33% vs 2019 (up 122% vs 2021). Occupancy was approaching
50%, down 21%pts on 2019, whilst rate was down just 4%. Previous restrictions,
particularly on international travel, were generally being lifted over the
course of the quarter in all markets, though the timing of these still
resulted in a broad spread of performance within the region: Q1 RevPAR was
down just 7% vs 2019 in the Middle East and 15% in the UK, whilst it was still
38% lower in Australia, 45% in Continental Europe, 58% in South East Asia
& Korea and 64% in Japan.

 

Gross system size growth was +5.7% YOY, with 3.5k rooms (17 hotels) opened in
the quarter. Net system size growth was 4.2% YOY on an adjusted basis. There
were 2.3k rooms (15 hotels) added to the pipeline, around half being
conversions.

 

Greater China

Q1 RevPAR was down 42% vs 2019 (down 7% vs 2021). Occupancy was 36%, down
16%pts on 2019, whilst rate was down 17%. The Winter Olympics boosted
performance around Beijing, though overall Tier 2-4 cities continued to
outperform Tier 1 cities. However, in March, travel restrictions implemented
following increased Covid-19 cases led to RevPAR weakening to a 53% decline vs
2019, with around a third of the estate temporarily closed or repurposed.

 

Gross system size growth was +11.3% YOY, with 0.9k rooms (5 hotels) opened in
the quarter. Net system size growth was 9.9% YOY on an adjusted basis. There
were 6.6k rooms (32 hotels) added to the pipeline.

 

Financing update

 

In April, IHG entered into a new $1.35bn syndicated bank revolving credit
facility (RCF). The previous $1.275bn syndicated facility and $75m bilateral
facility have been cancelled. The covenant amendments to the previous facility
announced in December 2020, which included a relaxation of covenants for the
June 2022 and December 2022 and the $400m minimum liquidity covenant, are no
longer in effect.

 

The new five-year RCF matures in April 2027. Two one-year extension options
are at the lenders' discretion. There are two financial covenants: interest
cover and leverage ratio. Covenants are tested at half year and full year on a
trailing 12-month basis. Interest cover requires a ratio of Covenant EBITDA to
Covenant interest payable above 3.5:1. The leverage ratio requires Covenant
net debt to Covenant EBITDA below 4.0:1. These covenants now include the
impact of IFRS 16, Leases, which was previously excluded due to 'frozen GAAP'
treatment in the previous agreement.

 

 

For further information, please contact:

Investor Relations: Stuart Ford (+44 (0)7823 828 739); Joe Simpson (+44
(0)7976 862 072)

Media Relations: Amy Shields (+44 (0)7881 035 550); Claire Scicluna (+44
(0)7776 778 808)

 

Conference call for analysts and institutional shareholders:

A conference call with Paul Edgecliffe-Johnson, Chief Financial Officer and Group Head of Strategy, will commence at 9:00am (London time) on 6 May and can be accessed at
www.ihgplc.com/en/investors/results-and-presentations (https://www.ihgplc.com/en/investors/results-and-presentations)
.

 

Analysts and institutional shareholders wishing to ask questions should use the following dial-in details for a Q&A facility:
 UK:                   0800 640 6441
 UK local:             0203 936 2999

US:
+1 855 979 6654
 US local:             +1 646 664 1960
 All other locations:  +44 203 936 2999
 Passcode:             47 09 62

 

An audio replay will also be available for 7 days using the following details:

 UK:                   0203 936 3001
 All other locations:  +44 203 936 3001
 Passcode:             76 80 66

 
Website:

The full release and supplementary data will be available on our website from
7:00am (London time) on 6 May. The web address is
www.ihgplc.com/en/investors/results-and-presentations
(https://www.ihgplc.com/en/investors/results-and-presentations) .

 

 

About IHG Hotels & Resorts:

IHG Hotels & Resorts (https://www.ihgplc.com) [LON:IHG, NYSE:IHG (ADRs)]
is a global hospitality company, with a purpose to provide True Hospitality
for Good.

 

With a family of 17 hotel brands and IHG One Rewards
(https://urldefense.com/v3/__http:/email.investis.com/ls/click?upn=T-2Fn3OVRavEvfp-2BcwHA4A99imKpoqIJxvmXwKaaQPh-2F0-3DygFb_ojq2lu66bX8JNKV7VmBiOZ2gLVi27eAYFqE40NVToEeeHiYKncxdBspif1mQlBK7ih-2B5rzYsrNnDqgQn1wszyhe5xRGUvld0NWW3KwpUnWtxiJsqB0ttFTF4eNwtEIP6Oq8lyDW5KoQFtyJe-2Bm18YjgiHAhr23RBEd1PKOwFYY8z7PScBuJSe1ztaC6p56jTzGST-2Fvc-2BetCMz1pPnnGDUjyivzqA2pH29Vmiz8T-2BmmunkBHoR5LSxI1VjgVEsv7cApWyuKiG8-2BGNJnO5ejYTcA-3D-3D__;!!EOxaMA!CjjXZ7KAZ7idANJdcoLB7daWoS810tckeGbds16Y8bqw50-1iPUaVwYwmb01-ewc$)
, one of the world's largest hotel loyalty programmes, IHG has around 6,000
open hotels in more than 100 countries, and more than 1,800 in the development
pipeline.

 

-     Luxury & Lifestyle: Six Senses Hotels Resorts Spas
(https://www.sixsenses.com/) , Regent Hotels & Resorts
(https://www.regenthotels.com/) , InterContinental Hotels & Resorts
(http://www.intercontinental.com/hotels/gb/en/reservation) , Vignette
Collection (https://www.vignettecollectionhotels.com/) , Kimpton Hotels &
Restaurants (https://www.ihg.com/kimptonhotels/hotels/gb/en/reservation) ,
Hotel Indigo (http://www.ihg.com/hotelindigo/hotels/gb/en/reservation)

-     Premium: voco hotels
(https://www.ihg.com/voco/hotels/gb/en/reservation) , HUALUXE Hotels &
Resorts (https://www.ihg.com/hualuxe/hotels/gb/en/reservation) , Crowne Plaza
Hotels & Resorts (http://www.ihg.com/crowneplaza/hotels/gb/en/reservation)
, EVEN Hotels (http://www.ihg.com/evenhotels/hotels/us/en/reservation)

-     Essentials: Holiday Inn Hotels & Resorts
(http://www.ihg.com/holidayinn/hotels/gb/en/reservation) , Holiday Inn Express
(http://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation) , avid hotels
(https://www.ihg.com/avidhotels/hotels/us/en/reservation)

-     Suites: Atwell Suites (https://www.atwellsuites.com/) , Staybridge
Suites (http://www.ihg.com/staybridge/hotels/gb/en/reservation) ,  Holiday
Inn Club Vacations
(https://www.ihg.com/holidayinnclubvacations/hotels/us/en/reservation) ,
Candlewood Suites (http://www.ihg.com/candlewood/hotels/us/en/reservation)

 

InterContinental Hotels Group PLC is the Group's holding company and is
incorporated and registered in England and Wales. Approximately 325,000 people
work across IHG's hotels and corporate offices globally.

 

Visit us online for more about our hotels and reservations
(http://www.ihg.com) and IHG One Rewards
(https://urldefense.com/v3/__http:/email.investis.com/ls/click?upn=T-2Fn3OVRavEvfp-2BcwHA4A99imKpoqIJxvmXwKaaQPh-2F0-3DygFb_ojq2lu66bX8JNKV7VmBiOZ2gLVi27eAYFqE40NVToEeeHiYKncxdBspif1mQlBK7ih-2B5rzYsrNnDqgQn1wszyhe5xRGUvld0NWW3KwpUnWtxiJsqB0ttFTF4eNwtEIP6Oq8lyDW5KoQFtyJe-2Bm18YjgiHAhr23RBEd1PKOwFYY8z7PScBuJSe1ztaC6p56jTzGST-2Fvc-2BetCMz1pPnnGDUjyivzqA2pH29Vmiz8T-2BmmunkBHoR5LSxI1VjgVEsv7cApWyuKiG8-2BGNJnO5ejYTcA-3D-3D__;!!EOxaMA!CjjXZ7KAZ7idANJdcoLB7daWoS810tckeGbds16Y8bqw50-1iPUaVwYwmb01-ewc$)
. For our latest news, visit our Newsroom
(https://www.ihgplc.com/en/news-and-media) and follow us on LinkedIn
(https://www.linkedin.com/company/ihghotels&resorts/) , Facebook
(http://www.facebook.com/ihgcorporate) and Twitter
(http://www.twitter.com/IHGCorporate) .

 

 

Appendix 1: RevPAR(a) (CER) movement summary

 

           Q1 2022 vs 2021            Q1 2022 vs 2019
           RevPAR  ADR     Occupancy  RevPAR   ADR      Occupancy
 Group     60.8%   26.7%   11.1%pts   (17.7)%  (0.5)%   (11.1)%pts
 Americas  57.9%   26.1%   11.8%pts   (7.7)%   1.3%     (5.7)%pts
 EMEAA     122.0%  34.8%   18.8%pts   (33.1)%  (4.0)%   (21.0)%pts
 G. China  (7.4)%  2.2%    (3.8)%pts  (41.8)%  (16.6)%  (16.3)%pts

 

Appendix 2: RevPAR(a) movement at constant exchange rates (CER) vs actual
exchange rates (AER)

 

           Q1 2022 vs 2021             Q1 2022 vs 2019
           CER     AER     Difference  CER      AER      Difference
 Group     60.8%   59.9%   (0.9)%pts   (17.7)%  (17.9)%  (0.2)%pts
 Americas  57.9%   58.0%   0.1%pts     (7.7)%   (8.2)%   (0.5)%pts
 EMEAA     122.0%  112.8%  (9.2)%pts   (33.1)%  (34.2)%  (1.1)%pts
 G. China  (7.4)%  (5.6)%  1.8%pts     (41.8)%  (38.5)%  3.3%pts

 

Appendix 3: Monthly RevPAR(a) (CER)

 

 2022 vs 2021  Jan    Feb     Mar
 Group         54.8%  72.3%   56.9%
 Americas      53.7%  65.1%   55.7%
 EMEAA         92.7%  122.7%  146.1%
 G. China      5.6%   36.9%   (39.8)%

 

 2022 vs 2019  Jan      Feb      Mar
 Group         (24.4)%  (18.1)%  (12.1)%
 Americas      (14.2)%  (8.2)%   (2.6)%
 EMEAA         (41.9)%  (36.6)%  (22.5)%
 G. China      (38.4)%  (31.7)%  (53.1)%

 

 2021 vs 2020  Jan      Feb      Mar      Apr     May     Jun     Jul     Aug      Sep      Oct     Nov      Dec
 Group         (51.7)%  (47.7)%  20.8%    228.0%  156.7%  108.4%  91.9%   52.8%    55.7%    62.8%   75.8%    77.9%
 Americas      (44.2)%  (44.2)%  20.7%    245.3%  160.4%  108.0%  98.6%   68.3%    63.0%    67.2%   84.7%    92.0%
 EMEAA         (72.2)%  (69.7)%  (21.5)%  183.4%  194.1%  165.4%  100.9%  77.8%    82.4%    107.9%  137.1%   112.0%
 G. China      (21.9)%  335.0%   288.6%   199.6%  107.5%  51.3%   45.3%   (43.0)%  (15.6)%  (8.7)%  (30.4)%  (14.6)%

 

 2021 vs 2019  Jan      Feb      Mar      Apr      May      Jun      Jul      Aug      Sep      Oct      Nov      Dec
 Group         (52.5)%  (53.8)%  (46.6)%  (41.4)%  (37.1)%  (31.0)%  (18.4)%  (23.0)%  (21.5)%  (19.2)%  (19.1)%  (12.1)%
 Americas      (45.1)%  (45.4)%  (39.4)%  (32.3)%  (27.8)%  (19.7)%  (7.3)%   (12.1)%  (10.6)%  (10.5)%  (7.4)%   0.4%
 EMEAA         (71.1)%  (72.7)%  (70.6)%  (70.1)%  (65.8)%  (59.4)%  (48.2)%  (38.2)%  (42.8)%  (36.3)%  (33.2)%  (30.2)%
 G. China      (41.5)%  (51.1)%  (23.2)%  (14.9)%  (12.0)%  (21.5)%  (6.4)%   (55.2)%  (25.9)%  (24.6)%  (46.3)%  (28.1)%

 

 2020 vs 2019  Jan      Feb      Mar      Apr      May      Jun      Jul      Aug      Sep      Oct      Nov      Dec
 Group         (1.5)%   (10.8)%  (55.1)%  (81.9)%  (75.6)%  (67.4)%  (58.1)%  (51.0)%  (50.9)%  (51.9)%  (55.3)%  (52.4)%
 Americas      0.2%     (0.9)%   (49.0)%  (80.1)%  (72.5)%  (62.0)%  (54.0)%  (48.6)%  (46.4)%  (48.0)%  (51.4)%  (49.5)%
 EMEAA         2.1%     (11.3)%  (62.7)%  (89.3)%  (88.5)%  (85.3)%  (74.7)%  (66.3)%  (69.9)%  (70.5)%  (72.4)%  (68.6)%
 G. China      (24.6)%  (89.3)%  (81.4)%  (71.2)%  (57.1)%  (48.6)%  (35.9)%  (20.2)%  (11.0)%  (16.9)%  (22.5)%  (15.1)%

 

(a)  RevPAR is presented on a comparable basis, comprising groupings of
hotels that have traded in all months in both years being compared. Comparable
hotel groupings will be different for comparisons between 2022 vs 2021, 2022
vs 2019, 2021 vs 2020, 2021 vs 2019 and 2020 vs 2019. See 'Use of non-GAAP
measures' in IHG's full year results announcement for further information on
the definition of RevPAR.

 

Appendix 4: System and pipeline summary of Q1 YTD 2022 movements and total
closing position (rooms):

 

           System                                                               Pipeline
           Openings  Removals  Net    Total    YTD%   YOY%    Adjusted YOY%(b)  Signings  Total
 Group     6,600     (2,107)   4,493  884,820  +0.5%  +0.1%   +3.4%             16,628    277,503
 Americas  2,204     (260)     1,944  501,033  +0.4%  (1.9)%  +1.2%             7,759     100,299
 EMEAA     3,468     (951)     2,517  226,717  +1.1%  +0.1%   +4.2%             2,287     79,706
 G. China  928       (896)     32     157,070  +0.0%  +7.3%   +9.9%             6,582     97,498

 

(b) Adjusting for the removals of Holiday Inn and Crowne Plaza rooms that
occurred later in 2021, driven by the review that was completed that year with
34.3k (151 hotels) exiting IHG's system for these two brands for the year as a
whole, of which 6.3k (31 hotels) exited in Q1 2021 and 28.0k (120 hotels)
exited in the balance of the year.

 

Cautionary note regarding forward-looking statements:

This announcement contains certain forward-looking statements as defined under
United States law (Section 21E of the Securities Exchange Act of 1934) and
otherwise. These forward-looking statements can be identified by the fact that
they do not relate only 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. These statements are based on assumptions and assessments made by
InterContinental Hotels Group PLC's management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. 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. The main factors that could
affect the business and the financial results are described in the 'Risk
Factors' section in the current InterContinental Hotels Group PLC's Annual
report and Form 20-F filed with the United States Securities and Exchange
Commission.

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