REG - Interco. Hotels Grp - Final Results
22/02/2022 07:00
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RNS Number : 3534C InterContinental Hotels Group PLC 22 February 2022
This announcement contains inside information
IHG PLC - Full Year Results to 31 December 2021
Reported Underlying(1)
2021 2020 % change(2) % change
REPORTABLE SEGMENTS(1):
Revenue(1) $1,390m $992m +40% +39%
Revenue from fee business(1) $1,153m $823m +40% +38%
Operating profit(1) $534m $219m +144% +138%
Fee margin(1) 49.6% 34.1% +15.5%pts
Adjusted EPS(1) 147.0¢ 31.3¢ +370% KEY METRICS:
GROUP RESULTS: · $19.4bn total gross revenue(1)
Total revenue $2,907m $2,394m +21% (30)% vs 2019 (+43% vs 2020)
Operating profit/(loss) $494m $(153)m NM · (30)% global FY RevPAR(1)
Basic EPS 145.4¢ (142.9)¢ NM vs 2019 (+46% vs 2020)
Total dividend per share 85.9¢ - ¢ NM · (17)% global Q4 RevPAR(1)
Net debt(1) $1,881m $2,529m (26)% vs 2019 (+71% vs 2020)
(1 )Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section, along with reconciliations of these measures to the most
directly comparable line items within the Financial Statements.
(2 )Percentage change shown unless not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
● Significant improvement in trading during the year, with RevPAR recovering to
70% of 2019 levels (83% in Q4)
● Particularly strong recovery in the US, resulting in Americas FY RevPAR (20)%
vs 2019, with Greater China (29)% and EMEAA (52)%; in Q4, Americas improved to
(7)% vs 2019, with Greater China (33)% and EMEAA (33)%
● Global Q4 RevPAR of (17)% vs 2019 reflected rate attained broadly in line with
2019 levels and occupancy 11%pts lower; Q4 occupancy was 56% (53% FY), with
the US reaching 61% (61% FY)
● Operating profit from reportable segments of $534m, +144% vs 2020, (down 38%
vs 2019); reported operating profit of $494m, after System Fund result of
$(11)m and operating exceptionals of $(29)m
● Fee business cost savings of $75m vs 2019 achieved and sustainable in future
years; additional temporary reductions in the 2021 cost base of $25m are not
expected to be retained
● Net cash from operating activities of $636m (2020: $137m), with adjusted free
cash flow(1) of $571m (2020: $29m); result includes strong cash conversion and
a System Fund inflow following an outflow in the prior year
● Leverage substantially reduced, with our net debt:adjusted EBITDA ratio now
3.0x
● Final dividend of 85.9¢ proposed, equivalent to the withdrawn final payment
in respect of 2019
● Gross system growth of +5.0% YOY; net (0.6)% YOY, after 49.7k rooms removed;
~70% of removals were across Holiday Inn and Crowne Plaza, driven by the
completion of the estate review for these two brands
● Opened 44.0k rooms (291 hotels) over the year, +12% vs 2020; global estate now
at 880k rooms (5,991 hotels)
● Significant acceleration in signings in Q4 at 23.7k, close to levels achieved
in 2019; strongest increase in EMEAA
● Signed 68.9k rooms (437 hotels) in total in 2021, +23% vs 2020; global
pipeline now at 271k rooms (1,797 hotels)
● Conversions ~25% of openings; first six properties secured for new Luxury
& Lifestyle brand, Vignette Collection
Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said:
"Trading improved significantly in 2021, with RevPAR getting closer to
pre-pandemic levels as the year went on, profitability and cash flow
rebounding strongly, and signings accelerating in Q4. Working hand in hand,
our colleagues and hotel owners have once again shown incredible efforts to
navigate the ebbs and flows of recovery. As vaccination rates rise and
restrictions are lifted around the world, we are seeing the demand for travel
increase. While there may be unexpected challenges ahead, we are confident in
our ability to respond and adapt to what consumers and owners need as we
position IHG for strong future growth.
Through our strategic priorities, we continue to build a better, stronger
company for guests and owners. Our commitment to maintaining a high-quality
estate and investing in operations, service and new designs is driving the
success of our established brands. The addition of attractive new brands in
multiple segments has opened up further growth opportunities globally. Our
loyalty programme will be transformed this year, alongside important
enhancements to our digital channels and experiences, and we are committed to
ensuring that as we grow around the world, we do so in the right way through
our Journey to Tomorrow plan and joining campaigns such as Race to Zero.
Recognising the scale of our ambitions and the strengths and efficiencies of
our distribution and technology platforms, owner interest in our brands
continues to increase. Development activity was well ahead of 2020, with 437
hotel signings contributing to a global pipeline that represents more than 30%
of today's system size.
With the strong financial improvements delivered in 2021, including more than
doubling our operating profit from reportable segments and substantially
reducing our net debt, the Board is pleased to be recommending the
reinstatement of a dividend. The signs are encouraging that we are nearing the
end of the pandemic, and we are confident in the strength of IHG's enterprise,
market positioning and ability to drive attractive levels of long-term,
sustainable growth."
For further information, please contact:
Investor Relations (Stuart Ford; Rakesh Patel) +44 (0)1895 512 176 +44 (0)7527 419 431
Media Relations (Yasmin Diamond; Mark Debenham) +44 (0)1895 512 097 +44 (0)7527 424 046
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.
Presentation for analysts and shareholders:
A conference call and webcast presented by Keith Barr, Chief Executive Officer, and Paul Edgecliffe-Johnson, Chief Financial Officer and Group Head of Strategy, will commence at 9:30am (London time) on 22 February 2022 and can be accessed at
www.ihgplc.com/en/investors/results-and-presentations (https://www.ihgplc.com/en/investors/results-and-presentations)
or directly on
https://www.investis-live.com/ihg/61f4103a5acd270d004e5aed/tyyt (https://www.investis-live.com/ihg/61f4103a5acd270d004e5aed/tyyt)
.
For analysts and shareholders wishing to ask questions, please use the dial-in details below which will have a Q&A facility:
UK: 0800 640 6441
UK Local: 0203 936 2999
US: +1 646 664 1960
All other locations: +44 203 936 2999
Passcode: 26 40 39
An archived webcast of the presentation is expected to be available later on
the day of the results and will remain on it for the foreseeable future,
accessed at www.ihgplc.com/en/investors/results-and-presentations
(http://www.ihgplc.com/en/investors/results-and-presentations) . An audio
replay will also be available for 7 days using the following details:
UK: 0203 936 3001
US: +1 845 709 8569
All other locations: +44 203 936 3001
Passcode: 24 66 47
Website:
The full release and supplementary data will be available on our website from
7:00am (London time) on 22 February. The web address is
www.ihgplc.com/en/investors/results-and-presentations
(https://www.ihgplc.com/en/investors/results-and-presentations) .
About IHG Hotels & Resorts:
IHG Hotels & Resorts (https://www.ihgplc.com) [LON:IHG, NYSE:IHG (ADRs)]
is a global hospitality company, with a purpose to provide True Hospitality
for Good.
With a family of 17 hotel brands and IHG Rewards
(http://www.ihg.com/rewardsclub/gb/en/home) , one of the world's largest hotel
loyalty programmes, IHG has nearly 6,000 open hotels in more than 100
countries, and a further 1,800 in the development pipeline.
- Luxury & Lifestyle: Six Senses Hotels Resorts Spas
(https://www.sixsenses.com/) , Regent Hotels & Resorts
(https://www.regenthotels.com/) , InterContinental Hotels & Resorts
(http://www.intercontinental.com/hotels/gb/en/reservation) , Vignette
Collection (https://www.vignettecollectionhotels.com/) , Kimpton Hotels &
Restaurants (https://www.ihg.com/kimptonhotels/hotels/gb/en/reservation) ,
Hotel Indigo (http://www.ihg.com/hotelindigo/hotels/gb/en/reservation)
- Premium: voco hotels
(https://www.ihg.com/voco/hotels/gb/en/reservation) , HUALUXE Hotels &
Resorts (https://www.ihg.com/hualuxe/hotels/gb/en/reservation) , Crowne Plaza
Hotels & Resorts (http://www.ihg.com/crowneplaza/hotels/gb/en/reservation)
, EVEN Hotels (http://www.ihg.com/evenhotels/hotels/us/en/reservation)
- Essentials: Holiday Inn Hotels & Resorts
(http://www.ihg.com/holidayinn/hotels/gb/en/reservation) , Holiday Inn Express
(http://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation) , avid hotels
(https://www.ihg.com/avidhotels/hotels/us/en/reservation)
- Suites: Atwell Suites (https://www.atwellsuites.com/) , Staybridge
Suites (http://www.ihg.com/staybridge/hotels/gb/en/reservation) , Holiday
Inn Club Vacations
(https://www.ihg.com/holidayinnclubvacations/hotels/us/en/reservation) ,
Candlewood Suites (http://www.ihg.com/candlewood/hotels/us/en/reservation)
InterContinental Hotels Group PLC is the Group's holding company and is
incorporated and registered in England and Wales. Approximately 325,000 people
work across IHG's hotels and corporate offices globally.
Visit us online for more about our hotels and reservations
(http://www.ihg.com) and IHG Rewards
(https://www.ihg.com/rewardsclub/content/gb/en/home) . For our latest news,
visit our Newsroom (https://www.ihgplc.com/en/news-and-media) and follow us on
LinkedIn (https://www.linkedin.com/company/ihghotels&resorts/) , Facebook
(http://www.facebook.com/ihgcorporate) and Twitter
(http://www.twitter.com/IHGCorporate) .
Cautionary note regarding forward-looking statements:
This announcement contains certain forward-looking statements as defined under
United States law (Section 21E of the Securities Exchange Act of 1934) and
otherwise. These forward-looking statements can be identified by the fact that
they do not relate only to historical or current facts. Forward-looking
statements often use words such as 'anticipate', 'target', 'expect',
'estimate', 'intend', 'plan', 'goal', 'believe' or other words of similar
meaning. These statements are based on assumptions and assessments made by
InterContinental Hotels Group PLC's management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. By their
nature, forward-looking statements are inherently predictive, speculative and
involve risk and uncertainty. There are a number of factors that could cause
actual results and developments to differ materially from those expressed in
or implied by, such forward-looking statements. The main factors that could
affect the business and the financial results are described in the 'Risk
Factors' section in the current InterContinental Hotels Group PLC's Annual
report and Form 20-F filed with the United States Securities and Exchange
Commission.
Attractive industry fundamentals
The long-term attractiveness of our markets and their future growth potential
are considered to be unchanged by the Covid-19 pandemic. The pre-existing
industry tailwinds, such as a growing global population, rising middle
classes, the increasing desire for travel and new experiences, and the human
need to physically interact and collaborate, give confidence as drivers of
continued growth. The Travel & Tourism sector contributed almost $9
trillion or 10% to the world's GDP in 2019. The sector outpaced global
economic growth each year for a decade. Over that period, the hotel industry
saw consistent growth in RevPAR and the expansion of branded market share,
benefitting from consumer trends and the strength of global brands and
enterprise systems such as those of IHG.
The industry is expected to return to robust levels of growth in new-build
supply over the longer term, which is in addition to the RevPAR growth driven
by the existing hotel room inventory. We also anticipate that further
increases in consumer focus on trusted brands, technology platforms and
booking flexibility should favour leading brands such as IHG's with both
owners and guests.
2021 has already demonstrated a strong recovery from the significant demand
suppression that our industry incurred in 2020 as a result of the pandemic. A
rapid return in demand has been led by removals of travel restrictions,
vaccinations, and a revival of economic activity. This return has been
quickest in domestic leisure, whilst essential business demand had already
proved resilient. Discretionary business travel, group bookings and
international trips have also more recently shown encouraging signs of
recovery.
We understand the shifting trends and are responding and adapting. The
pandemic may lead to some structural changes for our industry, such as an
element of technology replacing certain kinds of business travel. However, we
are already seeing clear signs of business demand returning. There will also
be other trends, including a greater use of hotels to facilitate a global
shift to increasingly flexible working arrangements. These further support a
view that overall demand levels could be little changed.
We therefore anticipate the attractive industry fundamentals to be fully
restored in the longer term, even though a volatile demand environment may
still continue in the short term whilst temporary travel restrictions prevail.
Supporting this, according to Oxford Economics, global hotel room nights
consumed grew at a CAGR of just under 5% in the decade through to 2019, and
are expected to be back above 2019 levels by 2023, and to resume growing at a
similar CAGR of just under 5% in their forecasts through to 2030. Furthermore,
the latest industry forecasts by STR and CBRE, providers of hospitality
industry analytics, expect US industry RevPAR to return to 2019 levels by the
end of 2023.
IHG strongly positioned for both resiliency and growth in shareholder value
IHG's weighting towards essential business and domestic leisure travel has
driven resilience relative to the wider industry during the Covid pandemic.
The midscale segments, which represent ~70% of our system size and includes
our market-leading Holiday Inn Express brand, have historically been impacted
less and recovered faster than other segments in economic downturns. Our
business is also weighted towards non-urban markets that are less reliant on
international inbound travel (~95% of our US business is domestic driven) and
less reliant on large group meetings and events. These weightings supported
IHG's ability to outperform the wider industry during the pandemic. Our asset
light, fee-based, predominantly franchised model has also delivered resilience
in terms of cash flow and profitability.
As we look to future growth, in addition to the attractive RevPAR growth
characteristics of our overall industry, IHG expects to be able to gain
further market share. This will be driven by the expansion of our estate,
leveraging our scale efficiencies and investing in our brands, technology and
loyalty programmes. Our system size growth will in part be driven by increased
conversion activity (either from independently branded hotels or other real
estate), as well as an ongoing level of new-build development, reflecting
lenders' recognition of the strength and value of IHG's enterprise system and
reputation for generating attractive investment returns. Our ambition is to
deliver industry-leading net rooms growth. Whilst 2020 and 2021 saw IHG's net
system size remain broadly flat, we are confident of reverting back to
pre-pandemic levels, with IHG's net system growth being 4.8% in 2018 and 5.6%
in 2019.
Our ability to expand the Group's fee margins will increase our profitability,
additive to the long-term attractive levels of growth in RevPAR and net system
size, which drive IHG's fee revenue. The benefit of scale advantages and
efficiencies, along with brands and markets becoming more mature, saw fee
margins expand on average by over a 100bps a year over the decade through to
2019, to reach 54.1% that year. Our progress on sustainable cost reductions in
2021 will also support increased margins. In the Americas region, given the
strong recovery of demand in the US and our particular weighting to the
franchise model in this market, margins in 2021 are already ahead of 2019.
As an asset-light business, we focus on growing our fee revenues and fee
margins, with limited requirements for capital. This enables us to grow our
business whilst generating high returns on invested capital. Our track record
of strong cash generation has also enabled IHG to enhance earnings growth
through our approach of returning excess capital to shareholders.
Summary of our approach to capital allocation and shareholder returns
Our asset-light business model is highly cash generative through the cycle and
enables us to invest in our brands and strengthen our enterprise. We have a
disciplined approach to capital allocation which ensures that the business is
appropriately invested in, whilst looking to maintain an efficient and
conservative balance sheet.
IHG has a strong track record of paying shareholders a sustainably growing
ordinary dividend, and additionally returning surplus funds to shareholders
when these are not required to invest in the business for optimising growth
and long-term shareholder value creation. Since demerger in 2003, IHG has
returned some $13.6bn to shareholders, $2.4bn through ordinary dividends and
$11.2bn via additional returns.
In 2020, in response to the onset of Covid and as part of our actions to
preserve cash in order to maintain substantial liquidity and support our
conservative balance sheet approach, IHG's Board withdrew its recommendation
of a final dividend in respect of 2019, a payment of which would have had a
cash outflow of ~$150m in the first half of 2020.
Since then, trading has improved significantly in 2021, leading to
profitability rebounding, accompanied by strong cash flow and a reduction in
net debt. The Board's perspectives on the uses of cash generated by the
business are unchanged: ensuring the business is appropriately invested in to
optimise growth, funding a sustainably growing dividend, and then returning
excess funds to shareholders, whilst maintaining our leverage ratio within a
range of 2.5‑3.0x net debt:adjusted EBITDA. This ratio was 3.0x at 31
December 2021.
The Board is therefore proposing a final dividend of 85.9¢ in respect of
2021, an amount equivalent to the withdrawn final payment in respect of 2019.
No interim dividend was paid in respect of 2021. Going forward, dividend
payments will be reflective of IHG's prior approach to sustainably grow the
ordinary dividend whilst targeting a level of leverage that maintains an
investment grade credit rating, and ensuring careful consideration of our
responsibilities to all stakeholders. The Board will also continue to actively
assess the opportunity for any surplus capital to be additionally returned
through special dividends or share buybacks.
The ex-dividend date is Thursday 31 March 2022 and the Record date is Friday 1
April. Subject to shareholder approval at the AGM on Friday 6 May, the
dividend will be paid on Tuesday 17 May.
System size and pipeline progress
The long-term attractiveness of IHG's brands and the markets we operate in
have supported increased opening and signings activity in 2021:
● Global system of 880k rooms (5,991 hotels) at 31 December 2021, weighted 68%
across midscale segments and 32% across upscale and luxury
● Gross growth of 5.0%, with 44.0k rooms (291 hotels) opened, up +12% vs 2020
● Removals of 49.7k rooms (264 hotels) or (5.6)%; of these, 34.3k (151 hotels)
were Holiday Inn and Crowne Plaza rooms, driven by the completed review, and
impacting total global system size by (3.9)%
● Future removal rate expected to revert to average ~1.5%
● Global pipeline of 271k rooms (1,797 hotels), which represents over 30% of
current system size; pipeline change YOY of (0.4)%
● Signed 68.9k rooms (437 hotels), up +23% vs 2020
● More than 40% of the global pipeline is under construction, in line with prior
years, and with some improving trends in ground breaks starting to be seen by
Q4
● 45 hotels or less than 1% of the global estate remained temporarily closed at
31 December 2021, a significant improvement from nearly 300 hotels at the
start of the year
System and pipeline summary of movements in 2021 and total closing position
(rooms):
System Pipeline
Openings Removals Net Total Change YOY% Signings Total
Group 43,958 (49,667) (5,709) 880,327 (0.6)% 68,870 270,960
Americas 15,739 (30,662) (14,923) 499,089 (2.9)% 17,647 96,603
EMEAA 10,162 (13,811) (3,649) 224,200 (1.6)% 20,376 80,932
G. China 18,057 (5,194) 12,863 157,038 +8.9% 30,847 93,425
The regional performance reviews provide further detail of the system and
pipeline by region, and further analysis by brand and by ownership type.
Updates on our strategic priorities
1. Build loved and trusted brands
Across our portfolio, we continue to move at pace to introduce new brands,
take recent brand additions to scale, and invest in the further growth of our
established brands through an ongoing focus on design, service and quality.
Launch of Vignette Collection
Launched in August 2021, our collection brand, Vignette Collection,
complements our existing Luxury & Lifestyle brands, whilst also offering a
different price point to our upscale conversion brand voco. Six Vignette
properties have already been secured, the first of which was open by the end
of the year. Owners that join the collection will gain access to our world
class revenue delivery systems, technology platforms, loyalty offering,
operational expertise and procurement savings, without high upfront costs or
any compromise on their hotel's distinctive identity. Accelerating IHG's
growth, we expect to attract more than 100 properties over the next decade.
The upscale and luxury segments currently represent 32% of our system size and
42% of our pipeline. These market segments were worth over $100bn in rooms
revenue globally in 2019, and over 40% or around 1.5 million rooms are
currently independent. Owners of independent hotels and small chains are
increasingly attracted by the opportunity to benefit from the scale, expertise
and investment of a global system, illustrated by conversions as a proportion
of our total signings growing since 2019.
Completion of the Holiday Inn and Crowne Plaza review
Holiday Inn and Crowne Plaza are two powerful global brands. In 2021, 68 new
hotels were opened, whilst 84 signings grew their combined pipeline to 340
hotels, equivalent to over 20% growth on the current system of 1,594
properties.
To protect their significant future growth prospects, in 2021 we completed a
review to address the consistency and quality of the hotel estate, reflective
of the expectations of IHG, our owners and guests. In total, 151 hotels were
removed from the Holiday Inn and Crowne Plaza estates. The reduction of 34.3k
rooms represented 10% of the combined estate for these two brands at the start
of the year, or 3.9% of our global system size. In addition, as part of the
review, a further 83 hotels in the Americas and EMEAA regions have committed
to improvement plans or scopes of work, reflecting significant investment by
owners. Through the outcomes of the review, together with other property
improvements and new openings over the last four years, this will result in
two-thirds of the Americas Holiday Inn estate having been updated recently,
and three-quarters of the Crowne Plaza estate.
Completion of the review will lead the future removal rate for these brands to
align more with the remainder of the estate, which averaged 1.6% a year
between 2016 and 2019. Given the prior elevated levels of removals of Holiday
Inn and Crowne Plaza hotels, the removal rate of the overall IHG estate
averaged 2.2% over these years.
Other notable developments in 2021 included:
· Strengthening our IHG Hotels & Resorts masterbrand. New
masterbrand marketing approach adopted to increase reach and enhance
perception among consumers of IHG's brands across Luxury & Lifestyle,
Premium, Essentials and Suites. This drove uplifts in brand awareness and
brand preference metrics.
· Increased conversion activity. Achieved 21 signings for voco,
taking it to 69 openings and signings across 25 countries since launch in
2018. The addition of resort destinations and all-suites properties
demonstrate the brand's flexibility. Conversions represented 13 of voco's
signings in 2021, with a further 83 conversion signings across our other
brands, including several multi-brand portfolio deals that reflect the
increased breadth of IHG's offering.
· Driving avid and Atwell Suites to scale. Our avid brand has already
become the second largest contributor to system growth, with a doubling of the
number of hotels open to 48, a further 164 in the pipeline and the brand
outperforming peers in guest satisfaction. Our first Atwell Suites property is
set to open in Miami in the coming weeks, and the accelerated signings pace in
2021 resulted in a pipeline of 23 hotels.
· Growing momentum behind Six Senses and Regent. Six Senses has grown
to 21 open properties and a pipeline of 33, which combined represents an
increase of more than 50% in its presence since acquisition in 2019. Regent
now has seven open properties and a further eight in the pipeline, with strong
international owner interest that will be supported by the opening of the
flagship Regent Hong Kong later in 2022.
· More market debuts. Kimpton's growth to 75 hotels included its
first in France, and its pipeline of 35 includes market debuts in Mainland
China and Australia this year. Hotel Indigo has reached 130 properties in over
20 countries, and with focused work on accelerating the speed to open for the
brand, a record year of openings is expected for 2022. Our extended stay
brands, Candlewood Suites and Staybridge Suites, continued to be among the
strongest RevPAR performers in our portfolio, with recent signings for
Staybridge including its first hotels in France, Spain and India.
· Holiday Inn Express well-positioned for further growth. In its
30(th) year, Holiday Inn Express reached 3,000 properties globally and now has
a pipeline of 645 hotels, representing 26% of its current system size. The
brand achieved a leading share of signings in its chain scale in the US,
whilst a first opening in Japan extended its presence to 50 countries.
· InterContinental Hotels & Resorts celebrates its 75(th) Diamond
Anniversary year. Maintaining its position as a global leader in luxury, our
InterContinental estate grew to 204 hotels, with 23 signings, including 15 in
EMEAA, increasing its global pipeline to 79 properties. Our work on
contemporising and future proofing the brand continues, and guest satisfaction
scores saw another year of outperformance against its brand peers.
2. Customer centric in all we do
Delivering True Hospitality means creating seamless and tailored guest
experiences that generate increased demand, and ensuring that as we deliver
those things, we do so with efficient operations and high returns in mind for
our owners.
Transforming loyalty
Our IHG Rewards loyalty programme is critical to our business and future
growth. Our more than 100 million loyalty members are responsible for around
half of all room nights globally each year, stay in our hotels more often, and
spend 20% more than non-members. They are also 9x more likely to book direct,
which is our most profitable channel.
In 2021, highlights in the development of our loyalty proposition included:
○ Reward Night bookings largely recovering to pre-pandemic levels, with
participation rates of our higher tiered members, and particularly leisure
customers, exceeding pre-pandemic levels
○ A further nine million loyalty members added, despite the Covid-related
challenges to on-property enrolment, and with record enrolments over our web
and mobile channels
○ Through growth in Reward Night dynamic pricing, on average the number of
loyalty points required to book IHG hotels is expected to be around 15% less
in 2022 than 2019, helping members get free nights faster, and without
increased cost to our owners due to compensating changes in the reimbursement
rates
○ We extended membership tier status and continued the temporary pause on points
expiration, used targeted loyalty promotions and Enrol & Stay campaigns to
drive new guests and members and fast-track the status of returning
travellers, and integrated more Six Senses resorts into the programme
As announced in January 2022, we will be relaunching a transformed IHG Rewards
programme this year, designed to offer more rewarding member tiers and points
value; provide richer benefits and exceptional choice, especially for our
elite members; and attract more next generation travellers. This will be
brought to life by a re-energised frontline culture to deliver great member
experiences, supported by new tools, training and incentives.
The first phase was announced in January and goes live in March. This creates
a new, simplified tier structure based upon nights and points qualification,
with more bonus points awarded across the new Silver Elite, Gold Elite and
Platinum Elite tiers, and maintaining our industry-leading bonus points for
the Diamond Elite tier, our most loyal customers. The programme is designed to
maximise return on investment for our hotel owners, and will continue to be
self-funded through the System Fund. Greater efficiency will be enabled by
member choice, with costs incurred for only the benefits that individual
member values most. Cost will be reduced for all hotels through eliminating
some previous welcome amenities and enrolling stay assessments, which creates
capacity to invest in the new higher-value benefits.
To be announced in the coming months will be further phases which will bring
new, customer-preferred benefits, and to enable unique options to personalise
and put the member in control, supported by the next generation of our IHG
mobile app.
Other customer centric developments in the year included:
· Supporting owners with operational challenges
○ Brand standards have been evolved or removed to help create more efficient and
effective operations for owners, whilst still delivering on guest expectations
- all supported by clear hotel action plans and training to drive performance
and address opportunities from guest feedback. This assistance continues, for
example with 80 brand standards still being relaxed for owners in the Americas
region to support managing costs.
○ Staffing challenges met with new hiring resources, deeper relationships with
job platforms, targeted social media campaigns, and new flexible working
initiatives. New or enhanced programmes have also been introduced to support
retention and accelerate development of talent.
○ Supply chain pressures met with an expanded procurement offer that uses IHG's
scale and expertise to deliver new solutions, resulting in net year-on-year
savings of more than 10% for owners across the $1.3bn of spend managed by IHG.
One important cost category, particularly in our select service formats, is
breakfast, which has seen our procurement solutions lower costs by around 15%.
· Driving more demand to our hotels. IHG has created increasingly
tailored marketing campaigns and promotions, supported by new resources and
services within our Revenue Management for Hire (RMH) programme that helps
hotels quickly identify and act on revenue opportunities using business
intelligence and data. Key demographics of returning demand within specific
leisure travel categories have been targeted with real-time search/location
campaigns, and corporate travellers with tailored 'Welcome Back to Business'
campaigns. IHG's award-winning dedicated SME programme, IHG Business Edge,
increased enrolled accounts by 44% to over 57,000, gaining share.
· Improving rate negotiations for our owners. Delivered revenue
improvements and faster responses for owners using IHG's award-winning
centralised RFP processes (CRFP), with 2,200 hotels now using the service. The
process to roll over corporate rates has also been successful, with high
adoption and corporate customers also embracing IHG's strategic pricing model
which transitions from static to dynamic rates and helps shift market share of
corporate account volumes to IHG.
· Updating guest room and public space designs. Ongoing programmes
across brands further enhance the guest experience and drive stronger returns
for owners. These include our Formula Blue concept for Holiday Inn Express
adopted in over 1,200 hotels in the Americas since its introduction in 2014,
with an enhanced '2.0' iteration further reducing the cost-per-key for owners
across furniture, fixtures and equipment (FF&E) by approximately 10%.
Other 'next-gen' formats and refurbishments are being widely applied across
Holiday Inn, Candlewood Suites and Staybridge Suites.
· Evolving the stay experience. Food and beverage options have been
reintroduced for guests, whilst new solutions for group events were added to
our award-winning Meet with Confidence programme. These, in combination with
all our other developments and initiatives, supported IHG's Guest Satisfaction
Index (GSI) continuing to improve during 2021 and achieving scores of 100 or
better for each of our brands, reflecting outperformance against peers.
3. Create digital advantage
Our digital-first approach enables seamless experiences across the guest
journey, drives direct bookings, creates efficiencies, and delivers the right
data, insights, technology and platforms to drive performance for owners.
Developments in the year included:
· Enabling attribute pricing and the selection of stay enhancements.
Around 95% of hotels have now completed detailed room inventory assessments to
prepare for attribute pricing on our industry-leading Guest Reservation System
(GRS), which will allow guests to choose specific room characteristics when
booking their stay and seamlessly add additional non-room stay enhancements.
These, together with other booking flow improvements, enable guests to fully
tailor their trip, and owners to generate maximum value from their hotel's
unique attributes.
· Simple room rates. To improve the booking experience for guests we
have simplified room rates and focused on achieving consistency across all
channels, as we look to encourage booking direct and drive low-cost revenue
for our owners. In January 2022, we also moved to centralise our wholesale
distribution.
· Enhancing customer service. AI voice-activated platforms used to
answer and route customer calls is helping increase both satisfaction scores
and higher average daily rates on bookings, whilst a digital concierge chatbot
has also been introduced on IHG.com and the IHG mobile app to further assist
customer bookings and communication. Further streamlining the digital guest
experience, digital arrivals has now expanded to nearly 4,000 properties.
· Next generation IHG mobile app under development and piloting. With
full roll out planned in 2022, our next‑gen App, using data insights and new
designs, will provide a richer customer experience, enable personal and timely
marketing offers, and allow us to introduce new features, fast, including
enabling new benefits as part of the transformed loyalty offer. The
enhancements are expected to increase direct bookings and loyalty engagement
for our owners and drive incremental spend during stays.
4. Care for our people, communities and planet
Central to our priority to care for our people, communities and planet, and
our purpose of True Hospitality for Good, is our 2030 Journey to Tomorrow
plan, which launched in 2021 with a series of ambitious commitments.
Developments in 2021 included:
· Carbon & energy
○ Joining the UN's Race to Zero campaign, we upgraded our 2030 science-based
target to align with the most ambitious target of the Paris Agreement to limit
global warming to 1.5°C, with our aim to now reduce absolute scope 1, 2 and 3
greenhouse gas emissions by 46% by 2030. IHG also became the first hotel group
to join the UK's Zero Carbon Forum.
○ We have developed a comprehensive decarbonisation roadmap, setting out plans
to improve the energy efficiency of existing hotels, help owners source
renewable energy, and establish our approach for new-build hotels to operate
at very low or zero-carbon in the future. Immediate steps included launching
an automated data collection programme for all hotels globally, and creating a
new Hotel Energy Reduction Opportunities (HERO) tool, which will be key to
helping our hotels develop energy, carbon and water reductions. In 2022, every
IHG hotel will have an individual energy reduction target.
· Diversity, equity & inclusion (DE&I)
○ Corporate employees completed more than 10,000 hours of conscious inclusion
training during the year, and new Inclusion and Wellness Metrics were
incorporated into our employee engagement survey to help measure our progress
over time.
○ New programmes such as Ascend in the Americas were launched to help increase
ethnically diverse representation in leadership roles and IHG's progress was
recognised recently for an 8(th) year running as a 'Best Place to Work for
LGBTQ Equality', with a 100% rating in the Corporate Equality Index, alongside
a Highly Commended award in the Company of the Year category at the European
Diversity Awards.
· Human rights. Requirements related to mitigating migrant worker
risks in our hotels were developed in the year, alongside a continued
assessment of our supply chain risks and approach to the due diligence of
suppliers.
· Communities. More than 40,000 colleagues volunteered to help more
than 350,000 people during IHG's Giving for Good month. The IHG Academy
programme expanded with the IHG Skills Academy, a free global virtual learning
platform that breaks down barriers to education and training. IHG also
continued to support its many charity partners responding to natural disasters
around the world.
· Water. Work continued on water stewardship projects in Shenzhen,
China, and Hayman Island, Australia, in partnership with the Alliance for
Water Stewardship.
· Waste. Bathroom bulk amenities solutions were secured for all IHG
hotel brands and markets, with the switch reducing our plastic usage by an
estimated 850 tonnes in the Americas region alone. Negotiated through IHG
Procurement, these bulk products also provide hotels with cost savings of
10-30%. A global food waste training module was developed for our hotels ahead
of rollout in 2022.
Summary of financial performance
INCOME STATEMENT SUMMARY
12 months ended 31 December
2021 2020 %
$m $m change
Revenue
Americas 774 512 51.2
EMEAA 303 221 37.1
Greater China 116 77 50.6
Central 197 182 8.2
____ ____ ____
Revenue from reportable segments(a) 1,390 992 40.1
System Fund revenues 928 765 21.3
Reimbursement of costs 589 637 (7.5)
_____ _____ _____
Total revenue 2,907 2,394 21.4
_____ _____ _____
Operating profit/(loss)
Americas 559 296 88.9
EMEAA 5 (50) NM(b)
Greater China 58 35 65.7
Central (88) (62) 41.9
____ ____ _____
Operating profit from reportable segments(a) 534 219 143.8
Analysed as:
Fee Business excluding central 658 340 93.5
Owned, leased and managed lease (36) (59) (39.0)
Central (88) (62) 41.9
System Fund result (11) (102) (89.2)
____ ____ ____
Operating profit before exceptional items 523 117 347.0
Operating exceptional items (29) (270) (89.3)
____ ____ ____
Operating profit/(loss) 494 (153) NM(b)
Net financial expenses (139) (140) (0.7)
Analysed as:
Adjusted interest expense(a) (142) (130) 9.2
System Fund interest 3 4 (25.0)
Exceptional financial expenses - (14) -
Fair value gains on contingent purchase consideration 6 13 (53.8)
____ ____ ____
Profit/(loss) before tax 361 (280) NM(b)
Tax (96) 20 NM(b)
Analysed as
Tax before exceptional items and System Fund(a) (125) (32) 290.6
Tax on exceptional items and exceptional tax 29 52 (44.2)
____ ____ ____
Profit/(loss) for the year 265 (260) NM(b)
Adjusted earnings(c) 269 57 371.9
Basic weighted average number of ordinary shares (millions) 183 182 0.5
____ ____ ____
Earnings/(loss) per ordinary share
Basic 145.4¢ (142.9)¢ NM(b)
Adjusted(a) 147.0¢ 31.3¢ 369.6
Dividend per share 85.9¢ - NM(b)
Average US dollar to sterling exchange rate $1: £0.73 $1: £0.78 (6.4)
(a) Definitions for non-GAAP measures can be found in the 'Use of 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.
(c) Adjusted earnings as used within adjusted earnings per
share, a non-GAAP measure.
Revenue
Trading improved significantly during the year, with Group comparable
RevPAR(a) getting closer to pre-pandemic levels. More travel demand returned
as vaccines rolled out, government-mandated restrictions eased and economic
activity started to rebuild. Through the summer months many markets, including
the US and UK, saw significant improvements, driven by domestic leisure
travel. Whilst the ability of travellers to freely move between and within
countries continued to vary significantly, the second half of the year saw a
gradual further improvement in overall trading conditions.
Group comparable RevPAR(a) declined 34% in the first quarter, then grew 151%
in the second quarter, 66% in the third quarter, 71% in the fourth quarter and
46% in the full year. When compared to the pre-pandemic levels of 2019, Group
comparable RevPAR(a) declined 51% in the first quarter, 36% in the second
quarter, 21% in the third quarter, 17% in the fourth quarter and 30% in the
full year.
Our other key driver of revenue, net system size, decreased by 0.6%
year-on-year to 880.3k rooms, impacted by 34.3k Holiday Inn and Crowne Plaza
removals as we concluded our quality review of these brands.
During the year ended 31 December 2021, total revenue increased by $513m
(21.4%) to $2,907m, including a $48m reduction in cost reimbursement revenue.
Revenue from reportable segments(b) increased by $398m (40.1%) to $1,390m,
driven by the improved trading conditions. Underlying revenue(b) increased by
$387m to $1,373m, with underlying fee revenue(b) increasing by $314m. Owned,
leased and managed lease revenue increased by $68m.
Operating profit and margin
Operating profit improved by $647m from a loss of $153m to a profit of $494m,
including a $241m net reduction in operating exceptional items, a $91m
improvement in the System Fund result, from a $102m deficit to an $11m
deficit, and a $36m decrease in the charge for expected credit losses on
corporate trade receivables.
Operating profit from reportable segments(b) increased by $315m (143.8%) to
$534m, driven by improved demand and the delivery of sustainable fee business
cost savings. Underlying operating profit(b) increased $308m to $531m.
Fee margin(b) increased by 15.5 percentage points to 49.6%, benefitting from
the improvement in trading and focussed cost management.
The impact of the movement in average USD exchange rates for 2021 netted to a
nil impact on operating profit from reportable segments(b).
If the average exchange rate during January 2022 had existed throughout 2021,
the 2021 operating profit from reportable segments would have been $5m higher.
System Fund
The Group operates a System Fund to collect and administer cash assessments
from hotel owners for the specific purpose of use in marketing, reservations,
and the hotel loyalty programme, IHG Rewards. The System Fund also benefits
from proceeds from the sale of loyalty points under third-party co-branding
arrangements. The Fund is not managed to generate a profit or loss for IHG
over the longer term, although an in-year surplus or deficit can arise, but is
managed for the benefit of hotels in the IHG System with the objective of
driving revenues for the hotels.
In the year to 31 December 2021, System Fund revenues increased $163m (21%) to
$928m, primarily driven by the recovery in travel demand yielding higher
assessment revenues.
The System Fund income statement deficit reduced by $91m to $11m, primarily
due to the rebound in travel demand and associated assessment income,
partially offset by the reversal of temporary savings realised in 2020.
Reimbursement of costs
Cost reimbursement revenue represents reimbursements of expenses incurred on
behalf of managed and franchised properties and relates, predominantly, to
payroll costs at managed properties where we are the employer. As we record
cost reimbursements based upon costs incurred with no added mark up, this
revenue and related expenses have no impact on either our operating profit or
net profit for the year.
In the year to 31 December 2021, reimbursable revenue decreased by $48m (7.5%)
to $589m. The reduction reflects the impact of the prior year termination of
the SVC portfolio in the Americas estate, meaning the overall scale of
reimbursements fell.
(a) Comparable RevPAR includes the impact of hotels temporarily closed as a
result of Covid-19.
(b) Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements.
Operating exceptional items
Operating exceptional items totalled $29m, comprising the $25m provisionally
agreed costs to settle two commercial disputes in the Americas and EMEAA, and
the reversal of a $4m fair value gain recorded in 2020 on the put option over
part of the Group's investment in the InterContinental Barclay hotel.
Further information on exceptional items can be found in note 5 to the
preliminary Group Financial Statements.
Net financial expenses
Net financial expenses decreased by $1m to $139m. Adjusted interest(a), which
excludes exceptional finance expenses, and adds back interest relating to the
System Fund, increased by $12m to an expense of $142m. The increase in
adjusted interest(a) was primarily driven by increased average bond debt.
Fair value gains on contingent purchase consideration
Contingent purchase consideration arose on the acquisitions of Regent, the UK
portfolio and Six Senses. The net gain of $6m (2020: $13m) primarily arises
from the conditions related to the Six Senses contingent purchase
consideration no longer being met. The total contingent purchase consideration
liability at 31 December 2021 is $73m (2020: $79m).
Taxation
The effective rate of tax on profit before exceptional items and System
Fund(a) was 31% (2020: 38%); this was lower than 2020 largely due to the
improved profit base. In May 2021, a change to the UK rate of Corporation Tax
was enacted which led to a $30m credit; $26m was recorded as an exceptional
credit within the Income Statement and $4m within the Statement of Other
Comprehensive Income. A net credit of $3m arose on other accounting
exceptional items (2020: $52m). Further information on tax within exceptional
items can be found in note 5 to the preliminary Group Financial Statements.
Net tax paid in 2021 totalled $86m (2020: $41m) and included refunds in the US
of $15m (2020: $24m). No more significant refunds are expected.
IHG pursues an approach to tax that is consistent with its business strategy
and its overall business conduct principles. The approach seeks to ensure full
compliance with all tax filing, payment and reporting obligations on the basis
of communicative and transparent relationships with tax authorities. The IHG
Audit Committee reviews IHG's approach to tax annually, including
consideration of the Group's current tax profile.
Further information on tax can be found in note 6 to the preliminary Group
Financial Statements.
Earnings per share
The Group's basic earnings per ordinary share is 145.4¢ (2020: basic loss per
ordinary share: 142.9¢). Adjusted earnings per ordinary share(a) increased by
115.7¢ to 147.0¢.
Dividends
The Board is proposing a final dividend of 85.9¢ in respect of 2021, an
amount equivalent to the withdrawn final payment in respect of 2019. No
interim dividend was paid in respect of 2021. Going forward, dividend payments
will be reflective of IHG's prior approach to sustainably grow the ordinary
dividend, whilst targeting a level of leverage that maintains an investment
grade credit rating and ensuring careful consideration of our responsibilities
to all stakeholders. The Board will also continue to actively assess the
opportunity for any surplus capital to be additionally returned through
special dividends or share buybacks.
The ex-dividend date is Thursday 31 March 2022 and the Record date is Friday 1
April. The corresponding dividend amount in Pence Sterling per ordinary share
will be announced on 27 April 2022, calculated based on the average of the
market exchange rates for the three working days commencing 22 April 2022.
Subject to shareholder approval at the AGM on Friday 6 May, the dividend will
be paid on Tuesday 17 May.
(a) Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements.
Summary of cash flow, working capital, net debt and liquidity
CASH FLOW SUMMARY
12 months ended 31 December
2021 2020 $m
$m $m change
GAAP cash flow summary
Net cash from operating activities 636 137 499
Net cash from investing activities (12) (61) 49
Net cash from financing activities (860) 1,354 (2,214)
____ ____ ______
Net movement in cash and cash equivalents in the year (236) 1,430 (1,666)
12 months ended 31 December
2021 2020 $m
$m $m change
Operating profit from reportable segments 534 219
Depreciation and amortisation 98 110
____ ____ ____
Adjusted EBITDA 632 329 303
Working capital and other adjustments 110 (27)
Impairment loss on financial assets - 40
Other non-cash adjustments to operating profit/loss(b) 71 60
System Fund result (11) (102)
System Fund depreciation and amortisation 94 62
Other non-cash adjustments to System Fund result 6 97
Capital expenditure: contract acquisition costs (key money) net of repayments (42) (64)
Capital expenditure: maintenance (33) (43)
Cash flows relating to exceptional items (12) (87)
Net interest paid (126) (130)
Tax paid (86) (41)
Principal element of lease payments (32) (65)
____ ____ ____
Adjusted free cash flow(a) 571 29 542
Capital expenditure: gross recyclable investments (5) (6)
Capital expenditure: gross System Fund capital investments (19) (35)
Deferred purchase consideration paid (13) -
Disposals and repayments, including other financial assets 58 18
Distributions from associates and joint ventures - 5
Other items - 3
____ ____ ____
Net cash flow before other net debt movements 592 14 578
Add back principal element of lease repayments within adjusted free cash flow 32 65
Exchange and other non-cash adjustments 24 57
____ ____ ____
Decrease in net debt 648 136 512
Net debt at beginning of the year (2,529) (2,665)
______ ______ ____
Net debt at end of the year (1,881) (2,529) 648
______ ______ ____
(a) Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements.
(b) 2020 Excludes $48m related to trade deposits and loans which were
recognised as exceptional items.
Cash from operating activities
Net cash from operating activities totalled $636m for the year ended 31
December 2021, an increase of $499m on the previous year, primarily reflecting
the increase in operating profit and improvement in working capital (see
below) and other adjustments.
Cash flow from operations is the principal source of cash used to fund the
ongoing operating expenses, interest payments, maintenance capital expenditure
and normal dividend payments of the Group.
Cash from investing activities
Net cash outflows from investing activities decreased by $49m to $12m, driven
by $44m net proceeds from the sale of three hotels in the Americas region.
There was an overall decrease in purchases of property, plant and equipment
and intangible assets of $24m. Deferred consideration paid of $13m related to
the acquisition of the Regent brand (2020: $nil). The Group had committed
contractual capital expenditure of $17m at 31 December 2021 (2020: $19m).
Cash used in financing activities
Net cash outflows from financing activities totalled $860m (2020: $1,354m
inflow). This was primarily due to the repayment of the £600m commercial
paper under the UK Covid Corporate Financing Facility (CCFF).
Adjusted free cash flow
Adjusted free cash flow(a) was an inflow of $571m, an increase of $542m on
2020, driven by an improvement in operating profit from reportable segments(a)
partially offset by related tax payments, coupled with a $137m improvement in
working capital as explained below. Exceptional cash costs of $12m decreased
by $75m due to lower restructuring expenses and the timing of litigation
payments.
Working capital
On the Group statement of financial position, trade and other receivables
increased by $60m, from $514m to $574m, primarily due to the significant
increase in RevPAR in the fourth quarter compared to 2020. Trade and other
payables increased by $108m, from $560m to $668m, primarily due to an increase
in bonus accruals compared to prior year. Deferred revenue increased by $44m,
from $1,569m to $1,613m, reflecting an increase in the future redeemable
points balance related to the loyalty programme.
Net and gross capital expenditure
Net capital expenditure(a) was a $50m inflow (2020: $67m outflow) and gross
capital expenditure was $100m (2020: $148m). Gross capital expenditure
comprised: $76m maintenance capex and key money; $5m gross recyclable
investments; and $19m System Fund capital investments. Net capital expenditure
includes the offset from $58m net disposal proceeds and $91m System Fund
depreciation and amortisation(b). Our capex guidance is unchanged at around
$150m net per annum and up to $350m gross into the medium term.
Net debt
At 31 December 2021, net debt(a) was $1,881m, after favourable foreign
exchange and other non-cash adjustments of $24m, and compared to $2,529m at 31
December 2020.
Sources of liquidity
As at 31 December 2021 the Group had total liquidity of $2,655m (31 December
2020: $2,925m), comprising $1,350m of undrawn bank facilities and $1,305m of
cash and cash equivalents (net of overdrafts and restricted cash). The
reduction in total liquidity from December 2020 is due to the repayment of the
£600m CCFF in March 2021, largely offset by the net cash flow before other
net debt movements of $592m(c).
The Group currently has $2,786m of sterling and euro bonds outstanding. The
current bonds mature in November 2022 (£173m), October 2024 (€500m), August
2025 (£300m), August 2026 (£350m), May 2027 (€500m) and October 2028
(£400m). There are currency swaps in place on both the euro bonds, fixing the
October 2024 bond at £454m and the May 2027 bond at £436m.
The Group currently has a senior unsecured long-term credit rating of BBB-
from Standard and Poor's. In the event this rating was downgraded below BBB-
there would be an additional step-up of 125bps payable on the bonds which
would result in an additional interest cost of approximately $35m per year.
(a.) Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements.
(b.) Excluding $3m depreciation of right-of-use assets.
(c.) As shown in Cash Flow Summary on page 4.
The $1,275m revolving syndicated bank facility (the Syndicated Facility) and
the $75m revolving bilateral facility (the Bilateral Facility) mature in
September 2023. The facilities were undrawn at 31 December 2021. The
Syndicated and Bilateral Facilities contain the same terms and two financial
covenants: interest cover and a leverage ratio. Covenants are monitored on a
'frozen GAAP' basis excluding the impact of IFRS 16 and 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 of below
3.5:1. Covenant EBITDA is calculated (on a frozen GAAP basis) as operating
profit before exceptional items, depreciation and amortisation and System Fund
revenues and expenses.
These covenants have been amended for test dates in 2022. A minimum liquidity
covenant of $400m has been introduced which will be tested at each test date
up to and including 31 December 2022. The amended leverage ratio and interest
cover covenant test levels for the facilities are as follows:
June 2022 December 2022
Leverage Ratio Less than 7.5x Less than 6.5x
Interest Cover Greater than 1.5x Greater than 2.0x
At 31 December 2021 the leverage ratio was 3.0x and the interest cover ratio
was 4.5x. See note 10 in the preliminary Group Financial Statements for
further information.
The Group is in compliance with all of the applicable financial covenants in
its loan documents, none of which are expected to present a material
restriction on funding in the near future.
In the Group's opinion, the available facilities are sufficient for the
Group's present liquidity requirements. However, the Group continues to assess
its liquidity position and financing options and will take further actions as
necessary.
The Group has taken certain actions during 2021 regarding the discontinuation
of LIBOR. The Group's main exposure to LIBOR is the underlying reference rate
in the Syndicated and Bilateral Facilities. The terms of these agreements will
need to be renegotiated to address the discontinuation of LIBOR. The
replacement of LIBOR with alternative reference rates is not expected to have
a material impact on the Group at this stage.
The Group had net liabilities of $1,474m at 31 December 2021 ($1,849m at 31
December 2020).
Additional revenue, global system size and pipeline analysis
Total gross revenue
Total gross revenue(a) provides a measure of the overall strength of the
Group's brands. It comprises total rooms revenue from franchised hotels and
total hotel revenue from managed, owned, leased and managed lease hotels and
excludes revenue from the System Fund and reimbursement of costs. Other than
owned, leased and managed lease hotels, total gross revenue is not revenue
attributable to IHG as it is derived from hotels owned by third parties.
12 months ended 31 December
2021 2020 %
$bn $bn change(b)
Analysed by brand
InterContinental 2.7 2.0 31.6
Kimpton 0.7 0.4 83.9
HUALUXE 0.1 0.1 36.5
Crowne Plaza 2.3 1.8 25.7
Hotel Indigo 0.4 0.3 73.9
EVEN hotels 0.1 0.0 127.0
Holiday Inn 4.0 2.8 42.7
Holiday Inn Express 6.5 4.2 54.2
Staybridge Suites 1.0 0.7 38.2
Candlewood Suites 0.7 0.7 11.5
Other 0.9 0.5 51.9
____ ____ ____
Total 19.4 13.5 42.8
____ ____ ____
Analysed by ownership type
Fee business 19.2 13.3 42.8
Owned, leased and managed lease 0.2 0.2 40.3
____ ____ ____
Total 19.4 13.5 42.8
____ ____ ____
Total gross revenue in IHG's system increased by 42.8% (40.5% increase at
constant currency) to $19.4bn (70% of 2019 levels), driven by the improvement
in trading conditions in many markets, particularly through the second half of
2021.
(a.) Definitions for non-GAAP measures can be found in the 'Use of 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 to
provide better illustration of relative impact of Covid-19 on brands and on
fee business and owned, leased and managed lease hotels.
RevPAR(a) movement summary
Full Year 2021 vs 2020 Full Year 2021 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 46.0% 10.6% 12.7%pts (29.8)% (8.0)% (16.5)%pts
Americas 54.0% 12.2% 15.9%pts (19.8)% (5.5)% (10.4)%pts
EMEAA 35.0% 5.3% 9.1%pts (51.8)% (14.2)% (32.4)%pts
G. China 20.6% 3.6% 6.9%pts (28.7)% (10.7)% (12.4)%pts
Q4 2021 vs 2020 Q4 2021 vs 2019
RevPAR ADR Occupancy RevPAR ADR Occupancy
Group 71.3% 26.7% 14.5%pts (17.1)% (0.9)% (11.0)%pts
Americas 79.6% 27.0% 17.7%pts (6.5)% 1.0% (4.8)%pts
EMEAA 118.3% 24.5% 22.2%pts (33.4)% (5.4)% (21.9)%pts
G. China (17.4)% 1.5% (10.5)%pts (32.9)% (8.2)% (17.2)%pts
RevPAR(a) movement at constant exchange rates (CER) vs. actual exchange rates
(AER)
Full Year 2021 vs 2020 Full Year 2021 vs 2019
CER AER Difference CER AER Difference
Group 46.0% 47.9% (1.9)%pts (29.8)% (28.9)% 0.9%pts
Americas 54.0% 54.2% (0.3)%pts (19.8)% (20.0)% (0.2)%pts
EMEAA 35.0% 38.3% (3.3)%pts (51.8)% (50.3)% 1.5%pts
G. China 20.6% 27.7% (7.1)%pts (28.7)% (23.8)% 4.8%pts
Q4 2021 vs 2020 Q4 2021 vs 2019
CER AER Difference CER AER Difference
Group 71.3% 71.0% 0.3%pts (17.1)% (16.3)% 0.8%pts
Americas 79.6% 79.4% 0.1%pts (6.5)% (6.9)% (0.4)%pts
EMEAA 118.3% 114.8% 3.5%pts (33.4)% (32.8)% 0.7%pts
G. China (17.4)% (14.5)% (2.8)%pts (32.9)% (26.5)% 6.4%pts
Monthly RevPAR(a) (CER)
2021 vs 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Group (51.7)% (47.7)% 20.8% 228.0% 156.7% 108.4% 91.9% 52.8% 55.7% 62.8% 75.8% 77.9%
Americas (44.2)% (44.2)% 20.7% 245.3% 160.4% 108.0% 98.6% 68.3% 63.0% 67.2% 84.7% 92.0%
EMEAA (72.2)% (69.7)% (21.5)% 183.4% 194.1% 165.4% 100.9% 77.8% 82.4% 107.9% 137.1% 112.0%
G. China (21.9)% 335.0% 288.6% 199.6% 107.5% 51.3% 45.3% (43.0)% (15.6)% (8.7)% (30.4)% (14.6)%
2021 vs 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Group (52.5)% (53.8)% (46.6)% (41.4)% (37.1)% (31.0)% (18.4)% (23.0)% (21.5)% (19.2)% (19.1)% (12.1)%
Americas (45.1)% (45.4)% (39.4)% (32.3)% (27.8)% (19.7)% (7.3)% (12.1)% (10.6)% (10.5)% (7.4)% 0.4%
EMEAA (71.1)% (72.7)% (70.6)% (70.1)% (65.8)% (59.4)% (48.2)% (38.2)% (42.8)% (36.3)% (33.2)% (30.2)%
G. China (41.5)% (51.1)% (23.2)% (14.9)% (12.0)% (21.5)% (6.4)% (55.2)% (25.9)% (24.6)% (46.3)% (28.1)%
2020 vs 2019 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Group (1.5)% (10.8)% (55.1)% (81.9)% (75.6)% (67.4)% (58.1)% (51.0)% (50.9)% (51.9)% (55.3)% (52.4)%
Americas 0.2% (0.9)% (49.0)% (80.1)% (72.5)% (62.0)% (54.0)% (48.6)% (46.4)% (48.0)% (51.4)% (49.5)%
EMEAA 2.1% (11.3)% (62.7)% (89.3)% (88.5)% (85.3)% (74.7)% (66.3)% (69.9)% (70.5)% (72.4)% (68.6)%
G. China (24.6)% (89.3)% (81.4)% (71.2)% (57.1)% (48.6)% (35.9)% (20.2)% (11.0)% (16.9)% (22.5)% (15.1)%
(a. )RevPAR is presented on a comparable basis, comprising groupings
of hotels that have traded in all months in both years being compared.
Comparable hotel groupings will be different for comparisons between 2021 vs
2019, 2021 vs 2020 and 2020 vs 2019. See 'Use of non-GAAP measures' section
for further information on the definition of RevPAR.
Hotels Rooms
Global hotel and room count Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 21 5 1,412 283
Regent 7 - 2,190 -
InterContinental 204 (1) 69,402 (539)
Vignette Collection 1 1 146 146
Kimpton 75 2 13,283 198
HUALUXE 16 4 4,603 1,170
Crowne Plaza 404 (25) 111,178 (7,701)
Hotel Indigo 130 5 16,343 739
EVEN Hotels 21 5 2,994 584
voco 31 13 7,445 2,368
Holiday Inn(a) 1,218 (58) 224,684 (11,870)
Holiday Inn Express 3,016 50 317,329 7,842
avid hotels 48 24 4,280 2,124
Staybridge Suites 315 12 34,306 1,411
Candlewood Suites 361 (5) 32,025 (410)
Other(b) 123 (5) 38,707 (2,054)
_____ ____ _______ ______
Total 5,991 27 880,327 (5,709)
_____ ____ _______ ______
Analysed by ownership type
Franchised 5,033 28 626,115 (1,233)
Managed 939 3 249,591 (3,697)
Owned, leased and managed lease 19 (4) 4,621 (779)
_____ ____ _______ ______
Total 5,991 27 880,327 (5,709)
_____ ____ _______ ______
(a.) Includes 41 Holiday Inn Resort properties (10,454 rooms) and 28
Holiday Inn Club Vacations properties (8,679 rooms) (2020: 47 Holiday Inn
Resort properties (11,446 rooms) and 28 Holiday Inn Club Vacations properties
(8,679 rooms)).
(b.) Includes three open hotels that will be re-branded to voco and one
open hotel that will be re-branded to Vignette Collection.
Hotels Rooms
Global Pipeline Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 33 2 2,424 185
Regent 8 2 1,938 403
InterContinental 79 10 19,679 1,905
Kimpton 35 3 6,852 587
HUALUXE 23 (2) 6,045 (862)
Crowne Plaza 96 7 25,261 1,033
Hotel Indigo 114 10 18,452 2,748
EVEN Hotels 29 (2) 4,907 (139)
voco 38 9 10,090 1,911
Holiday Inn(a) 244 (18) 48,078 (3,085)
Holiday Inn Express 645 (38) 83,026 (4,126)
avid hotels 164 (28) 14,495 (3,031)
Staybridge Suites 156 1 16,843 (647)
Candlewood Suites 93 20 7,765 1,396
Atwell Suites 23 4 2,275 426
Other(b) 17 2 2,830 199
_____ ____ _______ _____
Total 1,797 (18) 270,960 (1,097)
_____ ____ _______ _____
Analysed by ownership type
Franchised 1,290 (20) 157,832 (1,236)
Managed 506 2 112,973 139
Owned, leased and managed lease 1 - 155 -
_____ ____ _______ _____
Total 1,797 (18) 270,960 (1,097)
_____ ____ _______ _____
(a.) Includes 35 Holiday Inn Resort properties (8,219 rooms) (2020: 34
Holiday Inn Resort properties (7,251 rooms)).
(b. )Includes four Vignette Collection pipeline hotels.
Net system size declined by 0.6% year-on-year. 43,958 rooms (291 hotels) were
opened in the year, 11.6% higher than in 2020. 264 hotels (49,667 rooms) left
the IHG system in 2021, including 151 Holiday Inn and Crowne Plaza hotels
(34,345 rooms) as we concluded our review of these brands. In 2020, 224 hotels
(36,919 rooms) left the IHG system, of which 102 hotels (16,655 rooms) related
to the termination of the SVC portfolio in the Americas estate.
At the end of 2021, the global pipeline totalled 270,960 rooms (1,797 hotels),
a 0.4% decrease of 1,097 rooms (18 hotels), as the increase in signings was
more than offset by the strong openings pace out of the pipeline and a normal
level of terminations from the pipeline. The IHG pipeline represents hotels
where a contract has been signed and the appropriate fees paid.
Group signings increased from 360 hotels in 2020 to 437 hotels, and rooms
increased from 56,146 in 2020 to 68,870 rooms, growth of 22.7%. Signings in
2021 included 205 hotels (31,169 rooms) signed for the Holiday Inn Brand
Family, almost half of which were contributed by Greater China (89 hotels,
16,260 rooms). Conversions represented 22% of Group signings in 2021,
including six for our newest brand, Vignette Collection.
Regional performance reviews, system size and pipeline analysis
AMERICAS
12 months ended 31 December
Americas Results
2021 2020 %
$m $m change
Revenue from the reportable segment(a)
Fee business 691 457 51.2
Owned, leased and managed lease 83 55 50.9
____ ____ ____
Total 774 512 51.2
____ ____ ____
Operating profit from the reportable segment(a)
Fee business 568 323 75.9
Owned, leased and managed lease (9) (27) (66.7)
____ ____ ____
559 296 88.9
Operating exceptional items (22) (118) (81.4)
____ ____ ______
Operating profit 537 178 201.7
____ _____ _______
12 months ended
Americas Comparable RevPAR(b) movement on previous year 31 December 2021
Fee business
InterContinental 73.0%
Kimpton 90.1%
Crowne Plaza 54.4%
Hotel Indigo 82.4%
EVEN Hotels 112.4%
Holiday Inn 56.8%
Holiday Inn Express 53.3%
avid hotels 115.4%
Staybridge Suites 40.4%
Candlewood Suites 30.5%
All brands 53.8%
Owned, leased and managed lease
All brands 91.6%
Comparable RevPAR(b) was up 54.0% vs 2020 (down 19.8% vs 2019). The pick-up in
demand that began in March continued through the year, benefitting from
improved domestic leisure demand, particularly in non-urban and resort
locations, as well as an improvement in business demand. Q4 RevPAR(b) was up
79.6% vs 2020 (down 6.5% vs 2019) with occupancy of 60% (down five percentage
points relative to 2019 with rate 1% higher than 2019 levels). US Q4 RevPAR(b)
was down 4.6% vs 2019 with particular strength during December where RevPAR
was up 2.2% vs 2019. Across our US franchised estate, which is weighted to
domestic demand in upper midscale hotels, Q4 RevPAR(b) declined by 2% vs 2019.
The US managed estate, weighted to upscale and luxury hotels in urban
locations, declined by 23% vs 2019.
Revenue from the reportable segment(a) increased by $262m (51%) to $774m (a
decrease of $266m vs 2019). Operating profit increased by $359m to $537m
driven by the increase in revenue and a $96m decrease in operating exceptional
charges. Operating profit from the reportable segment(a) increased by $263m
(89%) to $559m (a decrease of $141m vs 2019).
Fee business revenue(a) increased by $234m (51%) to $691m. Fee business
operating profit(a) increased by $245m (76%) to $568m, benefitting from the
improvement in demand, along with the delivery of sustainable fee business
cost savings. Operating profit from the reportable segment also included the
benefit of $11m payroll tax credits, which relates to the Group corporate
office presence in certain countries.
Owned, leased and managed lease revenue increased by $28m to $83m, with
comparable RevPAR(b) up 91.6% (down 41.0% vs 2019) leading to an owned, leased
and managed leased operating loss of $9m compared to a $27m loss in the prior
year. Excluding the results of three owned EVEN hotels which were disposed and
retained under franchise contracts in November 2021, and the impact of one
leased hotel that exited in December 2020, revenue increased by $34m and
operating profit improved by $14m.
(a.) Definitions for non-GAAP measures can be found in the 'Use of non-GAAP
measures' section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements.
(b.) Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
Hotels Rooms
Americas hotel and room count Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 1 1 20 20
InterContinental 43 (3) 15,651 (1,138)
Kimpton 64 - 11,008 (89)
Crowne Plaza 112 (24) 27,930 (7,475)
Hotel Indigo 66 (1) 8,745 (48)
EVEN Hotels 19 4 2,743 504
voco 5 4 469 420
Holiday Inn(a) 716 (50) 120,850 (10,092)
Holiday Inn Express 2,436 11 221,727 1,385
avid hotels 48 24 4,280 2,124
Staybridge Suites 296 11 31,097 1,040
Candlewood Suites 361 (5) 32,025 (410)
Other(b) 101 (2) 22,544 (1,164)
_____ ____ _______ ______
Total 4,268 (30) 499,089 (14,923)
_____ ____ _______ ______
Analysed by ownership type
Franchised 4,087 (18) 460,257 (11,545)
Managed 178 (9) 37,505 (2,886)
Owned, leased and managed lease 3 (3) 1,327 (492)
_____ ____ _______ ______
Total 4,268 (30) 499,089 (14,923)
_____ ____ _______ ______
(a. )Includes 19 Holiday Inn Resort properties (5,334 rooms) and 28
Holiday Inn Club Vacations properties (8,679 rooms) (2020: 22 Holiday Inn
Resort properties (6,003 rooms) and 28 Holiday Inn Club Vacations properties
(8,679 rooms)).
(b. )Includes one open hotel that will be re-branded to voco.
Hotels Rooms
Americas Pipeline Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 6 (1) 471 (48)
InterContinental 9 2 2,252 528
Kimpton 19 (1) 3,431 (52)
Crowne Plaza 8 2 1,643 393
Hotel Indigo 29 (2) 4,070 (85)
EVEN Hotels 10 (6) 1,166 (809)
voco 5 3 1,045 771
Holiday Inn(a) 74 (6) 9,468 (978)
Holiday Inn Express 338 (48) 32,701 (4,654)
avid hotels 164 (27) 14,495 (2,816)
Staybridge Suites 137 2 14,050 (11)
Candlewood Suites 93 20 7,765 1,396
Atwell Suites 23 4 2,275 426
Other 11 (2) 1,771 (215)
____ ____ ______ ______
Total 926 (60) 96,603 (6,154)
____ ____ ______ ______
Analysed by ownership type
Franchised 889 (55) 90,732 (5,796)
Managed 37 (5) 5,871 (358)
____ ____ ______ ______
Total 926 (60) 96,603 (6,154)
____ ____ ______ ______
(a. )Includes one Holiday Inn Resort property (165 rooms) (2020: three
Holiday Inn Resort properties (490 rooms)).
Net system size declined by 2.9% year-on-year. We opened 15.7k rooms (151
hotels) during the year including 85 across the Holiday Inn Brand Family, with
others of note including a further 24 avid hotels, a dual-branded EVEN hotel
and Staybridge Suites in Rochester, Minnesota, Hotel Indigo Miami Bricknell
and the voco Times Square South in New York. 30.7k rooms (181 hotels) were
removed in the year of which 20.1k (92 hotels) were across Holiday Inn and
Crowne Plaza, driven by the completion of a review to address the consistency
and quality of the estates for these two powerful global brands.
There were 17.6k rooms (175 hotels) signed during the year including 5.8k (57
hotels) during Q4. Signings included 13 further avid hotels, five voco
properties as we further establish the brand since launching in the Americas
in the prior year, the InterContinental Grenada and the InterContinental San
Antonio, Texas. The pipeline stands at 96.6k rooms (926 hotels), which
represents 19% of the current system size in the region.
EMEAA
12 months ended 31 December
EMEAA results
2021 2020 %
$m $m change
Revenue from the reportable segment(a)
Fee business 149 107 39.3
Owned, leased and managed lease 154 114 35.1
____ ____ ____
Total 303 221 37.1
____ ____ ____
Operating profit/(loss) from the reportable segment(a)
Fee business 32 (18) NM(c)
Owned, leased and managed lease (27) (32) (15.6)
____ ____ ____
5 (50) NM(c)
Operating exceptional items (7) (128) (94.5)
____ ____ _____
Operating loss (2) (178) (98.9)
____ ____ _____
12 months ended
31 December 2021
EMEAA comparable RevPAR(b) movement on previous year
Fee business
Six Senses 32.7%
InterContinental 26.9%
Kimpton (8.4)%
Crowne Plaza 34.3%
Hotel Indigo 62.6%
voco 24.1%
Holiday Inn 34.4%
Holiday Inn Express 46.2%
Staybridge Suites 46.2%
All brands 34.8%
Owned, leased and managed lease
InterContinental 0.1%
Kimpton 111.1%
voco 136.6%
All brands 46.6%
Comparable RevPAR(b) in the year was up 35.0% vs 2020 (down 51.8% vs 2019).
Performance in the first half of the year reflected the levels of
government-mandated closures and restrictions still largely in place. As these
eased, the improvement in RevPAR(b) performance seen in the third quarter
continued into the fourth quarter, with RevPAR(b) up 118.3% vs 2020 (down
33.4% vs 2019). Variance in performance within the region continued to
predominantly reflect the differing levels of restrictions. The UK, which saw
an easing of restrictions towards the end of May, saw RevPAR(b) down 41% for
the year vs. 2019 and down 16% in Q4 vs 2019, though this included December
down 21%, reflecting the impact of restrictions following increased cases
arising from the Omicron variant. As had been seen through the year, the
Provinces outperformed with RevPAR(b) down 2% vs 2019 in Q4 whilst London was
down 39%. Elsewhere, the differing timing and level of restrictions impacted
performance with Q4 RevPAR(b) relative to 2019 down 40% for Continental
Europe, 53% in Australia, 56% for Japan, and 59% for South East Asia and
Korea. By contrast, Q4 RevPAR(b) in the Middle East was down 10% vs. 2019
reflecting demand during the Expo 2020 event in Dubai.
Hotel reopenings continued, with only 21 hotels or 2% of the EMEAA estate
temporarily closed at the end of the year, compared to 215 at the start of the
year; all 16 of the owned, leased and managed lease hotels were open.
Revenue from the reportable segment(a) increased by $82m (37%) to $303m (a
decrease of 58% vs 2019). The operating loss decreased by $176m to a loss of
$2m, driven by the increase in revenue and a $121m decrease in operating
exceptional charges. Operating profit from the reportable segment(a) increased
by $55m to $5m (a decline of $212m vs 2019). Results included $29m of
incentive management fees recorded (2020: $14m; 2019: $90m) driven by an
improvement in trading, particularly in the Middle East.
Fee business revenue(a) increased by $42m (39%) to $149m. Fee business
operating profit(a) improved by $50m to $32m, benefitting from the improvement
in trading and the delivery of sustainable fee business cost savings.
Owned, leased and managed lease revenue increased by $40m to $154m, with
RevPAR(b) up 46.6% (down 68.9% vs 2019) leading to an owned, leased and
managed lease operating loss of $27m compared to a $32m loss in the prior
year, as the lifting of travel restrictions, predominantly in the UK, began to
ease the trading challenges on this largely urban-centred portfolio.
(a. )Definitions for non-GAAP measures can be found in the 'Use of
non-GAAP measures' section along with reconciliations of these measures to the
most directly comparable line items within the Group Financial Statements.
(b. )Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
(c. )Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
Hotels Rooms
EMEAA hotel and room count Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 19 4 1,270 263
Regent 3 - 771 -
InterContinental 108 - 32,561 87
Vignette Collection 1 1 146 146
Kimpton 10 2 2,146 287
Crowne Plaza 182 (6) 44,828 (1,696)
Hotel Indigo 48 2 5,183 117
voco 21 5 5,882 1,002
Holiday Inn(a) 380 (21) 70,824 (4,160)
Holiday Inn Express 333 4 48,548 1,192
Staybridge Suites 19 1 3,209 371
Other(b) 13 (4) 8,832 (1,258)
_____ ____ _______ ______
Total 1,137 (12) 224,200 (3,649)
_____ ____ _______ ______
Analysed by ownership type
Franchised 767 (7) 125,707 (13)
Managed 354 (4) 95,199 (3,349)
Owned, leased and managed lease 16 (1) 3,294 (287)
_____ ____ _______ ______
Total 1,137 (12) 224,200 (3,649)
_____ ____ _______ ______
(a. )Includes 14 Holiday Inn Resort properties (3,229 rooms) (2020: 17
Holiday Inn Resort properties (3,330 rooms)).
(b. )Includes two open hotels that will be re-branded to voco and
Vignette Collection.
Hotels Rooms
EMEAA Pipeline Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 23 2 1,720 169
Regent 6 1 1,341 86
InterContinental 43 10 9,520 2,035
Kimpton 9 3 1,674 546
Crowne Plaza 40 5 10,461 1,360
Hotel Indigo 44 3 7,004 957
voco 31 5 8,753 979
Holiday Inn(a) 98 (10) 21,014 (1,540)
Holiday Inn Express 99 7 15,593 360
avid hotels - (1) - (215)
Staybridge Suites 19 (1) 2,793 (636)
Other(b) 6 5 1,059 711
____ ____ ______ _____
Total 418 29 80,932 4,812
____ ____ ______ _____
Analysed by ownership type
Franchised 175 20 27,045 1,393
Managed 242 9 53,732 3,419
Owned, leased and managed lease 1 - 155 -
____ ____ ______ _____
Total 418 29 80,932 4,812
____ ____ ______ _____
(a. )Includes 20 Holiday Inn Resort properties (4,849 rooms) (2020: 18
Holiday Inn Resort properties (3,553 rooms)).
(b. )Includes four hotels that will be re-branded to Vignette
Collection.
Net system size declined by 1.6% year-on-year. We opened 10.2k rooms (52
hotels) during the year, including Hotel X Brisbane Fortitude Valley,
Australia, as part of the Vignette Collection, and Hotel Indigo
Cagnes-sur-Mer, France. 13.8k rooms (64 hotels) were removed in the year, of
which nearly 80% or 10.7k rooms (48 hotels) were across the Holiday Inn and
Crowne Plaza estates driven by the completion of the quality review.
There were 20.4k rooms (109 hotels) signed in the year, with a notable pick-up
in signing pace in Q4 which improved upon the level achieved in 2019. Signings
included a multi-property deal which encompassed a new property for voco in
Algarve, Portugal and three hotels signed to the Vignette Collection in
Austria and Portugal. We also signed a further four-hotel portfolio deal in
Vietnam which included two Holiday Inn Resort properties, together with a
Crowne Plaza and voco. In total, there were 10 voco signings in the year,
whilst for the InterContinental brand there were 15, including properties in
Crete and Bali. Other notable signings included five Six Senses properties,
the Kimpton Khao Yai Resort in Thailand and the Regent Kyoto, Japan. The
pipeline stands at 80.9k rooms (418 hotels), which represents 36% of the
current system size in the region.
GREATER CHINA
12 months ended 31 December
Greater China results 2021 2020 %
$m $m change
Revenue from the reportable segment(a)
Fee business 116 77 50.6
____ ____ _____
Total 116 77 50.6
____ ____ _____
Operating profit from the reportable segment(a)
Fee business 58 35 65.7
____ ____ ____
Operating exceptional items - (5) -
____ ____ ____
Operating profit 58 30 93.3
____ ____ ____
12 months ended
Greater China comparable RevPAR(b) movement on previous year 31 December 2021
Fee business
Regent 9.6%
InterContinental 20.8%
HUALUXE 13.1%
Crowne Plaza 20.4%
Hotel Indigo 33.4%
Holiday Inn 21.8%
Holiday Inn Express 20.9%
All brands 20.6%
Comparable RevPAR(b) in the year was up 20.6% vs 2020 (down 28.7% vs 2019).
The recovery seen in the earlier part of the year, particularly from March
through to strong summer trading in July, slowed during the second half of the
year driven by increases in Covid-19 cases and the reintroduction of temporary
restrictions. The impact of more prevalent restrictions in Q4 resulted in
RevPAR(b) declining 17.4% vs 2020 (down 32.9% vs 2019). Mainland China saw Q4
RevPAR(b) in Tier 1 cities down 15.0% vs 2020, whilst Tier 2-4 cities were
down 23.1%. Against 2019 levels, Tier 1 cities declined 40.3%, whereas Tier
2-4 cities, which are more weighted to domestic and leisure demand, performed
better with a decline of 29.3%.
Revenue from the reportable segment(a) increased by $39m (51%) to $116m (a
decrease of 14% vs 2019). Operating profit improved by $28m, driven by the
increase in revenue and a $5m decrease in operating exceptional charges.
Operating profit from the reportable segment(a) increased by $23m to $58m (a
decline of 21% vs 2019). The improvement in demand at our managed hotels led
to $25m recognition of incentive management fees compared to $16m in 2020
(2019: $48m). Revenue and operating profit from the reportable segment(a) also
included the benefit of a $6m individually significant liquidated damages
settlement.
(a. )Definitions for non-GAAP measures can be found in the 'Use of
non-GAAP measures' section along with reconciliations of these measures to the
most directly comparable line items within the Group Financial Statements.
(b. )Comparable RevPAR and occupancy include the impact of hotels
temporarily closed as a result of Covid-19.
Hotels Rooms
Greater China hotel and room count Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 1 - 122 -
Regent 4 - 1,419 -
InterContinental 53 2 21,190 512
Kimpton 1 - 129 -
HUALUXE 16 4 4,603 1,170
Crowne Plaza 110 5 38,420 1,470
Hotel Indigo 16 4 2,415 670
EVEN Hotels 2 1 251 80
voco 5 4 1,094 946
Holiday Inn(a) 122 13 33,010 2,382
Holiday Inn Express 247 35 47,054 5,265
Other(b) 9 1 7,331 368
____ ____ _______ _____
Total 586 69 157,038 12,863
____ ____ _______ _____
Analysed by ownership type
Franchised 179 53 40,151 10,325
Managed 407 16 116,887 2,538
____ ____ _______ _____
Total 586 69 157,038 12,863
____ ____ _______ _____
(a. )Includes eight Holiday Inn Resort properties (1,891 rooms) (2020:
eight Holiday Inn Resort properties (2,113 rooms)).
(b. )Includes one open hotel that will be re-branded to voco.
Hotels Rooms
Greater China Pipeline Change over Change over
2021 2020 2021 2020
31 December 31 December 31 December 31 December
Analysed by brand
Six Senses 4 1 233 64
Regent 2 1 597 317
InterContinental 27 (2) 7,907 (658)
Kimpton 7 1 1,747 93
HUALUXE 23 (2) 6,045 (862)
Crowne Plaza 48 - 13,157 (720)
Hotel Indigo 41 9 7,378 1,876
EVEN Hotels 19 4 3,741 670
voco 2 1 292 161
Holiday Inn(a) 72 (2) 17,596 (567)
Holiday Inn Express 208 3 34,732 168
Other - (1) - (297)
____ ____ ______ _____
Total 453 13 93,425 245
____ ____ ______ _____
Analysed by ownership type
Franchised 226 15 40,055 3,167
Managed 227 (2) 53,370 (2,922)
____ ____ ______ _____
Total 453 13 93,425 245
____ ____ ______ _____
(a. )Includes 14 Holiday Inn Resort properties (3,205 rooms) (2020: 13
Holiday Inn Resort properties (3,208 rooms)).
Net system size grew by 8.9% year-on-year. The opening of 88 hotels (18.1k
rooms) during the year matched that of 2019, and included the first
InterContinental hotel in Taiwan, voco Wuhan Xinhua and the Crowne Plaza
Chongli resort. There were 5.2k rooms (19 hotels) removed during the year.
30.8k rooms (153 hotels) were signed in the year, including 80 franchise
contracts, 50 of which were for Holiday Inn Express. Other notable signings
included Regent Sanya Haitang Bay and Hotel Indigo Sanya Haitang Bay as part
of a combined complex, the InterContinental Taipei and the Holiday Inn
Shenzhen Nanshan. The pipeline stands at 93.4k rooms (453 hotels), which
represents 59% of the current system size.
Central
12 months ended 31 December
2021 2020 %
Central results $m $m change
Revenue 197 182 8.2
Gross costs (285) (244) 16.8
____ ____ ____
(88) (62) 41.9
Exceptional items - (19) -
____ ____ ____
Operating loss (88) (81) 8.6
____ ____ ____
Central revenue, which mainly comprises technology fee income, increased by
$15m (8.2%) to $197m, driven by the temporary discounts on technology fees in
2020 no longer being applicable.
Gross costs increased by $41m (16.8%) year-on-year, as temporary cost saving
measures were introduced from the second quarter of 2020 which were not
repeated in 2021. When comparing to 2019, gross costs decreased by 8.1%, which
includes sustainable cost savings achieved in 2021.
The operating loss before exceptional items increased by $26m, a decrease of
$37m compared to 2019.
Use of non-GAAP measures
In addition to performance measures directly observable in the Financial
Statements (IFRS measures), the Business Review presents certain financial
measures when discussing the Group's performance which are not measures of
financial performance or liquidity under International Financial Reporting
Standards (IFRS). In management's view these measures provide investors and
other stakeholders with an enhanced understanding of IHG's operating
performance, profitability, financial strength and funding requirements. These
measures do not have standardised meanings under IFRS, and companies do not
necessarily calculate these in the same way. As these measures exclude certain
items (for example impairment and the costs of individually significant legal
cases or commercial disputes) these financial measures may be materially
different to the measures prescribed by IFRS and may result in a more
favourable view of performance. Accordingly, they should be viewed as
complementary to, and not as a substitute for, the measures prescribed by IFRS
and as included in the Group Financial Statements.
Global revenue per available room (RevPAR) growth
RevPAR is the primary metric used by management to track hotel performance
across regions and brands. RevPAR is also a commonly used performance measure
in the hotel industry.
RevPAR comprises IHG's System rooms revenue divided by the number of room
nights available and can be derived from occupancy rate multiplied by average
daily rate (ADR). ADR is rooms revenue divided by the number of room nights
sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis,
comprising groupings of hotels that have traded in all months in both the
current and comparable year. The principal exclusions in deriving this measure
are new hotels (including those acquired), hotels closed for major
refurbishment and hotels sold in either of the comparable years. These
measures include the impact of hotels temporarily closed as a result of
Covid-19.
RevPAR and ADR are quoted at a constant US$ conversion rate, in order to allow
a better understanding of the comparable year-on-year trading performance
excluding distortions created by fluctuations in exchange rates.
Total gross revenue from hotels in IHG's System
Total gross revenue is revenue not wholly attributable to IHG, however,
management believes this measure is meaningful to investors and other
stakeholders as it provides a measure of System performance, giving an
indication of the strength of IHG's brands and the combined impact of IHG's
growth strategy and RevPAR performance.
Total gross revenue refers to revenue which IHG has a role in driving and from
which IHG derives an income stream.
Total gross revenue comprises:
• total rooms revenue from franchised hotels;
• total hotel revenue from managed hotels includes food and beverage,
meetings and other revenues and reflects the value IHG drives to managed hotel
owners by optimising the performance of their hotels; and
• total hotel revenue from owned, leased and managed lease hotels.
Other than total hotel revenue from owned, leased and managed lease hotels,
total gross hotel revenue is not revenue attributable to IHG as these managed
and franchised hotels are owned by third parties.
Revenue and operating profit measures
Revenue and operating profit from (1) fee business and (2) owned, leased and
managed lease hotels, are described as 'revenue from reportable segments' and
'operating profit from reportable segments', respectively. These measures are
presented for each of the Group's regions. Management believes revenue and
operating profit from reportable segments is meaningful to investors and other
stakeholders as it excludes the following elements and reflects how management
monitors the business:
• System Fund - the Fund is not managed to generate a profit or loss
for IHG over the longer term, but is managed for the benefit of the hotels
within the IHG System. The System Fund is operated to collect and administer
cash assessments from hotel owners for the specific purpose of use in
marketing, the Guest Reservation Systems and hotel loyalty programme.
• Revenues related to the reimbursement of costs - there is a cost
equal to these revenues so there is no profit impact. Cost reimbursements are
not applicable to all hotels, and growth in these revenues is not reflective
of growth in the performance of the Group. As such, management do not include
these revenues in their analysis of results.
• Exceptional items - these are identified by virtue of their size,
nature, or incidence and can include, but are not restricted to, gains and
losses on the disposal of assets, impairment charges and reversals, the costs
of individually significant legal cases or commercial disputes, and
reorganisation costs. As each item is different in nature and scope, there
will be little continuity in the detailed composition and size of the reported
amounts which affect performance in successive periods. Separate disclosure of
these amounts facilitates the understanding of performance including and
excluding such items. Further detail of amounts presented as exceptional is
included in note 5 to the preliminary Group Financial Statements.
In further discussing the Group's performance in respect of revenue and
operating profit, additional non-IFRS measures are used and explained further
below:
• Underlying revenue;
• Underlying operating profit;
• Underlying fee revenue; and
• Fee margin.
Operating profit measures are, by their nature, before interest and tax.
Management believes such measures are useful for investors and other
stakeholders when comparing performance across different companies as interest
and tax can vary widely across different industries or among companies within
the same industry. For example, interest expense can be highly dependent on a
company's capital structure, debt levels and credit ratings. In addition, the
tax positions of companies can vary because of their differing abilities to
take advantage of tax benefits and because of the tax policies of the various
jurisdictions in which they operate.
Although management believes these measures are useful to investors and other
stakeholders in assessing the Group's ongoing financial performance and
provide improved comparability between periods, there are limitations in their
use as compared to measures of financial performance under IFRS. As such, they
should not be considered in isolation or viewed as a substitute for IFRS
measures. In addition, these measures may not necessarily be comparable to
other similarly titled measures of other companies due to potential
inconsistencies in the methods of calculation.
Underlying revenue and underlying operating profit
These measures adjust revenue from reportable segments and operating profit
from reportable segments, respectively, to exclude revenue and operating
profit generated by owned, leased and managed lease hotels which have been
disposed, and significant liquidated damages, which are not comparable
year-on-year and are not indicative of the Group's ongoing profitability. The
revenue and operating profit of current year acquisitions are also excluded as
these obscure underlying business results and trends when comparing to the
prior year. In addition, in order to remove the impact of fluctuations in
foreign exchange, which would distort the comparability of the Group's
operating performance, prior year measures are restated at constant currency
using current year exchange rates.
Management believes these are meaningful to investors and other stakeholders
to better understand comparable year-on-year trading and enable assessment of
the underlying trends in the Group's financial performance.
Underlying fee revenue growth
Underlying fee revenue is used to calculate underlying fee revenue growth.
Underlying fee revenue is calculated on the same basis as underlying revenue
as described above but for the fee business only.
Management believes underlying fee revenue is meaningful to investors and
other stakeholders as an indicator of IHG's ability to grow the core fee-based
business, aligned to IHG's asset-light strategy.
Fee margin
Fee margin is presented at actual exchange rates and is a measure of the
profit arising from fee revenue. Fee margin is calculated by dividing 'fee
operating profit' by 'fee revenue'. Fee revenue and fee operating profit are
calculated from the revenue from reportable segments and operating profit from
reportable segments, as defined above, adjusted to exclude the revenue and
operating profit from the Group's owned, leased and managed lease hotels and
significant liquidated damages.
In addition, fee margin is adjusted for the results of the Group's captive
insurance company, where premiums are intended to match the expected claims
over the longer term, and as such these amounts are adjusted from the fee
margin to better depict the profitability of the fee business.
Management believes fee margin is meaningful to investors and other
stakeholders as an indicator of the sustainable long-term growth in the
profitability of IHG's core fee-based business, as the scale of IHG's
operations increases with growth in IHG's System size.
Adjusted interest
Adjusted interest is presented before exceptional items and excludes the
following items of interest which are recorded within the System Fund:
• IHG records an interest charge on the outstanding cash balance
relating to the IHG Rewards programme. These interest payments are recognised
as interest income for the Fund and interest expense for IHG.
• The System Fund also benefits from the capitalisation of interest
related to the development of the next-generation Guest Reservation System.
• Other components of System Fund interest income and expense,
including lease interest expense and interest income on overdue receivables.
As the Fund is included on the Group Income Statement, these amounts are
included in the reported net Group financial expenses, reducing the Group's
effective interest cost. Given results related to the System Fund are excluded
from
adjusted measures used by management, these are excluded from adjusted
interest and adjusted earnings per ordinary share (see below).
Management believes adjusted interest is a meaningful measure for investors
and other stakeholders as it provides an indication of the comparable
year-on-year expense associated with financing the business including the
interest on any balance held on behalf of the System Fund.
Tax excluding the impact of exceptional items and System Fund
As outlined above, exceptional items can vary year-on-year and, where subject
to tax at a different rate than the Group as a whole, they can impact the
current year's tax charge. The System Fund is not managed to a profit or loss
for IHG over the longer term and is, in general, not subject to tax either.
Management believes removing these provides a better view of the Group's
underlying tax rate on ordinary operations and aids comparability
year-on-year, thus providing a more meaningful understanding of the Group's
ongoing tax charge. A reconciliation of the tax charge as recorded in the
Group income statement, to tax excluding the impact of exceptional items and
System Fund, can be found in note 6 to the preliminary Group Financial
Statements.
Adjusted earnings per ordinary share
Adjusted earnings per ordinary share adjusts the profit available for equity
holders used in the calculation of basic earnings per share to remove System
Fund revenue and expenses, the items of interest related to the System Fund as
excluded in adjusted interest, the change in fair value of contingent purchase
consideration, exceptional items, and the related tax impacts of such
adjustments.
Management believes that adjusted earnings per share is a meaningful measure
for investors and other stakeholders as it provides a more comparable earnings
per share measure aligned with how management monitors the business.
Net debt
Net debt is used in the monitoring of the Group's liquidity and capital
structure and is used by management in the calculation of the key ratios
attached to the Group's bank covenants and with the objective of maintaining
an investment grade credit rating. Net debt is used by investors and other
stakeholders to evaluate the financial strength of the business.
Net debt comprises loans and other borrowings, lease liabilities, the exchange
element of the fair value of derivatives hedging debt values, less cash and
cash equivalents. A summary of the composition of net debt is included in note
10 to the preliminary Group Financial Statements.
Adjusted EBITDA
One of the key measures used by the Group in monitoring its debt and capital
structure is the net debt:adjusted EBITDA ratio, which is managed with the
objective of maintaining an investment grade credit rating. The Group has a
stated aim of maintaining this ratio at 2.5-3.0x. Adjusted EBITDA is defined
as operating profit, excluding System Fund revenues and expenses, exceptional
items and depreciation and amortisation.
Adjusted EBITDA is useful to investors and other stakeholders for comparing
the performance of different companies as depreciation, amortisation and
exceptional items are eliminated. It can also be used as an approximation of
operational cash flow generation. This measure is relevant to the Group's
banking covenants, which have been relaxed for test dates in 2022. Details of
covenant levels and performance against these is provided in note 10 to the
preliminary Group Financial Statements. The leverage ratio uses a Covenant
EBITDA measure which is calculated on a 'frozen GAAP' basis, which excludes
the effect of IFRS 16.
Gross capital expenditure, net capital expenditure, adjusted free cash flow
These measures have limitations as they omit certain components of the overall
cash flow statement. They are not intended to represent IHG's residual cash
flow available for discretionary expenditures, nor do they reflect the Group's
future capital commitments. These measures are used by many companies, but
there can be differences in how each company defines the terms, limiting their
usefulness as a comparative measure. Therefore, it is important to view these
measures only as a complement to the Group statement of cash flows.
Gross capital expenditure
Gross capital expenditure represents the consolidated capital expenditure of
IHG inclusive of System Fund capital investments. Gross capital expenditure is
defined as net cash from investing activities, adjusted to include contract
acquisition costs (key money). In order to demonstrate the capital outflow of
the Group, cash flows arising from any disposals or distributions from
associates and joint ventures are excluded. The measure also excludes any
material investments made in acquiring businesses, including any subsequent
payments of deferred or contingent purchase consideration included within
investing activities, which represent ongoing payments for acquisitions.
Gross capital expenditure is reported as either maintenance, recyclable, or
System Fund. This disaggregation provides useful information as it enables
users to distinguish between:
• System Fund capital investments which are strategic investments to
drive growth at hotel level;
• Recyclable investments (such as investments in associates and joint
ventures), which are intended to be recoverable in the medium term and are to
drive the growth of the Group's brands and expansion in priority markets; and
• Maintenance capital expenditure (including contract acquisition
costs), which represents a permanent cash outflow.
Management believes gross capital expenditure is a useful measure as it
illustrates how the Group continues to invest in the business to drive growth.
It also allows for comparison year-on-year.
Net capital expenditure
Net capital expenditure provides an indicator of the capital intensity of
IHG's business model. Net capital expenditure is derived from net cash from
investing activities, adjusted to include contract acquisition costs (net of
repayments) and to exclude any material investments made in acquiring
businesses, including any subsequent payments of deferred or contingent
purchase consideration included within investing activities, which are
typically non-recurring in nature. Net capital expenditure includes the
inflows arising from any disposal receipts, or distributions from associates
and joint ventures.
In addition, System Fund depreciation and amortisation relating to property,
plant and equipment and intangible assets, respectively, is added back,
reducing the overall cash outflow. This reflects the way in which System
Funded capital investments are recharged to 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.
Revenue and operating profit non-GAAP reconciliations
Highlights for the 12 months ended 31 December
Reportable segments Revenue Operating profit
2021 2020 % 2021 2020 %
$m $m change $m $m change
Per Group income statement 2,907 2,394 21.4 494 (153) NM(a)
System Fund (928) (765) 21.3 11 102 (89.2)
Reimbursement of costs (589) (637) (7.5) - - -
Operating exceptional items - - - 29 270 (89.3)
_____ _____ _____ _____ _____ _____
Reportable segments 1,390 992 40.1 534 219 143.8
_____ _____ _____ _____ _____ _____
Reportable segments analysed as:
Fee business 1,153 823 40.1 570 278 105.0
Owned, leased and managed lease 237 169 40.2 (36) (59) 39.0
_____ _____ _____ _____ _____ _____
Reportable segments 1,390 992 40.1 534 219 143.8
(a. )Percentage change considered not meaningful, such as where a
positive balance in the latest period is comparable to a negative or zero
balance in the prior period.
Underlying revenue and underlying operating profit
Revenue Operating profit
2021 2020 % 2021 2020 %
$m $m change $m $m Change
Reportable segments (see above) 1,390 992 40.1 534 219 143.8
Significant liquidated damages(a) (6) (1) 500.0 (6) (1) 500.0
Owned and leased asset disposals(b) (11) (21) (47.6) 3 6 (50.0)
Currency impact - 16 - - (1) -
____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 1,373 986 39.2 531 223 138.1
(a. )$6m recognised in 2021 reflects the significant liquidated
damages related to one hotel in Greater China. The $1m recognised in 2020
reflects the continued recognition of the significant liquidated damages
related to the previously disclosed exit of a portfolio of 2.1k hotels in
Germany.
(b. )The results of three EVEN Hotels have been removed in 2021 (being
the year of disposal for these hotels) and the prior year to determine
underlying growth. The results of the hotels that were removed in 2020 (being
the year of disposal or lease termination for these hotels) have also been
removed to determine underlying growth.
Underlying fee revenue and underlying fee operating profit
Revenue Operating profit
2021 2020 % 2021 2020 %
$m $m change $m $m change
Reportable segments fee business (see above) 1,153 823 40.1 570 278 105.0
Significant liquidated damages(a) (6) (1) 500.0 (6) (1) 500.0
Currency impact - 11 - - - -
_____ _____ _____ _____ _____ _____
Underlying fee revenue and underlying fee operating profit 1,147 833 37.7 564 277 103.6
(a. )$6m recognised in 2021 reflects the significant liquidated
damages related to one hotel in Greater China. The $1m recognised in 2020
reflects the continued recognition of the significant liquidated damages
related to the previously disclosed exit of a portfolio of 2.1k hotels in
Germany.
Americas
Revenue Operating profit(a)
2021 2020 % 2021 2020 %
$m $m change $m $m change
Per Group financial statements 774 512 51.2 559 296 88.9
Reportable segments analysed as:
Fee business 691 457 51.2 568 323 75.9
Owned, leased and managed lease 83 55 50.9 (9) (27) (66.7)
_____ _____ _____ _____ _____ _____
774 512 51.2 559 296 88.9
Reportable segments (see above) 774 512 51.2 559 296 88.9
Owned and leased asset disposals(b) (11) (17) (35.3) 3 7 (57.1)
Currency impact - - - - 2 -
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 763 495 54.1 562 305 84.3
Owned, leased and managed lease included in the above (72) (38) 89.5 6 19 (68.4)
_____ _____ _____ _____ _____ _____
Underlying fee business 691 457 51.2 568 324 75.3
(a. )Before exceptional items.
(b. )The results of three EVEN Hotels have been removed in 2021 (being
the year of disposal for these hotels) and the prior year to determine
underlying growth. The results of the hotels that were removed in 2020 (being
the year of disposal or lease termination for these hotels) have also been
removed to determine underlying growth.
EMEAA
Revenue Operating profit(a)
2021 2020 % 2021 2020 %
$m $m change $m $m change
Per Group financial statements 303 221 37.1 5 (50) NM(d)
Reportable segments analysed as:
Fee business 149 107 39.3 32 (18) NM(d)
Owned, leased and managed lease 154 114 35.1 (27) (32) 15.6
_____ _____ _____ _____ _____ _____
303 221 37.1 5 (50) NM(d)
Reportable segments (see above) 303 221 37.1 5 (50) NM(d)
Significant liquidated damages(b) - (1) - - (1) -
Owned asset disposals(c) - (4) - - (1) -
Currency impact - 8 - - (2) -
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 303 224 35.3 5 (54) NM(d)
Owned, leased and managed lease included in the above (154) (115) 33.9 27 35 (22.9)
_____ _____ _____ _____ _____ _____
Underlying fee business 149 109 36.7 32 (19) NM(d)
(a. )Before exceptional items.
(b. )$1m recognised in 2020 reflects the continued recognition of the
significant liquidated damages related to the previously disclosed exit of a
portfolio of 2.1k hotels in Germany.
(c. )The results of the hotels removed in 2020 (being the year of
disposal of these hotels) have been removed to determine underlying growth.
(d. )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.
Greater China
Revenue Operating profit(a)
2021 2020 % 2021 2020 %
$m $m change $m $m change
Per Group financial statements
Reportable segments analysed as: 116 77 50.6 58 35 65.7
_____ _____ _____ _____ _____ _____
Fee business 116 77 50.6 58 35 65.7
Reportable segments (see above) 116 77 50.6 58 35 65.7
Significant liquidated damages(b) (6) - - (6) - -
Currency impact - 5 - - 1 -
_____ _____ _____ _____ _____ _____
Underlying revenue and underlying operating profit 110 82 34.1 52 36 44.4
(a. )Before exceptional items.
(b. )$6m recognised in 2021 reflects the significant liquidated
damages related to one property.
Fee margin reconciliation
2021 2020
$m $m
Revenue
Reportable segments analysed as fee business (see above) 1,153 823
Significant liquidated damages (6) (1)
Captive insurance company (17) (19)
_____ _____
1,130 803
Operating profit
Reportable segments analysed as fee business (see above) 570 278
Significant liquidated damages (6) (1)
Captive insurance company (3) (3)
_____ _____
561 274
Fee margin 49.6% 34.1%
Net capital expenditure reconciliation
12 months ended
31 December
2021 2020
$m $m
Net cash from investing activities (12) (61)
Adjusted for:
Contract acquisition costs, net of repayments (42) (64)
System Fund depreciation and amortisation(a) 91 58
Deferred purchase consideration paid 13 -
_____ _____
Net capital expenditure 50 (67)
_____ _____
Analysed as:
Capital expenditure: maintenance (including contract acquisition costs, net of (75) (107)
repayments of $42m (2020: $64m))
Capital expenditure: recyclable investments 53 17
Capital expenditure: System Fund capital investments 72 23
_____ _____
Net capital expenditure 50 (67)
_____ _____
(a. )Excludes depreciation of right-of-use assets.
Gross capital expenditure reconciliation
12 months ended
31 December
2021 2020
$m $m
Net capital expenditure 50 (67)
Add back:
Disposal receipts (58) (18)
Repayments of contract acquisition costs (1) -
Distributions from associates and joint ventures - (5)
System Fund depreciation and amortisation(a) (91) (58)
_____ _____
Gross capital expenditure (100) (148)
_____ _____
Analysed as:
Capital expenditure: maintenance (76) (107)
(including gross contract acquisition costs of $43m (2020: $64m))
Capital expenditure: recyclable investments (5) (6)
Capital expenditure: System Fund capital investments (19) (35)
_____ _____
Gross capital expenditure (100) (148)
_____ _____
(a. )Excludes depreciation of right-of-use assets.
Adjusted free cash flow reconciliation
12 months ended
31 December
2021 2020
$m $m
Net cash from operating activities 636 137
Adjusted for:
Principal element of lease payments (32) (65)
Capital expenditure: maintenance (excluding contract acquisition costs) (33) (43)
_____ _____
Adjusted free cash flow 571 29
_____ _____
Adjusted interest reconciliation
The following table reconciles net financial expenses to adjusted interest.
12 months ended
31 December
2021 2020
$m $m
Net financial expenses
Financial income 8 4
Financial expenses (147) (144)
_____ _____
(139) (140)
Adjusted for:
Interest attributable to the System Fund (3) (3)
Capitalised interest relating to System Fund assets - (1)
Exceptional financial expenses - 14
_____ _____
(3) 10
Adjusted interest (142) (130)
Adjusted EBITDA reconciliation
12 months ended
31 December
2021 2020
$m $m
Operating profit/(loss) 494 (153)
Add back:
System Fund result 11 102
Operating exceptional items 29 270
Depreciation and amortisation 98 110
_____ _____
Adjusted EBITDA 632 329
Adjusted earnings per ordinary share reconciliation
12 months ended
31 December
2021 2020
$m $m
Profit/(loss) available for equity holders 266 (260)
Adjusting items:
System Fund revenues and expenses 11 102
Interest attributable to the System Fund (3) (4)
Operating exceptional items 29 270
Exceptional financial expenses - 14
Fair value gains on contingent purchase consideration (6) (13)
Tax on fair value gains on contingent purchase consideration 1 -
Tax on exceptional items (3) (52)
Exceptional tax (26) -
_____ _____
Adjusted earnings 269 57
Basic weighted average number of ordinary shares (millions) 183 182
Adjusted earnings per ordinary share (cents) 147.0 31.3
2019 reportable segments
Revenue from reportable segments
Americas EMEAA Greater China Central Total
$m
$m
$m
$m
$m
Revenue from reportable segments 1,040 723 135 185 2,083
Fee Business 853 337 135 185 1,510
Owned & Leased 187 386 - - 573
_____ _____ _____ _____ _____
1,040 723 135 185 2,083
Operating Profit from reportable segments
Americas EMEAA Greater China Central Total
$m
$m
$m
$m
$m
Operating Profit from reportable segments 700 217 73 (125) 865
Fee Business 663 202 73 (125) 813
Owned & Leased 37 15 - - 52
_____ _____ _____ _____ _____
700 217 73 (125) 865
InterContinental Hotels Group PLC
GROUP INCOME STATEMENT
For the year ended 31 December 2021
2021 2020
Year ended Year ended
31 December
31 December
$m
$m
Revenue from fee business 1,153 823
Revenue from owned, leased and managed lease hotels 237 169
System Fund revenues 928 765
Reimbursement of costs 589 637
_____ _____
Total revenue (notes 3 and 4) 2,907 2,394
Cost of sales (486) (354)
System Fund expenses (939) (867)
Reimbursed costs (589) (637)
Administrative expenses (300) (267)
Share of losses of associates and joint ventures (8) (14)
Other operating income 11 16
Depreciation and amortisation (98) (110)
Impairment loss on financial assets - (88)
Other impairment charges (note 5) (4) (226)
_____ _____
Operating profit/(loss) (note 3) 494 (153)
Operating profit/(loss) analysed as:
Operating profit before System Fund and exceptional items 534 219
System Fund (11) (102)
Operating exceptional items (note 5) (29) (270)
_____ _____
494 (153)
Financial income 8 4
Financial expenses (147) (144)
Fair value gains on contingent purchase consideration 6 13
_____ _____
Profit/(loss) before tax 361 (280)
Tax (note 6) (96) 20
_____ _____
Profit/(loss) for the year from continuing operations 265 (260)
_____ _____
Attributable to:
Equity holders of the parent 266 (260)
Non-controlling interest (1) -
_____ _____
265 (260)
_____ _____
Earnings/(loss) per ordinary share (note 7)
Basic 145.4¢ (142.9)¢
Diluted 144.6¢ (142.9)¢
InterContinental Hotels Group PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
2021 2020
Year ended Year ended
31 December 31 December
$m $m
Profit/(loss) for the year 265 (260)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Losses on cash flow hedges, including related tax charge of $7m (2020: $4m
credit)
(69) 3
Costs of hedging 2 (6)
Hedging losses/(gains) reclassified to financial expenses 96 (13)
Exchange gains/(losses) on retranslation of foreign operations, net of related
tax charge of $4m (2020: $4m credit)
18 (85)
_____ _____
47 (101)
Items that will not be reclassified to profit or loss:
Gains/(losses) on equity instruments classified as fair value through other
comprehensive income, net of related tax charge of $1m (2020: $4m credit)
14 (43)
Re-measurement gains/(losses) on defined benefit plans, including related tax
credit of $nil (2020: $1m credit)
7 (7)
Tax related to pension contributions 1 1
_____ _____
22 (49)
_____ _____
Total other comprehensive income/(loss) for the year 69 (150)
_____ _____
Total comprehensive income/(loss) for the year 334 (410)
_____ _____
Attributable to:
Equity holders of the parent 335 (410)
Non-controlling interest (1) -
_____ _____
334 (410)
_____ _____
InterContinental Hotels Group PLC
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Year ended 31 December 2021
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the year 156 (2,581) 568 8 (1,849)
Total comprehensive income for the year - 61 274 (1) 334
Transfer of treasury shares to employee share trusts
- (34) 34 - -
Release of own shares by employee share trusts
- 13 (13) - -
Equity-settled share-based cost - - 39 - 39
Tax related to share schemes - - 2 - 2
Exchange adjustments (2) 2 - - -
_____ _____ _____ _____ _____
At end of the year 154 (2,539) 904 7 (1,474)
_____ _____ _____ _____ _____
Year ended 31 December 2020
Equity share capital Other reserves* Retained earnings Non-controlling interest Total equity
$m $m $m $m $m
At beginning of the year 151 (2,433) 809 8 (1,465)
Total comprehensive loss for the year - (147) (263) - (410)
Transfer of treasury shares to employee share trusts
- (14) 14 - -
Release of own shares by employee share trusts
- 18 (18) - -
Equity-settled share-based cost, net of $3m reclassification to cash-settled
awards
- - 27 - 27
Tax related to share schemes - - (1) - (1)
Exchange adjustments 5 (5) - - -
_____ _____ _____ _____ _____
At end of the year 156 (2,581) 568 8 (1,849)
_____ _____ _____ _____ _____
* 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.
All items within total comprehensive income/(loss) are shown net of tax.
InterContinental Hotels Group PLC
GROUP STATEMENT OF FINANCIAL POSITION
31 December 2021
2021 2020
31 December 31 December
$m $m
ASSETS
Goodwill and other intangible assets 1,195 1,293
Property, plant and equipment 137 201
Right-of-use assets 274 303
Investment in associates 77 81
Retirement benefit assets 2 -
Other financial assets 173 168
Derivative financial instruments - 5
Deferred compensation plan investments 256 236
Non-current tax receivable 1 15
Deferred tax assets 147 113
Contract costs 72 70
Contract assets 316 311
______ ______
Total non-current assets 2,650 2,796
______ ______
Inventories 4 5
Trade and other receivables 574 514
Current tax receivable 1 18
Other financial assets 2 1
Cash and cash equivalents 1,450 1,675
Contract costs 5 5
Contract assets 30 25
______ ______
Total current assets 2,066 2,243
______ ______
Total assets 4,716 5,039
_____ _____
LIABILITIES
Loans and other borrowings (292) (869)
Lease liabilities (35) (34)
Trade and other payables (579) (466)
Deferred revenue (617) (452)
Provisions (49) (16)
Current tax payable (52) (30)
______ ______
Total current liabilities (1,624) (1,867)
______ ______
Loans and other borrowings (2,553) (2,898)
Lease liabilities (384) (416)
Derivative financial instruments (62) (18)
Retirement benefit obligations (92) (103)
Deferred compensation plan liabilities (256) (236)
Trade and other payables (89) (94)
Deferred revenue (996) (1,117)
Provisions (41) (44)
Deferred tax liabilities (93) (95)
______ ______
Total non-current liabilities (4,566) (5,021)
______ ______
Total liabilities (6,190) (6,888)
_____ _____
Net liabilities (1,474) (1,849)
_____ _____
EQUITY
IHG shareholders' equity (1,481) (1,857)
Non-controlling interest 7 8
______ ______
Total equity (1,474) (1,849)
_____ _____
InterContinental Hotels Group PLC
GROUP STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
Year ended Year ended
31 December 31 December
$m $m
Profit/(loss) for the year 265 (260)
Adjustments reconciling profit/(loss) for the year to cash flow from
operations (note 9)
583 568
_____ _____
Cash flow from operations 848 308
Interest paid (134) (132)
Interest received 8 2
Tax paid (86) (41)
_____ _____
Net cash from operating activities 636 137
_____ _____
Cash flow from investing activities
Purchase of property, plant and equipment (17) (26)
Purchase of intangible assets (35) (50)
Investment in associates - (2)
Investment in other financial assets (5) (5)
Deferred purchase consideration paid (13) -
Capitalised interest paid - (1)
Distributions from associates and joint ventures - 5
Disposal of hotel assets, net of costs and cash disposed 44 1
Repayments of other financial assets 14 13
Disposal of equity securities - 4
_____ _____
Net cash from investing activities (12) (61)
_____ _____
Cash flow from financing activities
Issue of long-term bonds, including effect of currency swaps - 1,093
(Repayment)/issue of commercial paper (828) 738
Repayment of long-term bonds - (290)
Principal element of lease payments (32) (65)
Decrease in other borrowings - (125)
Proceeds from currency swaps - 3
_____ _____
Net cash from financing activities (860) 1,354
_____ _____
Net movement in cash and cash equivalents, net of overdrafts, in the year
(236) 1,430
Cash and cash equivalents, net of overdrafts, at beginning of the year 1,624 108
Exchange rate effects 3 86
_____ _____
Cash and cash equivalents, net of overdrafts, at end of the year 1,391 1,624
_____ _____
interContinental Hotels Group plc
NOTES TO THE INTERIM 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 2021 have been
prepared in accordance with UK-adopted international accounting standards and
with applicable law and regulations and with International Financial Reporting
Standards ('IFRSs') as issued by the IASB. The Group transitioned to
UK-adopted international accounting standards in its consolidated financial
statements on 1 January 2021. There was no impact or change in accounting
policies from the transition. 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 2021 were
approved by the Board on 21 February 2022. 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 2021 will
be delivered to the Registrar of Companies in due course.
Financial information for the year ended 31 December 2020 has been extracted
from the Group's published financial statements for that year which were
prepared in accordance with IFRSs adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union and with international
accounting standards as applied in accordance with the provisions of the
Companies Act 2006 and which have been filed with the Registrar of Companies.
The Group's previous auditor, Ernst & Young LLP, has reported on those
financial statements. Its report was unqualified with no reference to matters
to which Ernst & Young LLP drew attention by way of emphasis and no
statement under s498(2) or s498(3) of the Companies Act 2006.
Going concern
The resilience of the Group's fee-based model, wide geographic spread and
strong cash management means that the Group has been able to generate $636m of
net cash from operating activities in a year when trading has still been
substantially impacted by the global pandemic. Trading has recovered
significantly during 2021, with RevPAR up 46% on 2020 and returning to 70% of
2019's pre-pandemic levels.
As at 31 December 2021 the Group had total liquidity of $2,655m, comprising
$1,350m of undrawn bank facilities and $1,305m of cash and cash equivalents
(net of overdrafts and restricted cash). In March 2021 the Group used cash
reserves to repay £600m commercial paper under the UK's Covid Corporate
Financing Facility ('CCFF').
In 2020, the Group agreed amendments of existing covenants on its syndicated
and bilateral revolving credit facilities ('the bank facilities') until
December 2022.
A period of 18 months has been used, from 1 January 2022 to 30 June 2023, to
complete the going concern assessment. There are a wide range of possible
planning scenarios over the going concern period. In adopting the going
concern basis for preparing these financial statements the Directors have
considered a scenario (the 'Base Case') which is based on continued
improvement in demand as travel restrictions are reduced, with RevPAR assumed
to reach greater than 90% of 2019 levels in 2023. The only debt maturity in
the period under consideration is the £173m 3.875% November 2022 bond which
is assumed to be repaid with cash on maturity. Under this scenario, the bank
facilities remain undrawn.
The principal risks and uncertainties which could be applicable have been
considered and are able to be absorbed within the $400m liquidity covenant and
amended covenant requirements. A large number of the Group's principal
risks, for example macro external factors or preferred brands and loyalty,
would result in an impact on RevPAR which is one of the sensitivities assessed
against the headroom available in the Base Case.
Climate risks are not considered to have a significant impact over the
18-month period of assessment. Other principal risks that could result in a
large one-off incident that has a material impact on cash flow have also been
considered, for example a cybersecurity event. The assumptions applied in the
Base Case scenario are consistent with those used for Group planning purposes,
for impairment testing and for assessing recoverability of deferred tax
assets.
The Directors have also reviewed a 'Downside Case' which is based on current
external market downside forecasts with RevPAR growth reduced by 8% in 2022 in
comparison to the Base Case followed by similar growth rates to the Base Case
in 2023. The Directors have also reviewed a 'Severe Downside Case' which is
based on a severe but plausible scenario. This assumes that the performance
during 2022 continues without further recovery on 2021 levels with RevPAR
remaining at 70% of 2019 levels, and then with recovery in 2023. The
assumptions used in the going concern assessment are consistent with those
used in the viability assessment. Under the Downside Case and Severe Downside
Case, the bank facilities remain undrawn.
Under the Severe Downside scenario, there is limited headroom to the covenants
at 30 June 2023 to absorb additional risks. However, based on experience in
2020, the Directors reviewed a number of actions, such as reductions in
bonuses and other discretionary spend, creating substantial additional
headroom. After these actions are taken, the principal risks and uncertainties
which could be applicable can be absorbed within the amended covenant
requirements.
In the Severe Downside Case, the Group has substantial levels of existing cash
reserves available (approximately $1bn at 30 June 2023) and is not expected to
draw on the bank facilities. These cash reserves would increase after the
additional actions are taken as described above. The Directors reviewed a
reverse stress test scenario to determine how much additional RevPAR downside
could be absorbed before utilisation of the bank facilities would be required.
The Directors concluded that the outcome of this reverse stress test showed
that it was very unlikely the bank facilities would need to be drawn.
The leverage and interest cover covenant tests at 30 June 2022, 31 December
2022 and 30 June 2023 (the last day of the assessment period), have been
considered as part of the Base Case, Downside Case and Severe Downside Case
scenarios. However, as the bank facilities are unlikely to be drawn even in a
scenario significantly worse than the Severe Downside scenario, the Group does
not need to rely on the additional liquidity provided by the bank facilities
to remain a going concern. In the event that a further covenant amendment was
required, the Directors believe it is reasonable to expect that such an
amendment could be obtained based on prior experience in negotiating the 2020
amendments, however the going concern conclusion is not dependent on this
expectation. The bank facilities mature in September 2023, outside the
period considered by the going concern assessment and it has been assumed that
these bank facilities are renewed as they mature. However, as explained
above, the going concern conclusion is not dependent on the bank facilities.
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 2023 and there are no material uncertainties that may cast doubt on
the Group's going concern status. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
2. Exchange rates
The results of operations have been translated into US dollars at the average
rates of exchange for the year. In the case of sterling, the translation rate
is $1 = £0.73 (2020: $1 = £0.78). In the case of the euro, the translation
rate is $1 = €0.85 (2020: $1 = €0.88).
Assets and liabilities have been translated into US dollars at the rates of
exchange on the last day of the year. In the case of sterling, the translation
rate is $1 = £0.74 (2020: $1 = £0.73). In the case of the euro, the
translation rate is $1 = €0.88 (2020: $1 = €0.81).
3. Segmental Information
Revenue 2021 2020
$m $m
Americas 774 512
EMEAA 303 221
Greater China 116 77
Central 197 182
_____ _____
Revenue from reportable segments 1,390 992
System Fund revenues 928 765
Reimbursement of costs 589 637
_____ _____
Total revenue 2,907 2,394
_____ _____
Profit/(loss) 2021 2020
$m $m
Americas 559 296
EMEAA 5 (50)
Greater China 58 35
Central (88) (62)
_____ _____
Operating profit from reportable segments 534 219
System Fund (11) (102)
Operating exceptional items (note 5) (29) (270)
_____ _____
Operating profit/(loss) 494 (153)
Net financial expenses (139) (140)
Fair value gains on contingent purchase consideration 6 13
_____ _____
Profit/(loss) before tax 361 (280)
_____ _____
4. Revenue
Disaggregation of revenue
Year ended 31 December 2021
Americas EMEAA Greater China Central Total
$m
$m $m $m $m
Franchise and base management fees 683 120 91 - 894
Incentive management fees 8 29 25 - 62
Central revenue - - - 197 197
_____ _____ _____ _____ _____
Revenue from fee business 691 149 116 197 1,153
Revenue from owned, leased and managed lease hotels 83 154 - - 237
_____ _____ _____ _____ _____
774 303 116 197 1,390
System Fund revenues 928
Reimbursement of costs 589
_____
Total revenue 2,907
_____
Year ended 31 December 2020
Americas EMEAA Greater China Central Total
$m
$m $m $m $m
Franchise and base management fees 452 93 61 - 606
Incentive management fees 5 14 16 - 35
Central revenue - - - 182 182
_____ _____ _____ _____ _____
Revenue from fee business 457 107 77 182 823
Revenue from owned, leased and managed lease hotels
55 114 - - 169
_____ _____ _____ _____ _____
512 221 77 182 992
_____ _____ _____ _____
System Fund revenues 765
Reimbursement of costs 637
_____
Total revenue 2,394
_____
At 31 December 2021, the maximum exposure remaining under performance
guarantees was $85m (2020: $72m).
5. Exceptional items
2021 2020
$m $m
Cost of sales:
Derecognition of right-of-use assets and lease liabilities - 22
Gain on lease termination - 30
Provision for onerous contractual expenditure - (10)
Reorganisation costs - (8)
_____ _____
- 34
Administrative expenses:
Reorganisation costs - (19)
Acquisition and integration costs - (6)
Litigation and commercial disputes (25) (5)
_____ _____
(25) (30)
Impairment loss on financial assets - (48)
Other impairment charges:
Management agreements - (48)
Property, plant and equipment - (90)
Right-of-use assets - (16)
Associates (4) (19)
Contract assets - (53)
_____ _____
(4) (226)
_____ _____
Operating exceptional items (29) (270)
_____ _____
Financial expenses - (14)
_____ _____
Fair value gains on contingent purchase consideration - 21
_____ _____
Exceptional items before tax (29) (263)
_____ _____
Tax on exceptional items 3 52
Exceptional tax 26 -
_____ _____
Tax (note 6) 29 52
_____ _____
Litigation and commercial disputes
In 2021, relates to the provisionally agreed costs to settle two commercial
disputes, $18m in the Americas region and $7m relating to a leased property in
the EMEAA region.
In 2020, related to the agreed cost of settlement of $14m in respect of a
lawsuit in the EMEAA region, offset primarily by the partial release of a 2019
provision related to a lawsuit in the Americas region which was settled in
2020.
These costs are presented as exceptional reflecting (i) the nature of the 2021
disputes which arose as a direct result of trading performance during
Covid-19; (ii) the quantum of the settlements; and (iii) in respect of
releases, consistency with the treatment applied in prior years.
Other impairment charges: associates
Relates to the reversal of the $4m fair value gain recorded in 2020 on the put
option over part of the Group's investment in the InterContinental Barclay
hotel. The classification as exceptional is consistent with the presentation
of the initial gain (included within the net impairment charge in 2020).
Tax
An exceptional tax credit of $26m has been recorded as a result of the
enactment of a change to the UK rate of corporate income tax from 19% to 25%,
effective 1 April 2023. The change has resulted in the re-measurement of
those UK deferred tax assets and liabilities which are forecast to be utilised
or to crystallise after this effective date, using the higher tax rate. A
further credit of $4m has been recorded within the Group statement of
comprehensive income in respect of movements in deferred tax assets and
liabilities originally recorded there. The value attributable to
unrecognised deferred tax assets has increased by $34m as a result of the rate
change. This has no impact on the reported tax charge.
6. Tax
2021 2020
Profit/(loss) Tax Tax Profit/(loss) Tax Tax
rate
$m $m rate $m $m
Before exceptional items and System Fund
401 (125) 31% 85 (32) 38%
System Fund (11) - (102) -
Exceptional items (note 5) (29) 29 (263) 52
_____ _____ _____ _____
361 (96) (280) 20
_____ _____ _____ _____
Analysed as:
Current tax (143) (34)
Deferred tax 47 54
_____ _____
(96) 20
_____ _____
Further analysed as:
UK tax 28 36
Foreign tax (124) (16)
_____ _____
(96) 20
_____ _____
The 2021 UK tax charge includes credits of $26m in respect of the announced
increase in the UK rate of corporate income tax (see note 5).
The deferred tax asset has increased from $113m to $147m in the year and
comprises $127m (31 December 2020: $103m) in the UK and $20m (31 December
2020: $10m) in respect of other territories. The deferred tax asset has been
recognised based upon forecasts consistent with those used in the going
concern assessment.
7. Earnings/(loss) per ordinary share
2021 2020
Basic earnings/(loss) per ordinary share
Profit/(loss) available for equity holders ($m) 266 (260)
Basic weighted average number of ordinary shares (millions) 183 182
Basic earnings/(loss) per ordinary share (cents) 145.4 (142.9)
_____ _____
Diluted earnings/(loss) per ordinary share
Profit/(loss) available for equity holders ($m) 266 (260)
Diluted weighted average number of ordinary shares (millions) 184 182
Diluted earnings/(loss) per ordinary share (cents) 144.6 (142.9)
_____ _____
Diluted weighted average number of ordinary shares is calculated as:
2021 2020
millions millions
Basic weighted average number of ordinary shares 183 182
Dilutive potential ordinary shares 1 -
______ ______
184 182
_____ _____
8. Dividends
The final dividend of 85.9¢ per ordinary share (amounting to $157m) is
proposed for approval at the AGM on 6 May 2022. No dividends were paid in
2021 or 2020.
9. Reconciliation of profit/(loss) for the year to cash flow from operations
2021 2020
$m $m
Profit/(loss) for the year 265 (260)
Adjustments for:
Net financial expenses 139 140
Fair value gains on contingent purchase consideration (6) (13)
Income tax charge/(credit) 96 (20)
Operating profit adjustments:
Impairment loss on financial assets - 88
Other impairment charges 4 226
Other operating exceptional items 25 (4)
Depreciation and amortisation 98 110
_____ _____
127 420
Contract assets deduction in revenue 35 25
Share-based payments cost 28 21
Share of losses of associates and joint ventures 8 14
_____ _____
71 60
System Fund adjustments:
Depreciation and amortisation 94 62
Impairment (reversal)/loss on financial assets (6) 24
Other impairment (reversals)/charges (3) 41
Other operating exceptional items - 20
Share-based payments cost 13 11
Share of losses of associates 2 1
_____ _____
100 159
Working capital and other adjustments:
Increase in deferred revenue 39 1
Changes in working capital 79 (30)
Other adjustments (8) 2
_____ _____
110 (27)
Cash flows relating to exceptional items (12) (87)
Contract acquisition costs, net of repayments (42) (64)
_____ _____
Total adjustments 583 568
_____ _____
Cash flow from operations 848 308
_____ _____
10. Net debt
2021 2020
$m $m
Cash and cash equivalents 1,450 1,675
Loans and other borrowings - current (292) (869)
Loans and other borrowings - non-current (2,553) (2,898)
Lease liabilities - current (35) (34)
Lease liabilities - non-current (384) (416)
Derivative financial instruments hedging debt values (67) 13
_____ _____
Net debt* (1,881) (2,529)
_____ _____
* See the Use of Non-GAAP measures section.
In the Group statement of cash flows, cash and cash equivalents is presented
net of $59m bank overdrafts (31 December 2020: $51m).
Cash and cash equivalents includes $9m (31 December 2020: $5m) restricted for
use on capital expenditure under hotel lease agreements and therefore not
available for wider use by the Group. An additional $77m (31 December 2020:
$44m) is held within countries from which funds are not currently able to be
repatriated to the Group's central treasury company.
Syndicated and Bilateral Facilities
The Group's $1,275m revolving syndicated bank facility and $75m revolving
bilateral facility were both undrawn at 31 December 2021 and 31 December 2020.
The following table details performance against the Group's covenant tests,
which were waived until 31 December 2021 and have been relaxed for test dates
in 2022. The measures used in these tests are calculated on a frozen GAAP
basis and do not align to the values reported by the Group as Non-GAAP
measures:
2021 2020
Covenant EBITDA ($m) 601 272
Covenant net debt ($m) 1,801 2,375
Covenant interest payable ($m) 133 111
Leverage 3.00 8.73
Interest cover 4.52 2.45
Liquidity ($m) 2,655 2,925
11. Movement in net debt
2021 2020
$m $m
Net (decrease)/increase in cash and cash equivalents, net of overdrafts
(236) 1,430
Add back financing cash flows in respect of other components of net debt:
Principal element of lease payments 32 65
Issue of long-term bonds, including effect of currency swaps
- (1,093)
Repayment/(issue) of commercial paper 828 (738)
Repayment of long-term bonds - 290
Decrease in other borrowings - 125
_____ _____
860 (1,351)
_____ _____
Decrease in net debt arising from cash flows 624 79
Other movements:
Lease liabilities (7) 144
Increase in accrued interest (1) (5)
Disposals 3 19
Exchange and other adjustments 29 (101)
_____ _____
24 57
_____ _____
Decrease in net debt 648 136
Net debt at beginning of the year (2,529) (2,665)
_____ _____
Net debt at end of the year (1,881) (2,529)
_____ _____
12. Assets and liabilities sold
Three hotels in the Americas region have been sold in 2021. Total cash
consideration of $46m was received with no gain or loss arising after charging
disposal costs. Net assets of $44m disposed comprised $45m property, plant and
equipment and $2m right-of-use assets, less $3m lease liabilities. The net
cash inflow arising was $44m.
In 2020, the Group sold one hotel in EMEAA, the Holiday Inn Melbourne Airport.
Total consideration of $2m was received with a total gain, net of disposal
costs, of $3m. The gain was included in other operating income in the Group
income statement.
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