REG - Interco. Hotels Grp - Half-year Report
09/08/2022 07:00
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RNS Number : 3300V InterContinental Hotels Group PLC 09 August 2022
InterContinental Hotels Group PLC
Half Year Results to 30 June 2022
9 August 2022
Reported Underlying(1)
2022 2021 % change(2) % change
REPORTABLE SEGMENTS(1):
Revenue(1) $840m $565m +49% +53%
Revenue from fee business(1) $664m $505m +31% +33%
Operating profit(1) $377m $188m +101% +91%
Fee margin1 55.9% 44.1% +11.8%pts
Adjusted EPS(1) 121.7¢ 40.4¢ +201% KEY METRICS:
GROUP RESULTS: · $11.7bn total gross revenue(1)
Total revenue $1,794m $1,179m +52% +48% vs 2021, (14)% vs 2019
Operating profit $361m $138m +162% · +51% global H1 RevPAR(1)
Basic EPS 117.4¢ 26.2¢ +348% vs 2021, (10.5)% vs 2019
Interim dividend per share 43.9¢ - ¢ NM · +44% global Q2 RevPAR(1)
Net debt(1) $1,718m $2,458m (30)% vs 2021, (4.5)% vs 2019
(1 ) Definitions for non-GAAP measures can be found in the 'Use of key
performance measures and non-GAAP measures' section, along with
reconciliations of these measures to the most directly comparable line items
within the Financial Statements.
(2 ) Percentage change shown unless not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
● Further significant improvement in trading: Americas Q2 RevPAR vs 2019 +3.5%,
strong sequential improvement also in EMEAA to (10.3)%; Greater China (48.9)%
due to localised travel restrictions
● H1 average daily rate +24% vs 2021, up +4% vs 2019; occupancy +10%pts vs 2021,
(10)%pts vs 2019
● Gross system growth +4.8% YOY, net +3.0% YOY (adjusted for Holiday Inn and
Crowne Plaza removals in H2 2021, and the impact of exiting Russia in H1
2022)
● Opened 14.9k rooms (96 hotels) in H1; global estate now at 883k rooms (6,028
hotels)
● Signed 30.7k rooms (210 hotels) in H1; global pipeline now at 278k rooms
(1,858 hotels)
● Luxury & Lifestyle portfolio now 445 hotels, 12% of system size; a further
287 hotels represent 19% of group pipeline
● IHG One Rewards transforms our loyalty programme; further developments to
enhance our digital advantage
● Operating profit from reportable segments of $377m, +101% vs 2021, (down (8)%
vs 2019); reported operating profit of $361m, after System Fund result of $3m
and operating exceptionals of $(19)m
● Net cash from operating activities of $175m (2021: $173m), with adjusted free
cash flow(1) of $142m (2021: $147m); net debt reduction of $163m since start
of the year includes $227m of net foreign exchange benefit
● Trailing 12-month adjusted EBITDA(1) of $812m, +78% on a year earlier; net
debt:adjusted EBITDA reduced to 2.1x
● Resumption of interim dividend at 43.9¢, +10% on prior interim payment in
2019
● Additional $500m of surplus capital to be returned via new share buyback
programme
Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said:
"We saw continued strong trading in the first half of 2022 with increased
demand for travel in most of our markets. This brought group RevPAR very close
to pre-pandemic levels in the second quarter. Alongside leisure stays, the
return of business and group travel demand continued to build over the period,
and our hotels are seeing increased pricing power due to the strength of IHG's
brands, loyalty programme and technology platform.
The recovery in demand and pricing led to group profit more than doubling
versus 2021, with profitability in the Americas now ahead of 2019. The EMEAA
region also saw excellent improvement in performance. Whilst Greater China had
a tough period as Covid-related travel restrictions were tightened, we have
since seen a strong recovery in the most recent months, although risk of
further volatility in trading in the region still remains.
Our overall performance reflects a continued focus to build a stronger
business for our guests and owners. We have significantly enhanced and
expanded our brand portfolio in recent years, and invested in our enterprise
platform to drive performance and accelerate our growth. The investments we
have made to innovate our technology and distribution channels continue to
drive improvements in both the guest experience and owner returns. Some of the
biggest achievements this year include the critical step of transforming our
loyalty programme, IHG One Rewards, and the redesign of our mobile app and
digital channels to deliver a faster, simpler booking experience.
We opened almost 100 hotels in the half, passing the 6,000 milestone globally,
and signed more than 200 properties to take our pipeline to 1,858,
representing over 30% of today's system size. We continue to see growing
interest in conversion opportunities which represented more than a quarter of
openings in the period. This illustrates the increasing appeal to hotel owners
of accessing IHG's brands and the significant scale and demand delivery
capability of our enterprise platform.
IHG's clear strategy over the last five years has seen us emerge from the
pandemic a stronger and more resilient company, delivering on key priorities
and progressing our ambitious 2030 Journey to Tomorrow responsible business
commitments. Whilst the economic outlook faces uncertainties as central banks
and governments take action to manage inflation, we remain confident in our
business model and the attractive industry fundamentals that will drive
long-term sustainable growth. Having reinstated a final dividend in respect of
2021 six months ago, the strong performance seen in 2022 to date, together
with the confidence we have in continued progress, has led us to reintroduce
an interim dividend at a level 10% higher than when last paid and launch an
initial $500m share buyback."
For further information, please contact:
Investor Relations: Stuart Ford (+44 (0)7823 828 739);
Aleksandar Milenkovic (+44 (0)7469 905 720);
Joe Simpson (+44 (0)7976 862 072)
Media Relations: Amy Shields (+44 (0)7881 035 550); Claire
Scicluna (+44 (0)7776 778 808)
Presentation for analysts and institutional shareholders:
A conference call and webcast presented by Keith Barr, Chief Executive Officer, and Paul Edgecliffe-Johnson, Chief Financial Officer and Group Head of Strategy, will commence at 9:30am (London time) on 9 August 2022 and can be accessed at
www.ihgplc.com/en/investors/results-and-presentations (https://www.ihgplc.com/en/investors/results-and-presentations)
or directly on
https://www.investis-live.com/ihg/62cea1f8d9438014007fbae3/ihgq2 (https://www.investis-live.com/ihg/62cea1f8d9438014007fbae3/ihgq2)
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: 91 98 94
An archived webcast of the presentation is expected to be available later on
the day of the results and will remain on it for the foreseeable future,
accessed at www.ihgplc.com/en/investors/results-and-presentations
(http://www.ihgplc.com/en/investors/results-and-presentations) . An audio
replay will also be available for 7 days using the following details:
UK: 0203 936 3001
US: +1 845 709 8569
All other locations: +44 203 936 3001
Passcode: 07 07 21
Website:
The full release and supplementary data will be available on our website from
7:00am (London time) on 9 August. 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 over 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$)
. To download the new IHG One Rewards app, visit the Apple App
(https://apps.apple.com/us/app/ihg-hotel-deals-rewards/id368217298) or Google
Play (https://play.google.com/store/apps/details?id=com.ihg.apps.android)
stores.
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) .
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.
System size and pipeline progress
The long-term attractiveness of IHG's brands and the markets we operate in
have supported continued openings and signings activity in the first half of
2022:
● Global system of 883k rooms (6,028 hotels) at 30 June 2022, weighted 68%
across midscale segments and 32% across upscale and luxury
● Gross growth of +4.8% YOY, with 14.9k rooms (96 hotels) opened in H1, of which
8.3k (51 hotels) in Q2
● Removal of 12.4k rooms (59 hotels) in H1; this includes the impact of ceasing
all operations in Russia, resulting in the removal of 6.5k rooms (28 hotels),
equivalent to 0.7% of IHG's global system
● Underlying removal rate of 1.8% YOY; the removals in H1 2022 equate to an
annualised underlying rate of 1.4%, broadly in line with historical average
underlying rate of ~1.5%
● Net system size growth of +3.0% YOY (adjusted for Holiday Inn and Crowne Plaza
removals in H2 2021, and for Russia operations in H1 2022); unadjusted YOY
growth of (0.2)%
● Global pipeline of 278k rooms (1,858 hotels), which represents over 30% of
current system size; pipeline growth YTD of +2.7% (+3.5% excluding 2.2k rooms
impact from 7 pipeline hotels in Russia)
● Signed 30.7k rooms (210 hotels) in H1, of which 14.1k (90 hotels) in Q2
● Signings mix drives pipeline to be weighted 56% across midscale segments and
44% across upscale and luxury
● More than 40% of the global pipeline is under construction, broadly in line
with prior years
System and pipeline summary of movements in H1 2022 and total closing position
(rooms):
System Pipeline
Openings Removals Net Total YTD% YOY% Adjusted YOY%(a) Signings Total
Group 14,949 (12,379) 2,570 882,897 +0.3% (0.2)% +3.0% 30,732 278,275
Americas 4,287 (2,188) 2,099 501,188 +0.4% (1.8)% +0.6% 11,504 100,401
EMEAA 6,828 (8,844) (2,016) 222,184 (0.9)% (0.6)% +5.2% 8,111 80,079
G. China 3,834 (1,347) 2,487 159,525 +1.6% +5.9% +8.2% 11,117 97,795
(a) Adjusted for: 1) the removal of Holiday Inn and Crowne Plaza rooms that
occurred in H2 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 13.3k (57 hotels) exited in H1 2021 and 21.1k (94 hotels)
exited in the H2 2021; 2) the removal of 6.5k rooms (28 hotels) in Russia,
following IHG's announcements regarding ceasing all operations in that
country.
The regional performance reviews provide further detail of the system and
pipeline by region, and further analysis by brand and by ownership type.
Updates on our strategic priorities
Our four strategic priorities put the expanded brand portfolio we have built
in recent years at the heart of our business, and our owners and guests at the
heart of our thinking. Our priorities recognise the crucial role of a
sophisticated, well-invested digital approach, ensure we meet our growing
responsibility to care for and invest in our people, and make a positive
difference to our communities and planet.
We have increased our level of investment spending to meet these priorities,
including on developing our brand portfolio and hotel formats further, the
critical step of transforming our loyalty programme, and rolling out more
digital solutions. We have also invested in the resiliency and flexibility of
our core revenue-generating technology platforms to support future growth,
alongside enhancing the capabilities of our core HR systems and in
developments that help IHG and our hotel owners meet our Journey to Tomorrow
responsible business commitments.
We will continue to be agile and thoughtful on how we focus and shift our own
cost resources, together with those of the System Fund, as part of building
out competencies and capturing the significant opportunities for growth of
IHG's enterprise system. In 2021, fee business cost savings of $75m were
achieved and are sustainable into this and future years. As intended, the
additional temporary reductions in the 2021 cost base of $25m have been
redeployed this year. Whilst there is some pressure to the underlying level of
cost inflation in our overheads base, IHG is adept at driving incremental
efficiencies and scale advantage to help offset these, and delivering
productivity gains to further support our hotel owners.
1. Build loved and trusted brands
We continue to invest in all our brands, helping achieve scale and focusing on
design, service and quality. Recent highlights included:
Continued growth of our most established brands.
● The InterContinental brand opened three hotels in the period; growing to 205
across more than 60 countries. Its pipeline of 83 hotels and resorts
represents growth equivalent to 30% of current system size.
● Having reached 3,000 hotels in its 30th year last year, Holiday Inn Express is
now in 50 countries, and has a pipeline for a further 26% growth. Holiday Inn
Express achieved more than 60 signings in the period, with our Candlewood
Suites and Staybridge Suites extended stay brands together adding over 40
more.
Strengthening Holiday Inn and Crowne Plaza. Our review in 2021 addressed the
consistency and quality of the estates for these two brands, resulting in the
removal of 151 hotels or 10% of their combined estate, and owners committing
to improvements in 83 hotels.
● Both brands have pipelines equivalent to over 20% of their current system
size.
● Two-thirds of the Americas Holiday Inn estate and three-quarters of the Crowne
Plaza estate will have been recently updated. As part of this, 28 Crowne Plaza
hotels are being renovated in 2022, equivalent to the combined number
renovated over the previous four years. Recently renovated hotels are showing
strong performance metrics across occupancy, room rate, revenue market share
and guest satisfaction scores.
Driving more conversion to our brands. Conversions have grown to represent
around a quarter of signings and openings thanks to growing demand for access
to our revenue-generating systems, marketing and loyalty programmes to support
performance, increase efficiencies and drive returns for owners.
● Vignette Collection, our Luxury & Lifestyle conversion brand that launched
last August, has secured its first eight properties, with further strong
progress expected over the remainder of 2022.
● Our upscale conversion brand, voco, has reached 80 open and pipeline hotels.
With nine openings in the period, these included the first all-suites format
in Doha, a flagship property for the brand in Melbourne, and a presence in
four new country markets. The brand was recognised as the World's Leading
Premium Hotel Brand at the World Travel Awards, and is achieving top guest
satisfaction scores versus equivalent competing brands.
● Portfolio opportunities are also increasing, due to the broader suite of
brands and the overall enterprise system we can offer owners to support their
growth; three portfolio deals in EMEAA in H1 added 10 hotels across six
brands.
Excellent progress in growing our Luxury & Lifestyle presence. We have
grown this category to 12% of IHG's system size, and the proportion of our
pipeline is bigger still at 19%, up from 13% five years ago.
● A number of brand halo properties opened in the period, including an
all-suites-and-villas Regent property in Phu Quoc (Vietnam) and Australia's
first Kimpton (Sydney).
● There were six further Kimpton signings in the period and more resort
destinations for the brand including Kimpton Aysla Mallorca will be opening
soon.
● Signings for Six Senses increased its pipeline to 35 hotels, on top of 21
currently open.
● Hotel Indigo is set for a record year of openings; it has reached 134
properties across more than 20 countries, which is set to nearly double with a
pipeline of 120 hotels. There were 16 signings for the brand in the half,
including new resort properties in Barbados and Grand Cayman.
First Atwell Suites openings and the rapid scale of avid.
● The first two Atwell Suites properties to open have been the prototype
new-build at Denver Airport and an adaptive re-use at Miami Brickell, with 23
further hotels in the pipeline.
● Five new avid hotels opened in the half, taking the brand's presence to 53
locations, with the first opening in Canada later this year. The avid pipeline
totals 157 properties and the brand is outperforming peers in guest
satisfaction.
2. Customer centric in all we do
Delivering True Hospitality for Good means creating seamless and tailored
guest experiences that generate increased demand, whilst delivering high
returns for our owners.
IHG's Guest Satisfaction Index (GSI) has continued to maintain a global score
of over 100, which reflects outperformance against peers. The score on a
rolling 12-month basis to June 2022 was higher than the equivalent 2019
pre-Covid benchmark.
Transforming loyalty
Our loyalty programme is critical to our business and future growth. Our more
than 100 million loyalty members are responsible for around half of all room
nights globally each year, they stay in our hotels more often, and spend 20%
more than non-members. They are also 9x more likely to book direct, which is
our most profitable channel for owners.
This year we launched our transformed loyalty programme, IHG One Rewards, to
offer industry-leading value, richer benefits and greater choice for members
to enhance their stays. It also aims to attract more next-generation
travellers. The enhanced rewards include free breakfast for Diamond Elite
members and the ability for guests to choose the rewards that matter to them
most through the introduction of Milestone Rewards. To date:
● 14% more points have been redeemed year-to-date compared to 2019, with an 18%
increase in reward nights booked.
● Enrolments in Q2 2022 were more than 30% higher than the comparable period
last year, and year-on-year 11 million more loyalty members have been added.
● Within a month of launching Milestone Rewards, engagement has exceeded our
expectations and over 800,000 rewards have been earned.
● We also launched our largest marketing campaign in more than a decade to help
raise awareness and drive more revenue to our hotels for our owners.
Lowering costs and driving efficiencies for our owners
With increasing supply costs and supply chain issues, together with labour
shortages, our owners around the world rely heavily on IHG to help them run an
efficient business. We have continued to expand the benefits for owners of
being part of the IHG system, whilst also improving guest experience.
● We have further expanded the scale and reach of our procurement solutions for
operating supplies and equipment. More than 2,900 hotels in the Americas are
now participating in our F&B purchasing programme. These programmes
support menu optimisation, help owners mitigate inflationary pressures and
achieve absolute savings. Smaller owner groups recently onboarded in the UK
have seen typical savings of 7-15% on food costs and 10‑15% on beverage
costs.
● We are also helping owners lower construction and refurbishment costs in our
latest format upgrades and helping reduce other costs associated with
operating and maintaining their building infrastructure.
● IHG Voice Cloud, our enhanced intelligent call services solution, will be
supporting several hundred hotels by the end of the year. This typically saves
an owner around 50 hours a month of on-premises call handling, whilst also
driving better guest experiences, boosting loyalty enrolment and delivering
revenue up-sell.
● We are piloting renewable energy sourcing on behalf of our owners and
developing a power purchase agreement in a very competitive market. Owners
have also been able to lock-in substantial savings though our fixed negotiated
rates on other energy costs.
● The rollout of our IHG NextGen Payments system during 2022 and 2023 adds more
guest payment options including e-wallet, and lowers transaction and support
fees for our owners.
3. Create digital advantage
Our digital-first approach drives a higher percentage of direct bookings,
creates cost efficiencies, and delivers data and insights to optimise revenue
management decisions. Developments to date in 2022 included:
● Booking flow improvements. Newly designed webpages that combine rooms and
rates choices have contributed to increases in booking conversion of up to one
percentage point and revenue uplift of 2 to 3%. This new web experience has
also driven a 10 percentage point increase in enrolments to our IHG One
Rewards programme.
● Stay enhancements and attribute pricing. Pilots progressing well to drive
cross-sell of non-room extras and for room up-sell which enable owners to
generate maximum value from the unique attributes of their room inventory.
● Next generation IHG mobile app released. The IHG mobile app is our
fastest-growing revenue channel. Amongst many enhancements, the new app offers
streamlined booking and allows guests to check-in faster, and it powers IHG
One Rewards to provide members with seamless access to their loyalty benefits,
including the ability to choose and redeem Milestone Rewards. Enhancements are
expected to further increase direct bookings and loyalty engagement, and drive
incremental spend during stays. Since its relaunch, revenue driven by our
mobile app for the Americas and EMEAA regions has been at 30% higher levels
than 2019.
4. Care for our people, communities and planet
Central to our priority to care for our people, communities and planet, and
our purpose of True Hospitality for Good, is our 2030 Journey to Tomorrow
plan, which launched in 2021 with a series of ambitious commitments.
People
Creating a culture where everyone feels valued and able to thrive is a vital
part of our ability to attract, develop and retain a more diverse range of
talent with different experiences and backgrounds. We are making investments
in multiple areas to achieve this:
● Over the next three years we are investing significantly to enhance the
capabilities of our core HR platforms and technology, to deliver a more
seamless user experience and the right data and insights needed to drive
performance. A new flagship learning and development offering is also being
developed across the business to support talent.
● We continue to make progress on our commitment to increase ethnic minority
leadership representation at a corporate level, notably US ethnic minority
leadership where we have committed to doubling representation between 2020 and
2025 (was 13%, now 20%, with a goal of 26% in 2025). Conscious inclusion
training is being extended to frontline hotel employees and we are also
piloting new inclusive hiring practices in different markets.
● As one of many programmes to diversify representation in leadership roles,
more than 100 colleagues have so far graduated from our RISE programme to
increase the number of women in General Manager and other senior positions in
our managed hotels.
Communities
IHG is proud to be at the heart of thousands of communities around the world,
as we strive to make a difference every day by delivering our purpose of True
Hospitality for Good.
● The IHG Skills Academy, a free virtual learning platform, is being translated
into more languages to broaden the global reach of our IHG Academy programme
and continue to break down barriers to education and training.
● In response to the war in Ukraine and the humanitarian crisis it has caused,
IHG made significant donations to our humanitarian charity partners, and has
committed to work with our hotel owners in other countries to shelter and
recruit refugees. We have a dedicated Refugees Careers Site at
careers.ihg.com/Ukraine-support
(https://ihg.sharepoint.com/sites/IRTeam573/Shared%20Documents/Results/2022/Interims%20HY22%20-%209%20Aug%202022/SEA%20drafting/SF%20working%20folder/careers.ihg.com/Ukraine-support)
.
Planet
As part of our Journey to Tomorrow commitments, our 2030 science-based target
is to reduce scope 1, 2 and 3 greenhouse gas emissions by 46%.
● New training has been rolled out for our Hotel Energy Reduction Opportunities
(HERO) tool, which gives owners bespoke sustainability recommendations, costs
and savings based upon their hotel's individual data and characteristics.
● We continue to roll-out automated data collection across our business to make
it easier for our hotels to understand and measure their environmental
impacts, identify areas for reduction and track progress.
● An energy metric has been introduced for all hotels as part of our strategy to
decarbonise the existing estate, as well as adding further measures to our
brand standards to conserve energy and water.
● As part of our commitments to tackle waste, we recently announced a global
collaboration with Unilever to replace bathroom miniatures with bulk amenities
for 4,000 more hotels. The initiative is expected to save at least 850 tonnes
of plastic annually in the Americas region alone and provide hotels with
savings of 10-30% versus current costs.
Capital allocation: resumption of interim dividend at 10% increased level and
$500m share buyback
IHG's asset-light business model is highly cash generative through the cycle
and enables us to invest in our brands and strengthen our enterprise. We have
a disciplined approach to capital allocation which ensures that the business
is appropriately invested in, whilst looking to maintain an efficient and
conservative balance sheet.
The Board's perspectives on the uses of cash generated by the business are
unchanged: ensuring the business is appropriately invested in to optimise
growth that drives long-term shareholder value creation, funding a sustainably
growing dividend, and then returning surplus capital to shareholders, whilst
targeting our leverage ratio within a range of 2.5-3.0x net debt:adjusted
EBITDA to maintain an investment grade credit rating. IHG's capital allocation
approach delivered a strong track record of returning $13.6bn to shareholders
since demerger in 2003 through to 2019, $2.4bn through ordinary dividends and
$11.2bn via additional returns.
In February, we announced the results for 2021 showing that trading had
improved significantly, leading to profitability rebounding, accompanied by
strong cash flow and a reduction in net debt. This resulted in our net
debt:adjusted EBITDA ratio returning to 3.0x at 31 December 2021. As a
consequence, a final dividend of 85.9¢ in respect of 2021 was proposed by the
Board and subsequently paid in May 2022, resulting in a cash outflow of $154m.
This dividend was equivalent to the final payment in respect of 2019 that was
withdrawn in 2020 in response to the onset of Covid.
With the further improvement in profitability and reduction in net debt in the
first half of 2022, our net debt:adjusted EBITDA ratio reduced to 2.1x at 30
June 2022. The Board is therefore recommending an interim dividend of 43.9¢,
which represents growth of 10% on the 39.9¢ interim dividend paid in 2019 (no
interim dividend was paid in respect of 2020 or 2021). The ex-dividend date is
Thursday 1 September 2022 and the Record date is Friday 2 September 2022. The
dividend will be paid on Thursday 6 October 2022, resulting in a cash outflow
of around $80m. This will result in total dividends paid to shareholders in
2022 amounting to approximately $235m.
Furthermore, the Board has reviewed the opportunity to return surplus capital
to shareholders. As a result, an additional $500m is expected to be returned
through a share buyback programme that will commence immediately and end no
later than 31 January 2023. This initial additional return is considered
appropriate in the current environment, maintaining our disciplined approach
to investing in the business to drive future growth, which in 2022 includes
significant increases in capital expenditure as well as substantial operating
cost investment to deliver our strategic priorities.
It is expected that substantial additional capacity will be generated in the
coming years to enable continued investment to drive growth, the funding of a
sustainably growing ordinary dividend, and further surplus capital to be
returned to shareholders. The Board will continue to actively assess these
opportunities as the trading environment further evolves.
Summary of financial performance
INCOME STATEMENT SUMMARY
6 months ended 30 June
2022 2021 %
$m $m change
Revenue
Americas 471 325 44.9
EMEAA 239 84 184.5
Greater China 36 59 (39.0)
Central 94 97 (3.1)
____ ____ ____
Revenue from reportable segments(a) 840 565 48.7
System Fund revenues 554 378 46.6
Reimbursement of costs 400 236 69.5
_____ _____ _____
Total revenue 1,794 1,179 52.2
_____ _____ _____
Operating profit
Americas 351 224 56.7
EMEAA 59 (27) NM(b)
Greater China 5 31 (83.9)
Central (38) (40) (5.0)
_____ ____ _____
Operating profit from reportable segments(a) 377 188 100.5
Analysed as:
Fee Business excluding central 410 264 55.3
Owned, leased and managed lease 5 (36) NM(b)
Central (38) (40) (5.0)
System Fund result 3 (46) NM(b)
____ ____ ____
Operating profit before exceptional items 380 142 167.6
Operating exceptional items (19) (4) 375.0
____ ____ ____
Operating profit 361 138 161.6
Net financial expenses (69) (72) (4.2)
Analysed as:
Adjusted interest expense(a) (64) (72) (11.1)
System Fund interest 3 - NM(b)
Foreign exchange losses (8) - NM(b)
Fair value gains on contingent purchase consideration 7 1 600.0
____ ____ ____
Profit before tax 299 67 346.3
Tax (83) (19) 336.8
Analysed as;
Tax before exceptional items and System Fund(a) (88) (42) 109.5
Tax on exceptional items and exceptional tax 5 23 (78.3)
____ ____ ____
Profit for the period 216 48 350.0
Adjusted earnings(c) 224 74 202.7
Basic weighted average number of ordinary shares (millions) 184 183 0.5
____ ____ ____
Earnings per ordinary share
Basic 117.4¢ 26.2¢ 348.1
Adjusted(a) 121.7¢ 40.4¢ 201.2
Dividend per share 43.9¢ - NM(b)
Average US dollar to sterling exchange rate $1: £0.77 $1: £0.72 6.9
(a) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
(b ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
(c) Adjusted earnings as used within adjusted earnings per share, a
non-GAAP measure.
Revenue
Trading improved significantly over the first half of 2022, with Group
comparable RevPAR(a) at the end of the first half reaching near pre-pandemic
levels. Through the first half, trading conditions improved as
government-mandated restrictions eased across many markets. Strong trading in
Americas was predominantly driven by leisure demand in the US, supported by
improving corporate and group bookings. Trading in the EMEAA region also saw
strong sequential improvement whilst Greater China was impacted by localised
travel restrictions for much of the first half.
Group comparable RevPAR(a) improved 60.8% in the first quarter, then grew
43.9% in the second quarter and 50.7% in the half. When compared to the
pre-pandemic levels of 2019, Group comparable RevPAR(a) declined 17.7% in the
first quarter, 4.5% in the second quarter and 10.5% in the half.
Our other key driver of revenue, net system size, decreased by 0.2%
year-on-year to 882.9k rooms, impacted by 21.1k Holiday Inn and Crowne Plaza
removals in H2 2021 related to last year's review of the estates of these two
brands and by 6.5k of removals relating to Russia in H1 2022. Adjusting for
these, net system size increased 3.0%.
During the six months ended 30 June 2022, total revenue increased by $615m
(52%) to $1,794m, including a $164m increase in cost reimbursement revenue.
Revenue from reportable segments(b) increased by $275m (49%) to $840m, driven
by the improved trading conditions. Underlying revenue(b) increased by $287m
to $833m, with underlying fee revenue(b) increasing by $162m. Owned, leased
and managed lease revenue increased by $116m.
Operating profit and margin
Operating profit improved by $223m from $138m to $361m, including a $15m
increase in charges from operating exceptional items and a $49m improvement in
the System Fund result, from a $46m deficit to a $3m surplus.
Operating profit from reportable segments(b) increased by $189m (101%) to
$377m, driven by improvement in trading conditions. Underlying operating
profit(b) increased $175m to $368m.
Fee margin(b) increased by 11.8 percentage points to 55.9%, benefitting from
the improvement in trading and focussed cost management.
The impact of the movement in average USD exchange rates for the first half of
2021 compared to the first half of 2022 netted to a $3m gain on operating
profit from reportable segments(b).
If the average exchange rate during July 2022 had existed throughout the first
half of 2022, the 2022 operating profit from reportable segments would have
been $4m higher.
System Fund
The Group operates a System Fund to collect and administer cash assessments
from hotel owners for the specific purpose of use in marketing, reservations,
and the Group's loyalty programme, IHG One Rewards. The System Fund also
benefits from proceeds from the sale of loyalty points under third-party
co-branding arrangements. The Fund is not managed to generate a profit or loss
for IHG over the longer term, although an in-year surplus or deficit can
arise, but is managed for the benefit of hotels in the IHG System with the
objective of driving revenues for the hotels.
In the six months to 30 June 2022, System Fund revenues increased $176m (46%)
to $554m, primarily driven by the recovery in travel demand yielding higher
assessment revenues.
The System Fund result improved from a $46m deficit to a $3m surplus,
primarily due to the rebound in travel demand and associated assessment
income, partially offset by increased investments in consumer marketing,
loyalty and direct channels.
Reimbursement of costs
Cost reimbursement revenue represents reimbursements of expenses incurred on
behalf of managed and franchised properties and relates, predominantly, to
payroll costs at managed properties where we are the employer. As we record
cost reimbursements based upon costs incurred with no added mark up, this
revenue and related expenses have no impact on either our operating profit or
net profit for the year.
In the six months to 30 June 2022, reimbursable revenue increased by $164m
(70%) to $400m. The increase reflects the overall recovery in US trading
conditions.
(a) Comparable RevPAR includes the impact of hotels temporarily closed as a
result of Covid-19.
(b) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
Operating exceptional items
Operating exceptional items totalled $19m and comprises the costs of ceasing
operations in Russia and the impairment of contract assets relating to managed
and franchised hotels in Russia. Further information on exceptional items can
be found in note 5 to the Interim Financial Statements.
Net financial expenses
Net financial expenses decreased by $3m to $69m. Adjusted interest(a), which
excludes exceptional finance expenses, and adds back interest relating to the
System Fund, reduced by $8m compared to 2021, driven by favourable translation
of sterling bond interest expense.
Fair value gains on contingent purchase consideration
Contingent purchase consideration arose on the acquisition of Regent. The net
gain of $7m (2021: $1m) relates to a favourable movement in the bond rates
used in the valuation. The total contingent purchase consideration liability
at 30 June 2022 is $66m (31 December 2021: $73m).
Taxation
The interim effective rate of tax on profit, before exceptional items and
System Fund, was 28% (2021: 36%). This lower effective tax rate ('ETR') is a
result of the continued recovery of the business, in particular, changes to
the Group's profit mix and a lesser impact of fixed items of tax within the
ETR (due to the higher profit base). Taxation within exceptional items
totalled a credit of $5m (2021: $23m) and predominantly relates to the tax
reliefs on the costs of ceasing business in Russia. Further information on tax
within exceptional items can be found in note 5 to the Interim Financial
Statements. Net tax paid totalled $124m (2021: $47m). Further information on
tax can be found in note 6 to the Interim Financial Statements.
Earnings per share
The Group's basic earnings per ordinary share is 117.4¢ (2021: 26.2¢).
Adjusted earnings per ordinary share(a) increased by 81.3¢ to 121.7¢.
Dividends and shareholder returns
With the further improvement in profitability and reduction in net debt in the
first half of 2022, our net debt:adjusted EBITDA ratio reduced to 2.1x at 30
June 2022. The Board is therefore recommending an interim dividend of 43.9¢,
which represents growth of 10% on the 39.9¢ interim dividend paid in 2019 (no
interim dividend was paid in respect of 2020 or 2021).
The ex-dividend date is Thursday 1 September 2022 and the Record date is
Friday 2 September 2022. The corresponding dividend amount in Pence Sterling
per ordinary share will be announced on 15 September 2022, calculated based on
the average of the market exchange rates for the three working days commencing
12 September 2022. The dividend will be paid on Thursday 6 October, resulting
in a cash outflow of around $80m. This will result in total dividends paid to
shareholders in 2022 amounting to approximately $235m.
In addition to the interim dividend, in line with its strategy to return
surplus capital to shareholders, in August 2022 the Board also approved a
$500m share buyback programme that will commence on 9 August and end no later
than 31 January 2023.
(a) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
Summary of cash flow, working capital, net debt and liquidity
Adjusted EBITDA reconciliation
6 months ended 30 June
2022 2021
$m $m
Restated(a)
Cash flow from operations 336 259
Cash flows relating to exceptional items 15 12
Impairment loss on financial assets (5) (8)
Other non-cash adjustments to operating profit/loss (34) (35)
System Fund result (3) 46
System Fund depreciation and amortisation (42) (41)
Other non-cash adjustments to System Fund result (13) (10)
Working capital and other adjustments 124 (6)
Capital expenditure: contract acquisition costs (key money) 35 16
________ ________
Adjusted EBITDA 413 233
____ ____
CASH FLOW SUMMARY 6 months ended 30 June
2022 2021 $m
$m $m change
Adjusted EBITDA(b) 413 233 180
Working capital and other adjustments (124) 6
Impairment loss on financial assets 5 8
Other non-cash adjustments to operating profit/loss 34 35
System Fund result 3 (46)
Non-cash adjustments to System Fund result 55 51
Capital expenditure: contract acquisition costs (key money) net of repayments (35) (16)
Capital expenditure: maintenance (15) (9)
Cash flows relating to exceptional items (15) (12)
Net interest paid (37) (39)
Tax paid (124) (47)
Principal element of lease payments (18) (17)
____ ____ ____
Adjusted free cash flow(b) 142 147 (5)
Capital expenditure: gross recyclable investments (1) (9)
Capital expenditure: gross System Fund capital investments (18) (7)
Deferred purchase consideration paid - (13)
Disposals and repayments, including other financial assets 7 1
Dividends paid to shareholders (154) -
____ ____ ____
Net cash flow before other net debt movements (24) 119 (143)
Add back principal element of lease repayments within adjusted free cash flow 18 17
Exchange and other non-cash adjustments 169 (65)
____ ____ ____
Decrease in net debt(b) 163 71 92
Net debt at beginning of the period (1,881) (2,529)
______ ______ ____
Net debt at end of the period (1,718) (2,458) 740
______ ______ ____
(a) The definition and reconciliation of Adjusted EBITDA has been amended to
reconcile to the nearest GAAP measure, cash flow from operations, reflecting
the fact Adjusted EBITDA is primarily used by the Group as a liquidity
measure. The value of Adjusted EBITDA is unchanged from 2021.
(b) Definitions for non-GAAP measures can be found in the 'Use of key
performance measures and non-GAAP measures' section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
Cash flow from operations
Cash flow from operations was $336m for the six months ended 30 June 2022, an
increase of $77m on the previous year, primarily reflecting the increase in
operating profit, offset by negative working capital movements (see below).
Cash flow from operations is the principal source of cash used to fund the
ongoing operating expenses, interest payments, maintenance capital expenditure
and normal dividend payments of the Group.
Cash from investing activities
Net cash outflows from investing activities decreased by $10m to $27m, largely
due to the non-recurrence of deferred consideration paid in H1 2021 of $13m in
relation to the acquisition of the Regent brand. There was an overall increase
in purchases of property, plant and equipment and intangible assets of $17m,
partially offset by reduced investment in other financial assets of $9m. The
Group had committed contractual capital expenditure of $26m at 30 June 2022
(31 December 2021: $17m).
Cash used in financing activities
Net cash outflows from financing activities totalled $172m (2021: $845m)
primarily comprising payment of ordinary dividends of $154m. There were no
debt repayments in H1 2022 (H1 2021: repayment of the £600m commercial paper
under the UK Covid Corporate Financing Facility (CCFF)).
Adjusted free cash flow
Adjusted free cash flow(a) was an inflow of $142m, a reduction of $5m on the
six months to June 2021, reflecting an improvement in operating profit from
reportable segments(a) and system fund result, offset by related tax payments
and net working capital outflows. Exceptional cash costs of $15m increased by
$3m and include the cost of ceasing operations in Russia.
Working capital
Trade and other receivables increased by $117m, from $574m at 31 December 2021
to $691m, primarily due to the significant increase in RevPAR in the second
quarter of 2022 compared to the fourth quarter of 2021. Trade and other
payables reduced by $66m primarily driven by payment of the 2021 bonus. The
cash inflow related to deferred revenue was $65m driven by an increase in the
future redeemable points balance related to the loyalty programme.
Net and gross capital expenditure
Net capital expenditure(a) was $22m (2021: $1m) and gross capital expenditure
was $72m (2021: $42m). Gross capital expenditure comprised: $53m maintenance
capex and key money; $1m gross recyclable investments; and $18m System Fund
capital investments. Net capital expenditure includes the offset from $4m
proceeds from other financial assets, $3m net disposal proceeds, $3m key money
repayments and $40m System Fund depreciation and amortisation(b).
Net debt
At 30 June 2022, net debt(a) was $1,718m (31 December 2021: $1,881m), after
favourable foreign exchange of $227m driven by translation of the Group's
sterling bond debt, offset by $58m of other non-cash adjustments.
Sources of liquidity
As at 30 June 2022, the Group had total liquidity of $2,613m (31 December
2021: $2,655m), comprising $1,350m of undrawn bank facilities and $1,263m of
cash and cash equivalents (net of overdrafts and restricted cash). The change
in total liquidity from December 2021 is due to the decrease in cash and cash
equivalents, net of overdrafts, of $24m and unfavourable foreign exchange
movement on cash of $70m, offset by the change in restricted cash balances of
$52m(c).
The Group currently has $2,550m of sterling and euro bonds outstanding. The
current bonds mature in November 2022 (£173m), October 2024 (€500m), August
2025 (£300m), August 2026 (£350m), May 2027 (€500m) and October 2028
(£400m). There are currency swaps in place on both the euro bonds, fixing the
October 2024 bond at £454m and the May 2027 bond at £436m.
The Group currently has a senior unsecured long-term credit rating of BBB-
from Standard and Poor's.
(a. ) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
(b. ) Excluding $2m depreciation of right-of-use assets.
(c. ) See note 10 within the Interim Financial Statements for further
details.
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
facilities announced in December 2020, which included a relaxation of
covenants for 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. The interest
cover covenant requires a ratio of Covenant EBITDA to Covenant interest
payable above 3.5:1 and 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. The new facility uses alternative reference rates
instead of LIBOR.
At 30 June 2022 the leverage ratio was 2.16x and the interest cover ratio was
6.11x. See note 10 in the Interim Financial Statements for further
information. The facility was undrawn at 30 June 2022.
The Group is in compliance with all of the applicable financial covenants in
its loan documents, none of which are expected to present a material
restriction on funding in the near future.
In the Group's opinion, the available facilities are sufficient for the
Group's present liquidity requirements. However, the Group continues to assess
its liquidity position and financing options and will take further actions as
necessary.
The Group had net liabilities of $1,175m at 30 June 2022 ($1,474m at 31
December 2021).
Additional revenue, global system size and pipeline analysis
Total gross revenue
Total gross revenue(a) provides a measure of the overall strength of the
Group's brands. It comprises total rooms revenue from franchised hotels and
total hotel revenue from managed, owned, leased and managed lease hotels and
excludes revenue from the System Fund and reimbursement of costs. Other than
owned, leased and managed lease hotels, total gross revenue is not revenue
attributable to IHG as it is derived from hotels owned by third parties.
6 months ended 30 June
2022 2021 %
$bn $bn change(b)
Analysed by brand
InterContinental 1.7 1.0 65.6
Kimpton 0.6 0.3 116.9
Hotel Indigo 0.3 0.2 92.8
Crowne Plaza 1.3 1.0 35.8
Holiday Inn 2.4 1.6 46.7
Holiday Inn Express 3.8 2.7 40.4
Staybridge Suites 0.6 0.4 35.7
Candlewood Suites 0.4 0.3 20.3
Other 0.6 0.4 50.0
____ ____ ____
Total 11.7 7.9 48.0
____ ____ ____
Analysed by ownership type
Fee business 11.5 7.8 46.9
Owned, leased and managed lease 0.2 0.1 189.1
____ ____ ____
Total 11.7 7.9 48.0
____ ____ ____
Total gross revenue in IHG's system increased by 48% (50% increase at
constant currency) to $11.7bn, driven by the improvement in trading conditions
in many markets.
(a. ) Definitions for the key performance measures can be found in the
Use of key performance measures and non-GAAP measures section.
(b. ) Year-on-year percentage movement calculated from source figures.
RevPAR(a) movement summary
Half Year 2022 vs 2021 Half Year 2022 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 50.7% 24.4% 10.1%pts (10.5)% 3.9% (9.5)%pts
Americas 45.2% 22.1% 10.2%pts (1.6)% 5.6% (4.7)%pts
EMEAA 138.4% 35.3% 24.2%pts (20.9)% 1.0% (15.7)%pts
G. China (27.2)% (4.3)% (11.9)%pts (45.9)% (17.9)% (20.1)%pts
Q2 2022 vs 2021 Q2 2022 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 43.9% 23.5% 9.0%pts (4.5)% 7.4% (8.1)%pts
Americas 37.0% 20.2% 8.5%pts 3.5% 9.0% (3.7)%pts
EMEAA 146.8% 35.8% 28.8%pts (10.3)% 4.0% (10.4)%pts
G. China (39.5)% (8.9)% (19.8)%pts (48.9)% (18.7)% (23.5)%pts
RevPAR(a) movement at constant exchange rates (CER) vs. actual exchange rates
(AER)
Half Year 2022 vs 2021 Half Year 2022 vs 2019
CER AER Difference CER AER Difference
Group 50.7% 48.6% 2.1%pts (10.5)% (11.2)% 0.7%pts
Americas 45.2% 45.1% 0.1%pts (1.6)% (1.9)% 0.3%pts
EMEAA 138.4% 121.7% 16.7%pts (20.9)% (23.7)% 2.9%pts
G. China (27.2)% (27.4)% 0.2%pts (45.9)% (43.6)% (2.3)%pts
Q2 2022 vs 2021 Q2 2022 vs 2019
CER AER Difference CER AER Difference
Group 43.9% 41.0% 2.9%pts (4.5)% (5.6)% 1.1%pts
Americas 37.0% 36.8% 0.2%pts 3.5% 3.2% 0.3%pts
EMEAA 146.8% 124.9% 21.9%pts (10.3)% (14.9)% 4.6%pts
G. China (39.5)% (40.9)% 1.4%pts (48.9)% (47.4)% (1.5)%pts
Monthly RevPAR(a) (CER)
2022 vs 2021 Jan Feb Mar Apr May Jun
Group 54.8% 72.3% 56.9% 50.1% 43.8% 39.2%
Americas 53.7% 65.1% 55.7% 48.1% 37.6% 28.0%
EMEAA 92.7% 122.7% 146.1% 165.1% 156.3% 126.0%
G. China 5.6% 36.9% (39.8)% (51.5)% (45.6)% (17.7)%
2022 vs 2019 Jan Feb Mar Apr May Jun
Group (24.4)% (18.1)% (12.1)% (7.9)% (5.4)% (0.6)%
Americas (14.2)% (8.2)% (2.6)% 2.9% 2.0% 5.5%
EMEAA (41.9)% (36.6)% (22.5)% (17.2)% (8.3)% (6.0)%
G. China (38.4)% (31.7)% (53.1)% (58.6)% (51.6)% (35.5)%
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 2019 and 2020 vs 2019. See Use of key performance
measures and non-GAAP measures section for further information on the
definition of RevPAR.
Hotels Rooms
Global hotel and room count Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 21 - 1,439 27
Regent 8 1 2,532 342
InterContinental 205 1 69,525 123
Vignette Collection 2 1 539 393
Kimpton 75 - 13,304 21
Hotel Indigo 134 4 17,056 713
voco 40 9 9,447 2,002
HUALUXE 18 2 5,147 544
Crowne Plaza 402 (2) 110,317 (861)
EVEN Hotels 22 1 3,180 186
Holiday Inn(a) 1,206 (12) 220,860 (3,824)
Holiday Inn Express 3,044 28 320,970 3,641
avid hotels 53 5 4,771 491
Atwell Suites 2 2 186 186
Staybridge Suites 314 (1) 33,924 (382)
Candlewood Suites 363 2 32,222 197
Other(b) 119 (4) 37,478 (1,229)
_____ ____ _______ ______
Total 6,028 37 882,897 2,570
_____ ____ _______ ______
Analysed by ownership type
Franchised 5,078 45 630,895 4,780
Managed 931 (8) 247,381 (2,210)
Owned, leased and managed lease 19 - 4,621 -
_____ ____ _______ ______
Total 6,028 37 882,897 2,570
_____ ____ _______ ______
(a.) Includes 28 Holiday Inn Club Vacations properties (8,822 rooms) (2021:
28 Holiday Inn Club Vacations properties (8,679 rooms)).
(b.) Includes three open hotels that will be re-branded to voco.
Hotels Rooms
Global Pipeline Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 35 2 2,532 108
Regent 8 - 1,806 (132)
InterContinental 83 4 20,859 1,180
Vignette Collection 1 1 40 40
Kimpton 40 5 7,952 1,100
Hotel Indigo 120 6 19,403 951
voco 34 (4) 9,360 (730)
HUALUXE 21 (2) 5,506 (539)
Crowne Plaza 114 18 29,448 4,187
EVEN Hotels 28 (1) 4,776 (131)
Holiday Inn 245 1 47,234 (844)
Holiday Inn Express 650 5 82,079 (947)
avid hotels 157 (7) 13,601 (894)
Atwell Suites 23 - 2,268 (7)
Staybridge Suites 164 8 18,140 1,297
Candlewood Suites 111 18 9,213 1,448
Other(a) 24 7 4,058 1,228
_____ ____ _______ _____
Total 1,858 61 278,275 7,315
_____ ____ _______ _____
Analysed by ownership type
Franchised 1,328 38 162,276 4,444
Managed 529 23 115,844 2,871
Owned, leased and managed lease 1 - 155 -
_____ ____ _______ _____
Total 1,858 61 278,275 7,315
_____ ____ _______ _____
(a. ) Includes three voco pipeline hotels and five Vignette Collection
pipeline hotels.
Regional performance reviews, system size and pipeline analysis
AMERICAS
6 months ended 30 June
Americas Results
2022 2021 %
$m $m change
Revenue from the reportable segment(a)
Fee business 413 296 39.5
Owned, leased and managed lease 58 29 100.0
____ ____ ____
Total 471 325 44.9
____ ____ ____
Operating profit from the reportable segment(a)
Fee business 342 236 44.9
Owned, leased and managed lease 9 (12) NM(c)
____ ____ ____
351 224 56.7
Operating exceptional items - (4) NM(c)
____ ____ ____
Operating profit 351 220 59.5
____ _____ _______
6 months ended
Americas Comparable RevPAR(b) movement on previous year 30 June 2022
Fee business
InterContinental 162.3%
Kimpton 101.0%
Hotel Indigo 62.8%
Crowne Plaza 83.2%
EVEN Hotels 108.9%
Holiday Inn 50.0%
Holiday Inn Express 34.2%
Staybridge Suites 29.1%
Candlewood Suites 20.1%
All brands 44.9%
Owned, leased and managed lease
All brands 119.5%
H1 Comparable RevPAR(b) was up +45% vs 2021 (down (1.6)% vs 2019). Trading in
January was challenging given the initial impacts on travel volumes as a
result of the Omicron variant of Covid-19; sequential improvements in
RevPAR(b) resumed in February. Leisure demand continued to be strongest, with
business demand strengthening as the period went on with more corporate
bookings and group activity and events returning. Q2 RevPAR(b) was up +37% vs
2021 (up +3.5% vs 2019) with occupancy of 70%; occupancy was four percentage
points lower than 2019, which was more than offset by rate 9% higher than 2019
levels. US Q2 RevPAR(b) was up +3.9% vs 2019 with occupancy four percentage
points lower and rate 9% higher than 2019 levels. As the recovery has
broadened, the range of performance has narrowed. Across our US franchised
estate, which is weighted to domestic demand in upper midscale hotels, Q2
RevPAR(b) increased by +5% vs 2019. The US managed estate, weighted to upscale
and luxury hotels in urban locations, declined by (2)% vs 2019.
Revenue from the reportable segment(a) in H1 increased by $146m (+45%) to
$471m (a decrease of $49m or 9% vs 2019). Operating profit increased by $131m
to $351m, driven by the increase in revenue. Operating profit from the
reportable segment(a) increased by $127m (+57%) to $351m (an increase of $7m
or 2% vs 2019). There were $7m of incentive management fees recorded for the
period (2021: $4m; 2019: $7m).
Fee business revenue(a) increased by $117m (+40%) to $413m. Fee business
operating profit(a) increased by $106m (+45%) to $342m, driven by the
improvement in trading. Also benefiting from the prior delivery of sustainable
fee business cost savings, H1 fee margin(a) increased to 82.8%, compared to
79.7% in 2021 and 77.3% in 2019. Operating profit from the reportable segment
included $2m of ongoing support received in the form of tax credits which
relate to the Group's corporate office presence in certain locations, down
from $5m benefit in the comparable period.
Owned, leased and managed lease revenue increased by $29m to $58m, with
comparable RevPAR(b) up 120% (down 23% vs 2019) leading to an owned, leased
and managed leased operating profit of $9m compared to a $12m loss in the
comparable period. Excluding the results of three owned EVEN hotels which were
disposed and retained under franchise contracts in November 2021, revenue
increased by $34m and operating profit improved by $17m.
(a. ) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
(b. ) Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
(c. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
Hotels Rooms
Americas hotel and room count Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 1 - 20 -
InterContinental 43 - 15,652 1
Kimpton 63 (1) 10,857 (151)
Hotel Indigo 70 4 9,282 537
voco 5 - 469 -
Crowne Plaza 112 - 28,035 105
EVEN Hotels 19 - 2,743 -
Holiday Inn(a) 716 - 120,911 61
Holiday Inn Express 2,451 15 222,944 1,217
avid hotels 53 5 4,771 491
Atwell Suites 2 2 186 186
Staybridge Suites 296 - 30,992 (105)
Candlewood Suites 363 2 32,222 197
Other(b) 99 (2) 22,104 (440)
_____ ____ _______ ______
Total 4,293 25 501,188 2,099
_____ ____ _______ ______
Analysed by ownership type
Franchised 4,118 31 463,430 3,173
Managed 172 (6) 36,431 (1,074)
Owned, leased and managed lease 3 - 1,327 -
_____ ____ _______ ______
Total 4,293 25 501,188 2,099
_____ ____ _______ ______
(a. ) Includes 28 Holiday Inn Club Vacations properties (8,822 rooms)
(2021: 28 Holiday Inn Club Vacations properties (8,679 rooms)).
(b. ) Includes two open hotels that will be re-branded to voco.
Hotels Rooms
Americas Pipeline Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 5 (1) 338 (133)
InterContinental 9 - 2.252 -
Kimpton 23 4 4,300 869
Hotel Indigo 28 (1) 4.009 (61)
voco 4 (1) 920 (125)
Crowne Plaza 8 - 1,644 1
EVEN Hotels 10 - 1,161 (5)
Holiday Inn 73 (1) 9,444 (24)
Holiday Inn Express 352 14 34,336 1,635
avid hotels 157 (7) 13,601 (894)
Atwell Suites 23 - 2,268 (7)
Staybridge Suites 143 6 14,910 860
Candlewood Suites 111 18 9,213 1,448
Other(a) 13 2 2,005 234
____ ____ ______ ______
Total 959 33 100,401 3,798
____ ____ ______ ______
Analysed by ownership type
Franchised 922 33 94,367 3,635
Managed 37 - 6,034 163
____ ____ ______ ______
Total 959 33 100,401 3,798
____ ____ ______ ______
(a. ) Includes one pipeline hotel that will be re-branded to voco.
Gross system size growth was +2.3% year-on-year. We opened 4.3k rooms (42
hotels) during the first half, including 25 hotels across the Holiday Inn
Brand Family. There were five avid hotels opened, including Fort Lauderdale
Airport, and four Hotel Indigo properties. The first two Atwell Suites
properties opened in Miami and Denver. There were 2.2k rooms (17 hotels)
removed in the first half.
Net system size declined (1.8)% year-on-year; on an adjusted basis (for the
Holiday Inn and Crowne Plaza removals that occurred in the second half of
2021, driven by last year's review of the estates of these two brands), net
system size growth was +0.6%.
There were 11.5k rooms (108 hotels) signed during the first half (including
3.7k (35 hotels) during Q2). There were 45 hotel signings across the Holiday
Inn Brand Family and 38 across Staybridge Suites and Candlewood Suites. Other
notable signings included a strong period for Kimpton with four signings, nine
further avid hotels and four further Atwell Suites.
The pipeline stands at 100.4k rooms (959 hotels), which represents 20% of the
current system size in the region.
EMEAA
6 months ended 30 June
EMEAA results
2022 2021 %
$m $m change
Revenue from the reportable segment(a)
Fee business 121 53 128.3
Owned, leased and managed lease 118 31 280.6
____ ____ ____
Total 239 84 184.5
____ ____ ____
Operating profit/(loss) from the reportable segment(a)
Fee business 63 (3) NM(c)
Owned, leased and managed lease (4) (24) (83.3)
____ ____ ____
59 (27) NM(c)
Operating exceptional items (19) - NM(c)
____ ____ _____
Operating profit/(loss) 40 (27) NM(c)
____ ____ _____
6 months ended
30 June 2022
EMEAA comparable RevPAR(b) movement on previous year
Fee business
Six Senses 161.6%
Regent 39.9%
InterContinental 115.8%
Kimpton 334.5%
Hotel Indigo 375.6%
voco 95.4%
Crowne Plaza 120.7%
Holiday Inn 143.5%
Holiday Inn Express 157.6%
Staybridge Suites 53.9%
All brands 135.1%
Owned, leased and managed lease
All brands 422.6%
H1 Comparable RevPAR(b) was up +138% vs 2021 (down (20.9)% vs 2019). The
industry faced some renewed challenges to travel volumes at the start of the
year from the Omicron variant of Covid-19. However, from February and over
subsequent months, easing of previous restrictions on international travel
contributed to strong sequential improvements in RevPAR. Leisure stays and
transient business were the strongest categories, with corporate bookings and
group activity picking up in their pace of recovery as the period went on. Q2
RevPAR(b) was up +147% vs 2021 (down (10.3)% vs 2019) with occupancy of 64%;
occupancy was 10 percentage points lower relative to 2019, partially offset by
rate 4% higher than 2019 levels. Variance in performance within the region
continued to predominantly reflect the timing of the lifting of restrictions.
The UK, which saw one of the earlier easing of restrictions, saw RevPAR(b)
down (8)% in H1 vs 2019 and down (2)% in Q2 vs 2019. Strong improvements in
London trading saw Q2 RevPAR(b) down (10)% vs 2019, rapidly closing the
performance gap with the provinces which saw RevPAR(b) up +1% vs 2019.
Elsewhere, Q2 RevPAR(b) vs 2019 was down (3)% in Australia, (6)% in
Continental Europe, (8)% in the Middle East, (34)% in South East Asia &
Korea and (50)% in Japan.
Revenue from the reportable segment(a) in H1 increased by $155m (+185%) to
$239m (a decrease of $99m or 29% vs 2019). Operating profit increased by $67m
to a $40m profit, driven by the increase in revenue, partially offset by $19m
of operating exceptional charges relating to ceasing all operations in Russia.
Operating profit from the reportable segment(a) increased by $86m to a $59m
profit (a decrease of $29m vs 2019). There were $25m of incentive management
fees recorded for the period (2021: $11m; 2019: $41m). Revenue and operating
profit from the reportable segment(a) also included the benefit of a $7m
individually significant liquidated damages settlement.
Fee business revenue(a) increased by $68m (+128%) to $121m. Fee business
operating profit(a) increased to a $63m profit from a $3m loss in the
comparable period, driven by the improvement in trading. Together with the
prior delivery of sustainable fee business cost savings, H1 fee margin(a) was
49.1%, compared to -5.7% in 2021 and 57.8% in 2019.
Owned, leased and managed lease revenue sharply increased by $87m to $118m,
with comparable RevPAR(b) up 423% (down 36% vs 2019) leading to an owned,
leased and managed leased operating loss that decreased to $4m compared to a
$24m loss in the comparable period. The lifting of travel restrictions,
predominantly in the UK, began to ease the trading challenges on this largely
urban-centred portfolio. Excluding the result of one InterContinental hotel
which was disposed of in January 2022, revenue increased by $91m and operating
loss decreased to $6m.
(a. ) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
(b. ) Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
(c. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
Hotels Rooms
EMEAA hotel and room count Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 19 - 1,289 19
Regent 4 1 1,113 342
InterContinental 109 1 32,667 106
Vignette Collection 2 1 539 393
Kimpton 11 1 2,318 172
Hotel Indigo 49 1 5,488 305
voco 29 8 7,758 1,876
Crowne Plaza 179 (3) 43,671 (1,157)
Holiday Inn 370 (10) 67,389 (3,435)
Holiday Inn Express 335 2 48,977 429
Staybridge Suites 18 (1) 2,932 (277)
Other 11 (2) 8,043 (789)
_____ ____ _______ ______
Total 1,136 (1) 222,184 (2,016)
_____ ____ _______ ______
Analysed by ownership type
Franchised 772 5 125,560 (147)
Managed 348 (6) 93,330 (1,869)
Owned, leased and managed lease 16 - 3,294 -
_____ ____ _______ ______
Total 1,136 (1) 222,184 (2,016)
_____ ____ _______ ______
Hotels Rooms
EMEAA Pipeline Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 26 3 1,961 241
Regent 5 (1) 999 (342)
InterContinental 47 4 10,709 1,189
Vignette Collection 1 1 40 40
Kimpton 9 - 1,626 (48)
Hotel Indigo 45 1 7,068 64
voco 26 (5) 7,695 (1,058)
Crowne Plaza 44 4 11,040 579
Holiday Inn 94 (4) 18,803 (2,211)
Holiday Inn Express 96 (3) 14,855 (738)
Staybridge Suites 21 2 3,230 437
Other(a) 11 5 2,053 994
____ ____ ______ _____
Total 425 7 80,079 (853)
____ ____ ______ _____
Analysed by ownership type
Franchised 167 (8) 24,957 (2,088)
Managed 257 15 54,967 1,235
Owned, leased and managed lease 1 - 155 -
____ ____ ______ _____
Total 425 7 80,079 (853)
____ ____ ______ _____
(a. ) Includes two voco pipeline hotels and five Vignette Collection
pipeline hotels.
Gross system size growth was +7.3% year-on-year. We opened 6.8k rooms (35
hotels) during the first half. There were 16 openings across the Holiday Inn
Brand Family, including resort locations such as Holiday Inn Resort Ho Tram
Beach (Vietnam) and Holiday Inn & Suites Sydney Bondi Junction, and urban
locations such as Holiday Inn Express Auckland City Centre and at Cambridge
West in the UK. There were eight voco properties opened, including Doha West
Bay, Johannesburg and a flagship new-build at Melbourne Central. Other notable
openings included InterContinental properties in Bali, Ras Al Khaimah and Appi
Kogen Resort, Japan, and the first Vignette Collection hotel to open in Asia
at Sindhorn Midtown Hotel Bangkok. There were 8.8k rooms (36 hotels) removed
in the first half, of which 6.5k (28 hotels) related to our ceasing of
operations in Russia.
Net system size declined (0.6)% year-on-year; on an adjusted basis (for the
Holiday Inn and Crowne Plaza removals that occurred in the second half of
2021, driven by last year's review of the estates of these two brands, and
also adjusting for the removal of hotels in Russia following IHG's
announcement regarding ceasing all operations in that country), net system
size growth was +5.2%.
There were 8.1k rooms (49 hotels) signed during the first half (including 5.8k
(34 hotels) during Q2). This included 14 across the Holiday Inn Brand Family
and a particularly strong period for the InterContinental brand with seven
signings. Other notable signings included the fourth Kimpton in Thailand with
Kimpton Hua Hin Resort, voco Osaka Central (the first for the brand in Japan)
and a three-brand portfolio signing in Vietnam, bringing the Hotel Indigo,
Crowne Plaza and Holiday Inn Express brands to Hoi An and its UNESCO world
heritage site.
The pipeline stands at 80.1k rooms (425 hotels), which represents 36% of the
current system size in the region.
GREATER CHINA
6 months ended 30 June
Greater China results 2022 2021 %
$m $m change
Revenue from the reportable segment(a)
Fee business 36 59 (39.0)
____ ____ _____
Total 36 59 (39.0)
____ ____ _____
Operating profit from the reportable segment(a)
Fee business 5 31 (83.9)
____ ____ ____
Operating profit 5 31 (83.9)
____ ____ ____
6 months ended
Greater China comparable RevPAR(b) movement on previous year 30 June 2022
Fee business
Regent (20.0)%
InterContinental (40.3)%
Hotel Indigo (23.8)%
HUALUXE (28.5)%
Crowne Plaza (23.9)%
Holiday Inn (18.5)%
Holiday Inn Express (21.8)%
All brands (27.2)%
H1 Comparable RevPAR(b) was down (27.2)% vs 2021 (down (45.9)% vs 2019).
Localised travel restrictions were reimplemented following increased Covid-19
cases, which saw the industry substantially impacted. At the peak of these
restrictions, around 40% of IHG's estate was repurposed for quarantine hotels
or temporarily closed. The monthly RevPAR(b) performance bottomed in April at
down (59)% vs 2019 levels, and saw sequential improvements resume in May; by
June, overall RevPAR was down (36)% vs 2019. Tier 1 cities were the most
severely impacted by the latest restrictions, declining (56)% in H1 vs 2019.
Tier 2-4 cities, which are more weighted to domestic and leisure demand,
performed better with a decline of (39)%; these cities were still
significantly impacted given the larger Tier 1 cities represent much of the
source markets for travellers into these locations. As many of the
restrictions have now been lifted or reduced, a rapid recovery has begun.
However, future intermittent lockdowns would continue to cause further trading
volatility.
Revenue from the reportable segment(a) in H1 decreased by $23m (39%) to $36m
(a decrease of $30m or 45% vs 2019). Operating profit decreased by $26m to $5m
driven by the reduction in revenue. Operating profit from the reportable
segment(a) decreased by $26m (84%) to $5m (a decrease of $31m vs 2019). The
impact on trading of the Covid-related restrictions at our managed hotels led
to $5m recognition of incentive management fees compared to $15m in 2021
(2019: $24m). H1 fee margin(a) reduced to 13.9%, compared to 47.2% in 2021 and
54.5% in 2019.
(a. ) Definitions for non-GAAP measures can be found in the Use of key
performance measures and non-GAAP measures section along with reconciliations
of these measures to the most directly comparable line items within the
Interim Financial Statements.
(b. ) Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
Hotels Rooms
Greater China hotel and room count Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 1 - 130 8
Regent 4 - 1,419 -
InterContinental 53 - 21,206 16
Kimpton 1 - 129 -
Hotel Indigo 15 (1) 2,286 (129)
voco 6 1 1,220 126
HUALUXE 18 2 5,147 544
Crowne Plaza 111 1 38,611 191
EVEN Hotels 3 1 437 186
Holiday Inn 120 (2) 32,560 (450)
Holiday Inn Express 258 11 49,049 1,995
Other(a) 9 - 7,331 -
____ ____ _______ _____
Total 599 13 159,525 2,487
____ ____ _______ _____
Analysed by ownership type
Franchised 188 9 41,905 1,754
Managed 411 4 117,620 733
____ ____ _______ _____
Total 599 13 159,525 2,487
____ ____ _______ _____
(a. ) Includes one open hotel that will be re-branded to voco.
Hotels Rooms
Greater China Pipeline Change over Change over
2022 2021 2022 2021
30 June 31 December 30 June 31 December
Analysed by brand
Six Senses 4 - 233 -
Regent 3 1 807 210
InterContinental 27 - 7,898 (9)
Kimpton 8 1 2.026 279
Hotel Indigo 47 6 8,326 948
voco 4 2 745 453
HUALUXE 21 (2) 5,506 (539)
Crowne Plaza 62 14 16,764 3,607
EVEN Hotels 18 (1) 3,615 (126)
Holiday Inn 78 6 18,987 1,391
Holiday Inn Express 202 (6) 32,888 (1,844)
Other - - - -
____ ____ ______ _____
Total 474 21 97,795 4,370
____ ____ ______ _____
Analysed by ownership type
Franchised 239 13 42,952 2,897
Managed 235 8 54,843 1,473
____ ____ ______ _____
Total 474 21 97,795 4,370
____ ____ ______ _____
Gross system size growth was +10.1% year-on-year. The Covid-related
restrictions in the latest period have however significantly impacted the
ability for new hotels to open. There were 3.8k rooms (19 hotels) added to our
system during the first half, a sharp reduction from the 7.0k rooms (36
hotels) in the comparable period. Those that were able to open included
Holiday Inn & Suites Sanya Yalong Bay, Hualuxe Qingdao Licang, voco
Nanjing Garden Expo and EVEN Hotel Chengdu Jinniu. There were 1.3k rooms (6
hotels) removed in the first half.
Net system size growth was +5.9% year-on-year; on an adjusted basis (for the
Holiday Inn and Crowne Plaza removals that occurred in the second half of
2021, driven by last year's review of the estates of these two brands), net
system size growth was +8.2%.
There were 11.1k rooms (53 hotels) signed during the first half (including
4.5k (21 hotels) during Q2). Of 30 franchise contracts signed during the first
half, 13 were for Holiday Inn Express. This was a particularly strong period
for Crowne Plaza, with a total of 16 signings growing its pipeline to 62
hotels. Other notable signings included: Regent Shenzhen Bay, a key market
given the city's leading economic importance; our second Kimpton property in
Suzhou; Hotel Indigo and the accompanying Holiday Inn Resort at Kanas Hemu, a
rapidly growing ski resort; and Hotel Indigo Shanghai Harbour City, the first
example of an online signing ceremony.
The pipeline stands at 97.8k rooms (474 hotels), which represents 61% of the
current system size in the region.
Central
6 months ended 30 June
2022 2021 %
Central results $m $m change
Revenue 94 97 (3.1)
Gross costs (132) (137) (3.6)
____ ____ ____
Operating loss (38) (40) (5.0)
____ ____ ____
Central revenue, which is mainly comprised of technology fee income, decreased
by $3m (3%) to $94m, driven by the impact of localised travel restrictions for
much of the first half in Greater China.
Gross costs decreased by $5m (3.6%) year-on-year, due to timing of spend.
The operating loss decreased by $2m.
Use of key performance measures and non-GAAP measures
In addition to performance measures directly observable in the Financial
Statements (IFRS measures), the Business Review presents certain financial
measures when discussing the Group's performance which are not measures of
financial performance or liquidity under International Financial Reporting
Standards (IFRS). In management's view these measures provide investors and
other stakeholders with an enhanced understanding of IHG's operating
performance, profitability, financial strength and funding requirements. These
measures do not have standardised meanings under IFRS, and companies do not
necessarily calculate these in the same way. As these measures exclude certain
items (for example impairment and the costs of individually significant legal
cases or commercial disputes) these financial measures may be materially
different to the measures prescribed by IFRS and may result in a more
favourable view of performance. Accordingly, they should be viewed as
complementary to, and not as a substitute for, the measures prescribed by IFRS
and as included in the Group Financial Statements.
Global revenue per available room (RevPAR) growth
RevPAR is the primary metric used by management to track hotel performance
across regions and brands. RevPAR is also a commonly used performance measure
in the hotel industry.
RevPAR comprises IHG's System rooms revenue divided by the number of room
nights available and can be derived from occupancy rate multiplied by average
daily rate (ADR). ADR is rooms revenue divided by the number of room nights
sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis,
comprising groupings of hotels that have traded in all months in both the
current and comparable year. The principal exclusions in deriving this measure
are new hotels (including those acquired), hotels closed for major
refurbishment and hotels sold in either of the comparable years. These
measures include the impact of hotels temporarily closed as a result of
Covid-19.
RevPAR and ADR are quoted at a constant US$ conversion rate, in order to allow
a better understanding of the comparable year-on-year trading performance
excluding distortions created by fluctuations in exchange rates.
Total gross revenue from hotels in IHG's System
Total gross revenue is revenue not wholly attributable to IHG, however,
management believes this measure is meaningful to investors and other
stakeholders as it provides a measure of System performance, giving an
indication of the strength of IHG's brands and the combined impact of IHG's
growth strategy and RevPAR performance.
Total gross revenue refers to revenue which IHG has a role in driving and from
which IHG derives an income stream.
Total gross revenue comprises:
● total rooms revenue from franchised hotels;
● total hotel revenue from managed hotels (includes food and beverage, meetings
and other revenues and reflects the value IHG drives to managed hotel owners
by optimising the performance of their hotels); and
● total hotel revenue from owned, leased and managed lease hotels.
Other than total hotel revenue from owned, leased and managed lease hotels,
total gross hotel revenue is not revenue attributable to IHG as managed and
franchised hotels are owned by third parties.
Total gross revenue is used to describe this measure as it aligns with terms
used in the Group's management and franchise agreements and therefore is well
understood by owners and other stakeholders.
Revenue and operating profit measures
Revenue and operating profit from (1) fee business and (2) owned, leased and
managed lease hotels, are described as 'revenue from reportable segments' and
'operating profit from reportable segments', respectively. These measures are
presented for each of the Group's regions. Management believes revenue and
operating profit from reportable segments is meaningful to investors and other
stakeholders as it excludes the following elements and reflects how management
monitors the business:
● System Fund - the Fund is not managed to generate a profit or loss for IHG
over the longer term, but is managed for the benefit of the hotels within the
IHG System. The System Fund is operated to collect and administer cash
assessments from hotel owners for the specific purpose of use in marketing,
the Guest Reservation Systems and loyalty programme.
● Revenues related to the reimbursement of costs - there is a cost equal to
these revenues so there is no profit impact. Cost reimbursements are not
applicable to all hotels, and growth in these revenues is not reflective of
growth in the performance of the Group. As such, management does not include
these revenues in their analysis of results.
● Exceptional items - these are identified by virtue of their size, nature, or
incidence and can include, but are not restricted to, gains and losses on the
disposal of assets, impairment charges and reversals, the costs of
individually significant legal cases or commercial disputes, and
reorganisation costs. As each item is different in nature and scope, there
will be little continuity in the detailed composition and size of the reported
amounts which affect performance in successive periods. Separate disclosure of
these amounts facilitates the understanding of performance including and
excluding such items. Further detail of amounts presented as exceptional is
included in note 5 to the interim Group Financial Statements.
In further discussing the Group's performance in respect of revenue and
operating profit, additional non-IFRS measures are used and explained further
below:
● Underlying revenue;
● Underlying operating profit;
● Underlying fee revenue; and
● Fee margin.
Operating profit measures are, by their nature, before interest and tax.
Management believes such measures are useful for investors and other
stakeholders when comparing performance across different companies as interest
and tax can vary widely across different industries or among companies within
the same industry. For example, interest expense can be highly dependent on a
company's capital structure, debt levels and credit ratings. In addition, the
tax positions of companies can vary because of their differing abilities to
take advantage of tax benefits and because of the tax policies of the various
jurisdictions in which they operate.
Although management believes these measures are useful to investors and other
stakeholders in assessing the Group's ongoing financial performance and
provide improved comparability between periods, there are limitations in their
use as compared to measures of financial performance under IFRS. As such, they
should not be considered in isolation or viewed as a substitute for IFRS
measures. In addition, these measures may not necessarily be comparable to
other similarly titled measures of other companies due to potential
inconsistencies in the methods of calculation.
Underlying revenue and underlying operating profit
These measures adjust revenue from reportable segments and operating profit
from reportable segments, respectively, to exclude revenue and operating
profit generated by owned, leased and managed lease hotels which have been
disposed, and significant liquidated damages, which are not comparable
year-on-year and are not indicative of the Group's ongoing profitability. The
revenue and operating profit of current year acquisitions are also excluded as
these obscure underlying business results and trends when comparing to the
prior year. In addition, in order to remove the impact of fluctuations in
foreign exchange, which would distort the comparability of the Group's
operating performance, prior year measures are restated at constant currency
using current year exchange rates.
Management believes these are meaningful to investors and other stakeholders
to better understand comparable year-on-year trading and enable assessment of
the underlying trends in the Group's financial performance.
Underlying fee revenue growth
Underlying fee revenue is used to calculate underlying fee revenue growth.
Underlying fee revenue is calculated on the same basis as underlying revenue
as described above but for the fee business only.
Management believes underlying fee revenue is meaningful to investors and
other stakeholders as an indicator of IHG's ability to grow the core fee-based
business, aligned to IHG's asset-light strategy.
Fee margin
Fee margin is presented at actual exchange rates and is a measure of the
profit arising from fee revenue. Fee margin is calculated by dividing 'fee
operating profit' by 'fee revenue'. Fee revenue and fee operating profit are
calculated from the revenue from reportable segments and operating profit from
reportable segments, as defined above, adjusted to exclude the revenue and
operating profit from the Group's owned, leased and managed lease hotels and
significant liquidated damages.
In addition, fee margin is adjusted for the results of the Group's captive
insurance company, where premiums are intended to match the expected claims
over the longer term, and as such these amounts are adjusted from the fee
margin to better depict the profitability of the fee business.
Management believes fee margin is meaningful to investors and other
stakeholders as an indicator of the sustainable long-term growth in the
profitability of IHG's core fee-based business, as the scale of IHG's
operations increases with growth in IHG's System size.
Adjusted interest
Adjusted interest is presented before exceptional items and excludes foreign
exchange gains / losses primarily related to the Group's internal funding
structure and the following items of interest which are recorded within the
System Fund:
● Interest income is recorded in the System Fund on the outstanding cash balance
relating to the IHG loyalty programme. These interest payments are recognised
as interest expense for IHG.
● Other components of System Fund interest income and expense, including
capitalised interest, lease interest expense and interest income on overdue
receivables.
As the Fund is included on the Group Income Statement, these amounts are
included in the reported net Group financial expenses, reducing the Group's
effective interest cost. Given results related to the System Fund are excluded
from
adjusted measures used by management, these are excluded from adjusted
interest and adjusted earnings per ordinary share (see page 28).
The exclusion of foreign exchange gains / losses provides greater
comparability with covenant interest as calculated under the terms of the
Group's revolving credit facility.
Management believes adjusted interest is a meaningful measure for investors
and other stakeholders as it provides an indication of the comparable
year-on-year expense associated with financing the business including the
interest on any balance held on behalf of the System Fund.
Tax excluding the impact of exceptional items and System Fund
As outlined above, exceptional items can vary year-on-year and, where subject
to tax at a different rate than the Group as a whole, they can impact the
current year's tax charge. The System Fund is not managed to a profit or loss
for IHG over the longer term and is, in general, not subject to tax either.
Management believes removing these provides a better view of the Group's
underlying tax rate on ordinary operations and aids comparability
year-on-year, thus providing a more meaningful understanding of the Group's
ongoing tax charge. A reconciliation of the tax charge as recorded in the
Group income statement, to tax excluding the impact of exceptional items and
System Fund, can be found in note 6 to the Interim Financial Statements.
Adjusted earnings per ordinary share
Adjusted earnings per ordinary share adjusts the profit available for equity
holders used in the calculation of basic earnings per share to remove System
Fund revenue and expenses, the items of interest related to the System Fund
and foreign exchange gains / losses as excluded in adjusted interest (above),
change in fair value of contingent purchase consideration, exceptional items,
and the related tax impacts of such adjustments.
Management believes that adjusted earnings per share is a meaningful measure
for investors and other stakeholders as it provides a more comparable earnings
per share measure aligned with how management monitors the business.
Net debt
Net debt is used in the monitoring of the Group's liquidity and capital
structure and is used by management in the calculation of the key ratios
attached to the Group's bank covenants and with the objective of maintaining
an investment grade credit rating. Net debt is used by investors and other
stakeholders to evaluate the financial strength of the business.
Net debt comprises loans and other borrowings, lease liabilities, the exchange
element of the fair value of derivatives hedging debt values, less cash and
cash equivalents. A summary of the composition of net debt is included in note
10 to the interim Group Financial Statements.
Adjusted EBITDA
One of the key measures used by the Group in monitoring its debt and capital
structure is the net debt:adjusted EBITDA ratio, which is managed with the
objective of maintaining an investment grade credit rating. The Group has a
stated aim of maintaining this ratio at 2.5-3.0x. Adjusted EBITDA is defined
as cash flow from operations, excluding cash flows relating to exceptional
items, cash flows arising from the System Fund result, other non-cash
adjustments to operating profit or loss, working capital and other
adjustments, and contract acquisition costs (key money).
Adjusted EBITDA is useful to investors as an approximation of operational cash
flow generation and is also relevant to the Group's banking covenants, which
use Covenant EBITDA in calculating the leverage ratio. Details of covenant
levels and performance against these is provided in note 10 to the Interim
Financial Statements.
Gross capital expenditure, net capital expenditure, adjusted free cash flow
These measures have limitations as they omit certain components of the overall
cash flow statement. They are not intended to represent IHG's residual cash
flow available for discretionary expenditures, nor do they reflect the Group's
future capital commitments. These measures are used by many companies, but
there can be differences in how each company defines the terms, limiting their
usefulness as a comparative measure. Therefore, it is important to view these
measures only as a complement to the Group statement of cash flows.
Gross capital expenditure
Gross capital expenditure represents the consolidated capital expenditure of
IHG inclusive of System Fund capital investments. Gross capital expenditure is
defined as net cash from investing activities, adjusted to include contract
acquisition costs (key money). In order to demonstrate the capital outflow of
the Group, cash flows arising from any disposals or distributions from
associates and joint ventures are excluded. The measure also excludes any
material investments made in acquiring businesses, including any subsequent
payments of deferred or contingent purchase consideration included within
investing activities, which represent ongoing payments for acquisitions.
Gross capital expenditure is reported as either maintenance, recyclable, or
System Fund. This disaggregation provides useful information as it enables
users to distinguish between:
● System Fund capital investments which are strategic investments to drive
growth at hotel level;
● Recyclable investments (such as investments in associates and joint ventures),
which are intended to be recoverable in the medium term and are to drive the
growth of the Group's brands and expansion in priority markets; and
● Maintenance capital expenditure (including contract acquisition costs), which
represents a permanent cash outflow.
Management believes gross capital expenditure is a useful measure as it
illustrates how the Group continues to invest in the business to drive growth.
It also allows for comparison year-on-year.
Net capital expenditure
Net capital expenditure provides an indicator of the capital intensity of
IHG's business model. Net capital expenditure is derived from net cash from
investing activities, adjusted to include contract acquisition costs (net of
repayments) and to exclude any material investments made in acquiring
businesses, including any subsequent payments of deferred or contingent
purchase consideration included within investing activities which are
typically non-recurring in nature. Net capital expenditure includes the
inflows arising from any disposal receipts, or distributions from associates
and joint ventures.
In addition, System Fund depreciation and amortisation relating to property,
plant and equipment and intangible assets, respectively, is added back,
reducing the overall cash outflow. This reflects the way in which System
Funded capital investments are recovered from the System Fund, over the life
of the asset.
Management believes net capital expenditure is a useful measure as it
illustrates the net capital investment by IHG, after taking into account
capital recycling through asset disposal and the funding of strategic
investments by the System Fund. It provides investors and other stakeholders
with visibility of the cash flows which are allocated to long-term investments
to drive the Group's strategy.
Adjusted free cash flow
Adjusted free cash flow is net cash from operating activities adjusted for:
(1) the inclusion of the cash outflow arising from the purchase of shares by
employee share trusts reflecting the requirement to satisfy incentive schemes
which are linked to operating performance; (2) the inclusion of maintenance
capital expenditure (excluding contract acquisition costs); (3) the inclusion
of the principal element of lease payments; and (4) the exclusion of payments
of deferred or contingent purchase consideration included within net cash from
operating activities.
Management believes adjusted free cash flow is a useful measure for investors
and other stakeholders, as it represents the cash available to invest back
into the business to drive future growth and pay the ordinary dividend, with
any surplus being available for additional returns to shareholders.
Changes in definitions to the 2021 Annual Report and Accounts
The following definitions have been amended:
● Adjusted interest and adjusted earnings per ordinary share have been amended
to exclude foreign exchange gains / losses recorded within financial expenses.
Since the gains / losses are principally as a result of the Group's internal
funding structure they are not reflective of the performance of the Group,
excluding these amounts provides a more comparable year-on-year measure for
investors and other users, aligned to how management monitor the business.
Comparatives have not been restated as the impact of these changes are not
material in 2021.
● The definition and reconciliation of Adjusted EBITDA has been amended to
reconcile to the nearest GAAP measure, cash flow from operations, reflecting
the fact Adjusted EBITDA is primarily used by the Group as a liquidity
measure. The value of Adjusted EBITDA is unchanged from 2021.
Revenue and operating profit non-GAAP reconciliations
Highlights for the 6 months ended 30 June
Reportable segments Revenue Operating profit
2022 2021 % 2022 2021 %
$m $m change $m $m change
Per Group income statement 1,794 1,179 52.2 361 138 161.6
System Fund (554) (378) 46.6 (3) 46 NM(a)
Reimbursement of costs (400) (236) 69.5 - - -
Operating exceptional items - - - 19 4 375.0
_____ _____ _____ _____ _____ _____
Reportable segments 840 565 48.7 377 188 100.5
_____ _____ _____ _____ _____ _____
Reportable segments analysed as:
Fee business 664 505 31.5 372 224 66.1
Owned, leased and managed lease 176 60 193.3 5 (36) NM(a)
_____ _____ _____ _____ _____ _____
Reportable segments 840 565 48.7 377 188 100.5
(a. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
Underlying revenue and underlying operating profit
Revenue Operating profit
2022 2021 % 2022 2021 %
$m $m change $m $m Change
Reportable segments (see above) 840 565 48.7 377 188 100.5
Significant liquidated damages(b) (7) (6) 16.7 (7) (6) 16.7
Owned and leased asset disposals(c) - (6) NM(a) (2) 8 NM(a)
Currency impact - (7) NM(a) - 3 NM(a)
____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 833 546 52.6 368 193 90.7
(a.) Percentage change considered not meaningful, such as where a positive
balance in the latest period is comparable to a negative or zero balance in
the prior period.
(b.) $7m recongnised in 2022 reflects the significant liquidated damages
related to one hotel in EMEAA and $6m recognised in 2021 reflects the
significant liquidated damages related to one hotel in Greater China.
(c.) The results of one InterContinental Hotel have been removed in 2022
(being the year of disposal) and the prior year to determine underlying
growth. The results of the hotels removed in 2021 (being the year of disposal
of these hotels) have also been removed to determine underlying growth.
Underlying fee revenue and underlying fee operating profit
Revenue Operating profit
2022 2021 % 2022 2021 %
$m $m change $m $m change
Reportable segments fee business (see above) 664 505 31.5 372 224 66.1
Significant liquidated damages(b) (7) (6) 16.7 (7) (6) 16.7
Currency impact - (4) NM(a) - 1 NM(a)
_____ _____ _____ _____ _____ _____
Underlying fee revenue and underlying fee operating profit 657 495 32.7 365 219 66.7
(a. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
(b. ) $7m recognised in 2022 reflects the significant liquidated
damages related to one hotel in EMEAA and $6m recognised in 2021 reflects the
significant liquidated damages related to one hotel in Greater China.
Americas
Revenue Operating profit(a)
2022 2021 % 2022 2021 %
$m $m change $m $m change
Per Interim financial statements 471 325 44.9 351 224 56.7
Reportable segments analysed as:
Fee business 413 296 39.5 342 236 44.9
Owned, leased and managed lease 58 29 100.0 9 (12) NM(b)
_____ _____ _____ _____ _____ _____
471 325 44.9 351 224 56.7
Reportable segments (see above) 471 325 44.9 351 224 56.7
Owned and leased asset disposals(c) - (5) NM(b) - 4 (100.0)
Currency impact - (1) NM(b) - (1) NM(b)
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 471 319 47.6 351 227 54.6
Owned, leased and managed lease included in the above (58) (24) 141.7 (9) 8 NM(b)
_____ _____ _____ _____ _____ _____
Underlying fee business 413 295 40.0 342 235 45.5
(a. ) Before exceptional items.
(b. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
(c. ) The results of the hotels removed in 2021 (being the year of
disposal of these hotels) have been removed to determine underlying growth.
EMEAA
Revenue Operating profit(a)
2022 2021 % 2022 2021 %
$m $m change $m $m change
Per Interim financial statements 239 84 184.5 59 (27) NM(b)
Reportable segments analysed as:
Fee business 121 53 128.3 63 (3) NM(b)
Owned, leased and managed lease 118 31 280.6 (4) (24) 83.3
_____ _____ _____ _____ _____ _____
239 84 184.5 59 (27) NM(b)
Reportable segments (see above) 239 84 184.5 59 (27) NM(b)
Significant liquidated damages (7) - NM(b) (7) - NM(b)
Owned and leased asset disposals(c) - (1) NM(b) (2) 4 NM(b)
Currency impact - (5) NM(b) - 2 NM(b)
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 232 78 197.4 50 (21) NM(b)
Owned, leased and managed lease included in the above (118) (27) 337.0 6 18 (66.7)
_____ _____ _____ _____ _____ _____
Underlying fee business 114 51 123.5 56 (3) NM(b)
(a. ) Before exceptional items.
(b. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
(c. ) The results of one InterContinental Hotel have been removed in
2022 (being the year of disposal) and the prior year to determine underlying
growth.
Greater China
Revenue Operating profit(a)
2022 2021 % 2022 2021 %
$m $m change $m $m change
Per Interim financial statements
Reportable segments analysed as: 36 59 (39.0) 5 31 (83.9)
_____ _____ _____ _____ _____ _____
Fee business 36 59 (39.0) 5 31 (83.9)
Reportable segments (see above) 36 59 (39.0) 5 31 (83.9)
Significant liquidated damages(c) - (6) NM(b) - (6) NM(b)
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 36 53 (32.1) 5 25 (80.0)
(a. ) Before exceptional items.
(b. ) Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
(c. ) $6m recognised in 2021 reflects the significant liquidated
damages related to one property.
Fee margin reconciliation
6 months ended 30 June
2022
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 413 121 36 94 664
Significant liquidated damages - (7) - - (7)
Captive insurance company - - - (8) (8)
_____ _____ _____ _____ _____
413 114 36 86 649
Operating profit $m
Reportable segments analysed as fee business (see above) 342 63 5 (38) 372
Significant liquidated damages - (7) - - (7)
Captive insurance company - - - (2) (2)
_____ _____ _____ _____ _____
342 56 5 (40) 363
Fee margin % 82.8% 49.1% 13.9% (46.5%) 55.9%
6 months ended 30 June
2021
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 296 53 59 97 505
Significant liquidated damages - - (6) - (6)
Captive insurance company - - - (9) (9)
_____ _____ _____ _____ _____
296 53 53 88 490
Operating profit $m
Reportable segments analysed as fee business (see above) 236 (3) 31 (40) 224
Significant liquidated damages - - (6) - (6)
Captive insurance company - - - (2) (2)
_____ _____ _____ _____ _____
236 (3) 25 (42) 216
Fee margin % 79.7% (5.7%) 47.2% (47.7%) 44.1%
Net capital expenditure reconciliation
6 months ended
30 June
2022 2021
$m $m
Net cash from investing activities (27) (37)
Adjusted for:
Contract acquisition costs, net of repayments (35) (16)
System Fund depreciation and amortisation(a) 40 39
Deferred purchase consideration paid - 13
_____ _____
Net capital expenditure (22) (1)
_____ _____
Analysed as:
Capital expenditure: maintenance (including contract acquisition costs, net of (50) (25)
repayments of $35m (2021: $16m))
Capital expenditure: recyclable investments 6 (8)
Capital expenditure: System Fund capital investments 22 32
_____ _____
Net capital expenditure (22) (1)
_____ _____
(a. ) Excludes depreciation of right-of-use assets.
Gross capital expenditure reconciliation
6 months ended
30 June
2022 2021
$m $m
Net capital expenditure (22) (1)
Add back:
Disposal receipts (7) (1)
Repayments of contract acquisition costs (3) (1)
System Fund depreciation and amortisation(a) (40) (39)
_____ _____
Gross capital expenditure (72) (42)
_____ _____
Analysed as:
Capital expenditure: maintenance (including contract (53) (26)
acquisition costs of $38m (2021: $17m))
Capital expenditure: recyclable investments (1) (9)
Capital expenditure: System Fund capital investments (18) (7)
_____ _____
Gross capital expenditure (72) (42)
_____ _____
(a. ) Excludes depreciation of right-of-use assets.
Adjusted free cash flow reconciliation
6 months ended
30 June
2022 2021
$m $m
Net cash from operating activities 175 173
Adjusted for:
Principal element of lease payments (18) (17)
Capital expenditure: maintenance (excluding contract acquisition costs) (15) (9)
_____ _____
Adjusted free cash flow 142 147
_____ _____
Adjusted interest reconciliation
The following table reconciles net financial expenses to adjusted interest.
6 months ended
30 June
2022 2021
$m $m
Net financial expenses
Financial income 5 1
Financial expenses (74) (73)
_____ _____
(69) (72)
Adjusted for:
Interest attributable to the System Fund (3) -
Foreign exchange losses* 8 n/a
_____ _____
5 -
Adjusted interest (64) (72)
* The definition of adjusted interest has been updated. The impact to the
prior year is not material, and as such has not been restated.
Adjusted earnings per ordinary share reconciliation
6 months ended
30 June
2022 2021
$m $m
Profit available for equity holders 216 48
Adjusting items:
System Fund revenues and expenses (3) 46
Interest attributable to the System Fund (3) -
Operating exceptional items 19 4
Fair value gain on contingent purchase consideration (7) (1)
Foreign exchange losses* 8 n/a
Tax on foreign exchange losses* (1) n/a
Tax on exceptional items (5) (1)
Exceptional tax - (22)
_____ _____
Adjusted earnings 224 74
Basic weighted average number of ordinary shares (millions) 184 183
Adjusted earnings per ordinary share (cents) 121.7 40.4
* The definition of adjusted earnings per share has been updated. The impact
to the prior year is not material, and as such has not been restated.
Highlights for the 6 months ended 30 June vs 2019
Reportable segments Revenue Operating profit
2022 2019 % 2022 2019 %
$m $m change $m $m change
Per Group income statement 1,794 2,280 (21.3) 361 442 (18.3)
System Fund (554) (675) (17.9) (3) (47) (93.6)
Reimbursement of costs (400) (593) (32.5) - - -
Operating exceptional items - - - 19 15 26.7
_____ _____ _____ _____ _____ _____
Reportable segments 840 1,012 (17.0) 377 410 (8.0)
_____ _____ _____ _____ _____ _____
Reportable segments analysed as:
Fee business 664 730 (9.0) 372 394 (5.6)
Owned, leased and managed lease 176 282 (37.6) 5 16 (68.8)
_____ _____ _____ _____ _____ _____
Reportable segments 840 1,012 (17.0) 377 410 (8.0)
Americas
Revenue Operating profit(a)
2022 2019 % 2022 2019 %
$m $m change $m $m change
Per Interim financial statements 471 520 (9.4) 351 341 2.9
Reportable segments analysed as:
Fee business 413 418 (1.2) 342 323 5.9
Owned, leased and managed lease 58 102 (43.1) 9 21 (57.1)
_____ _____ _____ _____ _____ _____
471 520 (9.4) 351 344 2.0
a. Before exceptional items.
EMEAA
Revenue Operating profit(a)
2022 2019 % 2022 2019 %
$m $m change $m $m change
Per Interim financial statements 239 338 (29.3) 59 88 (33.0)
Reportable segments analysed as:
Fee business 121 158 (23.4) 63 93 (32.3)
Owned, leased and managed lease 118 180 (34.4) (4) (5) (20.0)
_____ _____ _____ _____ _____ _____
239 338 (29.3) 59 88 (33.0)
a. Before exceptional items.
Greater China
Revenue Operating profit(a)
2022 2019 % 2022 2019 %
$m $m change $m $m change
Per Interim financial statements
Reportable segments analysed as: 36 66 (45.5) 5 36 (86.1)
_____ _____ _____ _____ _____ _____
Fee business 36 66 (45.5) 5 36 (86.1)
a. Before exceptional items.
Fee Margin Reconciliation
6 months ended 30th June
2019
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 418 158 66 88 730
Significant liquidated damages - (4) - - (4)
Captive insurance company - - - (7) (7)
_____ _____ _____ _____ _____
418 154 66 81 719
Operating profit $m
Reportable segments analysed as fee business (see above) 323 93 36 (58) 394
Significant liquidated damages - (4) - - (4)
Captive insurance company - - - (1) (1)
_____ _____ _____ _____ _____
323 89 36 (59) 389
Fee margin % 77.3% 57.8% 54.5% (72.8%) 54.1%
PRINCIPAL RISKS AND UNCERTAINTIES
The principal and emerging risks and uncertainties that could substantially
affect IHG's business and results are set out on pages 40 to 47 of the IHG
Annual Report and Form 20-F 2021 (the "Annual Report").
We have continued to face dynamic risks relating to macro-economic and
geo-political factors, including those related to our Greater China
operations, the war in Ukraine and as central banks and governments take
action to manage inflation. These factors also create wider accumulated
uncertainties across our principal risk portfolio, for example relating to
global supply chains, inflationary cost pressures and cyber security, which we
will continue to monitor closely over the remainder of the year. There may
also be unknown risks or risks currently believed to be inconsequential that
emerge and could become material.
Our Board and management continue regularly to review our risk profile and
risk trends arising externally or internally, and risk management and internal
control arrangements.
As an example of active senior executive and Board evaluation of risks and
considering the interests of our stakeholders, local and global management
teams have closely monitored and reported on the developing situation in
Ukraine, reviewing both local operational matters and triggers of potential
impact on IHG outside of the immediate area which may require a more active
response. This has included monitoring of potential risk factors relating to
national / international sanctions; payment systems; cybersecurity and
technology threats; and procurement and supply chain arrangements for key
geographies and commodities.
Following the outbreak of the war, we announced the suspension of future
investments, development activity and new hotel openings in Russia and that we
did not intend to resume any investment or development activity in the
foreseeable future. We also closed our corporate office in Moscow. These steps
followed significant donations to our humanitarian charity partners and a
commitment to work with hotel owners in other countries to shelter refugees.
Subsequently, we announced that we were in discussions with our owners in
Russia regarding the complex, long-term management and franchise contracts
under which these hotels operate. We are ceasing all operations in Russia,
consistent with evolving UK, US and EU sanction regimes and the ongoing and
increasing challenges of operating there.
The following summarises the risks and uncertainties set out in the 2021
Annual Report, which continue to apply:
● Macro external factors, such as political and economic disruption, or the
emerging risk of infectious diseases, could have an impact on IHG's ability to
perform and grow; commercial performance, financial loss and undermine
stakeholder confidence;
● Failure to deliver IHG's preferred brands and loyalty programme could impact
IHG's competitive positioning, IHG's growth ambitions and reputation with
guests and owners;
● Failure to effectively attract, develop and retain talent in key areas could
impact IHG's ability to achieve its growth ambitions and execute effectively;
● Threats to cybersecurity and information governance could lead to the
disruption or loss of IHG's critical systems and sensitive data and could
impact IHG financially, reputationally or operationally;
● Failure to capitalise on innovation in booking technology, and maintain and
enhance IHG's functionality and resilience of its channel management and
technology platforms could impact IHG's revenues and growth ambitions;
● Failure to manage risks associated with delivering investment effectiveness
and efficiency may impact commercial performance, lead to financial loss, and
undermine stakeholder confidence;
● Failure to ensure contractual, legal, regulatory and ethical compliance would
impact IHG operationally and reputationally;
● Failure to effectively safeguard the safety and security of colleagues and
guests and respond appropriately to operational risk could result in
reputational and / or financial damage, and undermine stakeholder confidence;
● A material breakdown in financial management and control systems could lead to
increased public scrutiny, regulatory investigation and litigation; and
● Environment and social mega-trends have the potential to impact performance
and growth in key markets.
These principal and emerging risks and uncertainties are supported by a
broader description of risk factors set out on pages 231 to 236 of the Annual
Report
RELATED PARTY TRANSACTIONS
There were no material related party transactions during the six months to 30
June 2022.
GOING CONCERN
As at 30 June 2022 the Group had total liquidity of $2,613m, comprising
$1,350m of undrawn bank facilities and $1,263m of cash and cash equivalents
(net of overdrafts and restricted cash).
There remains a wide range of possible planning scenarios over the going
concern period. The scenarios considered and assessment made by the Directors
in adopting the going concern basis for preparing these financial statements
are included in note 1 to the Interim Financial Statements.
Based on the assessment completed, the Directors have a reasonable expectation
that the Group has sufficient resources to continue operating until at least
31 December 2023. Accordingly, they continue to adopt the going concern basis
in preparing the interim financial statements.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
• The condensed set of Financial Statements has been prepared in
accordance with UK-adopted IAS 34;
• The Interim Management Report includes a fair review of the
important events during the first six months, and their impact on the
financial statements and a description of the principal risks and
uncertainties for the remaining six months of the year, as required by DTR
4.2.7R; and
• The Interim Management Report includes a fair review of related
party transactions and changes therein, as required by DTR 4.2.8R.
On behalf of the Board
Keith Barr
Paul Edgecliffe-Johnson
Chief Executive
Officer
Chief Financial Officer
8 August 2022
8 August 2022
InterContinental Hotels Group PLC
GROUP INCOME STATEMENT
For the six months ended 30 June 2022
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Revenue from fee business 664 505
Revenue from owned, leased and managed lease hotels 176 60
System Fund revenues 554 378
Reimbursement of costs 400 236
_____ _____
Total revenue (notes 3 and 4) 1,794 1,179
Cost of sales and administrative expenses (450) (321)
System Fund expenses (551) (424)
Reimbursed costs (400) (236)
Share of losses of associates - (5)
Other operating income 14 2
Depreciation and amortisation (36) (45)
Impairment loss on financial assets (5) (8)
Other impairment charges (note 5) (5) (4)
_____ _____
Operating profit (note 3) 361 138
Operating profit analysed as:
Operating profit before System Fund and exceptional items 377 188
System Fund 3 (46)
Operating exceptional items (note 5) (19) (4)
_____ _____
361 138
Financial income 5 1
Financial expenses (74) (73)
Fair value gains on contingent purchase consideration 7 1
_____ _____
Profit before tax 299 67
Tax (note 6) (83) (19)
_____ _____
Profit for the period from continuing operations 216 48
_____ _____
Attributable to:
Equity holders of the parent 216 48
_____ _____
Earnings per ordinary share (note 7)
Basic 117.4¢ 26.2¢
Diluted 116.8¢ 26.1¢
InterContinental Hotels Group PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Profit for the period 216 48
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Gains/(losses) on cash flow hedges, including related tax credit of $1m (2021:
$3m charge)
13 (54)
Costs of hedging - 2
Hedging (gains)/losses reclassified to financial expenses (17) 66
Exchange gains/(losses) on retranslation of foreign operations, including
related tax credit of $6m (2021: $nil)
198 (38)
_____ _____
194 (24)
Items that will not be reclassified to profit or loss:
Gains on equity instruments classified as fair value through other
comprehensive income, net of related tax charge of $2m (2021: $1m)
3 9
Re-measurement gains on defined benefit plans, net of related tax charge of
$5m (2021: tax credit of $1m)
15 5
Tax related to pension contributions - 2
_____ _____
18 16
_____ _____
Total other comprehensive income/(loss) for the period 212 (8)
_____ _____
Total comprehensive income for the period 428 40
_____ _____
Attributable to:
Equity holders of the parent 429 40
Non-controlling interest (1) -
_____ _____
428 40
_____ _____
InterContinental Hotels Group PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
6 months ended 30 June 2022
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the period 154 (2,539) 904 7 (1,474)
Total comprehensive income for the period - 198 231 (1) 428
Release of own shares by employee share trusts
- 17 (17) - -
Equity-settled share-based cost - - 25 - 25
Equity dividends paid - - (154) - (154)
Exchange adjustments (16) 16 - - -
_____ _____ _____ _____ _____
At end of the period 138 (2,308) 989 6 (1,175)
_____ _____ _____ _____ _____
6 months ended 30 June 2021
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the period 156 (2,581) 568 8 (1,849)
Total comprehensive income for the period - (15) 55 - 40
Transfer of treasury shares to employee share trusts
- (14) 14 - -
Release of own shares by employee share trusts
- 13 (13) - -
Equity-settled share-based cost - - 19 - 19
Tax related to share schemes - - 1 - 1
Exchange adjustments 3 (3) - - -
_____ _____ _____ _____ _____
At end of the period 159 (2,600) 644 8 (1,789)
_____ _____ _____ _____ _____
* Other reserves comprise the capital redemption reserve, shares held by
employee share trusts, other reserves, fair value reserve, cash flow hedge
reserves and currency translation reserve.
Total comprehensive income is shown net of tax.
InterContinental Hotels Group PLC
GROUP STATEMENT OF FINANCIAL POSITION
30 June 2022
2022 2021
30 June 31 December
$m $m
ASSETS
Goodwill and other intangible assets 1,160 1,195
Property, plant and equipment 126 137
Right-of-use assets 282 274
Investment in associates 76 77
Retirement benefit assets 2 2
Other financial assets 169 173
Deferred compensation plan investments 213 256
Non-current tax receivable - 1
Deferred tax assets 130 147
Contract costs 73 72
Contract assets 328 316
______ ______
Total non-current assets 2,559 2,650
______ ______
Inventories 4 4
Trade and other receivables 691 574
Current tax receivable 11 1
Other financial assets - 2
Cash and cash equivalents 1,361 1,450
Contract costs 5 5
Contract assets 30 30
______ ______
Total current assets 2,102 2,066
______ ______
Total assets 4,661 4,716
_____ _____
LIABILITIES
Loans and other borrowings (278) (292)
Lease liabilities (25) (35)
Trade and other payables (518) (579)
Deferred revenue (658) (617)
Provisions (51) (49)
Current tax payable (26) (52)
______ ______
Total current liabilities (1,556) (1,624)
______ ______
Loans and other borrowings (2,336) (2,553)
Lease liabilities (402) (384)
Derivative financial instruments (37) (62)
Retirement benefit obligations (69) (92)
Deferred compensation plan liabilities (213) (256)
Trade and other payables (84) (89)
Deferred revenue (1,016) (996)
Provisions (36) (41)
Deferred tax liabilities (87) (93)
______ ______
Total non-current liabilities (4,280) (4,566)
______ ______
Total liabilities (5,836) (6,190)
_____ _____
Net liabilities (1,175) (1,474)
_____ _____
EQUITY
IHG shareholders' equity (1,181) (1,481)
Non-controlling interest 6 7
______ ______
Total equity (1,175) (1,474)
_____ _____
InterContinental Hotels Group PLC
GROUP STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Profit for the period 216 48
Adjustments reconciling profit for the period to cash flow from operations 120 211
(note 9)
_____ _____
Cash flow from operations 336 259
Interest paid (42) (40)
Interest received 5 1
Tax paid (note 6) (124) (47)
_____ _____
Net cash from operating activities 175 173
_____ _____
Cash flow from investing activities
Purchase of property, plant and equipment (12) (3)
Purchase of intangible assets (21) (13)
Investment in associates (1) -
Investment in other financial assets - (9)
Deferred purchase consideration paid - (13)
Disposal of property, plant and equipment 3 -
Repayments of other financial assets 4 1
_____ _____
Net cash from investing activities (27) (37)
_____ _____
Cash flow from financing activities
Dividends paid to shareholders (note 8) (154) -
Principal element of lease payments (18) (17)
Repayment of commercial paper - (828)
_____ _____
Net cash from financing activities (172) (845)
_____ _____
Net movement in cash and cash equivalents, net of overdrafts, in the period
(24) (709)
Cash and cash equivalents, net of overdrafts, at beginning of the period 1,391 1,624
Exchange rate effects (70) 20
_____ _____
Cash and cash equivalents, net of overdrafts, at end of the period 1,297 935
_____ _____
interContinental Hotels Group plc
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These condensed interim financial statements have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and UK-adopted IAS 34 'Interim Financial
Reporting'. They have been prepared on a consistent basis using the same
accounting policies and methods of computation set out in the InterContinental
Hotels Group PLC ('the Group' or 'IHG') Annual Report and Form 20-F for the
year ended 31 December 2021.
These condensed interim financial statements are unaudited and do not
constitute statutory accounts of the Group within the meaning of Section 435
of the Companies Act 2006. The auditors have carried out a review of the
financial information in accordance with the guidance contained in ISRE (UK)
2410 'Review of Interim Financial Information performed by the Independent
Auditor of the Entity' issued by the Financial Reporting Council.
Financial information for the year ended 31 December 2021 has been extracted
from the Group's published financial statements for that year which were
prepared in accordance with UK-adopted international accounting standards and
with applicable law and regulations and which have been filed with the
Registrar of Companies. The report of the auditor was unqualified with no
reference to matters to which the auditor drew attention by way of emphasis
and no statement under s498(2) or s498(3) of the Companies Act 2006.
There are no changes in the Group's critical judgements, estimates and
assumptions from those disclosed in the 2021 Annual Report and Form 20-F. An
updated sensitivity related to expected credit losses is included in note
12(e).
Going concern
Trading in the first half of 2022 continued to recover with ongoing relaxation
of travel restrictions supporting an increasing return of travel demand,
resulting in Global RevPAR recovering to approximately 90% of 2019 levels.
Continued focus on cash conversion led to reported net cash from operating
activities in the first half of $175m and net debt reducing to $1,718m.
The Group's bank facilities were refinanced in April 2022 with a new revolving
credit facility of $1,350m maturing in 2027, with options to extend for a
further two years. Previously negotiated covenant relaxations and the $400m
liquidity covenant, which were applicable at 30 June and 31 December 2022 test
dates, will no longer apply. The leverage covenant has been adjusted to
incorporate the effects of IFRS 16 'Leases' and has been reset at 4.0x
covenant net debt:covenant EBITDA (see note 10).
A period of 18 months has been used, from 1 July 2022 to 31 December 2023, to
complete the going concern assessment. In adopting the going concern basis for
preparing these condensed interim financial statements, the Directors have
considered a 'Base Case' scenario which is based on continued improvement in
demand as travel restrictions are reduced, with RevPAR continuing to recover
towards pre-pandemic levels in 2023. The only debt maturity in the period
under consideration is the £173m 3.875% November 2022 bond which is assumed
to be repaid with cash on maturity. The assumptions applied in the Base Case
scenario are consistent with those used for Group planning purposes, for
impairment testing and for assessing recoverability of deferred tax assets.
Under the Base Case scenario, the bank facilities remain undrawn.
The principal risks and uncertainties which could be applicable have been
considered and are able to be absorbed within the covenant requirements of the
new bank facility. A large number of the Group's principal risks, for example
macro external factors or preferred brands and loyalty, would result in an
impact on RevPAR which is one of the sensitivities assessed against the
headroom available in the Base Case. Climate risks are not considered to have
a significant impact over the 18-month period of assessment. Other principal
risks that could result in a large one-off incident that has a material impact
on cash flow have also been considered, for example a cybersecurity event.
The Directors have also reviewed a 'Downside Case' based on a recession
scenario which assumes performance during the second half of 2022 starts to
worsen and then RevPAR decreases by 5% in 2023. The Directors have also
reviewed a 'Severe Downside Case' which is based on a severe but plausible
scenario equivalent to the market conditions experienced through the 2008/2009
global financial crisis. This assumes that the performance during the second
half of 2022 starts to worsen and then RevPAR decreases significantly by 17%
in 2023. It is assumed that the additional shareholder return of $500m
announced on 9 August 2022 is completed in full in all scenarios before
additional actions are taken. Under the Downside Case and Severe Downside
case, the bank facilities remain undrawn.
Under the Severe Downside scenario, there is limited headroom to the bank
covenants at 31 December 2023 to absorb additional risks. However, based on
experience in 2020, the Directors reviewed a number of actions to reduce
discretionary spend, creating substantial additional headroom. After these
actions are taken, there is significant headroom to the bank covenants to
absorb the principal risks and uncertainties which could be applicable.
In the Severe Downside Case, the Group has substantial levels of existing cash
reserves available after additional actions are taken (over $850m at 31
December 2023) and is not expected to draw on the bank facilities.
The Directors reviewed a reverse stress test scenario to determine what
decrease in RevPAR would create a breach of the covenants, and the cash
reserves that would be available to the Group at that time. The Directors
concluded that the outcome of this reverse stress test showed that it was very
unlikely the bank facilities would need to be drawn.
The leverage and interest cover covenant tests up to 31 December 2023 (the
last day of the assessment period), have been considered as part of the Base
Case, Downside Case and Severe Downside Case scenarios. However, as the bank
facilities are unlikely to be drawn even in a scenario significantly worse
than the Severe Downside scenario, the Group does not need to rely on the
additional liquidity provided by the bank facilities to remain a going
concern. In the event that a covenant amendment was required, the Directors
believe it is reasonable to expect that such an amendment could be obtained
based on prior experience in negotiating the 2020 amendments, however the
going concern conclusion is not dependent on this expectation.
The Group's fee based model and wide geographic spread have been proven to
leave it well-placed to manage through uncertain times. Having reviewed
these scenarios, the Directors have a reasonable expectation that the Group
has sufficient resources to continue operating until at least 31 December
2023. Accordingly, they continue to adopt the going concern basis in preparing
these condensed interim financial statements.
2. Exchange rates
The results of operations have been translated into US dollars at the average
rates of exchange for the period. In the case of sterling, the translation
rate is $1 = £0.77 (2021: $1 = £0.72). In the case of the euro, the
translation rate is $1 = €0.92 (2021: $1 = €0.83).
Assets and liabilities have been translated into US dollars at the rates of
exchange on the last day of the period. In the case of sterling, the
translation rate is $1 = £0.83 (31 December 2021: $1 = £0.74;
30 June 2021: $1 = £0.72). In the case of the euro, the translation rate is
$1 = €0.96 (31 December 2021: $1 = €0.88; 30 June 2021: $1 = €0.84).
3. Segmental Information
Revenue 2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Americas 471 325
EMEAA 239 84
Greater China 36 59
Central 94 97
_____ _____
Revenue from reportable segments 840 565
System Fund revenues 554 378
Reimbursement of costs 400 236
_____ _____
Total revenue 1,794 1,179
_____ _____
Profit 2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Americas 351 224
EMEAA 59 (27)
Greater China 5 31
Central (38) (40)
_____ _____
Operating profit from reportable segments 377 188
System Fund 3 (46)
Operating exceptional items (note 5) (19) (4)
_____ _____
Operating profit 361 138
Net financial expenses (69) (72)
Fair value gains on contingent purchase consideration 7 1
_____ _____
Profit before tax 299 67
_____ _____
4. Revenue
Disaggregation of revenue
6 months ended 30 June 2022
Americas EMEAA Greater China Central Group
$m
$m $m $m $m
Franchise and base management fees 406 96 31 - 533
Incentive management fees 7 25 5 - 37
Central revenue - - - 94 94
_____ _____ _____ _____ _____
Revenue from fee business 413 121 36 94 664
Revenue from owned, leased and managed lease hotels 58 118 - - 176
_____ _____ _____ _____ _____
471 239 36 94 840
_____ _____ _____ _____
System Fund revenues 554
Reimbursement of costs 400
_____
Total revenue 1,794
_____
6 months ended 30 June 2021
Americas EMEAA Greater China Central Group
$m
$m $m $m $m
Franchise and base management fees 292 42 44 - 378
Incentive management fees 4 11 15 - 30
Central revenue - - - 97 97
_____ _____ _____ _____ _____
Revenue from fee business 296 53 59 97 505
Revenue from owned, leased and managed lease hotels
29 31 - - 60
_____ _____ _____ _____ _____
325 84 59 97 565
_____ _____ _____ _____
System Fund revenues 378
Reimbursement of costs 236
_____
Total revenue 1,179
_____
At 30 June 2022, the maximum exposure remaining under performance guarantees
was $80m (31 December 2021: $85m).
5. Exceptional items
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Cost of sales and administrative expenses
Costs of ceasing operations in Russia (14) -
Other impairment charges
Impairment of contract assets (5) -
Impairment of associates - (4)
_____ _____
(5) (4)
____ ____
Total operating exceptional items (19) (4)
_____ _____
Tax on exceptional items 5 1
Exceptional tax - 22
_____ _____
Tax (note 6) 5 23
_____ _____
Costs of ceasing operations in Russia
On 27 June 2022, the Group announced it is in the process of ceasing all
operations in Russia consistent with evolving UK, US and EU sanction regimes
and the ongoing and increasing challenges of operating there. The costs
associated with the cessation of corporate operations in Moscow and long-term
management and franchise contracts are treated as exceptional due to the
nature of the war in Ukraine which has driven the Group's response.
Impairment of contract assets
Relates to key money relating to managed and franchised hotels in Russia.
The impairment is treated as exceptional for consistency with the costs of
ceasing operations described above.
6. Tax
2022 2021
6 months ended 6 months ended
30 June 30 June
Profit/(loss) Tax Tax Profit/(loss) Tax Tax
$m $m rate $m $m rate
Before exceptional items and System Fund
315 (88) 28% 117 (42) 36%
System Fund 3 - (46) -
Exceptional items (note 5) (19) 5 (4) 23
_____ _____ _____ _____
299 (83) 67 (19)
_____ _____ _____ _____
Analysed as:
Current tax (88) (43)
Deferred tax 5 24
_____ _____
(83) (19)
_____ _____
Further analysed as:
UK tax (3) 23
Foreign tax (80) (42)
_____ _____
(83) (19)
_____ _____
Tax before exceptional items and System Fund has been calculated by applying a
blended effective tax rate of 28%. This blended effective rate represents
the weighting of the annual tax rates of the Group's key territories using
corporate income tax rates substantively enacted at 30 June 2022 to provide
the best estimate for the full financial year. It is higher than the 2022 UK
Corporation Tax rate of 19% due to higher taxed overseas profits (particularly
in the US) and the impact of unrelieved foreign taxes and other non-tax
deductible expenses.
The deferred tax asset comprises $109m (31 December 2021: $127m) in the UK
and $21m (31 December 2021: $20m) in respect of other territories. The
deferred tax asset has been recognised based upon forecasts consistent with
those used in the going concern assessment.
Tax paid of $124m in the period exceeds the current tax charge in the Group
income statement predominantly as a result of liabilities already accrued at 1
January 2022 being settled in the period and the phasing of the 2022 US
instalment payments.
7. Earnings per ordinary share
2022 2021
6 months ended 6 months ended
30 June 30 June
Basic earnings per ordinary share
Profit available for equity holders ($m) 216 48
Basic weighted average number of ordinary shares (millions) 184 183
Basic earnings per ordinary share (cents) 117.4 26.2
_____ _____
Diluted earnings per ordinary share
Profit available for equity holders ($m) 216 48
Diluted weighted average number of ordinary shares (millions) 185 184
Diluted earnings per ordinary share (cents) 116.8 26.1
_____ _____
The diluted weighted average number of ordinary shares is calculated as:
Basic weighted average number of ordinary shares (millions) 184 183
Dilutive potential ordinary shares (millions) 1 1
______ ______
185 184
_____ _____
8. Dividends
2022 2021
6 months ended 6 months ended
30 June 30 June
cents per share $m cents per share $m
Paid during the period 85.9 154 - -
______ ______ ______ ______
Proposed for the interim period 43.9 81 - -
______ ______ ______ ______
In addition to the interim dividend of 43.9 cents per share, in August 2022
the Board also approved a $500m share buyback programme that will commence on
9 August and end no later than 31 January 2023.
9. Reconciliation of profit for the period to cash flow from operations
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Profit for the period 216 48
Adjustments for:
Net financial expenses 69 72
Fair value gains on contingent purchase consideration (7) (1)
Income tax charge 83 19
Operating profit adjustments:
Impairment loss on financial assets 5 8
Other impairment charges 5 4
Other operating exceptional items 14 -
Depreciation and amortisation 36 45
_____ _____
60 57
Contract assets deduction in revenue 17 16
Share-based payments cost 17 14
Share of losses of associates - 5
_____ _____
34 35
System Fund adjustments:
Depreciation and amortisation 42 41
Impairment loss on financial assets 4 3
Share-based payments cost 9 6
Share of losses of associates - 1
_____ _____
55 51
Working capital and other adjustments:
Increase in deferred revenue 65 35
Changes in working capital (189) (29)
_____ _____
(124) 6
Cash flows relating to exceptional items (15) (12)
Contract acquisition costs, net of repayments (35) (16)
_____ _____
Total adjustments 120 211
_____ _____
Cash flow from operations 336 259
_____ _____
10. Net debt
2022 2021
30 June 31 December
$m $m
Cash and cash equivalents* 1,361 1,450
Loans and other borrowings - current (278) (292)
Loans and other borrowings - non-current (2,336) (2,553)
Lease liabilities - current (25) (35)
Lease liabilities - non-current (402) (384)
Derivative financial instruments hedging debt values (38) (67)
_____ _____
Net debt** (1,718) (1,881)
_____ _____
* Of which $152m (31 December 2021: $124m) is cash at bank and in hand.
** See the Use of Non-GAAP measures section in the Interim Management Report.
In the Group statement of cash flows, cash and cash equivalents is presented
net of $64m bank overdrafts (31 December 2021: $59m).
Cash and cash equivalents includes $8m (31 December 2021: $9m) restricted for
use on capital expenditure under hotel lease agreements and therefore not
available for wider use by the Group. An additional $26m (31 December 2021:
$77m) is held within countries from which funds are not currently able to be
repatriated to the Group's central treasury company.
Bank facilities
In April 2022, the Group's $1,275m revolving syndicated bank facility and $75m
revolving bilateral facility were refinanced with a $1,350m revolving
syndicated bank facility. The facility was undrawn at 30 June 2022.
The new facility contains two financial covenants: interest cover and a
leverage ratio. These are tested at half year and full year on a trailing
12-month basis, with 30 June 2022 being the first test date.
The interest cover covenant requires a ratio of Covenant EBITDA: Covenant
interest payable above 3.5:1 and the leverage ratio requires Covenant net
debt: Covenant EBITDA below 4.0:1.
The previous covenants, as set out in the 2021 Annual Report and Form 20-F,
were waived until 31 December 2021 and had been relaxed for test dates in
2022. The temporary $400m liquidity covenant, which was previously applicable
at 30 June and 31 December 2022 test dates, will no longer apply.
2022 2021
30 June 31 December*
Covenant EBITDA ($m) 812 601
Covenant net debt ($m) 1,752 1,801
Covenant interest payable ($m) 133 133
Leverage 2.16 3.00
Interest cover 6.11 4.52
Liquidity ($m) n/a 2,655
* In 2021, covenant measures were reported on a frozen GAAP basis excluding
the effect of IFRS 16, an adjustment which is eliminated under the new
facility agreement.
11. Movement in net debt
2022 2021
6 months ended 6 months ended
30 June 30 June
$m $m
Net decrease in cash and cash equivalents, net of overdrafts (24) (709)
Add back financing cash flows in respect of other components of net debt:
Principal element of lease payments 18 17
Repayment of commercial paper - 828
_____ _____
(Increase)/decrease in net debt arising from cash flows (6) 136
Other movements:
Lease liabilities (32) (3)
Increase in accrued interest (24) (25)
Exchange and other adjustments 225 (37)
_____ _____
Decrease in net debt 163 71
Net debt at beginning of the period (1,881) (2,529)
_____ _____
Net debt at end of the period (1,718) (2,458)
_____ _____
12. Financial instruments
a) Fair value hierarchy
The following table provides the carrying value (which is equal to the fair
value) and position in the fair value measurement hierarchy of the Group's
financial assets and liabilities measured and recognised at fair value on a
recurring basis.
Value
Level 1 Level 2 Level 3 Total
$m $m $m $m
Financial assets
Equity securities* - - 109 109
Money market funds** 882 - - 882
Deferred compensation plan investments 213 - - 213
Financial liabilities
Derivative financial instruments - (37) - (37)
Contingent purchase consideration*** - - (66) (66)
Deferred compensation plan liabilities (213) - - (213)
* Included in 'other financial assets'.
** Included in 'other financial assets' and 'cash and cash equivalents'.
*** Included in 'trade and other payables'.
There were no transfers between Level 1 and Level 2 fair value measurements
during the period and no transfers into or out of Level 3.
b) Valuation techniques
The valuation techniques and types of input applied by the Group for the six
months ended 30 June 2022 are consistent with those disclosed within the 2021
Annual Report and Form 20-F. Changes in reported amounts are primarily
caused by payments made and received, changes in market inputs, such as
discount rates, and the impact of the time value of money.
Within Level 2 financial instruments, derivative financial liabilities have
fallen to $37m, primarily driven by movements in sterling:euro exchange rates
which impact the valuation of currency swaps.
Equity securities
The significant unobservable inputs used to determine the fair value of the
unquoted equity securities are RevPAR growth, pre-tax discount rate (which
ranged from 6.3% to 9.3%) and a non-marketability factor (which ranged from
20% to 30%).
Applying a one-year slower/faster RevPAR recovery period would result in a
$8m/$7m (decrease)/increase in fair value respectively. A one percentage point
increase/decrease in the discount rate would result in a $10m
(decrease)/increase in fair value respectively. A five percentage point
increase/decrease in the non-marketability factor would result in a $6m
(decrease)/increase in fair value.
Contingent purchase consideration
Principally comprises the present value of the expected amounts payable on
exercise of put and call options to acquire the remaining 49% shareholding in
Regent.
The significant unobservable inputs are the projected trailing revenues and
the date of exercising the options. If the annual trailing revenues were to
exceed the floor by 10%, the amount of the contingent purchase consideration
recognised would increase by $7m. If the date for exercising the options is
assumed to be 2033, the amount of the undiscounted contingent purchase
consideration would be $86m.
c) Reconciliation of financial instruments classified as Level 3
Contingent purchase consideration
Equity $m
securities
$m
At 1 January 2022 106 (73)
Unrealised changes in fair value 5 7
Exchange and other adjustments (2) -
_____ _____
At 30 June 2022 109 (66)
_____ _____
Changes in the fair value of equity securities are recognised within 'Gains on
equity instruments classified as fair value through other comprehensive
income' in the Group statement of comprehensive income.
Changes in the fair value of contingent purchase consideration are recognised
within 'Fair value gains on contingent purchase consideration' in the Group
income statement.
d) Fair value of other financial instruments
The Group also holds a number of financial instruments which are not measured
at fair value in the Group statement of financial position. With the exception
of the Group's bonds, their fair values are not materially different to their
carrying amounts, since the interest receivable or payable is either close to
current market rates or the instruments are short-term in nature. The Group's
bonds, which are classified as Level 1 fair value measurements, have a
carrying value of $2,550m and a fair value of $2,378m.
The Group did not measure any financial assets or liabilities at fair value on
a non-recurring basis as at 30 June 2022.
e) Estimation uncertainty related to financial instruments
Consistent with 31 December 2021, the calculation of expected credit losses on
trade receivables is a significant estimate. Although the collection of trade
receivables has improved compared to the prior year, there remains a
significant amount of older debt which has not yet been collected. There also
remains a risk of reduced owner liquidity. If historical evidence was applied
to all owner groups (rather than by reference to other sources of data), the
provision would reduce by approximately $11m; alternatively a 10% collection
rate of amounts over 270 days would reduce the provision by approximately $9m.
13. Commitments, contingencies and guarantees
At 30 June 2022, the amount contracted for but not provided for in the
financial statements for expenditure on property, plant and equipment and
intangible assets was $26m (31 December 2021: $17m).
From time to time, the Group is subject to legal proceedings the ultimate
outcome of each being always subject to many uncertainties inherent in
litigation. These legal claims and proceedings are in various stages and
include disputes related to specific hotels where the potential materiality is
not yet known; such proceedings, either individually or in the aggregate, have
not in the recent past and are not likely to have a significant effect on the
Group's financial position or profitability. In the EMEAA region, one such
dispute is expected to be resolved in the second half of the year and, in the
six months ended 30 June 2022, a further dispute has been found in the Group's
favour, subject to appeal, with no liability arising.
In limited cases, the Group may guarantee bank loans made to facilitate
third-party ownership of hotels under IHG management or franchise
agreements. At 30 June 2022, there were guarantees of up to $67m in place
(31 December 2021: $69m).
Subsequent to 30 June 2022, the Group has agreed to restructure the UK
portfolio leases with substantially lower rental payments. The revised
portfolio will comprise nine IHG-branded hotels, with the leases of three
unbranded hotels terminating in the second half of 2022. This is a
non-adjusting event since commitments were made after 30 June 2022.
Documentation is expected to be signed in the second half of 2022, subject
to obtaining consent from superior landlords.
The structure of the revised leases is similar to the current leases which
contain guarantees that the Group will fund any shortfalls in lease payments
up to an annual and cumulative cap. These caps limit the Group's exposure to
trading losses, meaning that rental payments are reduced if insufficient cash
flows are generated by the hotels. In the event that rent reductions are not
applicable, annual base rental payments stabilise at £34m over the remaining
lease term of 21 years. Additional performance-based rental payments are
calculated using hotel revenues and net cash flows.
The revised terms are expected to result in an immaterial reversal of previous
impairment of property, plant and equipment and related adjustments to
deferred tax. Existing provisions for onerous contractual expenditure will
be utilised on termination of the three leases.
INDEPENDENT REVIEW REPORT TO INTERCONTINENTAL HOTELS GROUP PLC
REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Our conclusion
We have reviewed InterContinental Hotels Group PLC's condensed consolidated
interim financial statements (the 'interim financial statements') in the Half
Year Results of InterContinental Hotels Group PLC for the six month period
ended 30 June 2022 (the 'period').
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK-adopted International Accounting
Standard 34 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
● the Group statement of financial position at 30 June 2022;
● the Group income statement and Group statement of comprehensive
income for the period then ended;
● the Group statement of cash flows for the period then ended;
● the Group statement of changes in equity for the period then ended;
and
● the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Results of
InterContinental Hotels Group PLC have been prepared in accordance with
UK-adopted International Accounting Standard 34 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the Group to cease to continue as a going concern.
RESPONSIBILITIES FOR THE INTERIM FINANCIAL STATEMENTS AND THE REVIEW
Our responsibilities and those of the Directors
The Half Year Results, including the interim financial statements, are the
responsibility of, and have been approved by, the Directors. The Directors
are responsible for preparing the Half Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half Year Results, including
the interim financial statements, the Directors are responsible for assessing
the Group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to
cease operations or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Year Results based on our review. Our conclusion,
including our conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures as described in the basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not,
in giving this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
8 August 2022
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