REG - Interco. Hotels Grp - 2023 Third Quarter Trading Update

Intercontinental HotelsAnnouncement

20/10/2023 07:00

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RNS Number : 7356Q  InterContinental Hotels Group PLC  20 October 2023

 

 

20 October 2023

InterContinental Hotels Group PLC

2023 Third Quarter Trading Update

 

Highlights

 

 ●    Q3 group RevPAR +10.5% vs 2022, with Americas +4.1%, EMEAA +15.9% and Greater
      China +43.2%
 ●    Q3 group RevPAR +12.8% vs 2019, with Americas +13.8%, EMEAA +17.5% and Greater
      China +9.3%
 ●    Average daily rate +4.1% vs 2022, +14.8% vs 2019; occupancy +4.1%pts vs 2022,
      (1.3)%pts vs 2019
 ●    Gross system size growth +6.2% YOY, +3.1% YTD; opened 7.7k rooms (50 hotels)
      in Q3, similar to 2022
 ●    Net system size growth +4.7% YOY, +2.0% YTD; excluding Iberostar, +2.9% YOY,
      +1.6% YTD
 ●    Global system of 930k rooms (6,261 hotels); 67% across midscale segments, 33%
      across upscale and luxury
 ●    Signed 16.8k rooms (123 hotels) in Q3, +27% vs 2022; global pipeline of 292k
      rooms (1,978 hotels), +5.1% YOY
 ●    On track to have returned $1.0bn to shareholders in 2023 through share
      buybacks and dividend payments

 

Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, said:

 

"Travel demand remained very healthy during the quarter, and I would like to
thank all our teams for supporting another strong trading period. Q3 RevPAR
increased 10% versus 2022 and 13% versus 2019, representing the fifth quarter
of sequential improvement exceeding pre-pandemic highs. Greater China
continued its excellent rebound with RevPAR now above 2019, which the Americas
achieved in the second quarter of last year and EMEAA in the fourth quarter.
Group-wide occupancy was 72%, just one percentage point behind 2019 which
further confirms the near-complete return to pre‑Covid levels of demand.
Pricing remained very robust. As well as year‑on‑year RevPAR growth in
each of our three regions, it was also pleasing to see rooms revenue growth
for each of leisure, business and group travel.

 

We opened nearly eight thousand rooms across 50 hotels in the quarter, and
added 17 thousand rooms to our pipeline across 123 properties. Year to date,
signings are up by 16%. Reflecting the breadth and attractiveness of our
portfolio, 'quicker to market' conversions have increased this year to be over
one-third of openings and signings. This will soon be further boosted by our
new midscale conversion brand, Garner, which became franchise‑ready in
September. There was good development progress across all our categories, and
our six Luxury & Lifestyle brands continue to represent a growing
proportion of IHG with over 800 open and pipeline hotels in that category.

 

As IHG powers forward to provide industry-leading advantages for our guests
and hotels owners across our brand portfolio, loyalty programme and entire
enterprise platform, we expect to close-out 2023 with very strong financial
performance. Looking further ahead, whilst there are macro-economic
uncertainties and some short-term financing challenges holding back new hotel
development, I am excited about the future for IHG and the attractive,
long-term demand drivers for our markets. As such, we're confident in the
strengths of IHG's business model, scale and in our strategic priorities to
capture sustainable, profitable growth."

 

Regional performance

 

Americas

Q3 RevPAR was up +4.1% vs 2022 (up +13.8% vs 2019), with US RevPAR up +3.1%
(up +11.8% vs 2019). Occupancy was 72%, up +0.7%pts on last year (down
(0.6)%pts vs 2019), whilst rate was up +3.1% (up +14.8% vs 2019). Leisure
rooms revenue in Q3 for the total estate was +3% higher than last year, and up
+22% on 2019 levels, driven by another strong summer vacation period.

 

Gross system size growth was +3.9% YOY, with 2.0k rooms (18 hotels) opened in
the quarter. Net system size growth was +2.9% YOY. A further 5.1k rooms (55
hotels) were added to the pipeline. Signings included eight avid hotels,
16 hotels across the Holiday Inn Brand Family, and a further 26 across our
extended stay brands.

 

EMEAA

Q3 RevPAR was up +15.9% vs 2022 (up +17.5% vs 2019). Occupancy was 73%, up
+4.7%pts on last year (and down (4.0)%pts vs 2019), whilst rate was up +8.6%
(up +23.9% vs 2019). By major geographic markets within the region, Q3 RevPAR
vs 2019 ranged from up +31% in Continental Europe, +18% in the UK, and +16% in
Australia, to down just (1)% in the Middle East and (4)% in Japan.

 

Gross system size growth was +10.0% YOY, with 2.0k rooms (11 hotels) opened in
the quarter. Net system size growth was +8.4% YOY (+5.2% excluding Iberostar).
There were 4.8k rooms (31 hotels) added to the pipeline, with conversions
representing around 40% of these. Luxury & Lifestyle brands performed
strongly, also representing 40% of all signings.

 

Greater China

Q3 RevPAR was up +43.2% vs 2022 (up +9.3% vs 2019). Occupancy was 67%, up
+14.1%pts (and up +2.3%pts vs 2019), whilst rate was up +13.0% (up +5.6% vs
2019). Tier 1 cities saw RevPAR vs 2019 down (3)%, reflecting the more gradual
return of international travel; the performance was stronger across Tier 2-4
cities which were up +13%.

 

Gross system size growth was +8.1% YOY, with 3.6k rooms (21 hotels) opened in
the quarter. Net system size growth was +5.5% YOY. A further 6.9k rooms (37
hotels) were added to the pipeline. As development activity continues to
improve following the extended period last year of Covid-related restrictions
in the region, this was the highest quarterly signings performance since 2021.

Share buyback and capital allocation update

 

As announced in February 2023, a $750m share buyback programme is returning
surplus capital to shareholders. This follows the $500m programme announced in
2022 which already reduced the total number of voting rights in the Company by
5.0%. The current 2023 programme is 94% complete with $704.7m (£561.2m)
having been cumulatively spent to date, repurchasing 10.1 million shares at an
average price of £55.76 per share. The 2023 programme to date has therefore
reduced the total number of voting rights in the Company by a further 5.7% to
165.3 million as at market close on Thursday 19 October 2023.

 

IHG's 2023 share buyback programme, together with ordinary dividend payments,
will have returned $1.0bn to shareholders during the year. This is equivalent
to 10% of IHG's $10.0bn (£8.3bn) market capitalisation at the start of 2023,
and more than 8% of IHG's most recent $12.4bn (£10.2bn) market
capitalisation.

 

IHG's perspectives on the uses of cash generated by the business remain
unchanged: ensuring the business is investing to optimise growth that will
drive 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. Having already returned $500m of
surplus capital via the 2022 programme and $750m which is being returned over
the course of 2023, the highly cash generative nature of our business model
means we expect to have significant ongoing capacity to return further surplus
capital to shareholders, both in the ordinary course and as we look to move
leverage into our target range over time. The Board's next assessment in
relation to the amounts, mechanisms and timings of future capital returns will
be carried out in early 2024, taking into account macro-economic conditions
and the trading outlook at that time. Our next capital allocation update will
therefore be communicated as part of the 2023 Full Year Results to be
announced on Tuesday 20 February 2024.

 

 

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:           Neil Maidment (+44 (0)7970 668 250); Mike
Ward (+44 (0)7795 257 407)

 

Conference call for analysts and institutional shareholders:

Elie Maalouf, Chief Executive Officer, and Michael Glover, Chief Financial
Officer, will host a call commencing at 9:00am (London time) on 20 October.
The live listen-only audio webcast can be accessed directly at
https://www.investis-live.com/ihg/65083b4e6dedf60c006bf2d6/xowlw
(https://urldefense.com/v3/__https:/www.investis-live.com/ihg/65083b4e6dedf60c006bf2d6/xowlw__;!!EOxaMA!TtbOorpgwUEE83Uc3BTGokP27pQcZL3LeZFgUjJ91AYmqaug0Do_Z_K2eqQkVqRG7BunQdgR_B4XQf0Qp3eDOOPtPEk1CcDzaw$)
or via www.ihgplc.com/en/investors/results-and-presentations
(https://urldefense.com/v3/__https:/www.ihgplc.com/en/investors/results-and-presentations__;!!EOxaMA!UQW-l3BiA8XXUiPMd4eGsANkqfgpOAuKdUs9F8vIC-aM7gqhkAVKAWJvBF8MUhNAo70bweitd6U_Wa_E$)
.

 

Analysts and institutional shareholders wishing to ask questions should use the following dial-in details for a Q&A facility:
 UK local:                     0207 107 0613
 US local:                     631 570 5613
 Other international numbers:  Click here (https://urldefense.com/v3/__https:/services3.choruscall.ch/NUMBERS/Attended_Dial_In_Numbers.pdf__;!!EOxaMA!TtbOorpgwUEE83Uc3BTGokP27pQcZL3LeZFgUjJ91AYmqaug0Do_Z_K2eqQkVqRG7BunQdgR_B4XQf0Qp3eDOOPtPEkrszrUgw$)
 Passcode:                     42 73 27 07

 

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

 UK local:         0203 608 8021
 US local:         412 317 0088
 Other locations:  +44 203 608 8021
 Passcode:         20 23 03 54#

 

Website:

The full release and supplementary data will be available on our website from
7:00am (London time) on 20 October. 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 19 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 6,200 open
hotels in more than 100 countries, and nearly 2,000 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) , Garner
hotels (https://www.ihg.com/content/us/en/garner-hotels) , 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)

-     Exclusive Partners: Iberostar Beachfront Resorts
(https://www.ihg.com/content/us/en/iberostar-beachfront-resorts)

 

InterContinental Hotels Group PLC is the Group's holding company and is
incorporated and registered in England and Wales. Approximately 345,000 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 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/) .

Appendix 1: RevPAR(a) movement summary at constant exchange rates (CER)

 

                Q3 2023 vs 2022            Q3 2023 vs 2019
                RevPAR  ADR     Occupancy  RevPAR  ADR     Occupancy
 Group          10.5%   4.1%    4.1%pts    12.8%   14.8%   (1.3)%pts
 Americas       4.1%    3.1%    0.7%pts    13.8%   14.8%   (0.6)%pts
 EMEAA          15.9%   8.6%    4.7%pts    17.5%   23.9%   (4.0)%pts
 Greater China  43.2%   13.0%   14.1%pts   9.3%    5.6%    2.3%pts

 

                Q3 YTD 2023 vs 2022          Q3 YTD 2023 vs 2019
                RevPAR   ADR      Occupancy  RevPAR   ADR      Occupancy
 Group          18.9%    6.1%     7.4%pts    10.2%    12.2%    (1.3)%pts
 Americas       8.7%     5.0%     2.4%pts    12.6%    12.7%    0.0%pts
 EMEAA          31.0%    12.8%    9.7%pts    14.1%    20.9%    (4.1)%pts
 Greater China  71.3%    17.4%    19.4%pts   0.8%     (0.5)%   0.8%pts

 

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

 

                Q3 2023 vs 2022                     Q3 2023 vs 2019
                CER (as above)  AER     Difference  CER (as above)  AER     Difference
 Group          10.5%           11.0%   0.5%pts     12.8%           10.3%   (2.5)%pts
 Americas       4.1%            4.4%    0.3%pts     13.8%           13.6%   (0.2)%pts
 EMEAA          15.9%           19.1%   3.2%pts     17.5%           10.4%   (7.1)%pts
 Greater China  43.2%           35.5%   (7.7)%pts   9.3%            6.1%    (3.2)%pts

 

                Q3 YTD 2023 vs 2022                  Q3 YTD 2023 vs 2019
                CER (as above)  AER      Difference  CER (as above)  AER      Difference
 Group          18.9%           18.3%    (0.6)%pts   10.2%           7.6%     (2.6)%pts
 Americas       8.7%            8.8%     0.1%pts     12.6%           12.2%    (0.4)%pts
 EMEAA          31.0%           30.0%    (1.0)%pts   14.1%           6.9%     (7.2)%pts
 Greater China  71.3%           61.9%    (9.4)%pts   0.8%            (1.4)%   (2.2)%pts

 

Appendix 3: Monthly RevPAR(a) (CER)

 

 2023 vs 2022   Jan    Feb    Mar     Apr     May     Jun    Jul    Aug    Sep
 Group          40.8%  33.5%  27.2%   21.7%   17.0%   13.3%  9.5%   10.4%  11.6%
 Americas       24.5%  18.3%  13.8%   5.9%    6.9%    4.7%   2.8%   3.9%   5.7%
 EMEAA          84.0%  71.9%  44.5%   36.7%   24.2%   22.7%  16.1%  16.1%  15.7%
 Greater China  53.3%  54.2%  125.2%  171.4%  106.9%  68.4%  40.5%  38.5%  54.2%

 

 2023 vs 2019   Jan      Feb     Mar     Apr    May     Jun     Jul    Aug    Sep
 Group          4.2%     6.7%    9.2%    9.5%   9.3%    10.9%   12.8%  11.1%  14.5%
 Americas       8.8%     11.0%   13.1%   11.5%  11.8%   13.0%   12.5%  10.9%  18.2%
 EMEAA          8.2%     7.7%    13.0%   12.6%  15.6%   16.7%   19.0%  17.0%  16.6%
 Greater China  (16.6)%  (3.8)%  (6.6)%  5.0%   (6.4)%  (0.1)%  14.0%  9.3%   3.3%

 

Appendix 4: System and pipeline summary of Q3 2023 YTD and YOY growths, and
closing positions (rooms)

 

                System                                             Pipeline
                Openings  Removals  Net     Total    YTD%   YOY%   Signings  Total
 Group          28,688    (10,328)  18,360  929,987  +2.0%  +4.7%  50,940    292,467
 Americas       6,210     (4,744)   1,466   516,962  +0.3%  +2.9%  18,416    106,788
 EMEAA          14,372    (2,898)   11,474  241,138  +5.0%  +8.4%  14,766    79,256
 Greater China  8,106     (2,686)   5,420   171,887  +3.3%  +5.5%  17,758    106,423

 

(a.    ) RevPAR (revenue per available room), ADR (average daily rate) and
occupancy are on a comparable basis, based on comparability as at 30 September
2023 and includes hotels that have traded in all months in both the current
and the prior year. This same group of hotels is also used to compare RevPAR
performance for 2023 vs 2019. The principal exclusions in deriving these
measures are new openings, properties under major refurbishments and removals.
See 'Use of key performance measures and non-GAAP measures' in IHG's full year
and half year results announcements for further information on the
definitions.

 

Cautionary note regarding forward-looking statements:

This announcement contains certain forward-looking statements as defined under
United States law (Section 21E of the Securities Exchange Act of 1934) and
otherwise. These forward-looking statements can be identified by the fact that
they do not relate only to historical or current facts. Forward-looking
statements often use words such as 'anticipate', 'target', 'expect',
'estimate', 'intend', 'plan', 'goal', 'believe' or other words of similar
meaning. These statements are based on assumptions and assessments made by
InterContinental Hotels Group PLC's management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. By their
nature, forward-looking statements are inherently predictive, speculative and
involve risk and uncertainty. There are a number of factors that could cause
actual results and developments to differ materially from those expressed in
or implied by, such forward-looking statements. The main factors that could
affect the business and the financial results are described in the 'Risk
Factors' section in the current InterContinental Hotels Group PLC's Annual
report and Form 20-F filed with the United States Securities and Exchange
Commission.

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