REG - Interco. Hotels Grp - New US co-brand credit card agreements

Intercontinental HotelsAnnouncement

25/11/2024 07:00

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RNS Number : 4178N  InterContinental Hotels Group PLC  25 November 2024

This announcement contains inside information

 

25 November 2024

InterContinental Hotels Group PLC

 

New US co-brand credit card agreements

 

InterContinental Hotels Group PLC (IHG) has entered into new agreements with
our current issuing and financial services partners to continue providing
co-branded IHG One Rewards credit cards in the US. The new agreements,
including that with JPMorgan Chase Bank, N.A. (Chase), are effective
immediately and have an initial term running through to 2036.

 

Co-brand credit cards drive further membership and loyalty to our IHG One
Rewards programme, deepening guest relationships and delivering more business
to our hotels. Co-brand credit card agreements generate ancillary fee streams
for IHG, in consideration for: providing the co-brand partners with access to
our loyalty programme and customer base, and rights to use our brands;
arranging for the provision of future benefits to members who have earned
points or free night certificates; and performing marketing services.

 

Total fees to IHG are expected to significantly increase from the start of the
new agreements and to continue growing over the term. This growth will be
driven by IHG's and our partners' ongoing commitment to expand the overall US
co‑brand credit card business, and the number and usage of card accounts.
This will also be supported by the growth of IHG One Rewards membership and
loyalty penetration, together with the ongoing expansion of IHG's hotel
portfolio. Fees recognised within IHG's operating profit from reportable
segments were $39m in 2023, with these expected to be double that level in
2025 and to more than triple by 2028, and with continued growth anticipated in
the years beyond. The balance of fees is recognised within System Fund
revenue, and this is also expected to grow meaningfully over the term of the
new agreements.

 

As part of the new agreements, upfront cash inflows totalling $137m, pre-tax,
are expected to be received over the coming months as part of IHG's cash flow,
and will be recognised within fee income over the term of the new agreements.

 

The IHG One Rewards programme is on track to have approximately 145 million
members globally by the end of the year, with enrolments to date in 2024
having grown by more than 10% year-on-year. Loyalty members typically spend
approximately 20% more in IHG hotels than non‑members and are around ten
times more likely to book through IHG direct channels. In the first half of
2024, Reward Night redemptions grew by around 15% year‑on-year,
demonstrating strong member engagement and driving increased returns for our
hotel owners. Loyalty penetration has also significantly increased, with
members now responsible for over 60% of room nights globally in 2024 and
approaching 70% in the Americas, each up more than 10%pts on the penetration
rates prior to the 2022 refresh of the programme.

 

IHG One Rewards co-brand credit card holders stay even more frequently and
spend more in IHG hotels. In 2023, following the update of US card products
alongside the relaunch of the loyalty programme in the prior year, new card
accounts reached record levels and we saw double-digit percentage growth in
total card spend. This has continued in 2024, such that compared to pre
relaunch levels two years earlier, new accounts are up by over 60% and total
card spend is around 30% higher.

 

Our new agreements build on IHG's strong track record of driving growth and
shareholder returns. In February 2024, IHG set out a clear framework for
future value creation over the medium to long term. As part of this, we aim to
grow ancillary products and fee streams, including those from co-brand credit
cards. The expansion of ancillary fee streams creates further value in
addition to IHG targeting delivering 100-150bps annual improvement in fee
margin from operational leverage. This is already being achieved in 2024, with
fee revenue growth and margin improvement from loyalty point sales to
consumers that is now being reported within results from reportable segments,
and is followed by today's announcement.

 

Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, commented:
"We are delighted to continue our partnerships to provide co-brand credit
cards in the US. Following a detailed review of the opportunities to grow this
important ancillary fee stream, the new agreements will create more
opportunities for customers to engage with IHG and our award-winning loyalty
programme, further strengthen IHG's enterprise and the System Fund for the
benefit of our hotel owners, and will drive significant shareholder value. We
look forward to continuing a close working relationship with our partners to
mutually benefit from the growth of the co-brand programme in the US, and we
continue to assess the potential for co-brand credit cards in other markets."

 

For further information, please contact:

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

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

For the purposes of the Market Abuse Regulation, the person responsible for
arranging the release of this announcement is Nicolette Henfrey, EVP, General
Counsel & Company Secretary.

 

About IHG Hotels & Resorts:

IHG Hotels & Resorts (https://www.ihgplc.com) (tickers: LON:IHG for
Ordinary Shares; NYSE:IHG for 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 6,500 open
hotels in more than 100 countries, and a development pipeline of over 2,200
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 Hotels & Resorts
(http://www.ihg.com/holidayinn/hotels/gb/en/reservation) , Holiday Inn Express
(http://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation) , Garner
hotels (https://www.ihg.com/content/us/en/garner-hotels) , avid hotels
(https://www.ihg.com/avidhotels/hotels/us/en/reservation)

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

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

InterContinental Hotels Group PLC is the Group's holding company and is
incorporated and registered in England and Wales. Approximately 375,000 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/) .

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