TIDMIHG
RNS Number : 1106N
InterContinental Hotels Group PLC
21 October 2016
21 October 2016
InterContinental Hotels Group PLC
Third Quarter Trading Update
Solid trading and strong signings performance
Highlights
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* Global Q3 comparable RevPAR(1) up 1.3%, and up 1.8%
Q3 YTD
* Enhanced global scale: 7k rooms opened in Q3,
increasing net system size 3.8% YoY to 754k rooms
* Building future growth: 19k rooms signed; highest for
Q3 since 2008, taking pipeline to 230k rooms
Richard Solomons, Chief Executive of InterContinental Hotels Group
PLC, said:
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"We delivered a solid performance in the third quarter, leveraging
our global scale to drive 3.8% net system growth and 1.3% RevPAR growth.
We remain focused on executing our commercial strategy to drive competitive
advantage. This includes broadening the footprint of our global portfolio
of brands, across which we drove our highest signings for eight years,
including our best ever third quarter performance for Greater China.
Enhancements to IHG Rewards Club, including the roll-out of our preferential
member pricing initiative, 'Your Rate', continue to drive excellent
results. This, together with our initiatives to utilise digital innovation
to enhance all stages of the guest journey, means we will continue
to generate more customised and informed interactions with our guests
and deliver improved returns for owners.
Looking ahead, while industry RevPAR growth has slowed, the fundamentals
for the sector, and particularly for IHG, remain compelling. This,
combined with our winning strategy and the strength of our cash generative
business model, will enable us to drive sustainable growth into the
future. Despite the uncertain environment in some markets, we remain
confident in the outlook for the remainder of the year."
Third Quarter RevPAR performance
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Americas
RevPAR was up 1.9% in Q3, and 2.2% Q3 YTD. In the US RevPAR was up
1.4% in Q3, and 1.9% in the first 9 months, with occupancy levels of
more than 75% driven by continued record levels of industry demand.
Performance continued to be impacted by our concentration in oil producing
markets, where RevPAR was down 7.3%, compared to 2.5% growth in the
rest of the estate. Elsewhere in the region, Mexico delivered double
digit RevPAR growth, we drove a solid performance in Latin America
and the Caribbean, and Canada was up 6.7% due to strong trading in
urban markets.
Europe
RevPAR was flat in Q3, and up 1.2% Q3 YTD. Germany delivered mid-single
digit RevPAR growth in Q3, and Russia/CIS drove 20% growth benefiting
from increased domestic travel. 2.5% RevPAR growth in the UK reflects
solid trading in the provinces partially offset by flat performance
in London, where industry-wide supply increases continue to have an
impact. Ongoing challenging trading conditions in France, Turkey and
Belgium resulted in significant RevPAR declines in those countries.
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Asia, Middle East & Africa
RevPAR was down 0.1% in Q3, and down 0.2% Q3 YTD. Performance in the
region outside the Middle East was strong, with 3.9% RevPAR growth
in Q3 overall. India delivered RevPAR growth of 21%, Japan was flat,
and Australasia and Southeast Asia were up low to mid-single digits,
the latter led by Vietnam and Thailand. In the Middle East, RevPAR
was down 7.7% due to the ongoing impact of low oil prices.
Greater China
RevPAR was up 0.9% in Q3, and 1.8% Q3 YTD. Q3 growth of 2.2% in mainland
China continued to be led by tier one cities, where RevPAR was up nearly
6%. A low single digit RevPAR decline in Hong Kong reflects some improvement
in trading, but Macau continues to be affected by industry-wide challenging
conditions with RevPAR down 14%.
1 RevPAR growth is at constant exchange rates (CER) unless otherwise
stated.
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Strategic progress
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Strengthening our preferred brands
* In InterContinental Hotels & Resorts' 70(th)
anniversary year, we are strengthening its position
as the world's largest luxury hotel brand, signing 12
properties year to date. This is our best performance
in eight years, and includes the signing of our first
InterContinental hotel in the Maldives in Q3.
* Our innovative new design solutions are driving
momentum for the Holiday Inn brand family, with more
than 13k room signings, our best Q3 performance since
2007.
* We are strengthening our position in the fast-growing
boutique segment, by signing our most Hotel Indigo
rooms since Q3 2007, including the first Hotel Indigo
in Poland. We continue to expand our Kimpton
portfolio with the Gray Hotel in Chicago, the fifth
opening for the brand this year.
* The latest phase of our Crowne Plaza refresh is
already driving success, with the brand voted best
Upscale Hotel Brand in North America by Business
Travel News, up from eighth position last year.
* We continue to grow our extended stay footprint, with
over 7k rooms added to our pipeline so far this year,
our best performance in eight years.
* Building on the appeal that the EVEN Hotels brand has
in the US, where we now have five open and six
pipeline hotels, we have signed a deal to develop a
portfolio of EVEN hotels in Australia and New
Zealand.
Building and leveraging scale
* Net system size up 3.8% year on year to 754k rooms
(5,099 hotels).
* 7k rooms (51 hotels) opened in the quarter and 3k
rooms (22 hotels) removed. During Q4 2016, consistent
with historic trends we expect an increase in room
openings pace, although we expect room removals to be
in line with the average of the previous 3 quarters.
* 19k rooms (128 hotels) were signed; our highest Q3
since 2008, including 6k rooms in Greater China,
driving the region's best ever third quarter and year
to date signings performance.
* IHG's pipeline increased to 230k rooms, with 90% in
our ten priority markets and approximately 45% under
construction.
* 4% share of industry room supply, 14% share of active
industry room pipeline.
Driving revenue delivery through technology and loyalty
* 'Your Rate by IHG Rewards Club', our preferential
member pricing initiative, is helping to drive record
growth in enrolments(1) , and a doubling in the
growth rate of our direct channels(2) , with no
negative impact on ADR(2) .
* In August we signed a global partnership with Alipay,
China's leading 3(rd) party online payment solutions
company. This will make IHG the first global hotel
company to give Chinese guests the ability to pay via
Alipay, available through all of our online and
mobile channels, as well as across our full estate of
hotels globally.
* Our innovative cloud-based Guest Reservation System
remains on track for phased roll out starting in late
2017.
Financial position and capital allocation
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The financial position of the group remains robust, with an on-going
commitment to an efficient balance sheet and an investment grade credit
rating.
In August the group issued a GBP350m, 10-year bond at a 2.125% coupon
rate, the lowest funding rate IHG has achieved in the Sterling bond
market.
Foreign exchange
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The US Dollar continued to strengthen through Q3 which reduced group
RevPAR to flat (0.0%) in the quarter when reported at actual exchange
rates. A breakdown of constant currency vs. actual currency RevPAR by
region is set out in Appendix 2.
Currency markets continue to be volatile and we expect foreign exchange
to have an impact on 2016 reported profit. If current spot exchange
rates(3) had existed throughout H2 2015, reported operating profit for
that period would have been $9m higher.
Note that whilst the UK comprises around 5% of our group revenues, approximately
50% of our gross central overhead and 40% of Europe regional overhead
are in sterling. At 30 June 2016 exchange rates, approximately 70% of
our debt was denominated in sterling.
(1) As at August 2016
(2) Since Your Rate by IHG Rewards Club launch on May 3, 2016
(3) As at 14 October 2016
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Appendix 1: RevPAR Movement Summary
Q3 2016 YTD 2016
RevPAR Rate Occ. RevPAR Rate Occ.
------- ------- ---------- ------- --------- ----------
Group 1.3% 1.0% 0.3%pts 1.8% 1.2% 0.4%pts
Americas 1.9% 2.0% 0.0%pts 2.2% 2.1% 0.1%pts
Europe 0.0% 1.4% (1.1)%pts 1.2% 1.5% (0.2)%pts
AMEA (0.1)% (2.9)% 2.1%pts (0.2)% (1.0)% 0.5%pts
G. China 0.9% (2.7)% 2.4%pts 1.8% (2.7)% 2.8%pts
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Appendix 2: RevPAR at constant exchange rates (CER) vs. actual exchange
rates (AER)
Q3 2016 YTD 2016
CER AER Difference CER AER Difference
--------- --------- ------------- -------- ---------- -------------
Group 1.3% 0.0% 1.3%pts 1.8% 0.2% 1.6%pts
Americas 1.9% 1.6% 0.3%pts 2.2% 1.5% 0.7%pts
Europe 0.0% (7.1)% 7.1%pts 1.2% (3.8)% 5.0%pts
AMEA (0.1)% 4.2% (4.3)%pts (0.2)% (0.2)% 0.0%pts
G. China 0.9% (3.7)% 4.6%pts 1.8% (2.4)% 4.2%pts
------------ --------- --------- ------------- -------- ---------- -------------
Appendix 3: Q3 system & pipeline summary (rooms)
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System Pipeline
Openings Removals Net Total Signings Total
--------- --------- ------ -------- --------- --------
Group 7,333 (2,789) 4,544 754,265 18,894 229,895
Americas 4,328 (2,831) 1,497 483,905 8,154 101,791
Europe 883 (117) 766 107,340 1,924 23,858
AMEA 294 28 322 73,731 2,703 39,344
G. China 1,828 131 1,959 89,289 6,113 64,902
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Appendix 4: Q3 YTD system & pipeline summary (rooms)
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System Pipeline
Openings Removals Net Total YoY% Signings Total
--------- --------- ------ -------- ------ --------- --------
Group 24,769 (14,872) 9,897 754,265 3.8% 53,406 229,895
Americas 17,171 (12,841) 4,330 483,905 2.3% 28,193 101,791
Europe 1,523 (894) 629 107,340 2.0% 5,668 23,858
AMEA 2,148 (990) 1,158 73,731 7.2% 5,362 39,344
G. China 3,927 (147) 3,780 89,289 11.8% 14,183 64,902
---------- --------- --------- ------ -------- ------ --------- --------
Appendix 5: Definitions
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AER: Actual exchange rates used for each respective period.
CER: Constant exchange rates.
RevPAR: Revenue per available room.
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For further information, please contact:
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Investor Relations (Heather Wood; Adam +44 (0)1895 +44 (0)7808
Smith; Neeral Morzaria): 512176 098724
Media Relations (Yasmin Diamond; Zoë +44 (0)1895 +44 (0)7736
Bird): 512008 746167
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Conference call for Analysts and Shareholders:
A conference call with Paul Edgecliffe-Johnson (Chief Financial Officer)
will commence at 9.00am London time on 21 October and can be accessed
on www.ihgplc.com/investors/2016-third-quarter-trading-update. There
will be an opportunity to ask questions.
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UK Toll +44 (0) 20 7108 6248
UK Toll Free 0800 279 3953
US Toll +1 210 795 1098
Passcode IHG Investor
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A replay of the 9.00am conference call will be available following the
event - details are below:
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US Toll +1 203 369 3501
US Toll Free 800 945 4244
Replay pin 1021
US conference call and Q&A:
There will also be a conference call, primarily for US investors and
analysts, at 9.00am New York Time on 21 October with Paul Edgecliffe-Johnson
(Chief Financial Officer). There will be an opportunity to ask questions.
----------------------------------------------------------------------------------------
UK Toll +44 (0) 20 7108 6248
UK Toll Free 0800 279 3953
US Toll +1 210 795 1098
Passcode IHG Investor
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A replay of the 9.00am US conference call will be available following
the event - details are below:
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US Toll +1 203 369 3280
US Toll Free 800 456 0339
Replay pin 1021
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Website:
The full release and supplementary data will be available on our website
from 7.00am (London time) on 21 October. The web address is
www.ihgplc.com/investors/results-and-presentations
Notes to Editors:
IHG(R) (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is
a global organisation with a broad portfolio of hotel brands, including
InterContinental(R) Hotels & Resorts, Kimpton(R) Hotels & Restaurants,
HUALUXE(R) Hotels and Resorts, Crowne Plaza(R) Hotels & Resorts, Hotel
Indigo(R), EVEN(R) Hotels, Holiday Inn(R) Hotels & Resorts, Holiday
Inn Express(R), Staybridge Suites(R) and Candlewood Suites(R).
IHG franchises, leases, manages or owns nearly 5,100 hotels and more
than 750,000 guest rooms in almost 100 countries, with nearly 1,500
hotels in its development pipeline. IHG also manages IHG(R) Rewards
Club, the world's first and largest hotel loyalty programme, with nearly
99 million members worldwide.
InterContinental Hotels Group PLC is the Group's holding company and
is incorporated in Great Britain and registered in England and Wales.
More than 350,000 people work across IHG's hotels and corporate offices
globally.
Visit www.ihg.com for hotel information and reservations and www.ihgrewardsclub.com
for more on IHG Rewards Club. For our latest news, visit: www.ihg.com/media
and follow us on social media at: www.twitter.com/ihg, www.facebook.com/ihg
and www.youtube.com/ihgplc.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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