REG - Interco. Hotels Grp - Final Results
20/02/2024 07:00
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RNS Number : 6860D InterContinental Hotels Group PLC 20 February 2024
InterContinental Hotels Group PLC
Full Year Results to 31 December 2023
20 February 2024
2023 2022(1) % change Underlying(2
) % change
REPORTABLE SEGMENTS(2):
Revenue(2) $2,164m $1,843m +17% +19%
Revenue from fee business(2) $1,672m $1,434m +17% +17%
Operating profit(2) $1,019m $828m +23% +25%
Fee margin(2) 59.3% 55.9% +3.4%pts
Adjusted EPS(2) 375.7¢ 282.3¢ +33%
GROUP RESULTS:
Total revenue $4,624m $3,892m +19%
Operating profit $1,066m $628m +70%
Basic EPS 443.8¢ 207.2¢ +114%
Total dividend per share 152.3¢ 138.4¢ +10%
Net debt(2) $2,272m $1,851m +23%
(1. ) Re-presented for the adoption of IFRS 17 'Insurance Contracts' (see
note 1 to the Financial Statements).
(2. ) 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.
( )
Trading and revenue
· Strong trading: global RevPAR(2) up +16.1% YoY (Q4 +7.6%); global
RevPAR up +10.9% vs 2019 (Q4 +12.7%)
· Americas FY RevPAR up +7.0% YoY (Q4 +1.5%), EMEAA +23.7% (Q4
+7.0%) and Greater China +71.7% (Q4 +72.0%), reflecting the differing levels
of travel restrictions that were still in place in 2022
· Average daily rate up +5% vs 2022, +13% vs 2019; occupancy up
+6%pts vs 2022, just (1)%pt lower vs 2019
· Total gross revenue(2) of $31.6bn, +23% vs 2022, +13% vs 2019
System size and pipeline
· Gross system growth +5.3%; net system size growth of +3.8%
· Opened 47.9k rooms (275 hotels), +16% YoY (ex. Iberostar); global
estate 946k rooms (6,363 hotels)
· Signed 79.2k rooms (556 hotels), +26% YoY (ex. Iberostar); global
pipeline 297k rooms (2,016 hotels), +5.5% YoY
· Q4 opened 19.2k rooms (117 hotels) and signed 28.3k rooms (194
hotels), one of the highest quarters on record
Margin and profit
· Fee margin(2) of 59.3%, up +3.4%pts driven by trading recovery in
EMEAA and Greater China
· Operating profit from reportable segments(2) of $1,019m, up +23%;
this included $13m adverse currency impact
· Reported operating profit of $1,066m, including a profit of $19m
from System Fund and reimbursables (2022: loss of $105m) and a $28m
exceptional profit (2022: $95m net exceptional charges)
Cash flow and net debt
· Net cash from operating activities of $893m (2022: $646m), with
adjusted free cash flow(2) of $819m (2022: $565m), the latter representing
129% conversion of adjusted earnings(2) (2022: 111%)
· Net debt increase of $421m reflects the strong adjusted free cash
flow, $1.0bn of shareholder returns and a $105m net foreign exchange adverse
impact
· Adjusted EBITDA(2) of $1,086m, +21% vs 2022; net debt:adjusted
EBITDA ratio of 2.1x
Shareholder returns
· Completion of 2023's $750m share buyback programme, and payment
of $245m in ordinary dividends
· Final dividend of 104.0¢ proposed, +10% vs 2022, resulting in a
total dividend for the year of 152.3¢
· New $800m buyback programme launched, which together with
ordinary dividends is expected to return over $1bn to shareholders in 2024
Clear framework to drive future value creation over the medium to long term
· High single digit percentage growth in fee revenue, though
combination of RevPAR and system size growth, together with 100‑150bps fee
margin expansion, annually on average over the medium to long term
· 100% conversion of adjusted earnings into adjusted free cash
flow, supporting investment in the business to optimise growth, sustainably
growing the ordinary dividend and returning surplus capital
· 12-15% adjusted EPS compound annual growth rate, including the
assumption of ongoing share buybacks
Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, said:
"I was honoured to take over as IHG's group CEO in July and would like to
thank our teams for delivering an excellent set of results. Travel demand was
strong across all markets, with RevPAR up 16% on last year and 11% ahead of
the 2019 pre-pandemic peak. Combined with the power of our enterprise and
efficient operating model, profit from reportable segments grew 23% and
exceeded one billion dollars for the first time, and adjusted EPS grew 33%.
Today we are announcing a further $800m share buyback programme, which
together with ordinary dividends is expected to return over $1bn to
shareholders in 2024.
Alongside strong trading and financial performances, we continued to grow our
portfolio and the global footprint of our brands. We opened 275 hotels in 2023
and signed more than double that amount - 556 hotels - into our pipeline.
Adjusting for the effect of the Iberostar hotels joining IHG's system,
openings for the fourth quarter grew by 27% year‑on‑year and signings were
up by 50%, representing one of our biggest ever quarters for development
activity.
As we look ahead, our evolved strategic priorities and clear plans will
further reinforce IHG Hotels & Resorts as the hotel company of choice for
guests and owners. The travel industry has attractive, long-term drivers of
demand, and the strength of our brand portfolio and enterprise platform will
continue to boost our RevPAR and system size growth. Combined with our scale
and cost base efficiencies, this will further expand fee margin. IHG's strong
cash generation supports investment in growth initiatives, sustainably
increasing our ordinary dividend and the regular return of surplus capital
such as through buybacks. We look forward to an important next chapter of
growth for IHG that creates long-term sustainable value for our shareholders
and benefits our employees, hotel owners and communities."
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)
Presentations for analysts and institutional shareholders:
Covering IHG's 2023 results, a pre-recorded webcast presented by Elie Maalouf, Chief Executive Officer, and Michael Glover, Chief Financial Officer, will be available from 7:00am (London time) today, 20 February 2024, and can be accessed at
www.ihgplc.com/en/investors/results-and-presentations (https://www.ihgplc.com/en/investors/results-and-presentations)
.
Covering IHG's update on strategic priorities, a live webcast, together with a Q&A session, will be hosted later today at 1:30pm (London time). Elie Maalouf and Michael Glover will present along with other senior management colleagues, and the event can be accessed directly on
https://limecrane.com/reg/ihg/ir/ (https://limecrane.com/reg/ihg/ir/)
or via
www.ihgplc.com/en/investors/results-and-presentations (https://www.ihgplc.com/en/investors/results-and-presentations)
. The content of this full year results announcement contains all material background information to IHG's update on strategic priorities, with no further announcement to be released.
Analysts and institutional investors wishing to ask questions should use the following dial-in details for a Q&A facility:
UK toll-free: 0800 048 7798. US toll-free: 800 579 2543. Other international:
(+1) 785 424 1789. Conference ID: IHG.
An archived replay of the update on strategic priorities is expected to be
available within 24 hours and will remain available, accessed at
www.ihgplc.com/en/investors/results-and-presentations
(http://www.ihgplc.com/en/investors/results-and-presentations) .
Website:
The full release and supplementary data will be available on our website from
7:00am (London time) on 20 February 2024. 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 6,300 open
hotels in more than 100 countries, and a development pipeline of over 2,000
properties.
- 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 Express
(http://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation) , Holiday Inn
Hotels & Resorts (http://www.ihg.com/holidayinn/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/) .
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.
Summary of system size and pipeline progress in 2023
Openings and signings progress in 2023 reflects IHG's strong portfolio of
brands and the overall enterprise platform that we provide to hotel owners,
together with the long-term attractiveness of the markets we operate in:
· Global system of 946k rooms (6,363 hotels) at 31 December 2023,
weighted 66% across midscale segments and 34% across upscale and luxury
· Gross growth +5.3%, with 47.9k rooms (275 hotels) opened which
represents an increase of +16% on the prior year when adjusting to exclude
Iberostar hotels added to IHG's system; on the same basis, Q4 was a +27%
increase on the prior year with 19.2k rooms (117 hotels) opened
· Removal of 13.3k rooms (76 hotels), a removal rate of -1.5%, in
line with the historical underlying average rate
· Net system size growth +3.8%, or +3.2% excluding Iberostar openings
in 2023
· Signed 79.2k rooms (556 hotels), +26% more than prior year when
excluding Iberostar; on the same basis, Q4 was a +50% increase on the prior
year with 28.3k rooms (194 hotels) signed
· Signings mix drives pipeline to be weighted 52% across midscale
segments and 48% across upscale and luxury, which over the coming years will
drive a more balanced system mix and fee stream
· Conversions growing strongly, representing 39% of openings and 36%
of signings (excluding Iberostar for both); conversion signings rose to 191
hotels in 2023 (2022: 96) and new-build signings rose to 359 (2022: 323)
· Global pipeline of 297k rooms (2,016 hotels), representing 31% of
current system size and growth of +5.5%
· More than 40% of the global pipeline is under construction, broadly
in line with prior years
System and pipeline summary of movements in 2023 and total closing position
(rooms):
System Pipeline
Openings Removals Net Total YoY% Signings Total
Group 47,919 (13,343) 34,576 946,203 +3.8% 79,220 296,954
Americas 10,405 (6,307) 4,098 519,594 +0.8% 28,297 109,164
EMEAA 21,174 (3,571) 17,603 247,267 +7.7% 24,787 82,226
Greater China 16,340 (3,465) 12,875 179,342 +7.7% 26,136 105,564
The regional performance reviews provide further detail of the system and
pipeline by region, and further analysis by brand and by ownership type.
Update on strategic priorities
To further strengthen our ability to drive future growth, in 2023 we evolved
key elements of our strategy, including our ambition, strategic pillars and
growth behaviours.
These changes build on the investments we have made in recent years, where we
have expanded our portfolio from 11 to 19 brands and significantly
strengthened our enterprise. This includes the relaunched IHG One Rewards
loyalty programme, refreshed masterbrand, new partnerships and an enhanced web
and mobile offer, as well as embarking on our Journey to Tomorrow to invest in
our people, deliver more sustainable hotels and bring positive change in our
communities.
Our purpose of True Hospitality for Good remains at the heart of our brands
and culture and is therefore unchanged, but our ambition as an organisation
has been simplified to focus on what is central to accelerating growth: being
the hotel company of choice for guests and owners. We have evolved the four
pillars to execute against our strategy:
· Relentless Focus on Growth, instils a targeted approach to
expanding our brands in high-value and growth markets;
· Brands Guests and Owners Love, shows our explicit intention to
deliver for both groups, every time;
· Leading Commercial Engine, recognises the importance of
investing in the technology and tools that drive commercial success and make
the biggest difference to guests, owners and hotel teams; and
· Care for our People, Communities and Planet, which remains in
step with our 2030 Journey to Tomorrow targets.
Together, our strategic pillars have been designed to push the limits of what
we've built, driving us further and faster towards realising our potential in
a sustainable and responsible way. Over the long term, with disciplined
execution, our strategy creates value for all our stakeholders and delivers
growth in cash flows and profits, which can be reinvested in our business and
returned to shareholders, and reflects how IHG delivers on our growth
algorithm and investment case.
Strategic and operational highlights for 2023
Relentless focus on growth
· New midscale conversion brand launched. Our new Garner brand became
franchise-ready in the US in September 2023, and rapidly achieved its first
seven signings and two openings by the end of the year. We have also quickly
expanded the brand to other markets, where it is ready for development in
Mexico from February 2024 and with initial agreements already reached for
conversions expected this year in Japan. IHG expects the growth potential of
Garner to reach more than 500 hotels over the next 10 years and 1,000 hotels
over the next 20 years.
· Other newer brands progressing well. The seven other brands
launched or acquired over more recent years (Regent, Six Senses, Kimpton,
Vignette Collection, voco, avid and Atwell Suites) are now 5% of the system
size but 16% of the pipeline. There were 141 hotels signed across these seven
brands in 2023, compared to 78 in the prior year. We continue to evaluate
where through the introduction of our existing brands to new markets and the
addition of new brands to our portfolio we could accelerate IHG's growth.
· Our established brands continue to grow. Each of InterContinental,
Hotel Indigo, Hualuxe, Crowne Plaza, EVEN, Holiday Inn, Holiday Inn Express,
Staybridge Suites and Candlewood Suites have pipelines representing at least
20% of current system size. Our commitment to continuous investment to keep
all our brands modern and relevant was reflected in the year with initiatives
such as the launch of our global brand evolution for InterContinental Hotels
& Resorts, new marketing campaigns and innovative format developments. For
example, these include changes to the build types for EVEN that significantly
lower the cost per key, and more flexible formats for our suites brands.
· Conversions reaching record levels. Hotel signings in 2023 included
nearly 200 in total that were conversions to IHG brands, double the number in
2022, and there were more than 100 conversion properties opened in the year.
Together, conversions therefore represented 37% of combined signings and
openings activity in 2023.
· Luxury & Lifestyle growing particularly fast. The six IHG
brands in this higher fee per key segment have grown to represent 14% of IHG's
system size (509 properties, 129k rooms) and 22% of our pipeline (357
properties, 65k rooms) which is around twice the size from five years earlier.
Luxury & Lifestyle accounted for 23% of signings in the year, and signings
grew by 33% year-on-year. One in two Luxury & Lifestyle development deals
now include a branded residences component, which will further accelerate
system growth and fee income.
· Further international expansion. We are already present in over 100
countries and capitalising on that in 2023 there were 31 hotel openings that
represented a debut in a new country for a particular IHG brand. We are also
expanding our presence in some of the most rapidly growing markets such as
India with 46 open and 49 pipeline hotels, Saudi Arabia with 43 open and 39
pipeline hotels, and Greater China which recently celebrated the achievement
of exceeding 700 open hotels and with 500 more in the pipeline. In the
Americas region, having strengthened our development capacity that serves
Canada, Mexico, Latin America and the Caribbean, there were 51 hotel signings
across these markets which represented 20% of the overall signings for the
Americas region and which was more than double the 21 signings in these
markets in the prior year (excluding Iberostar).
· Capturing demand across stay occasions. Reflecting the different
stages of recovery post-pandemic, by the fourth quarter of 2023 our global
revenue performance was ahead of 2019 levels for all three types of stay
occasions. For the full year of 2023, Leisure revenue was ahead of 2019 by
+33% (+13% room nights, +17% rate); Business was ahead by +3% (-2% room
nights, +5% rate) and although Groups was still -5% lower (-7% room nights,
+3% rate) it turned positive for the final quarter and Groups revenue
on-the-books was +17% higher year-on-year. Supporting the outlook for further
RevPAR progress, total global revenue on‑the-books at 1 January 2024 was
+16% higher than at the same point a year earlier.
Brands guests and owners love
· Driving overall guest satisfaction. Global 'Guest Love' scores
trended up further in 2023, and Guest Satisfaction Index (GSI), which measures
our outperformance against peers, continued to maintain a four-year high. Our
support to strengthen the quality and consistency of every stage and element
of the guest experience is paramount to succeeding in preferred customer
choice and strong owner returns.
· Brand resonance campaigns. Our masterbrand strategy is putting IHG
Hotels & Resorts in more places more often, which is lifting awareness and
brand favourability measures. The 'Guest How You Guest' global marketing
campaign extended its reach across markets, channels and events to increase
IHG's appeal with key demographics. We supported this with targeted regional
promotions and individual brand marketing campaigns, including new global
campaigns for Holiday Inn Express, InterContinental and our largest ever for
Hotel Indigo.
· Further updates to brands. These included rolling out programmes
for a vibrant new service culture for InterContinental to drive its
performance and growth, an upgraded breakfast service for Holiday Inn in the
US and Canada with streamlined labour costs, and also an improved breakfast
offering and fresh design for Holiday Inn Express in Greater China to further
accelerate its growth in the region.
· Constant pursuit of owner cost savings across design & build,
operate and renovate. Latest format evolutions in 2023 such as avid/Candlewood
Suites dual branding have reduced cost per key by a further 7‑9%. In-room
design standardisation for Holiday Inn and Holiday Inn Express in Greater
China is achieving savings of 13-18%. Our F&B purchasing programmes cover
over 4,000 hotels with a further 323 joining in 2023, and have driven savings
of up to 15%. Our Group Purchasing Organization agreements now cover over
100,000 items, and broader Hotel Purchasing Services are in place in 6
markets. These provide end-to-end support to speed up openings and
renovations, and achieve savings of up to 30% across various goods and
services categories and continue to expand into new areas such as freight and
logistics.
Leading commercial engine
· Growing the enterprise contribution delivered for owners. The
percentage of room revenue booked through IHG-managed channels and sources has
reached almost 80%, up from 72% three years earlier. It is a key indicator of
value-add, the success of our commercial engine across technology platforms,
and of our sales and distribution channels. Providing our hotel owners
higher-value revenue at a lower cost of acquisition is of paramount importance
to the attractiveness and proven success of our enterprise system.
· Loyalty participation going from strength to strength. IHG One
Rewards has grown to over 130 million members. Following its transformation
midway through the prior year, 2023 was a record year for enrolments, up 50%
YoY and up 24% on 2019 levels. Reward Nights were also up by around 20% YoY
and 40% on 2019 levels, demonstrating strong member engagement and driving
increased returns for owners particularly through Reward Night dynamic pricing
which helps increase demand in lower occupancy periods. Loyalty penetration
has increased with members now responsible for over 55% of room nights
globally in 2023. Loyalty members spend approximately 20% more in hotels than
non-members, and are around ten times more likely to book direct. IHG One
Rewards received seven Freddie Awards in 2023, the most prestigious
member-generated awards in the travel loyalty industry, reflecting an
exceptional year of further progress.
· Co-brand credit cards driving further loyalty contribution and
revenue. Following the update of US card products alongside the relaunch of
the loyalty programme, new account activations have continued to increase very
strongly and in 2023 were up 60%+ year-on-year and 80%+ on 2019 levels. We
have also achieved continued double-digit percentage growth in average card
spend, both on a year-on-year basis and versus 2019.
· Digital channels leading the way. By the end of 2023, we had
redesigned and relaunched brand websites covering 92% of open hotels. The IHG
mobile app and other mobile channels now account for 58% of all digital
bookings, and the rapid growth across IHG's direct digital booking channels
means these are now generating 25% of total room revenue across the whole
enterprise system. The app saw the number of downloads increase 60% YoY and
revenue increase 38%. In Greater China, updates to the IHG WeChat channel
contributed to an 8% increase in conversion rates year-on-year and the channel
generated nearly twice as much revenue.
· IHG's Guest Reservation System (GRS) maximising choice and value.
The up-sell of unique room attributes such as room size and views was made
available in over 6,000 hotels during the year. Guests that select an up-sell
in our digital booking channels drive an average nightly room revenue increase
of $18 across our Essentials and Suites brands and $40 for Luxury &
Lifestyle. Our GRS capabilities also enable more effective cross-sell of
guest‑stay extras such as F&B credits, lounge access, additional in-room
welcome amenities and parking, as part of the redesigned booking flow. For
hotels that have this live, conversion rates are around 2% of eligible guests,
with incremental revenue per booking averaging $31 for Essentials and Suites
brands and $90 for Luxury & Lifestyle.
· New Revenue Management System (RMS) to drive further improvements
in owner returns. Continuing our focus on providing best-in-class platforms,
IHG's RMS employs a new cloud-based platform that incorporates leading data
science and forecasting tools to deliver advanced insights and recommendations
to owners as part of our enhanced revenue management services. Already in
pilot, the rollout is targeting approximately 4,000 hotels in 2024 and the
balance of hotels in 2025. In a further important platform development, work
will also begin this year on our next‑generation Property Management System
(PMS) to create even greater value for owners, where a single cloud‑based
view across properties will enable the deployment of fast, efficient
enhancements.
· Further technology enhancements leveraging IHG's scale and skills
for both guests and owners. Artificial intelligence (AI) is providing a more
intuitive guest experience for our Digital Concierge 'chatbot' service. With
the growth in AI capabilities and IHG's scale investment, we have already
increased end-to-end AI‑led customer self‑service by 53% in 2023 compared
to a year earlier, with the potential for this to continue growing which will
drive additional cost efficiency and effectiveness for our owners, as well as
further increases in guest satisfaction.
· Leveraging our commercial engine through partnerships. As we
continue to integrate the Iberostar Beachfront Resorts brand and properties
into our systems, this is strengthening our all-inclusive resort offer, as
well as leveraging the scale of the loyalty programme and IHG's leading
technology platforms and distribution channel management. In 2023, we achieved
the important milestones of Iberostar properties becoming fully bookable on
IHG direct channels, and IHG One Rewards loyalty points being both earned and
redeemable at these properties. The integration progress and its benefits are
also laying the foundations for future exclusive partnerships demonstrating
the value of IHG's commercial engine.
Care for our people, communities and planet
We champion a diverse culture where everyone can thrive. In 2023 we launched
IHG University, a new gateway to build skills, advance career development and
champion best practice, and which has already received multiple digital
learning awards. Globally, 35% of our leaders working at VP level and above
are female, and we were delighted that Forbes recognised IHG as one of the
world's top companies for women and are proud to be officially certified in
the US as a Great Place to Work for parents, as well as featuring in the 100
Best Places to Work for Women. 22% of our leaders are racially/ethnically
diverse and represent 16 nationalities, and IHG has been rated 2(nd) out of
850 companies on the Financial Times Europe's Diversity Leaders 2024. Our
employee resource groups (ERGs) have grown significantly and now have more
than 4,000 members and allies across 29 chapters that promote different
workplace diversities. Reflecting our continued progress, overall employee
engagement in our 2023 survey stood at 87%, a +1% improvement on the prior
year, which once again saw IHG accredited as a Kincentric Global Best
Employer, and from the Inclusion Index measures, nine out of 10 employees
consider IHG to have an inclusive culture.
· Improving the lives of 30 million people in our communities around
the world. This goal is part of our 10-year responsible business plan, and we
focus on making a positive impact through three areas: skills training,
disaster relief and tackling food poverty. In 2023, through IHG Academy, more
than 30,000 participants all around the world gained valuable employment and
life skills, as the programme rapidly grows to give young people the benefit
of work experience, internships, apprenticeships and free online learning. IHG
supported 15 relief efforts in 2023, working with a range of humanitarian aid
partners around the world to assist in their critical relief and recovery
efforts. We expanded our work with more local foodshare partnerships, our
support of The Global FoodBanking Network covered nearly 50 countries in 2023,
and more than 39,000 colleagues volunteered over 121,000 hours to support
their local communities.
· Reducing our energy use and carbon emissions. Our 2030
science-based target is a 46% absolute reduction from the 2019 baseline year
in our Scope 1 and 2 Greenhouse Gas (GHG) emissions and material Scope 3
emission sources from our franchised hotels energy consumption and Fuel and
Energy Related Activities (FERA). Whilst there was an increase year-on-year in
2023 due to the recovery in occupancy and growth in the size of the estate, we
continued to drive energy efficiency with a 3.8% reduction in carbon emissions
per occupied room from 2019 and a 1.9% absolute reduction against the
baseline. Updates to our brand standards are integrating more Energy
Conservation Measures (ECMs) into hotel requirements, such as new lighting
controls, occupancy-sensing thermostats and heat pumps. We continued to
expand the availability of a renewable energy solution for hotels in a number
of states in the US. Throughout the year we also continued to develop a low
carbon hotel programme, focused primarily on operational carbon of new build
hotels, to support delivery of our carbon and energy goals. We expect to
launch this programme in 2024.
Outlook: attractive long-term growth drivers
Hotel industry demand characteristics exhibit both structural growth and
resiliency
· Industry revenue has outpaced global economic growth in 19 out of
24 years between 2000 and 2023, with a CAGR of +4.4% (versus +2.9% CAGR for
GDP). Prior to the pandemic, there were 10 consecutive years of industry
revenue growth outperforming global economic growth.
· The industry has previously demonstrated relative resilience during
economic downturns, particularly in essential business travel and in
chainscales such as upper midscale, which is where IHG has substantial
presence. Through the pandemic, a sustained level of essential travel was also
shown, followed by a rapid recovery.
· Whilst geopolitical risks and the economic outlook in some
geographies show challenges and uncertainties, current conditions, including
employment, consumer savings and business activity levels, remain supportive
of industry growth.
· Research and consumer surveys indicate relative resilience and
prioritisation of travel from discretionary spending and the ongoing strength
of real disposal income and household savings metrics. Business surveys
indicate expectations for increasing corporate travel budgets and a continued
return to pre-pandemic levels of travel activity, as well as the potential for
greater hotel use to support hybrid and flexible working arrangements.
· Reflecting the strength of current demand recovery, global hotel
room nights consumed are estimated by Oxford Economics to have already
returned back above 2019 levels in 2023. They forecast long-term growth at a
CAGR of +4.0% through to 2033. The US market alone is expected to increase by
a 2.7% CAGR from 2.3 billion to 3.0 billion room nights over this time period,
and China to be faster at a +4.2% CAGR.
· Near-term growth is also expected to capture a number of tailwinds,
including: the last stages of a full post-pandemic recovery in a number of
countries; further recovery in occupancy levels for business travel and for
groups, meetings and events; the full restoration of international flight
capacity; and further potential for room rate increases driven by the increase
in demand, constrained net new supply in the short term, and any ongoing
inflation.
The need for additional hotel supply remains an enduring industry
characteristic
· Global hotel room net new supply growth has been at a CAGR of 2.4%
over the 10 years from 2013 to 2023, and was 1.1% in the US, according to STR.
STR's recent forecasts for US industry net supply growth are for this to
improve from 0.3% in 2023 to 0.8% in 2024, followed by growth of between 1.4%
and 1.9% a year through to 2027.
· In the most recent years, Covid restrictions challenged the ability
to complete and open new build hotels. Development activity for the industry
also saw an impact from the costs and availability of construction crews and
materials, followed by the macro-economic outlook and interest rate increases
affecting the availability and cost of real estate financing.
· Longer-term, and in addition to the industry's RevPAR growth,
following the normalisation of financing and construction costs, further new
hotel supply will still be needed to satisfy the demands of growing
populations and rising middle classes, to drive business and commerce, and to
satisfy the inherent desire to travel to physically interact and for new
experiences.
· Global leading hotel brands are expected to continue their
long-term trend of taking market share. In periods when developers are adding
less new supply, RevPAR growth from existing room inventory is expected to be
stronger and leading branded players can also accelerate conversion
opportunities to progress their unit growth performance.
Outlook: IHG strongly positioned to drive growth and shareholder value
IHG sees a continuation of its strong track record of driving growth and
shareholder value through our:
· Asset light, fee-based, predominantly franchised model, which has
high barriers to entry in an industry that provides long-term structural
growth characteristics in both demand (RevPAR) and new supply (system growth).
Reflecting IHG's success in capturing growth, ahead of the temporary
disruption caused by Covid, in the decade to 2019 IHG delivered:
o +3.9% average annual growth in RevPAR, and
o +3.2% average annual growth in net system size.
· Chainscale and geographic diversification, with exposure to a mix
of large, resilient and high growth market segments.
· Well-invested portfolio that includes market leading brands, and an
enterprise platform through which our hotel owners leverage IHG's scale,
distribution channels, leading technology and loyalty programme.
· Existing system of over 6,300 hotels that will grow fee income
through long term, sustainable RevPAR expansion.
· Growing pipeline of over 2,000 further hotels that will deliver
multi-year growth in system size.
· Efficient cost base, with a proven track record of leveraging this
to increase margins whilst investing appropriately to support future growth,
and benefiting from a model where fee income is largely linked to hotel
revenues. Reflecting this, over the decade to 2019 IHG delivered:
o ~130bps average annual improvement in fee margin, and
o +11.4% CAGR in Adjusted EPS.
· Strong cash generation, from which to further invest in our brands
and enterprise platform to optimise growth, fund a sustainably growing
dividend and return surplus funds to shareholders. Reflecting this, IHG has
delivered:
o >100% conversion of adjusted earnings into adjusted free cash flow,
o +11.0% CAGR in ordinary dividends through to 2019, and, after resuming
dividend payments at the end of 2021, a +10% CAGR thereafter, and
o 5-6% of shares bought back in each of the last two years through surplus
capital being returned to shareholders via share buyback programmes.
Building on this track record, in 2023 IHG achieved:
· RevPAR back ahead of 2019 levels and substantially ahead of 2022,
which was a lower base from the residual Covid impact on trading in that year;
· Net system size growth of +3.8%, which is above the historical
long-run average;
· Underlying fee revenue(1) growth of +17.5% and underlying fee
operating profit(1) of +24.6%;
· Fee business cost base increased by +8.5%, reflecting around 5%
underlying inflation, together with a step-up in cost investment supporting
growth initiatives, including Iberostar integration costs and the launch of
Garner;
· Fee margin(1) expansion of +340bps year-on-year to 59.3% (for 2019
we reported 54.1% prior to adoption of IFRS17);
· Operating profit from reportable segments(1) growth of +23% and
adjusted EPS(1) of +33% year-on-year, which at $1,019m and 375.7¢ are up +18%
and +24% ahead of 2019, respectively;
· 129% conversion of adjusted earnings into adjusted free cash flow;
and
· The return of $1.0bn to shareholders during the year through
ordinary dividend payments and the share buyback programme, equivalent to 10%
of IHG's $10.0bn (£8.3bn) market capitalisation at the start of 2023.
Looking ahead, IHG's growth ambitions and drivers for future shareholder value
creation include:
· High-single digit percentage growth in fee revenue annually on
average over the medium to long term, driven by the combination of RevPAR
growth and net system size growth;
· 100-150bps annual improvement in fee margin on average over the
medium to long term from operational leverage;
· ~100% conversion of adjusted earnings into adjusted free cash flow;
· Sustainably growing the ordinary dividend;
· Returning additional capital to shareholders, such as through
regular share buyback programmes, further enhancing EPS growth; and
· The opportunity for compound growth in adjusted EPS of +12-15%
annually on average over the medium to long term, driven by the combination of
the above and including the assumption of ongoing share buybacks.
IHG's total fee revenue growth is driven by the combination of growth in
RevPAR and growth in our net system size. Total fee revenue growth is expected
to grow faster than the typical rate of increase in our fee business cost
base, and this positive operational leverage drives the potential for
100-150bps annual improvement in fee margin on average over the medium to long
term. Additional drivers of this include structural shifts over time such as a
growing proportion of franchising and increasing scale efficiencies in markets
such as Greater China.
In addition to fee margin progress from operational leverage, IHG is actively
developing further opportunities to drive fee margin over the longer term.
These will include ongoing cost base efficiency and effectiveness initiatives,
and the expansion of ancillary fee streams including driving additional growth
from our co-brand credit card offerings.
(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.
Capital allocation: growing the ordinary dividend and returning surplus
capital through buybacks
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 platform.
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.
IHG's perspectives on the uses of cash generated by the business remain
unchanged: ensuring we invest in the business 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.
IHG typically pays dividends weighted approximately one-third to the interim
and two-thirds to the final payment. The total dividend for 2022 was 138.4¢.
The interim dividend for 2023 was increased by 10% to 48.3¢. With a proposed
final dividend increase of 10% to 104.0¢, the total dividend for 2023 of
152.3¢ will have increased by 10%. The ex-dividend date is Thursday 4 April
2024 and the record date is Friday 5 April 2024. Subject to shareholder
approval at the AGM on Friday 3 May 2024, the dividend will be paid on Tuesday
14 May 2024.
In 2022, a $500m share buyback programme reduced the total number of voting
rights in the Company by 5.0%. In 2023, a $750m programme returned further
surplus capital, repurchasing 10.6 million shares at an average price of
£55.88 per share, and reduced the voting rights by a further 6.1%. This
programme, together with ordinary dividend payments, returned $1.0bn to
shareholders in 2023, equivalent to 10% of IHG's $10.0bn (£8.3bn) market
capitalisation at the start of 2023 and 6.1% of IHG's most recent $16.4bn
(£13.1bn) market capitalisation at 19 February 2024.
A new share buyback programme will commence immediately, targeted to return
$800m over the course of 2024. With the further improvement in profitability
and strong cash generation achieved in 2023, IHG's net debt:adjusted EBITDA
ratio reduced to 2.1x at 31 December 2023. With adjusted EBITDA(1) of $1,086m
in 2023, this new buyback programme to return a further $800m of surplus
capital to shareholders would increase pro forma leverage by 0.7x to 2.8x. On
a prospective basis, given analyst consensus expectations for growth in EBITDA
and cash generation in 2024, leverage would be expected at the end of the year
to be around the lower end of our target range of 2.5-3.0x.
The Board expects IHG's business model to continue its strong track record of
generating substantial capacity to support our investment plans that drive
growth, to fund a sustainably growing ordinary dividend, and to routinely
return surplus capital to our shareholders.
( )
( )
(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.
Summary of financial performance
INCOME STATEMENT SUMMARY
12 months ended 31 December
2023 2022 %
$m Re-presented(a) $m change
Revenue
Americas 1,105 1,005 10.0
EMEAA 677 552 22.6
Greater China 161 87 85.1
Central 221 199 11.1
____ ____ ____
Revenue from reportable segments(b) 2,164 1,843 17.4
System Fund and reimbursable revenues 2,460 2,049 20.1
_____ _____ _____
Total revenue 4,624 3,892 18.8
Operating profit
Americas 815 761 7.1
EMEAA 215 152 41.4
Greater China 96 23 317.4
Central (107) (108) (0.9)
_____ _____ _____
Operating profit from reportable segments(b) 1,019 828 23.1
Analysed as:
Fee business 992 805 23.2
Owned, leased and managed lease 29 19 52.6
Insurance activities (2) 4 NM(c)
System Fund and reimbursable result 19 (105) NM(c)
____ ____ ____
Operating profit before exceptional items 1,038 723 43.6
Operating exceptional items 28 (95) NM(c)
____ ____ ____
Operating profit 1,066 628 69.7
Net financial expenses (52) (96) (45.8)
Analysed as:
Adjusted interest expense(b) (131) (122) 7.4
System Fund interest 44 16 175.0
Foreign exchange gains 35 10 250.0
Fair value (losses)/gains on contingent purchase consideration (4) 8 NM(c)
____ ____ ____
Profit before tax 1,010 540 87.0
Tax (260) (164) 58.5
Analysed as;
Adjusted tax(b) (253) (194) 30.4
Tax attributable to System Fund (3) - NM(c)
Tax on foreign exchange gains 3 4 (25.0)
Tax on exceptional items (7) 26 NM(c)
____ ____ ____
Profit for the year 750 376 99.5
Adjusted earnings(d) 635 511 24.3
Basic weighted average number of ordinary shares (millions) 169 181 (6.6)
____ ____ ____
Earnings per ordinary share
Basic 443.8¢ 207.2¢ 114.2
Adjusted(b) 375.7¢ 282.3¢ 33.1
Dividend per share 152.3¢ 138.4¢ 10.0
Average US dollar to sterling exchange rate $1: £0.80 $1: £0.81 (1.2)
(a. ) Re-presented for the adoption of IFRS 17 'Insurance Contracts'
and to combine System Fund and reimbursables (see 'New accounting standards
and other presentational changes').
(b. ) Definitions for non-GAAP measures can be found in the '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.
(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.
(d. ) Adjusted earnings as used within adjusted earnings per share, a
non-GAAP measure.
Revenue
Trading improved significantly in the first quarter of 2023, as travel in the
comparative period of 2022 was impacted by the Omicron variant of Covid-19.
From April, the comparatives became subsequently tougher as
government-mandated travel restrictions eased in the prior year. Leisure
demand in the Americas and EMEAA saw continued strength, supported by
improving corporate and group bookings. Greater China rebounded significantly,
with RevPAR(a) exceeding pre-pandemic levels in the third quarter, which the
Americas and Europe achieved in 2022. By the fourth quarter, average daily
rate was 15% above pre-pandemic highs and occupancy had recovered to within
1%pt of 2019 levels.
Group comparable RevPAR improved year-on-year by 33.0% in the first quarter,
17.1% in the second quarter, 10.5% in the third quarter, 7.6% in the fourth
quarter and 16.1% for the full year. When compared to the pre-pandemic levels
of 2019, Group comparable RevPAR increased 6.8% in the first quarter and 9.9%
in the second quarter, 12.8% in the third quarter and 12.7% in the fourth
quarter, with the full year 10.9% ahead of 2019.
Our other key driver of revenue, net system size, increased by 3.8%
year-on-year to 946,203 rooms.
Total revenue increased by $732m (18.8%) to $4,624m, including a $411m
increase in System Fund and reimbursable revenues. Revenue from reportable
segments(a) increased by $321m (17.4%) to $2,164m, driven by the improved
trading conditions. Underlying revenue(a) increased by $347m to $2,164m, with
underlying fee revenue(a) increasing by $249m. Owned, leased and managed lease
revenue increased by $77m.
Operating profit and margin
Operating profit improved by $438m from $628m to $1,066m, including a $123m
increase in operating exceptional items, from a $95m charge in 2022 to a $28m
income in 2023, and a $124m increase in the reported System Fund and
reimbursable result, from a $105m loss in 2022 to a $19m profit in 2023.
Operating profit from reportable segments(a) increased by $191m (23.1%) to
$1,019m, with fee business operating profit increasing by $187m (23.2%) to
$992m, due to the improvement in trading which drove a $65m increase in
incentive management fees to $168m. Owned, leased and managed lease operating
profit improved from $19m to $29m. Underlying operating profit(a) increased by
$201m (24.6%) to $1,019m.
Fee margin(a) increased by 3.4%pts over the prior year to 59.3% benefitting
from the improvement in trading.
The impact of the movement in average USD exchange rates for 2022 compared to
2023 netted to a $2m impact on operating profit from reportable segments(a)
when calculated as restating 2022 figures at 2023 exchange rates, but
negatively impacted operating profit from reportable segments(a) by $13m when
applying 2022 rates to 2023 figures.
If the average exchange rate during January 2024 had existed throughout 2023,
the 2023 operating profit from reportable segments(a) would have been $4m
lower.
System Fund and reimbursable result
The Group operates a System Fund to collect and administer cash assessments
from hotel owners for specified purposes of use including 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
surplus or deficit for IHG over the longer term, but is managed for the
benefit of hotels in the IHG system with the objective of driving revenues for
the hotels in the system.
The growth in the IHG One Rewards programme means that, although assessments
are received from hotels up front when a member earns points, more revenue is
deferred each year than is recognised in the System Fund. This can lead to
accounting losses in the System Fund each year as the deferred revenue balance
grows which do not necessarily reflect the Fund's cash position and the
Group's capacity to invest.
Reimbursable revenues represent reimbursements of expenses incurred on behalf
of managed and franchised properties and relate, predominantly, to payroll
costs at managed properties where IHG is the employer. As IHG record
reimbursable expenses based upon costs incurred with no added mark up, this
revenue and related expenses have no impact on either operating profit or net
profit for the year.
In the year to 31 December 2023, System Fund and reimbursable revenues
increased $411m (20.1%) to $2,460m, driven by the continued strength in travel
demand, the strong performance of the IHG One Rewards programme since the
relaunch in the first half of last year.
The reported System Fund and reimbursable result improved to a $19m profit
from a $105m loss, primarily due to the continued strength in travel demand on
revenues, partially offset by increased investments in media as well as
revenue-driving channels and activities.
(a. ) Definitions for non-GAAP measures can be found in the '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.
Operating exceptional items
Operating exceptional items of $28m comprise the Group's $18m share of profits
from the InterContinental New York Barclay associate due to an increase in the
fair value of the hotel which resulted in the reversal of an $18m liability
recognised in 2022 and $10m other operating income relating to amounts
receivable from the Group's insurer under its business interruption policy for
certain owned, leased and managed lease hotels due to Covid-19. Further
information on exceptional items can be found in note 5 to the Group Financial
Statements.
Net financial expenses
Net financial expenses decreased to $52m from $96m, including $35m in foreign
exchange gains. Adjusted interest(a), which excludes exceptional finance
expenses and foreign exchange gains/losses and adds back interest attributable
to the System Fund, increased by $9m to an expense of $131m. The increase in
adjusted interest(a) was primarily driven by an increase in interest
attributable to the System Fund of $28m due to increased base rates, offset by
an increase in financial income of $17m.
Financial expenses include $78m (2022: $82m) of total interest costs on public
bonds, which are fixed rate debt. Interest expense on lease liabilities was
$29m (2022: $29m).
Fair value gains and losses on contingent purchase consideration
Contingent purchase consideration arose on the acquisition of Regent. The net
loss of $4m (2022: $8m gain) is principally due to an unfavourable movement in
observable US corporate bond rates. The total contingent purchase
consideration liability at 31 December 2023 is $69m (31 December 2022: $65m).
Taxation
The adjusted tax(a) rate for 2023 was 28% (2022: 27%). Taxation within
exceptional items totalled a charge of $7m (2022: credit of $26m) and relates
to the tax impacts of the operating exceptional items. Tax paid in 2023
totalled $243m (2022: $211m). Further information on tax can be found in
note 6 to the Group Financial Statements.
Earnings per share
The Group's basic earnings per ordinary share is 443.8¢ (2022: 207.2¢).
Adjusted earnings per ordinary share(a) increased by 93.4¢ to 375.7¢.
Dividends and shareholder returns
The Board is proposing a final dividend of 104.0¢ in respect of 2023, which
is growth of 10% on 2022. With the interim dividend of 48.3¢ paid in October
2023, the total dividend for the year would therefore be 152.3¢, representing
an increase of 10%. The ex-dividend date is Thursday 4 April 2024 and the
record date is Friday 5 April 2024. The corresponding dividend amount in Pence
Sterling per ordinary share will be announced on Thursday 25 April 2024,
calculated based on the average of the market exchange rates for the three
working days commencing 22 April 2024. Subject to shareholder approval at the
AGM on Friday 3 May 2024, the dividend will be paid on Tuesday 14 May 2024. A
Dividend Reinvestment Plan ("DRIP") is provided by Equiniti Financial Services
Limited. The DRIP enables the Company's shareholders to elect to have their
cash dividend payments used to purchase the Company's shares. More information
can be found at www.shareview.co.uk/info/drip
(http://www.shareview.co.uk/info/drip) .
Dividend payments in 2023 have returned close to $250m to IHG's shareholders.
Additional surplus capital was returned to shareholders through a $750m share
buyback programme that concluded on 29 December 2023. This repurchased
10,643,334 shares at an average price of £55.88 per share and reduced the
total number of voting rights in the Company by 6.1%.
The Board has announced a further share buyback programme to return an
additional $800m to shareholders in 2024.
(a. ) Definitions for non-GAAP measures can be found in the '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.
Summary of cash flow, working capital, net debt and liquidity
Adjusted EBITDA(a) reconciliation
12 months ended 31 December
2023 2022
$m $m
Cash flow from operations 1,219 961
Cash flows relating to exceptional items 29 43
Impairment reversal/(loss) on financial assets 1 (5)
Other non-cash adjustments to operating profit (60) (61)
System Fund and reimbursable result (19) 105
System Fund depreciation and amortisation (83) (86)
Other non-cash adjustments to System Fund result (23) (24)
Working capital and other adjustments (79) (101)
Capital expenditure: contract acquisition costs (key money), 101 64
net of repayments
________ _____
Adjusted EBITDA(a) 1,086 896
____ ___
CASH FLOW SUMMARY 12 months ended 31 December
2023 2022 $m
$m $m change
Adjusted EBITDA(a) 1,086 896 190
Working capital and other adjustments 79 101
Impairment (reversal)/loss on financial assets (1) 5
Other non-cash adjustments to operating profit 60 61
System Fund and reimbursable result 19 (105)
Non-cash adjustments to System Fund result 106 110
Capital expenditure: contract acquisition costs (key money), (101) (64)
net of repayments
Capital expenditure: maintenance (38) (44)
Cash flows relating to exceptional items (29) (43)
Net interest paid (83) (104)
Tax paid (243) (211)
Principal element of lease payments (28) (36)
Purchase of own shares by employee share trusts (8) (1)
____ ____ ____
Adjusted free cash flow(a) 819 565 254
Capital expenditure: gross recyclable investments (61) (15)
Capital expenditure: gross System Fund capital investments (46) (35)
Disposals and repayments, including other financial assets 8 16
Repurchase of shares, including transaction costs (790) (482)
Dividends paid to shareholders (245) (233)
Dividends paid to non-controlling interest (3) -
____ ____ ____
Net cash flow before other net debt(a) movements (318) (184) (134)
Add back principal element of lease repayments 28 36
Exchange and other non-cash adjustments (131) 178
____ ____ ____
(Increase)/decrease in net debt(a) (421) 30 (451)
Net debt(a) at beginning of the year (1,851) (1,881)
Net debt(a) at end of the year (2,272) (1,851) (421)
______ ______ ____
(a. ) Definitions for non-GAAP measures can be found in the 'Key
performance measures and non-GAAP measures' section.
Cash flow from operations
For the year ended 31 December 2023, cash flow from operations was $1,219m, an
increase of $258m on the previous year, primarily reflecting the increase in
operating profit.
Cash flow from operations is the principal source of cash used to fund
interest and tax payments, capital expenditure, ordinary dividend payments and
additional returns of capital of the Group.
Adjusted free cash flow(a)
Adjusted free cash flow(a) was an inflow of $819m, an increase of $254m on the
prior year. Adjusted EBITDA(a) increased by $190m and the System Fund and
reimbursable result improved by $124m due to stronger trading. Net interest
paid decreased by $21m primarily due to an increase in interest received of
$14m. These were partly offset by a $22m lower working capital and other
adjustments cash inflow, an increase in contract acquisition (key money) costs
net of repayments of $37m, and $32m higher tax payments. Working capital and
other adjustments includes $123m of cash inflow related to deferred revenue,
driven primarily by the loyalty programme. Exceptional cash costs in the year
of $29m includes payments relating to commercial litigation and disputes; in
the prior year, the cost of ceasing operations in Russia was also included.
Net and gross capital expenditure
Net capital expenditure(a) was $157m (2022: $59m) and gross capital
expenditure(a) was $253m (2022: $161m). Gross capital expenditure(a)
comprised: $146m maintenance capex and key money; $61m gross recyclable
investments; and $46m System Fund capital investments. Net capital
expenditure(a) includes the offset from $8m proceeds from other financial
assets, $7m key money repayments and $81m System Fund depreciation and
amortisation.
Net debt(a)
Net debt(a) increased by $421m from $1,851m at 31 December 2022 to $2,272m at
31 December 2023. There were $1,035m of payments related to ordinary dividends
and the share buyback programmes during the year. The change in net debt(a)
includes adverse net foreign exchange impacts of $105m driven by translation
of the Group's sterling bond debt and $26m of other non-cash adjustments.
Balance Sheet
2023 2022
$m $m
Goodwill and other intangible assets 1,099 1,144
Other non-current assets 1,585 1,394
Cash and cash equivalents 1,322 976
Other current assets 807 702
_______ ______
Total assets 4,813 4,216
Loans and other borrowings (3,166) (2,396)
Other current liabilities (1,591) (1,489)
Other non-current liabilities (2,002) (1,939)
________ _________
Total liabilities (6,759) (5,824)
________ ________
Net liabilities (1,946) (1,608)
Net liabilities
The Group had net liabilities of $1,946m at December 2023 ($1,608m at 31
December 2022). In accordance with accounting standards, the Group's
internally developed brands are not recorded on the Group's balance sheet, and
its asset-light business model means that most properties from which income is
derived are not owned. This does not have an impact on the ability of the
Group to raise external funding or the dividend capacity of the Group.
Goodwill and other intangible assets
Goodwill and other intangible assets total $1,099m. This was a decrease of
$45m compared to the prior year driven by amortisation of software assets.
Goodwill and brands have a total net book value of $775m as at 31 December
2023 ($774m as at 31 December 2022). Brands relate to the acquisitions of
Kimpton, Regent and Six Senses. They are each considered to have an indefinite
life given their strong brand awareness and reputation, and management's
commitment to continued investment in their growth. Goodwill and brands are
allocated to cash generating units (CGUs) and they are tested annually for
impairment, with no impairment recognised in 2023 given the recoverable
amounts of the CGUs exceeded their carrying value. The movement in the year is
due to exchange rates.
The remaining balance of intangible assets primarily relates to software
($297m).
(a. ) Definitions for non-GAAP measures
can be found in the '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.
Working capital
Trade receivables increased by $87m, from $493m at 31 December 2022 to $580m,
primarily due to improved trading in the last quarter of 2023 compared to the
last quarter of 2022. Current trade and other payables increased by $14m,
primarily due to $13m deferred consideration moving from non-current payables
in 2023. Deferred revenue increased by $124m, driven by an increase in the
future redeemable points balance related to the loyalty programme.
Sources of liquidity
As at 31 December 2023, the Group had total liquidity of $2,572m (31 December
2022: $2,224m), comprising $1,350m of undrawn bank facilities and $1,222m of
cash and cash equivalents (net of overdrafts and restricted cash). The
change in total liquidity from December 2022 of $348m is primarily due to a
new bond issuance of $657m, offset by other net cash outflows of $318m.
In November 2023, the Group issued a €600m 4.375% bond repayable in November
2029. Currency swaps were transacted at the same time as the bond was issued
in order to swap the proceeds and interest flows to US Dollars. The currency
swaps fix the bond debt at $657m, with interest payable semi-annually at
5.97%.
The Group currently has $3,122m of sterling and euro bonds outstanding. The
bonds mature in October 2024 (€500m), August 2025 (£300m), August 2026
(£350m), May 2027 (€500m), October 2028 (£400m) and November 2029
(€600m). There are currency swaps in place on the euro bonds, fixing the
October 2024 bond at £454m, the May 2027 bond at £436m and the November 2029
bond at $657m. The Group currently has senior unsecured long-term credit
ratings of BBB from S&P and Baa2 from Moody's.
The Group is further financed by a $1.35bn syndicated bank revolving credit
facility (RCF). A one-year extension option was exercised during the year
and the facility now matures in 2028. There is a one-year extension option
remaining at the lender's 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. At
31 December 2023, the leverage ratio was 2.14 and the interest cover ratio was
12.34. See note 10 to the Group Financial Statements for further information.
The RCF was undrawn at 31 December 2023.
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.
It is management's opinion that the available facilities are sufficient for
the Group's present liquidity requirements.
Additional revenue, global system size and pipeline analysis
Disaggregation of total gross revenue in IHG's System
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 hotels and from 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.
12 months ended 31 December
2023 2022 %
$bn $bn Change(b)
Analysed by brand
InterContinental 5.1 4.0 26.6
Kimpton 1.3 1.2 10.0
Hotel Indigo 0.9 0.7 28.2
Crowne Plaza 3.7 3.0 23.9
Holiday Inn Express 9.2 8.3 11.5
Holiday Inn 6.0 5.1 16.9
Staybridge Suites 1.2 1.2 6.4
Candlewood Suites 0.9 0.8 3.7
Other(c) 3.3 1.5 121.5
____ ____ ____
Total 31.6 25.8 22.6
____ ____ ____
Analysed by ownership type
Franchised(d) (revenue not attributable to IHG) 20.0 16.7 19.6
Managed (revenue not attributable to IHG) 11.1 8.7 28.4
Owned, leased and managed lease 0.5 0.4 18.8
(revenue recognised in Group income statement)
____ ____ ____
Total 31.6 25.8 22.6
____ ____ ____
Total gross revenue in IHG's system increased by 22.6% (23.4% increase at
constant currency) to $31.6bn, driven by improved trading conditions and
growth in the number of hotels in our system.
(a. ) Definitions for the key performance
measures can be found in the 'Key performance measures and non-GAAP measures'
section along with reconciliations of these measures to the most directly
comparable line items within the Group Financial Statements.
(b. ) Year-on-year percentage movement
calculated from source figures.
(c. ) Includes Holiday Inn Club
Vacations.
(d. ) Includes exclusive partner hotels.
RevPAR(a) movement summary at constant exchange rates (CER)
Full Year 2023 vs 2022 Full Year 2023 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 16.1% 5.1% 6.4%pts 10.9% 12.7% (1.1)%pts
Americas 7.0% 4.6% 1.5%pts 13.0% 12.8% 0.1%pts
EMEAA 23.7% 9.8% 7.9%pts 15.4% 21.0% (3.4)%pts
G. China 71.7% 18.0% 19.1%pts 0.7% 0.6% 0.1%pts
Q4 2023 vs 2022 Q4 2023 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 7.6% 2.4% 3.2%pts 12.7% 14.7% (1.2)%pts
Americas 1.5% 3.1% (1.0)%pts 14.0% 14.1% (0.1)%pts
EMEAA 7.0% 3.7% 2.2%pts 18.5% 22.4% (2.4)%pts
G. China 72.0% 21.1% 17.6%pts (0.6)% 3.3% (2.4)%pts
RevPAR(a) movement at CER vs actual exchange rates (AER)
Full Year 2023 vs 2022 Full Year 2023 vs 2019
CER (as above) AER Difference CER (as above) AER Difference
Group 16.1% 15.7% (0.4)%pts 10.9% 8.1% (2.8)%pts
Americas 7.0% 7.1% 0.1%pts 13.0% 12.5% (0.5)%pts
EMEAA 23.7% 23.7% 0.0%pts 15.4% 7.6% (7.8)%pts
G. China 71.7% 63.9% (7.8)%pts 0.7% (1.5)% (2.2)%pts
Q4 2023 vs 2022 Q4 2023 vs 2019
CER (as above) AER Difference CER (as above) AER Difference
Group 7.6% 8.0% 0.4%pts 12.7% 9.1% (3.6)%pts
Americas 1.5% 1.5% 0.0%pts 14.0% 13.3% (0.7)%pts
EMEAA 7.0% 8.8% 1.8%pts 18.5% 9.3% (9.2)%pts
G. China 72.0% 69.7% (2.3)%pts (0.6)% (2.9)% (2.3)%pts
Monthly RevPAR(a) (CER)
2023 vs 2022 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Group 40.8% 33.5% 27.2% 21.7% 17.0% 13.3% 9.5% 10.4% 11.6% 8.7% 7.2% 6.6%
Americas 24.5% 18.3% 13.8% 5.9% 6.9% 4.7% 2.8% 3.9% 5.7% 1.8% 2.4% 0.0%
EMEAA 84.0% 71.9% 44.5% 36.7% 24.2% 22.7% 16.1% 16.1% 15.7% 10.1% 5.9% 5.0%
G. China 53.3% 54.2% 125.2% 171.4% 106.9% 68.4% 40.5% 38.5% 54.2% 80.8% 59.9% 75.7%
2023 vs 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Group 4.2% 6.7% 9.2% 9.5% 9.3% 10.9% 12.8% 11.1% 14.5% 11.0% 11.0% 16.6%
Americas 8.8% 11.0% 13.1% 11.5% 11.8% 13.0% 12.5% 10.9% 18.2% 13.1% 13.1% 16.1%
EMEAA 8.2% 7.7% 13.0% 12.6% 15.6% 16.7% 19.0% 17.0% 16.6% 16.8% 15.5% 23.7%
G. China (16.6)% (3.8)% (6.6)% 5.0% (6.4)% (0.1)% 14.0% 9.3% 3.3% (4.5)% (3.3)% 6.9%
(a. ) RevPAR (revenue per available room), ADR (average daily rate) and
occupancy are on a comparable basis, based on comparability as at 31 December
2023 and include 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 principle exclusions in deriving these
measures are new openings, properties under major refurbishments and removals.
See '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
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 25 6 1,761 395
Regent 10 1 3,087 59
InterContinental 222 15 73,500 3,694
Vignette Collection 11 8 2,283 1,704
Kimpton 78 2 13,721 413
Hotel Indigo 153 10 20,218 1,764
voco 62 17 15,507 5,083
HUALUXE 20 (1) 5,529 (454)
Crowne Plaza 408 5 112,232 1,813
EVEN Hotels 26 4 3,931 751
Holiday Inn Express 3,171 80 336,317 9,415
Holiday Inn 1,202 4 215,910 351
Garner 2 2 158 158
avid hotels 67 8 6,027 674
Atwell Suites 2 - 186 -
Staybridge Suites 325 11 35,320 1,359
Holiday Inn Club Vacations 30 2 9,526 704
Candlewood Suites 376 8 33,497 744
Iberostar Beachfront Resorts 49 16 17,600 5,198
Other(a) 124 1 39,893 751
_____ _____ _______ _______
Total 6,363 199 946,203 34,576
_____ _____ _______ _______
Analysed by ownership type
Franchised(b) 5,356 154 680,601 24,170
Managed 990 44 261,371 10,394
Owned, leased and managed lease 17 1 4,231 12
_____ _____ _______ ______
Total 6,363 199 946,203 34,576
_____ ____ _______ ______
(a. ) Includes eight open hotels that
will be re-branded to voco and five open hotels that will be re-branded to
Vignette Collection.
(b. ) Includes exclusive partner hotels.
Hotels Rooms
Global Pipeline Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 42 4 3,057 426
Regent 11 1 2,442 132
InterContinental 100 10 25,271 2,690
Vignette Collection 18 11 2,056 1,456
Kimpton 54 13 10,761 2,318
Hotel Indigo 132 13 20,939 1,088
voco 74 35 12,741 2,512
HUALUXE 25 4 6,343 993
Crowne Plaza 126 15 32,442 3,492
EVEN Hotels 33 2 5,383 104
Holiday Inn Express 632 15 78,019 1,284
Holiday Inn 246 17 45,901 1,811
Garner 5 5 332 332
avid hotels 141 (4) 11,577 (808)
Atwell Suites 41 11 4,124 1,123
Staybridge Suites 164 2 18,185 190
Holiday Inn Club Vacations 2 1 832 680
Candlewood Suites 151 27 11,957 1,689
Iberostar Beachfront Resorts 5 (10) 2,240 (3,825)
Other 14 (15) 2,352 (2,201)
_____ _____ _______ ______
Total 2,016 157 296,954 15,486
_____ _____ _______ ______
Analysed by ownership type
Franchised(a) 1,426 113 174,084 10,773
Managed 589 44 122,715 4,713
Owned, leased and managed lease 1 - 155 -
_____ _____ _______ ______
Total 2,016 157 296,954 15,486
_____ _____ _______ ______
(a. ) Includes exclusive partner hotels.
Net system size increased by 3.8% year-on year to 946.2k rooms. During the
year, 47.9k rooms (275 hotels) opened, compared to 49.4k rooms (269 hotels) in
the prior year which included 12.4k rooms (33 hotels) under the Iberostar
Beachfront Resorts brand. In 2023, 13.3k rooms (76 hotels) left the IHG
system, compared to 18.1k rooms (96 hotels) in 2022 which included 6.5k rooms
(28 hotels) as part of ceasing operations in Russia. The removals rate of 1.5%
was in line with our historical underlying average.
At the end of 2023, the global pipeline totalled 297.0k rooms (2,016 hotels),
an increase of 15.5k rooms (157 hotels), as signings outpaced openings and
terminations. The IHG pipeline represents hotels where a contract has been
signed and the appropriate fees paid.
During the year, 79.2k rooms (556 hotels) were signed, compared to 80.3k rooms
(467 hotels) in the prior year which included 18.5k rooms (48 hotels) under
the Iberostar Beachfront Resorts brand. Signings in 2023 included 30.1k rooms
(220 hotels) for the Holiday Inn Brand Family, 0.8k rooms (13 hotels) under
the Six Senses brand and 0.5k rooms (seven hotels) as part of our newly
launched brand, Garner. Conversions (excluding Iberostar) represented 36% of
signings in 2023.
Regional performance reviews, system size and pipeline analysis
AMERICAS
12 months ended 31 December
Americas results
2023 2022 %
$m $m change
Revenue from the reportable segment(a)
Fee business 957 879 8.9
Owned, leased and managed lease 148 126 17.5
____ ____ ____
1,105 1,005 10.0
____ ____ ____
Operating profit from the reportable segment(a)
Fee business 787 741 6.2
Owned, leased and managed lease 28 20 40.0
____ ____ ____
815 761 7.1
Operating exceptional items 27 (46) NM(b)
____ ____ ____
Operating profit 842 715 17.8
____ ____ ____
12 months ended
Americas Comparable RevPAR(a) movement on previous year 31 December 2023
Fee business
InterContinental 12.0%
Kimpton 8.9%
Hotel Indigo 4.9%
Crowne Plaza 11.2%
EVEN Hotels 8.5%
Holiday Inn Express 6.4%
Holiday Inn 7.2%
avid hotels 8.6%
Staybridge Suites 6.1%
Candlewood Suites 2.4%
All brands 7.0%
Owned, leased and managed lease
All brands 16.8%
Comparable RevPAR(a) was up +7.0% vs 2022 (up +13.0% vs 2019) with occupancy
of 68.2% up +1.5%pts and rate +4.6% higher. Trading in the first quarter of
2022 saw travel volumes impacted as a result of the Omicron variant of
Covid-19, with comparatives becoming subsequently tougher from April onwards.
Q4 RevPAR(a) was up +1.5% vs 2022 (up +14.0% vs 2019), with occupancy of 63.9%
down -1.0%pts but rate +3.1% higher. US Q4 RevPAR(a) was up +0.1% and for the
full year was up +5.4% (up +11.2% and +11.1%, respectively, vs 2019). Leisure
demand had another strong year, and there was further return of groups
activity and more business travel, the latter achieving revenues ahead of
pre-Covid levels. This also led to urban locations being back above 2019
levels by the end of the year.
Revenue from the reportable segment(a) increased by $100m (+10%) to $1,105m.
Operating profit increased by $127m to $842m, driven by the increase in
revenue, together with a $73m favourable change in exceptional income (further
information on exceptional items can be found in note 5 to the Group Financial
Statements). Operating profit from the reportable segment(a) increased by $54m
(+7%) to $815m (an increase of $115m or +16% vs 2019).
Fee business revenue(a) increased by $78m (+9%) to $957m, with comparable
RevPAR(a) up +7.0%. Fee business operating profit(a) increased by $46m (+6%)
to $787m, driven by the improvement in trading. Fee margin(a) was 82.2%,
compared to 84.3% in 2022 and 77.7% in 2019; the year-on-year reduction
predominantly reflects cost investment in growth initiatives, including the
launch of Garner. There were $21m of incentive management fees earned (2022:
$18m; 2019: $13m).
Owned, leased and managed lease revenue increased by $22m to $148m, with
comparable RevPAR(a) up +16.8%, leading to an owned, leased and managed leased
operating profit of $28m compared to $20m in the prior year.
(a. ) Definitions for non-GAAP measures can be found in the 'Key
performance measures and non-GAAP measures' section along with reconciliations
of these measures to the most directly comparable line items within the Group
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.
Hotels Rooms
Americas hotel and room count Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 1 1 10 10
InterContinental 43 1 15,674 133
Vignette Collection 1 1 355 355
Kimpton 63 1 10,895 291
Hotel Indigo 72 (1) 9,578 (169)
voco 12 4 1,299 376
Crowne Plaza 106 (4) 27,142 (1,192)
EVEN Hotels 19 - 2,744 1
Holiday Inn Express 2,509 37 228,753 3,669
Holiday Inn 688 (8) 111,754 (1,613)
Garner 2 2 158 158
avid hotels 67 8 6,027 674
Atwell Suites 2 - 186 -
Staybridge Suites 303 7 31,675 646
Holiday Inn Club Vacations 30 2 9,526 704
Candlewood Suites 376 8 33,497 744
Iberostar Beachfront Resorts 23 - 9,027 -
Other(a) 97 (1) 21,294 (689)
_____ ____ _______ _____
Total 4,414 58 519,594 4,098
_____ ____ _______ _____
Analysed by ownership type
Franchised(b) 4,242 57 482,948 4,500
Managed 168 - 35,309 (412)
Owned, leased and managed lease 4 1 1,337 10
_____ ____ _______ ______
Total 4,414 58 519,594 4,098
_____ ____ _______ ______
(a. ) Includes four open hotels that will be re-branded to voco.
(b. ) Includes exclusive partner hotels.
Hotels Rooms
Americas Pipeline Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 8 2 474 151
Regent 1 1 167 167
InterContinental 12 2 2,708 305
Vignette Collection 3 1 261 86
Kimpton 28 4 5,518 935
Hotel Indigo 31 5 4,337 690
voco 12 8 1,383 636
Crowne Plaza 9 2 2,210 892
EVEN Hotels 11 1 1,239 68
Holiday Inn Express 349 9 33,463 571
Holiday Inn 72 7 8,639 669
Garner 5 5 332 332
avid hotels 141 (4) 11,577 (808)
Atwell Suites 41 11 4,124 1,123
Staybridge Suites 145 3 15,351 428
Holiday Inn Club Vacations 2 1 832 680
Candlewood Suites 151 27 11,957 1,689
Iberostar Beachfront Resorts 5 - 2,240 (151)
Other 14 1 2,352 382
_____ ____ ______ _____
Total 1,040 86 109,164 8,845
______ _____ _______ ______
Analysed by ownership type
Franchised(a) 994 78 101,989 7,731
Managed 46 8 7,175 1,114
_____ ____ ______ ______
Total 1,040 86 109,164 8,845
_____ ____ ______ ______
(a. ) Includes exclusive partner hotels.
Gross system size growth was +2.0% year-on-year with the opening of 10.4k
rooms (101 hotels) in the Americas region, of which 4.2k rooms (40 hotels)
opened in Q4. Openings for the year included 57 hotels across the Holiday Inn
Brand Family and a further 20 properties across the Staybridge Suites and
Candlewood Suites brands. The first two Garner conversions were achieved by
the end of the year, having become franchise-ready in the US in September
2023. The pace of openings for avid hotels also accelerated with eight added,
and there are a further 18 currently under construction. The voco brand is
rolling out further in the region, with four openings, to now have a portfolio
of 12 properties, while new openings for Crowne Plaza included Saint John
Harbour View, one of nine openings in Canada in 2023 as presence across our
brands builds in that market. There were eight openings across our Luxury
& Lifestyle brands including the first Vignette Collection property for
the region, InterContinental Dominica Cabrits Resort & Spa, and three
Kimpton properties (The Forum in Charlottesville, Grand Roatan Resort &
Spa in the Bay Islands, Honduras, and Kimpton Hotel Theta in New York). There
were 6.3k rooms (43 hotels) removed in the year, taking the removal rate to
1.2% and closer to the historical underlying average of 1.5%.
Net system size grew +0.8% year-on-year. There was no impact from Iberostar
Beachfront Resorts on net system growth in 2023, as all 23 properties in the
region had already joined the IHG system by the end of 2022.
There were 28.3k rooms (271 hotels) signed during the year, including 9.9k
rooms (90 hotels) during Q4. During the year there were 100 signings across
Holiday Inn and Holiday Inn Express, and a conversion portfolio including
three beachfront resorts in Mexico added by Holiday Inn Club Vacations which
marked the first for the brand outside of the US. There were 88 signings
across our other Suites brands, including 16 for Atwell Suites as this brand
accelerates development pace. 23 signings for avid hotels included further
examples of dual-branded properties with Candlewood Suites. Across our Luxury
& Lifestyle brands, 29 properties were signed, which was 58% more rooms
than the prior year. These included Six Senses Napa and Six Senses Xala in
Mexico, the first destination in the Americas for the Regent brand at Santa
Monica Beach, three for InterContinental (in Ecuador, Mexico and the Turks
& Caicos Islands) and a very strong year for Kimpton with eight properties
added to its pipeline (five in the US and three resort locations in the wider
region). 51, or nearly 20% of signings for the region, were outside of the US,
as we strengthen our development activity in Canada, Mexico, Latin America and
the Caribbean.
The pipeline stands at 109.2k rooms (1,040 hotels), which represents 21% of
the current system size in the region.
EMEAA
12 months ended 31 December
EMEAA results
2023 2022 %
$m $m change
Revenue from the reportable segment(a)
Fee business 354 284 24.6
Owned, leased and managed lease 323 268 20.5
____ ____ ____
677 552 22.6
____ ____ ____
Operating profit/(loss) from the reportable segment(a)
Fee business 214 153 39.9
Owned, leased and managed lease 1 (1) NM(b)
____ ____ ____
215 152 41.4
Operating exceptional items 1 (49) NM(b)
____ ____ ____
Operating profit 216 103 109.7
____ ____ ____
12 months ended
EMEAA comparable RevPAR(a) movement on previous year 31 December 2023
Fee business
Six Senses 17.7%
InterContinental 26.0%
Kimpton 47.1%
Hotel Indigo 24.5%
voco 10.5%
Crowne Plaza 23.7%
Holiday Inn Express 21.9%
Holiday Inn 23.4%
Staybridge Suites 12.5%
All brands 23.5%
Owned, leased and managed lease
All brands 31.8%
Comparable RevPAR(a) was up +23.7% vs 2022 (up +15.4% vs 2019) with occupancy
of 70.4% up +7.9%pts and rate +9.8% higher. Leisure had another very strong
year and business travel along with groups activity picked up pace as the post
Covid-19 recovery continued. Q4 RevPAR(a) was up +7.0% vs 2022 (up +18.5% vs
2019), with occupancy of 71.5% up +2.2%pts and rate +3.7% higher. The UK,
which saw one of the earlier easings of restrictions, saw RevPAR(a) up +14%
for the year (up +17% vs 2019) and up +5% in Q4 (up +20% vs 2019). Elsewhere,
the variances in performance largely reflected timing of recovery following
the easing of travel restrictions, with RevPAR(a) for Q4 in Continental Europe
up +8% (up +19% vs 2019), Australia up +7% (up +16% vs 2019), South East Asia
& Korea up +8% (+13% vs 2019) and Japan up +20% (+2% vs 2019). RevPAR(a)
in the Middle East was down -1% in Q4 (up +24% vs 2019) as the prior
comparable period benefitted from the FIFA World Cup held in Qatar, but there
was strong growth elsewhere particularly Saudi Arabia and the UAE.
Revenue from the reportable segment(a) increased by $125m (+23%) to $677m.
Operating profit increased by $113m to $216m, driven by the improved trading,
together with the non-recurrence of the $49m of operating exceptional charges
in the prior year (further information on exceptional items can be found in
note 5 to the Group Financial Statements). Operating profit from the
reportable segment(a) increased by $63m (+41%) to $215m (a decrease of $2m vs
2019).
Fee business revenue(a) increased by $70m (+25%) to $354m, with comparable
RevPAR(a) up +23.5%. Fee business operating profit(a) increased by $61m (+40%)
to $214m, driven by the improvement in trading. Fee margin(a) was 60.5%,
compared to 52.7% in 2022 and 58.6% in 2019. There were $101m of incentive
management fees earned (2022: $69m; 2019: $90m).
Owned, leased and managed lease revenue increased by $55m to $323m, with
comparable RevPAR up +31.8%. As the trading challenges on this largely
urban-centred portfolio have eased, a return to a $1m operating profit was
achieved compared to the $1m loss in 2022 (or a $3m loss in the comparable
period when excluding the results of three UK portfolio hotels and one
InterContinental hotel which were disposed of during 2022).
(a. ) Definitions for non-GAAP measures
can be found in the '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.
(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.
Hotels Rooms
EMEAA hotel and room count Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 23 5 1,621 385
Regent 4 - 1,036 (77)
InterContinental 119 8 34,443 1,582
Vignette Collection 7 4 1,206 627
Kimpton 12 - 2,376 (21)
Hotel Indigo 58 7 7,029 1,296
voco 38 9 11,791 3,865
Crowne Plaza 178 (4) 43,285 (657)
Holiday Inn Express 349 8 51,488 1,613
Holiday Inn 382 8 69,330 1,463
Staybridge Suites 22 4 3,645 713
Iberostar Beachfront Resorts 26 16 8,573 5,198
Other(a) 19 3 11,444 1,616
_____ ____ _______ ______
Total 1,237 68 247,267 17,603
_____ ____ _______ ______
Analysed by ownership type
Franchised(b) 839 37 140,830 8,914
Managed 385 31 103,543 8,687
Owned, leased and managed lease 13 - 2,894 2
_____ ____ _______ ______
Total 1,237 68 247,267 17,603
_____ ____ _______ ______
(a. ) Includes three open hotels that will be re-branded to voco and
five open hotels that will be re-branded to Vignette Collection.
(b. ) Includes exclusive partner hotels.
Hotels Rooms
EMEAA Pipeline Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 30 2 2,350 275
Regent 7 1 1,468 100
InterContinental 56 5 13,510 1,714
Vignette Collection 14 9 1,523 1,098
Kimpton 15 7 2,365 831
Hotel Indigo 53 7 8,309 265
voco 51 19 8,907 80
Crowne Plaza 49 9 11,529 1,152
Holiday Inn Express 89 1 13,309 110
Holiday Inn 86 2 16,122 (314)
Staybridge Suites 19 (1) 2,834 (238)
Iberostar Beachfront Resorts - (10) - (3,674)
Other - (16) - (2,583)
____ ____ ______ ______
Total 469 35 82,226 (1,184)
____ ____ ______ ______
Analysed by ownership type
Franchised(a) 174 10 24,516 (2,172)
Managed 294 25 57,555 988
Owned, leased and managed lease 1 - 155 -
____ ____ ______ ______
Total 469 35 82,226 (1,184)
____ ____ ______ ______
(a. ) Includes exclusive partner hotels.
Gross system size growth was +9.2% year-on-year with the opening of 21.2k
rooms (87 hotels) in the EMEAA region, of which 6.8k rooms (36 hotels) opened
in Q4. Openings for the year included 16 further Iberostar Beachfront Resorts
that were added as part of the long-term commercial agreement established in
November 2022, and 26 openings across the Holiday Inn Brand Family. There were
nine voco properties added, and in a particularly strong period of openings
for the InterContinental brand there were eight opened that included Jaipur,
Bucharest, Durrat Al Riyadh and the InterContinental Rome Ambasciatori Palace
in Rome. Six Senses Rome also opened in the year, as did further properties
for the brand in the Maldives, Saudi Arabia and Switzerland. The Vignette
Collection brand launched in new countries with four openings, and there were
five Crowne Plaza and seven Hotel Indigo properties added (with notable
openings including Crowne Plaza Kuala Lumpur City Centre and Hotel Indigo
Kuala Lumpur on the Park, marking the 150(th) globally for that brand, and
Hotel Indigo Bordeaux Centre Chartrons), while the opening of Staybridge
Suites Cannes marked its debut in France. There were 3.6k rooms (19 hotels)
removed in the year, resulting in a removal rate of 1.6%.
Net system size grew +7.7% year-on-year. Excluding the further 16 Iberostar
Beachfront Resorts properties that were added to the system in 2023 (after the
first 10 that were added in 2022), net growth would have been +5.4%.
There were 24.8k rooms (151 hotels) signed during the year, including 10.0k
rooms (63 hotels) during Q4. During the year there were 42 signings across the
Holiday Inn Brand Family. As we continue to rapidly expand in Saudi Arabia,
there were 14 signings in the country including Regent Riyadh King Abdullah
Financial District and Regent Jeddah Corniche which will be an important first
for the brand in the Middle East region and follows the flagship 2023 opening
for the brand with the Regent Carlton Cannes, France. Across our Luxury &
Lifestyle brands, there were 55 properties signed or 9.5k rooms, representing
38% of all signings for the year in the region. Within this there were 12 for
Vignette Collection, and in a further reflection of the strength of the brand
and our ability to attract conversion properties, there were 27 signings for
voco.
The pipeline stands at 82.2k rooms (469 hotels), which represents 33% of the
current system size in the region.
GREATER CHINA
12 months ended 31 December
Greater China results 2023 2022 %
$m $m change
Revenue from the reportable segment(a)
Fee business 161 87 85.1
____ ____ ____
161 87 85.1
____ ____ ____
Operating profit from the reportable segment(a)
Fee business 96 23 317.4
____ ____ ____
Operating profit 96 23 317.4
____ ____ ____
12 months ended
Greater China comparable RevPAR(a) movement on previous year 31 December 2023
Fee business
Regent 110.8%
InterContinental 82.4%
Hotel Indigo 70.3%
HUALUXE 75.6%
Crowne Plaza 69.7%
Holiday Inn Express 60.3%
Holiday Inn 63.8%
All brands 71.7%
Comparable RevPAR(a) was up +71.7% vs 2022 (up +0.7% vs 2019) with occupancy
of 61.1% up +19.1%pts and rate +18.0% higher. This reflected the excellent
rebound in demand since the lifting of travel restrictions in December 2022.
Q3 RevPAR(a), which was particularly strongly driven by domestic leisure
trips, was up +43.2% vs 2022 (up +9.3% vs 2019). Q4 RevPAR(a) was up +72.0% vs
2022 due to a comparable period in which the industry was substantially
impacted by localised travel restrictions in late 2022; when compared with
2019, Q4 RevPAR(a) slipped back down to ‑0.6%, as in comparison to Q3 the
final quarter of the year is more weighted to business demand and this is
still experiencing a lag from the more gradual return of international inbound
travel. Q4 occupancy was 59.5%, up +17.6%pts on 2022 but down ‑2.4%pts on
2019 levels, whilst rate was +21.1% higher than the prior year and +3.3%
higher than 2019. For the year, Tier 1 cities which are more weighted to
international travel saw RevPAR(a) still down -11% vs 2019, whilst Tier 2‑4
cities which are more weighted to domestic and leisure demand were up +7%.
Revenue from the reportable segment(a) increased by $74m (+85%) to $161m.
Driven by the improvement in trading, operating profit increased by $73m
(+317%) to $96m (an increase of $23m or +32% vs 2019). Fee margin(a) was
59.6%, compared to 26.4% in 2022 and 54.1% in 2019. There were $46m of
incentive management fees earned (2022: $16m; 2019: $48m).
(a. ) Definitions for non-GAAP measures can be found in the '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.
Hotels Rooms
Greater China hotel and room count Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 1 - 130 -
Regent 6 1 2,051 136
InterContinental 60 6 23,383 1,979
Vignette Collection 3 3 722 722
Kimpton 3 1 450 143
Hotel Indigo 23 4 3,611 637
voco 12 4 2,417 842
HUALUXE 20 (1) 5,529 (454)
Crowne Plaza 124 13 41,805 3,662
EVEN Hotels 7 4 1,187 750
Holiday Inn Express 313 35 56,076 4,133
Holiday Inn 132 4 34,826 501
Other(a) 8 (1) 7,155 (176)
____ ____ ______ ______
Total 712 73 179,342 12,875
____ ____ ______ ______
Analysed by ownership type
Franchised 275 60 56,823 10,756
Managed 437 13 122,519 2,119
____ ____ _______ ______
Total 712 73 179,342 12,875
____ ____ _______ ______
(a. ) Includes one open hotel that will be re-branded to voco.
Hotels Rooms
Greater China Pipeline Change over Change over
2023 2022 2023 2022
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 4 - 233 -
Regent 3 (1) 807 (135)
InterContinental 32 3 9,053 671
Vignette Collection 1 1 272 272
Kimpton 11 2 2,878 552
Hotel Indigo 48 1 8,293 133
voco 11 8 2,451 1,796
HUALUXE 25 4 6,343 993
Crowne Plaza 68 4 18,703 1,448
EVEN Hotels 22 1 4,144 36
Holiday Inn Express 194 5 31,247 603
Holiday Inn 88 8 21,140 1,456
____ ____ ______ ____
Total 507 36 105,564 7,825
____ ____ ______ ____
Analysed by ownership type
Franchised 258 25 47,579 5,214
Managed 249 11 57,985 2,611
____ ____ _______ ______
Total 507 36 105,564 7,825
____ ____ _______ ______
Gross system size growth was +9.8% year-on-year with the opening of 16.3k
rooms (87 hotels) in the Greater China region, of which 8.2k (41 hotels)
opened in a particularly busy final quarter of the year which also saw the
milestone of over 700 open hotels reached. Openings over the course of 2023
included 51 for the Holiday Inn Brand Family, including Holiday Inn Chengdu
East and Holiday Inn Express Shanghai NECC, and 14 Crowne Plaza properties,
including Chengdu Tianfu New Area which took the Crowne Plaza brand's category
leading position in the region to 124 hotels. There were four openings for
voco and the first three for Vignette Collection (Hangzhou Huaxia Center
Hotel, WM Hotel Hong Kong and The Xanadu Guangzhou, each opened within two
months of signing) as these brands expand in the region, and which contributed
to conversions accounting for 32% of all openings in the year. Across Luxury
& Lifestyle brands there were 15 openings, including a further flagship
for Regent with Shanghai On The Bund, and six openings for InterContinental
including Shenzhen World Exhibition & Convention Center, Changzhou and
Wuxi Taihu New City. Other notable openings included EVEN Hotel Zhongshan City
Center, which is a new flagship for this brand that now has 7 open in the
region and a pipeline for a further 22. There were 3.5k rooms (14 hotels)
removed in the year, representing a removal rate of 2.1%. Net system size
growth was +7.7% year-on-year.
There were 26.1k rooms (134 hotels) signed during the year, including 8.4k
rooms (41 hotels) during Q4. During the year there were 59 signings for
Holiday Inn Express and 16 for Holiday Inn, growing their pipelines to 194 and
88, respectively. Crowne Plaza had 17 signings, whilst voco achieved a further
12. There were 20 signings across our Luxury & Lifestyle brands; of these,
there were seven for InterContinental, including Hangzhou Wulin, Zhengzhou
Zhengdong and Haikou West Coast. Our six Luxury & Lifestyle brands grew to
represent 20% of both the existing system size and the pipeline in the region.
The pipeline stands at 105.6k rooms (507 hotels), which represents 59% of the
current system size in the region.
Central
12 months ended 31 December
2023 2022 %
Central results $m $m change
Revenue 221 199 11.1
Gross costs (328) (307) 6.8
____ ____ ____
Operating loss (107) (108) (0.9)
____ ____ ____
Central revenue, which is mainly comprised of technology fee income and
revenue from insurance activities, increased by $22m (+11.1%) to $221m in
2023, primarily driven by the growth of IHG system size and insurance
programme.
Gross costs increased by $21m (+6.8%) year-on-year, driven by $12m increase in
the insurance programme which was matched by associated revenues and by
investment spend to support growth initiatives, including the integration of
Iberostar Beachfront Resorts.
The resulting $107m operating loss was a decrease of $1m (-0.9%) year-on-year.
Key performance measures and non-GAAP measures
In addition to performance measures directly observable in the Financial
Statements (IFRS measures), certain financial measures are presented 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 each other. As these measures exclude
certain items (for example impairment and the costs of individually
significant legal cases or commercial disputes) they 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 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.
RevPAR and ADR are quoted at a constant US$ exchange rate, in order to allow a
better understanding of the comparable year-on-year trading performance
excluding distortions created by fluctuations in currency movements.
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 and exclusive partner hotels including food
and beverage, meetings and other revenues, reflecting the value driven by IHG
and the base upon which fees are typically earned; 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 revenue is not revenue attributable to IHG as these managed,
franchised and exclusive partner 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, franchise and exclusive partner agreements and
therefore is well understood by owners and other stakeholders.
Revenue and operating profit measures
Revenue and operating profit from (1) fee business, (2) owned, leased and
managed lease hotels, and (3) insurance activities are described as 'revenue
from reportable segments' and 'operating profit from reportable segments',
respectively, within note 3 to the Group Financial Statements. These measures
are presented insofar as they relate to each of the Group's regions and its
Central functions. Management believes revenue and operating profit from
reportable segments are meaningful to investors and other stakeholders as they
exclude the following elements and reflect how management monitors the
business:
● System Fund and reimbursables - the System Fund is not managed to generate a
surplus or deficit for IHG over the longer term; it 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 specific purposes of use
including marketing, the Guest Reservation System and loyalty programme. There
is a cost equal to reimbursable 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 with consideration given to consistency of treatment with prior
years and between gains and losses. Exceptional items 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 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. The
Group's reported operating profit additionally excludes fair value changes in
contingent purchase consideration, which relates to financing of acquisitions.
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 and to exclude revenue and
operating profit from insurance activities, which are not a core part of the
Group's trading operations.
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 revenue from reportable segments and operating profit from
reportable segments, as defined above, adjusted to exclude revenue and
operating profit from the Group's owned, leased and managed lease hotels as
well as from insurance activities and significant liquidated damages.
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.
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 below).
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.
Adjusted tax
Adjusted tax excludes the impact of foreign exchange gains/losses, exceptional
items, System Fund and fair value gains/losses on contingent consideration.
Foreign exchange gains/losses vary year-on-year depending on the movement in
exchange rates, and fair value gains/losses on contingent consideration and
exceptional items also vary year-on-year. These can impact the current year's
tax charge. The System Fund (including interest and tax) is not managed to a
surplus or deficit for IHG over the longer term and is, in general, not
subject to tax. Management believes removing these from both profit and tax
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. .
The adjusted tax definition has been amended from 2023 to align to the
adjustments made to adjusted earnings per share and ensure consistency between
measures. The measure has been re-presented for prior years to show consistent
presentation.
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 the
System Fund and reimbursable result, interest attributable 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 and exceptional tax.
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
principal amounts payable and receivable on maturity of derivatives swapping
debt values, less cash and cash equivalents. A summary of the composition of
net debt is included in note 10 to the 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 targeting 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 and reimbursable 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 are provided in note to the Group
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
and loans to facilitate third-party ownership of hotel assets), 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 and loan repayment 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 2022 Annual Report and Accounts
The following definitions have been amended:
● The definition and calculation of Total Gross Revenue has been amended to
include revenue from exclusive partner hotels, as this revenue reflects the
value that IHG generates for its exclusive partner hotels. The value of Total
Gross Revenue is unchanged in comparative years.
● Underlying fee revenue and operating profit measures have been amended to
separate revenue and related costs from insurance activities from fee business
revenue and costs. This change is due to the adoption of IFRS 17 'Insurance
Contracts', which requires insurance related revenue and costs to be disclosed
separately from fee revenues. Underlying fee revenue and operating profit
measures have also been amended. Comparative periods have been restated for
this change.
● The definition and reconciliation of fee margin has been amended to remove the
exclusion of insurance revenues and costs, as insurance related revenues and
costs are no longer included as part of fee business (see above). Where
information is available, comparative periods have been restated for this
change.
● The adjusted tax definition has been amended to align to the adjustments made
to adjusted earnings per share to ensure consistency between measures. Fair
value gains/losses on contingent consideration and System Fund interest are
therefore now excluded from the calculation of adjusted tax. The measure has
been re-presented for prior years to show consistent presentation.
Revenue and operating profit non-GAAP reconciliations
Highlights for the 12 months ended 31 December
Reportable segments Revenue Operating profit
2023 2022 % 2023 2022 %
Re-presented(a) Re-presented(a)
$m $m change $m $m change
Per Group income statement 4,624 3,892 18.8 1,066 628 69.7
System Fund and reimbursables (2,460) (2,049) 20.1 (19) 105 NM(b)
Operating exceptional items - - - (28) 95 NM(b)
_____ _____ _____ _____ _____ _____
Reportable segments 2,164 1,843 17.4 1,019 828 23.1
Reportable segments analysed as:
Fee business 1,672 1,434 16.6 992 805 23.2
Owned, leased and managed lease 471 394 19.5 29 19 52.6
Insurance activities 21 15 40.0 (2) 4 NM(b)
_____ _____ _____ _____ _____ _____
Reportable segments 2,164 1,843 17.4 1,019 828 23.1
(a. ) Re-presented for the adoption of IFRS 17 'Insurance Contracts'
and to combine System Fund and reimbursables (see 'New accounting standards
and other presentational changes' in the Group 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.
Underlying revenue and underlying operating profit
Revenue Operating profit
2023 2022 % 2023 2022 %
$m $m change $m $m Change
Reportable segments (see above) 2,164 1,843 17.4 1,019 828 23.1
Significant liquidated damages(b) - (7) NM(a) - (7) NM(a)
Owned and leased asset disposals(c) - (19) NM(a) - (2) NM(a)
Currency impact - - - - (1) NM(a)
____ ____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 2,164 1,817 19.1 1,019 818 24.6
(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.
(c. ) The results of three UK portfolio hotels and one InterContinental
Hotel have been removed in 2022 (being the year of disposal) to determine
underlying growth.
Underlying fee revenue and underlying fee operating profit
Revenue Operating profit
2023 2022 % 2023 2022 %
Re-presented(b) Re-presented(b)
$m $m change $m $m change
Reportable segments fee business (see above) 1,672 1,434 16.6 992 805 23.2
Significant liquidated damages(c) - (7) NM(a) - (7) NM(a)
Currency impact - (4) NM(a) - (2) NM(a)
_____ _____ _____ _____ _____ _____
Underlying fee revenue and underlying fee operating profit 1,672 1,423 17.5 992 796 24.6
(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. ) Re-presented for the adoption of IFRS 17 'Insurance Contracts'.
(c. ) $7m recognised in 2022 reflects the significant liquidated
damages related to one hotel in EMEAA.
Americas
Revenue Operating profit(a)
2023 2022 % 2023 2022 %
$m $m change $m $m change
Per financial statements 1,105 1,005 10.0 815 761 7.1
Reportable segments analysed as:
Fee business 957 879 8.9 787 741 6.2
Owned, leased and managed lease 148 126 17.5 28 20 40.0
_____ _____ _____ _____ _____ _____
1,105 1,005 10.0 815 761 7.1
Reportable segments (see above) 1,105 1,005 10.0 815 761 7.1
Currency Impact - 2 NM(b) - - -
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 1,105 1,007 9.7 815 761 7.1
Owned, leased and managed lease included in the above (148) (126) 17.5 (28) (20) 40.0
_____ _____ _____ _____ _____ _____
Underlying fee business 957 881 8.6 787 741 6.2
(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.
EMEAA
Revenue Operating profit(a)
2023 2022 % 2023 2022 %
$m $m change $m $m change
Per financial statements 677 552 22.6 215 152 41.4
Reportable segments analysed as:
Fee business 354 284 24.6 214 153 39.9
Owned, leased and managed lease 323 268 20.5 1 (1) NM(b)
_____ _____ _____ _____ _____ _____
677 552 22.6 215 152 41.4
Reportable segments (see above) 677 552 22.6 215 152 41.4
Significant liquidated damages(c) - (7) NM(b) - (7) NM(b)
Owned and leased asset disposals(d) - (19) NM(b) - (2) NM(b)
Currency impact - 3 NM(b) - 1 NM(b)
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 677 529 28.0 215 144 49.3
Owned, leased and managed lease included in the above (323) (253) 27.7 (1) 2 (150.0)
_____ _____ _____ _____ _____ _____
Underlying fee business 354 276 28.3 214 146 46.6
(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. ) $7m recognised in 2022 reflects the significant liquidated
damages related to one hotel in EMEAA.
(d. ) The results of three UK portfolio hotels and one InterContinental
Hotel have been removed in 2022 (being the year of disposal) to determine
underlying growth.
Greater China
Revenue Operating profit(a)
2023 2022 % 2023 2022 %
$m $m change $m $m change
Per financial statements
Reportable segments analysed as: 161 87 85.1 96 23 317.4
____ _____ _____ _____ _____ _____
Fee business 161 87 85.1 96 23 317.4
Reportable segments (see above) 161 87 85.1 96 23 317.4
Currency impact - (5) NM(b) - (1) NM(b)
_____ _____ ____ _____ _____ _____
Underlying revenue and underlying operating profit 161 82 96.3 96 22 336.4
(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.
Fee margin reconciliation
12 months ended 31 December 2023
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 957 354 161 200 1,672
_____ _____ _____ _____ _____
957 354 161 200 1,672
Operating profit $m
Reportable segments analysed as fee business (see above) 787 214 96 (105) 992
_____ _____ _____ _____ _____
787 214 96 (105) 992
Fee margin % 82.2% 60.5% 59.6% (52.5)% 59.3%
12 months ended 31 December 2022 (Re-presented(a))
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 879 284 87 184 1,434
Significant liquidated damages - (7) - - (7)
_____ _____ _____ _____ _____
879 277 87 184 1,427
Operating profit $m
Reportable segments analysed as fee business (see above) 741 153 23 (112) 805
Significant liquidated damages - (7) - - (7)
_____ _____ _____ _____ _____
741 146 23 (112) 798
Fee margin % 84.3% 52.7% 26.4% (60.9)% 55.9%
(a. ) Re-presented to reflect the adoption of IFRS 17 'Insurance
Contracts'.
12 months ended 31 December 2021 (Re-presented(a))
Americas EMEAA Greater China Central Total
Revenue $m
Reportable segments analysed as fee business (see above) 691 149 116 188 1,144
Significant liquidated damages - - (6) - (6)
_____ _____ _____ _____ _____
691 149 110 188 1,138
Operating profit $m
Reportable segments analysed as fee business (see above) 568 32 58 (89) 569
Significant liquidated damages - - (6) - (6)
_____ _____ _____ _____ _____
568 32 52 (89) 563
Fee margin % 82.2% 21.5% 47.3% (47.3)% 49.5%
(a. ) Re-presented to reflect the adoption of IFRS 17 'Insurance
Contracts'.
Net capital expenditure reconciliation
12 months ended
31 December
2023 2022
$m $m
Net cash from investing activities (137) (78)
Adjusted for:
Contract acquisition costs, net of repayments (101) (64)
System Fund depreciation and amortisation(a) 81 83
_____ _____
Net capital expenditure (157) (59)
_____ _____
Analysed as:
Capital expenditure: maintenance (including contract acquisition costs, net of (139) (108)
repayments, of $101m (2022: $64m))
Capital expenditure: recyclable investments (53) 1
Capital expenditure: System Fund capital investments 35 48
_____ _____
Net capital expenditure (157) (59)
_____ _____
(a. ) Excludes depreciation of right-of-use assets.
Gross capital expenditure reconciliation
12 months ended
31 December
2023 2022
$m $m
Net capital expenditure (157) (59)
Add back:
Disposal receipts (8) (16)
Repayments of contract acquisition costs (7) (3)
System Fund depreciation and amortisation(a) (81) (83)
_____ _____
Gross capital expenditure (253) (161)
_____ _____
Analysed as:
Capital expenditure: maintenance (including contract (146) (111)
acquisition costs of $108m (2022: $67m))
Capital expenditure: recyclable investments (61) (15)
Capital expenditure: System Fund capital investments (46) (35)
_____ _____
Gross capital expenditure (253) (161)
_____ _____
(a. ) Excludes depreciation of right-of-use assets.
Adjusted free cash flow reconciliation
12 months ended
31 December
2023 2022
$m $m
Net cash from operating activities 893 646
Adjusted for:
Principal element of lease payments (28) (36)
Purchase of shares by employee share trusts (8) (1)
Capital expenditure: maintenance (excluding contract acquisition costs) (38) (44)
_____ _____
Adjusted free cash flow 819 565
_____ _____
Adjusted interest reconciliation
12 months ended
31 December
2023 2022
$m $m
Net financial expenses
Financial income 39 22
Financial expenses (91) (118)
_____ _____
(52) (96)
Adjusted for:
Interest attributable to the System Fund (44) (16)
Foreign exchange gains (35) (10)
_____ _____
(79) (26)
_____ _____
Adjusted interest (131) (122)
_____ _____
Adjusted tax and tax rate reconciliation
2023 2022 (Re-presented(a))
Profit before tax Tax Profit before tax Tax
rate
rate
$m Tax $m Tax
$m $m
Group income statement
1,010 (260) 25.7% 540 (164) 30.4%
Adjust for:
Exceptional items (28) 7 95 (26)
Foreign exchange gains (35) (3) (10) (4)
System Fund (19) 3 105 -
System Fund interest (44) - (16) -
Fair value losses/(gains) on contingent purchase consideration
4 - (8) -
_____ _____ _____ _____
Adjusted tax and tax rate 888 (253) 28.5% 706 (194) 27.5%
(a. ) The definition of Adjusted tax measures has been amended in 2023,
see the 'Use of key performance measures and non-GAAP measures' section. Prior
year measures have been re-represented accordingly.
Adjusted earnings per ordinary share reconciliation
12 months ended
31 December
2023 2022
$m $m
Profit available for equity holders 750 375
Adjusting items:
System Fund and reimbursable result (19) 105
Interest attributable to the System Fund (44) (16)
Operating exceptional items (28) 95
Fair value losses/(gains) on contingent purchase consideration 4 (8)
Foreign exchange gains (35) (10)
Tax attributable to the System Fund 3 -
Tax on foreign exchange gains (3) (4)
Tax on exceptional items 7 (26)
_____ _____
Adjusted earnings 635 511
Basic weighted average number of ordinary shares (millions) 169 181
Adjusted earnings per ordinary share (cents) 375.7 282.3
Highlights for the 12 months ended 31 December 2023 vs 31 December 2019
Reportable segments Revenue Operating profit
2023 2019 % 2023 2019 %
Re-presented(b) Re-presented(b)
$m $m change $m $m change
Per Group income statement 4,624 4,627 (0.1) 1,066 630 69.2
System Fund and reimbursables (2,460) (2,544) (3.3) (19) 49 NM(a)
Operating exceptional items - - - (28) 186 NM(a)
_____ _____ _____ _____ _____ _____
Reportable segments 2,164 2,083 3.9 1,019 865 17.8
(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. ) Re-presented for the adoption of IFRS 17 'Insurance Contracts'
and to combine System Fund and reimbursables (see 'New accounting standards
and other presentational changes' in the Group Financial Statements).
Americas
Revenue Operating profit(a)
2023 2019 % 2023 2019 %
$m $m change $m $m change
Per financial statements 1,105 1,040 6.3 815 700 16.4
Reportable segments analysed as:
Fee business 957 853 12.2 787 663 18.7
Owned, leased and managed lease 148 187 (20.9) 28 37 (24.3)
_____ _____ _____ _____ _____ _____
1,105 1,040 6.3 815 700 16.4
(a. ) Before exceptional items.
EMEAA
Revenue Operating profit(a)
2023 2019 % 2023 2019 %
$m $m change $m $m change
Per financial statements 677 723 (6.4) 215 217 (0.9)
Reportable segments analysed as:
Fee business 354 337 5.0 214 202 5.9
Owned, leased and managed lease 323 386 (16.3) 1 15 (93.3)
_____ _____ _____ _____ _____ _____
677 723 (6.4) 215 217 (0.9)
(a. ) Before exceptional items.
Greater China
Revenue Operating profit(a)
2023 2019 % 2023 2019 %
$m $m change $m $m change
Per financial statements 161 135 19.3 96 73 31.5
Reportable segments analysed as:
Fee business 161 135 19.3 96 73 31.5
(a. ) Before exceptional items.
Fee margin reconciliation
12 months ended 31 December 2019
Americas EMEAA Greater China
Revenue $m
Reportable segments analysed as fee business (see above) 853 337 135
Significant liquidated damages - (11) -
_____ _____ _____
853 326 135
Operating profit $m
Reportable segments analysed as fee business (see above) 663 202 73
Significant liquidated damages - (11) -
_____ _____ _____
663 191 73
Fee margin % 77.7% 58.6% 54.1%
InterContinental Hotels Group PLC
GROUP INCOME STATEMENT
For the year ended 31 December 2023
2023 2022
Year ended Year ended
31 December
31 December
Re-presented*
$m
$m
Revenue from fee business 1,672 1,434
Revenue from owned, leased and managed lease hotels 471 394
Revenue from insurance activities 21 15
System Fund and reimbursable revenues 2,460 2,049
_____ _____
Total revenue (notes 3 and 4) 4,624 3,892
Cost of sales (742) (648)
System Fund and reimbursable expenses (2,441) (2,154)
Administrative expenses (338) (353)
Insurance expenses (23) (11)
Share of profits/(losses) of associates and joint ventures 31 (59)
Other operating income 21 29
Depreciation and amortisation (67) (68)
Impairment reversal/(loss) on financial assets 1 (5)
Other net impairment reversals (note 5) - 5
_____ _____
Operating profit (note 3) 1,066 628
Operating profit analysed as:
Operating profit before System Fund, reimbursables and exceptional items 1,019 828
System Fund and reimbursable result 19 (105)
Operating exceptional items (note 5) 28 (95)
_____ _____
1,066 628
Financial income 39 22
Financial expenses (91) (118)
Fair value (losses)/gains on contingent purchase consideration (4) 8
_____ _____
Profit before tax 1,010 540
Tax (note 6) (260) (164)
_____ _____
Profit for the year from continuing operations 750 376
_____ _____
Attributable to:
Equity holders of the parent 750 375
Non-controlling interest - 1
_____ _____
750 376
_____ _____
Earnings per ordinary share (note 8)
Basic 443.8¢ 207.2¢
Diluted 441.2¢ 206.0¢
* Re-presented for the adoption of IFRS 17 'Insurance Contracts' and to
combine System Fund and reimbursables (see note 1).
InterContinental Hotels Group PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2023
2023 2022
Year ended Year ended
31 December 31 December
Re-presented*
$m $m
Profit for the year 750 376
Other comprehensive (loss)/income
Items that may be subsequently reclassified to profit or loss:
(Losses)/gains on cash flow hedges, including related tax
of $nil (2022: $2m credit)
(30) 35
Gains/(losses) on net investment hedges 15 (6)
Costs of hedging - 3
Hedging losses/(gains) reclassified to financial expenses 28 (43)
Exchange (losses)/gains on retranslation of foreign operations,
including related tax charge of $4m (2022: $5m credit)
(137) 187
_____ _____
(124) 176
Items that will not be reclassified to profit or loss:
(Losses)/gains on equity instruments classified as fair value through other
comprehensive income, including related tax charge of $1m (2022: $2m
credit)
(3) 1
Re-measurement (losses)/gains on defined benefit plans,
including related tax of $nil (2022: $6m charge)
(2) 15
_____ _____
(5) 16
_____ _____
Total other comprehensive (loss)/income for the year (129) 192
_____ _____
Total comprehensive income for the year 621 568
_____ _____
Attributable to:
Equity holders of the parent 621 568
Non-controlling interest - -
_____ _____
621 568
_____ _____
* In 2023, gains/(losses) on net investment hedges have been presented on a
separate line. The 2022 amount was previously presented within 'Exchange
(losses)/gains on retranslation of foreign operations'.
InterContinental Hotels Group PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Year ended 31 December 2023
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the year 137 (2,359) 607 7 (1,608)
Total comprehensive income for the year - (127) 748 - 621
Repurchase of shares, including transaction costs (3) 3 (765) - (765)
Purchase of own shares by employee share trusts - (8) - - (8)
Transfer of treasury shares to employee share trusts - (21) 21 - -
Release of own shares by employee share trusts - 32 (32) - -
Equity-settled share-based cost - - 51 - 51
Tax related to share schemes - - 11 - 11
Equity dividends paid - - (245) (3) (248)
Exchange adjustments 7 (7) - - -
_____ _____ _____ _____ _____
At end of the year 141 (2,487) 396 4 (1,946)
_____ _____ _____ _____ _____
Year ended 31 December 2022
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the year 154 (2,539) 904 7 (1,474)
Total comprehensive income for the year - 178 390 - 568
Repurchase of shares, including transaction costs (1) 1 (513) - (513)
Purchase of own shares by employee share trusts
- (1) - - (1)
Transfer of treasury shares to employee share trusts
- (26) 26 - -
Release of own shares by employee share trusts
- 12 (12) - -
Equity-settled share-based cost - - 44 - 44
Tax related to share schemes - - 1 - 1
Equity dividends paid - - (233) - (233)
Exchange adjustments (16) 16 - - -
_____ _____ _____ _____ _____
At end of the year 137 (2,359) 607 7 (1,608)
_____ _____ _____ _____ _____
* 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
31 December 2023
2023 2022
31 December 31 December
Re-presented*
$m $m
ASSETS
Goodwill and other intangible assets 1,099 1,144
Property, plant and equipment 153 157
Right-of-use assets 273 280
Investment in associates and joint ventures 48 36
Retirement benefit assets 3 2
Other financial assets 185 156
Derivative financial instruments 20 7
Deferred compensation plan investments 250 216
Non-current other receivables 13 3
Deferred tax assets 134 126
Contract costs 82 75
Contract assets 424 336
______ ______
Total non-current assets 2,684 2,538
______ ______
Inventories 5 4
Trade and other receivables 740 646
Current tax receivable 15 16
Other financial assets 7 -
Cash and cash equivalents 1,322 976
Contract costs 5 5
Contract assets 35 31
______ ______
Total current assets 2,129 1,678
______ ______
Total assets 4,813 4,216
_____ _____
LIABILITIES
Loans and other borrowings (599) (55)
Lease liabilities (30) (26)
Derivative financial instruments (25) -
Trade and other payables (711) (697)
Deferred revenue (752) (681)
Provisions (10) (44)
Insurance liabilities (12) (9)
Current tax payable (51) (32)
______ ______
Total current liabilities (2,190) (1,544)
______ ______
Loans and other borrowings (2,567) (2,341)
Lease liabilities (396) (401)
Derivative financial instruments - (11)
Retirement benefit obligations (66) (66)
Deferred compensation plan liabilities (250) (216)
Trade and other payables (75) (81)
Deferred revenue (1,096) (1,043)
Provisions (26) (20)
Insurance liabilities (25) (23)
Deferred tax liabilities (68) (78)
______ ______
Total non-current liabilities (4,569) (4,280)
______ ______
Total liabilities (6,759) (5,824)
_____ _____
Net liabilities (1,946) (1,608)
_____ _____
EQUITY
IHG shareholders' equity (1,950) (1,615)
Non-controlling interest 4 7
______ ______
Total equity (1,946) (1,608)
_____ _____
* Re-presented for the adoption of IFRS 17 'Insurance Contracts' (see note 1).
InterContinental Hotels Group PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
2023 2022
Year ended Year ended
31 December 31 December
$m $m
Profit for the year 750 376
Adjustments reconciling profit for the year to cash flow from operations (note
9)
469 585
_____ _____
Cash flow from operations 1,219 961
Interest paid (119) (126)
Interest received 36 22
Tax paid (243) (211)
_____ _____
Net cash from operating activities 893 646
_____ _____
Cash flow from investing activities
Purchase of property, plant and equipment (28) (54)
Purchase of intangible assets (54) (45)
Investment in associates (3) (1)
Investment in other financial assets (60) -
Lease incentives received - 6
Disposal of property, plant and equipment - 3
Repayments of other financial assets 8 13
_____ _____
Net cash from investing activities (137) (78)
_____ _____
Cash flow from financing activities
Repurchase of shares, including transaction costs (790) (482)
Purchase of own shares by employee share trusts (8) (1)
Dividends paid to shareholders (note 7) (245) (233)
Dividend paid to non-controlling interest (3) -
Issue of long-term bonds, including effect of currency swaps 657 -
Repayment of long-term bonds - (209)
Principal element of lease payments (28) (36)
_____ _____
Net cash from financing activities (417) (961)
_____ _____
Net movement in cash and cash equivalents, net of overdrafts, in the year
339 (393)
Cash and cash equivalents, net of overdrafts, at beginning of the year 921 1,391
Exchange rate effects 18 (77)
_____ _____
Cash and cash equivalents, net of overdrafts, at end of the year 1,278 921
_____ _____
interContinental Hotels Group plc
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary consolidated financial statements of InterContinental Hotels
Group PLC (the 'Group' or 'IHG') for the year ended 31 December 2023 have been
prepared in accordance with UK-adopted international accounting standards and
with applicable law and regulations, including the Companies Act 2006, and
with International Financial Reporting Standards ('IFRSs') as issued by the
IASB. The preliminary statement of results shown in this announcement does not
represent the statutory accounts of the Group and its subsidiaries within the
meaning of Section 435 of the Companies Act 2006.
The Group financial statements for the year ended 31 December 2023 were
approved by the Board on 19 February 2024. The auditor, PricewaterhouseCoopers
LLP, has given an unqualified report in respect of those Group financial
statements 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. The Group financial statements for the year ended 31 December 2023 will
be delivered to the Registrar of Companies in due course.
Financial information for the year ended 31 December 2022 has been extracted
from the Group's published financial statements for that year and re-presented
for the following:
- The adoption of IFRS 17 using the full retrospective method with the date
of initial application being 1 January 2023. The adoption of IFRS 17 had no
impact on operating profit, profit before or after tax, net liabilities or
cash flows. The Group's current and non-current insurance reserves relating to
managed hotels of $9m and $23m, respectively, (previously included within
provisions) are now included in the Group statement of financial position as
insurance liabilities. Insurance revenue of $15m (previously presented within
revenue from fee business) and insurance expenses of $11m (previously
presented within administrative expenses) are now presented separately within
the Group income statement; and
- Revenues and expenses from the System Fund are presented together with
reimbursable revenue and expenses in the Group income statement for clarity of
presentation, consistency with industry practice and to reflect the fact
that neither of these are reported to the Chief Operating Decision Maker
(CODM) and do not generate a profit or loss for the Group over the longer
term.
The auditor's report on those financial statements 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.
Going concern
A period of 18 months has been used, from 1 January 2024 to 30 June 2025, to
complete the going concern assessment. In adopting the going concern basis for
preparing the Group financial statements, the Directors have considered a
'Base Case' scenario which assumes continued growth in RevPAR in 2024 and 2025
in line with market expectations. The assumptions applied in the Base Case
scenario are consistent with those used for Group planning purposes, for
impairment testing (impairment tests adjusted for factors specific to
individual properties or portfolios) and for assessing recoverability of
deferred tax assets.
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 2008/09 global financial crisis. This assumes that the performance
during 2024 starts to worsen and then RevPAR decreases significantly by 17% in
2025.
A large number of the Group's principal risks would result in an impact on
RevPAR, which is one of the sensitivities assessed against the headroom
available in the Base Case and Severe Downside Case scenarios. 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.
A one-year extension to the Group's revolving credit facility of $1,350m was
exercised in 2023 and the facility now matures in 2028. The Group's key
covenant requires net debt:EBITDA below 4.0x. See note 10 for additional
information. In November 2023 the Group issued a six-year €600m bond. The
only debt maturity in the period under consideration is the €500m October
2024 bond which is assumed to be repaid with cash on maturity.
Under the Base Case and Severe Downside Case, bank covenants are not breached
and there is significant headroom to the covenants to absorb multiple
additional risks and uncertainties. Additional funding is not required in the
period under consideration. The Directors also reviewed a number of actions
that could be taken if required to reduce discretionary spend, creating
substantial additional headroom to the covenants.
The Directors reviewed a reverse stress test scenario to determine what
decrease in RevPAR would create a breach of the covenants. The Directors
concluded that it was very unlikely that a single risk or combination of the
risks considered could create the sustained RevPAR impact required, except for
a significant global event.
The leverage and interest cover covenant tests up to 30 June 2025 (the last
day of the assessment period) have been considered as part of the Base Case
and Severe Downside Case scenarios. Neither of these scenarios indicate that a
covenant amendment would be required but, in the event that it was, the
Directors believe it is reasonable to expect that such an amendment could be
obtained based on experience of negotiating the waivers and amendments in
2020, however the going concern conclusion is not dependent on this
expectation. The Group also has alternative options to manage this risk
including raising additional funding in the capital markets.
Having reviewed these scenarios, the Directors have a reasonable expectation
that the Group has sufficient resources to continue operating until at least
30 June 2025. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
2. Exchange rates
2023
2022
Average Closing Average Closing
$1 equivalent
Sterling £0.80 £0.78 £0.81 £0.83
Euro €0.92 €0.90 €0.95 €0.94
3. Segmental information
Revenue 2023 2022
Re-presented*
$m $m
Americas 1,105 1,005
EMEAA 677 552
Greater China 161 87
Central 221 199
_____ _____
Revenue from reportable segments 2,164 1,843
System Fund and reimbursable revenues 2,460 2,049
_____ _____
Total revenue 4,624 3,892
_____ _____
* Re-presented to combine System Fund and reimbursable
revenues (see note 1).
Profit 2023 2022
$m $m
Americas 815 761
EMEAA 215 152
Greater China 96 23
Central (107) (108)
_____ _____
Operating profit from reportable segments 1,019 828
System Fund and reimbursable result 19 (105)
Operating exceptional items (note 5) 28 (95)
_____ _____
Operating profit 1,066 628
Net financial expenses (52) (96)
Fair value (losses)/gains on contingent purchase consideration (4) 8
_____ _____
Profit before tax 1,010 540
_____ _____
4. Revenue
Year ended 31 December 2023
Americas EMEAA Greater China Central Group
$m
$m $m $m $m
Franchise and base management fees 936 253 115 - 1,304
Incentive management fees 21 101 46 - 168
Central revenue - - - 200 200
_____ _____ _____ _____ _____
Revenue from fee business 957 354 161 200 1,672
Revenue from owned, leased and managed lease hotels 148 323 - - 471
Revenue from insurance activities - - - 21 21
_____ _____ _____ _____ _____
1,105 677 161 221 2,164
System Fund revenues 1,564
Reimbursable revenues 896
_____
Total revenue 4,624
_____
Year ended 31 December 2022
Americas EMEAA Greater China Central Group
Re-presented* Re-presented*
$m $m $m $m $m
Franchise and base management fees 861 215 71 - 1,147
Incentive management fees 18 69 16 - 103
Central revenue - - - 184 184
_____ _____ _____ _____ _____
Revenue from fee business 879 284 87 184 1,434
Revenue from owned, leased and managed lease hotels 126 268 - - 394
Revenue from insurance activities - - - 15 15
_____ _____ _____ _____ _____
1,005 552 87 199 1,843
System Fund revenues 1,217
Reimbursable revenues 832
_____
Total revenue 3,892
_____
* Re-presented for the adoption of IFRS 17 'Insurance
Contracts' (see note 1).
5. Exceptional items
2023 2022
$m $m
Administrative expenses:
Costs of ceasing operations in Russia - (12)
Commercial litigation and disputes - (28)
_____ _____
- (40)
Share of profits/(losses) of associate 18 (60)
Other operating income 10 -
Other net impairment reversals/(charges):
Management agreements - reversal - 12
Property, plant and equipment - charge - (10)
Property, plant and equipment - reversal - 3
Right-of-use assets - charge - (2)
Right-of-use assets - reversal - 2
Associates - reversal - 2
Contract assets - charge - (5)
Contract assets - reversal - 3
_____ _____
- 5
_____ _____
Operating exceptional items 28 (95)
_____ _____
Tax on exceptional items (7) 26
_____ _____
Tax (7) 26
_____ _____
Costs of ceasing operations in Russia
On 27 June 2022, the Group announced it was 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 were presented as exceptional due to the
nature of the war in Ukraine which drove the Group's response.
Commercial litigation and disputes
From time to time, the Group is subject to legal proceedings, the ultimate
outcome of each is always subject to many uncertainties inherent in
litigation. The 2022 provision for commercial litigation and disputes
principally related to the EMEAA region and was utilised in full in 2023
following settlement of the disputed matters.
These costs were presented as exceptional reflecting the quantum of the costs
and nature of the disputes.
Share of profits/losses of associate
As part of an agreed settlement of the 2021 Americas commercial dispute in
relation to the InterContinental New York Barclay associate, in 2022 the Group
was allocated expenses in excess of its actual percentage share which directly
reduced the Group's current interest in the associate. This resulted in $60m
of additional expenses being allocated to the Group in 2022, with a current
tax benefit of $15m and, applying equity accounting to this additional share
of expenses, reduced the Group's investment to $nil. In addition, a liability
of $18m was recognised, reflecting an unavoidable obligation to repay this
amount in certain circumstances. The value of the liability is linked to the
value of the hotel; increases in the property value are attributed first to
the Group and are reflected as a reduction of the liability until it is
reduced to $nil.
In 2023, the increase in fair value of the hotel (according to pricing
opinions provided by a professional external valuer) resulted in a full
reversal of the liability but no further trigger for reversal of previous
impairment charges.
The gain is presented as exceptional by reason of its size, the nature of the
agreement and for consistency with the associated charges in 2022 and 2021.
Other operating income
Relates to amounts receivable from the Group's insurer under its business
interruption policy for certain owned, leased and managed lease hotels due to
Covid-19.
The income is presented as exceptional due to its size.
Impairment reversals and charges
2022 impairment reversals related to charges recorded in 2020 and were
presented as exceptional for consistency with those charges. The management
agreement impairment reversal of $12m related to the Kimpton management
agreement portfolio in the Americas region. Other reversals related to assets
in the Americas ($2m) and EMEAA ($8m) regions.
$10m charge on property, plant and equipment and $2m impairment of
right-of-use assets were recognised in relation to one hotel in the EMEAA
region and arose largely as a result of cost and rent inflation. The charges
were presented as exceptional due to size and the nature of inflation rates in
2022.
$5m contract asset impairment related to key money pertaining to managed and
franchised hotels in Russia. The impairment was treated as exceptional for
consistency with the costs of ceasing operations described above.
6. Tax
2023 2022
$m $m
Current tax 273 176
Deferred tax (13) (12)
_____ _____
Tax charge 260 164
_____ _____
Further analysed as:
UK tax 18 3
Foreign tax 242 161
_____ _____
260 164
_____ _____
The deferred tax asset has increased from $126m to $134m in the year and
comprises $113m (31 December 2022: $109m) in the UK and $21m (31 December
2022: $17m) in respect of other territories. The deferred tax asset has been
recognised based upon forecasts consistent with those used in the going
concern assessment.
7. Dividends
2023 2022
cents per share $m cents per share
$m
Paid during the year:
Final (declared for previous year) 94.5 166 85.9 154
Interim 48.3 79 43.9 79
_____ _____ _____ _____
142.8 245 129.8 233
_____ _____ _____ _____
The final dividend in respect of 2023 of 104.0¢ per ordinary share (amounting
to $171m) is proposed for approval at the AGM on 3 May 2024.
8. Earnings per ordinary share
2023 2022
Basic earnings per ordinary share
Profit available for equity holders ($m) 750 375
Basic weighted average number of ordinary shares (millions) 169 181
Basic earnings per ordinary share (cents) 443.8 207.2
_____ _____
Diluted earnings per ordinary share
Profit available for equity holders ($m) 750 375
Diluted weighted average number of ordinary shares (millions) 170 182
Diluted earnings per ordinary share (cents) 441.2 206.0
_____ _____
Diluted weighted average number of ordinary shares is calculated as:
2023 2022
millions millions
Basic weighted average number of ordinary shares 169 181
Dilutive potential ordinary shares 1 1
______ ______
170 182
_____ _____
9. Reconciliation of profit for the year to cash flow from operations
2023 2022
$m $m
Profit for the year 750 376
Adjustments for:
Net financial expenses 52 96
Fair value losses/(gains) on contingent purchase consideration 4 (8)
Income tax charge 260 164
Operating profit adjustments:
Impairment (reversal)/loss on financial assets (1) 5
Other net impairment reversals - (5)
Other operating exceptional items (28) 100
Depreciation and amortisation 67 68
_____ _____
38 168
Contract assets deduction in revenue 37 32
Share-based payments cost 36 30
Share of profits of associates and joint ventures (before (13) (1)
exceptional items)
_____ _____
60 61
System Fund adjustments:
Depreciation and amortisation 83 86
Impairment loss on financial assets - 7
Share-based payments cost 20 16
Share of losses of associates 3 1
_____ _____
106 110
Working capital and other adjustments:
Increase in deferred revenue 123 108
Changes in working capital (39) (11)
Other adjustments (5) 4
_____ _____
79 101
Cash flows relating to exceptional items (29) (43)
Contract acquisition costs, net of repayments (101) (64)
_____ _____
Total adjustments 469 585
_____ _____
Cash flow from operations 1,219 961
_____ _____
10. Net debt
2023 2022
$m $m
Cash and cash equivalents 1,322 976
Loans and other borrowings - current (599) (55)
Loans and other borrowings - non-current (2,567) (2,341)
Lease liabilities - current (30) (26)
Lease liabilities - non-current (396) (401)
Principal amounts payable/receivable on maturity of derivative financial
instruments
(2) (4)
_____ _____
Net debt* (2,272) (1,851)
_____ _____
* See 'Use of key performance measures and Non-GAAP measures'.
In the Group statement of cash flows, cash and cash equivalents is presented
net of $44m bank overdrafts (31 December 2022: $55m). Cash and cash
equivalents includes $56m (31 December 2022: $47m) with restrictions on use.
Revolving Credit Facility
In April 2023, the maturity date of the Group's $1,350m revolving syndicated
bank facility ('RCF') was extended to April 2028. The facility was undrawn at
31 December 2023.
The RCF contains two financial covenants: interest cover (Covenant EBITDA:
Covenant interest payable) and a leverage ratio (Covenant net debt: Covenant
EBITDA). These are tested at half year and full year on a trailing 12-month
basis.
2023 2022
Covenant EBITDA ($m) 1,086 896
Covenant net debt ($m) 2,328 1,898
Covenant interest payable ($m) 88 109
Leverage 2.14 2.12
Interest cover 12.34 8.22
11. Movement in net debt
2023 2022
$m $m
Net increase/(decrease) in cash and cash equivalents, net of overdrafts 339 (393)
Add back financing cash flows in respect of other components of net debt:
Principal element of lease payments 28 36
(Issue)/repayment of long-term bonds (657) 209
_____ _____
(629) 245
_____ _____
Increase in net debt arising from cash flows (290) (148)
Other movements:
Lease liabilities (25) (48)
Increase in accrued interest (2) (1)
Exchange and other adjustments (104) 227
_____ _____
(131) 178
_____ _____
(Increase)/decrease in net debt (421) 30
Net debt at beginning of the year (1,851) (1,881)
_____ _____
Net debt at end of the year (2,272) (1,851)
_____ _____
12. Equity
In August 2022 the Board approved a $500m share buyback programme that
commenced on 9 August 2022 and completed on 31 January 2023. In February 2023
the Board approved a further $750m share buyback programme which completed on
29 December 2023.
In the year ended 31 December 2023, 10.9m shares were repurchased for total
consideration of $790m (including $28m transaction costs) and subsequently
cancelled. Of the total consideration, $38m relates to the completion of the
2022 programme and $752m relates to the 2023 programme.
In the year ended 31 December 2022, 9.1m shares were repurchased for total
consideration of $482m (including $2m transaction costs), of which 4.5m were
held as treasury shares and 4.6m were cancelled. The cost of treasury shares
and related transaction costs have been deducted from retained earnings.
In February 2024, the Board approved a further $800m share buyback programme.
A resolution to renew the authority to repurchase shares will be put to
shareholders at the AGM on 3 May 2024.
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