Intercontinental Hotels Group Plc - Preliminary Results for the year to 31 December 2018

 

Reported

 

Underlying4

2018

2017

% Change

 

2018

2017

% Change

REPORTABLE SEGMENTS1

 

 

 

 

 

 

 

Revenue2

$1,933m

$1,730m

12%

 

$1,828m

$1,730m

6%

Revenue from fee business

$1,486m

$1,379m

8%

 

$1,469m

$1,379m

7%

Operating profit2

$816m

$758m

8%

 

$805m

$758m

6%

Fee margin3

52.4%

52.4%

0.0%pts

 

52.5%

52.4%

0.1%pts

Adjusted EPS

292.1¢

244.6¢

19%

 

290.5¢

244.6¢

19%

 

 

 

 

 

 

 

GROUP RESULTS5

 

 

Total revenue

$4,337m

$4,075m

6%

 

KEY METRICS

Operating profit

$670m

$724m

(7)%

 

·  $27.4bn total gross revenue (up 6.6%)

Basic EPS

184.7¢

279.8¢

(34)%

 

·  2.5% global FY RevPAR (Q4 = 1.9%)

Total dividend per share

114.4¢

104.0¢

10%

 

·  4.8% net system growth to 837k rooms

Net debt

$1,530m

$1,851m

(17)%

 

·  99k signings; 271k pipeline rooms

1 Excludes System Fund results, hotel cost reimbursements and exceptional items. 2  Comprises the Group's fee business and owned, leased, and managed lease hotels, and excludes exceptional items. 3 Also excludes owned, leased and managed lease hotels, and significant liquidated damages. 4 Reportable segment results excluding owned asset disposals, significant liquidated damages, current year acquisitions and stated at constant FY 2017 exchange rates (CER). Includes System Fund results, hotel cost reimbursements and excludes exceptional items (except for Basic EPS).

 

·      FY Comparable RevPAR: Americas = 1.9% (US: FY = 1.3%; Q4 = 0.6%); EMEAA = 2.7%, Greater China = 6.9%.

 

·      Strongest net system size growth in a decade of 4.8% (+4.3% organic), including 56k room additions, up 17% YoY. 18k rooms removed leaving 837k rooms across the global estate.

 

·      Highest signings in a decade (+18% YoY) with nearly half of total signings from the Holiday Inn Brand Family.

 

·      Continued to strengthen and grow existing brands with increased pace of openings and innovations to enhance guest experience and owner returns including:

 

o  Holiday Inn Express new guest room designs now open or committed to in >50% estate globally.

o  Holiday Inn "Open Lobby" public space design now open or committed to in 80% of Europe estate.

o  Crowne Plaza renovation completed or on-going across one-third of the US estate. 

o  Kimpton: continued global expansion, presence secured in 14 countries, with 18 deals signed in the year.

 

·      Rapid progress augmenting portfolio with new brands targeted at strategically identified opportunities:

 

o  avid hotels: >170 signed since launch, including in Canada and Mexico, and brand launched in Germany.

o  voco: our new upscale brand, successfully brought to market with 16 hotels (3k rooms) signed.

o  Regent Hotels & Resorts: acquired and brand re-positioned, with three further signings.

o  Six Senses: acquired brand in the top tier of luxury; expect to grow to over 60 hotels in the next 10 years.

o  New brand launch: Building on existing mainstream strength, 2019 planned launch of all-suites upper midscale brand targeted at an $18bn industry segment where strong guest and owner demand has driven a ~70% increase in room supply in the last 4 years.

 

 

Keith Barr, Chief Executive Officer, IHG, said:

"We have made excellent progress in 2018 executing against the strategic initiatives I set out a year ago to accelerate our growth, whilst delivering a strong financial performance. The investments we have made have had a significant impact, allowing us to further evolve our established brands, move quickly to strengthen our portfolio both organically and by acquisition, and create real momentum in our business. We have made further progress in 2019 with the acquisition of the top-tier luxury brand Six Senses and the planned launch of a new all-suites upper midscale brand.  

 

Our strategic focus on accelerating our net rooms growth helped drive a net system size increase of 4.8%, and our best performance for both openings and signings in a decade, leaving us well positioned for future growth.

 

Global RevPAR increased 2.5%, with underlying operating profit growing 6%. This, combined with a 19% rise in underlying EPS, underpins our decision to raise the total dividend for the year by 10% and follows the payment of a $500m special dividend in January 2019, taking total shareholder returns announced for the year to over $700m.

 

The investments we have made have been funded through our group efficiency programme which is on track to deliver $125m of annual savings by 2020. We have successfully implemented a more efficient and agile organisational structure whilst building resources and capabilities focused on the most attractive growth opportunities.  

 

We also further strengthened our owner proposition and revenue delivery enterprise, with the successful global roll-out of IHG Concerto, featuring our innovative new Guest Reservation System. This gives IHG the most sophisticated, cloud-based platform in the industry, with further enhancements set to be deployed in 2019.

 

The fundamentals of our business remain strong, and while there are macro-economic and geopolitical uncertainties in some markets, we are confident in the year ahead and that our strategy will deliver industry-leading net rooms growth over the medium term."