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99.1
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Third
Quarter Trading Update dated 21 October 2016
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Highlights
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●
Global Q3 comparable
RevPAR1
up 1.3%, and up
1.8% Q3 YTD
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Enhanced global scale: 7k rooms
opened in Q3, increasing net system size 3.8% YoY to 754k
rooms
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Building future growth: 19k
rooms signed; highest for Q3 since 2008, taking pipeline to 230k
rooms
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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."
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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.
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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.
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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' 70th 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.
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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.
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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.
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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.
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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.
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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
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Net system size up 3.8% year on year to 754k rooms (5,099
hotels).
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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.
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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.
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IHG's pipeline increased to 230k rooms, with 90% in our ten
priority markets and approximately 45% under
construction.
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4% share of industry room supply, 14%
share of active industry room pipeline.
Driving revenue delivery through technology and
loyalty
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'Your Rate by IHG Rewards Club', our preferential member pricing
initiative, is helping to drive record growth in
enrolments1, and a doubling in
the growth rate of our direct channels2, with no negative
impact on ADR2.
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In August we signed a global partnership with Alipay, China's
leading 3rd 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.
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Our innovative cloud-based Guest Reservation System remains on
track for phased roll out starting in late 2017.
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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 £350m, 10-year bond at a 2.125%
coupon rate, the lowest funding rate IHG has achieved in the
Sterling bond market.
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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 rates3 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
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Q3 2016
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YTD 2016
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RevPAR
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Rate
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Occ.
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RevPAR
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Rate
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Occ.
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Group
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1.3%
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1.0%
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0.3%pts
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1.8%
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1.2%
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0.4%pts
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Americas
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1.9%
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2.0%
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0.0%pts
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2.2%
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2.1%
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0.1%pts
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Europe
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0.0%
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1.4%
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(1.1)%pts
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1.2%
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1.5%
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(0.2)%pts
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AMEA
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(0.1)%
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(2.9)%
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2.1%pts
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(0.2)%
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(1.0)%
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0.5%pts
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G.
China
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0.9%
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(2.7)%
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2.4%pts
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1.8%
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(2.7)%
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2.8%pts
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Appendix 2: RevPAR at constant exchange rates (CER) vs. actual
exchange rates (AER)
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Q3 2016
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YTD 2016
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CER
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AER
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Difference
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CER
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AER
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Difference
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Group
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1.3%
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0.0%
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1.3%pts
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1.8%
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0.2%
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1.6%pts
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Americas
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1.9%
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1.6%
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0.3%pts
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2.2%
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1.5%
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0.7%pts
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Europe
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0.0%
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(7.1)%
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7.1%pts
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1.2%
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(3.8)%
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5.0%pts
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AMEA
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(0.1)%
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4.2%
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(4.3)%pts
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(0.2)%
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(0.2)%
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0.0%pts
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G.
China
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0.9%
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(3.7)%
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4.6%pts
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1.8%
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(2.4)%
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4.2%pts
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Appendix 3: Q3 system & pipeline summary (rooms)
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System |
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Pipeline
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Openings
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Removals
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Net
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Total |
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Signings
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Total
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Group
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7,333
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(2,789)
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4,544
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754,265 |
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18,894
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229,895
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Americas
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4,328
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(2,831)
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1,497
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483,905 |
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8,154
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101,791
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Europe
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883
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(117)
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766
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107,340 |
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1,924
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23,858
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AMEA
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294
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28
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322
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73,731 |
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2,703
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39,344
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G.
China
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1,828
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131
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1,959
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89,289 |
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6,113
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64,902
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Appendix 4: Q3 YTD system & pipeline summary
(rooms)
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System
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Pipeline
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Openings
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Removals
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Net
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Total
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YoY%
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Signings
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Total
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Group
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24,769
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(14,872)
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9,897
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754,265
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3.8%
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53,406
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229,895
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Americas
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17,171
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(12,841)
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4,330
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483,905
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2.3%
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28,193
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101,791
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Europe
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1,523
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(894)
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629
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107,340
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2.0%
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5,668
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23,858
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AMEA
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2,148
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(990)
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1,158
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73,731
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7.2%
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5,362
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39,344
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G.
China
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3,927
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(147)
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3,780
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89,289
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11.8%
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14,183
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64,902
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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 Smith; Neeral Morzaria):
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+44
(0)1895 512176
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+44
(0)7808 098724
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Media
Relations (Yasmin Diamond; Zoë Bird):
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+44
(0)1895 512008
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+44
(0)7736 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
UK Toll
Free
US
Toll
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+44 (0)
20 7108 6248
0800
279 3953
+1 210
795 1098
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Passcode
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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
US Toll
Free
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+1 203
369 3501
800 945
4244
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Replay
pin
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1021
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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.
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UK
Toll
UK Toll
Free
US
Toll
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+44 (0)
20 7108 6248
0800
279 3953
+1 210
795 1098
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Passcode
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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
US Toll
Free
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+1 203
369 3280
800 456
0339
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Replay
pin
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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
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Notes to Editors:
IHG® (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global
organisation with a broad portfolio of hotel brands,
including InterContinental® Hotels
& Resorts,
Kimpton® Hotels
& Restaurants,
HUALUXE® Hotels
and Resorts,
Crowne Plaza®
Hotels & Resorts,
Hotel
Indigo®,
EVEN®
Hotels, Holiday Inn® Hotels &
Resorts, Holiday Inn
Express®,
Staybridge
Suites® and
Candlewood
Suites®.
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® 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.
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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.
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InterContinental Hotels Group PLC
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(Registrant)
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By:/s/
F. Cuttell
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Name: F. CUTTELL
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Title: ASSISTANT COMPANY SECRETARY
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Date: 21 October 2016
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