Company Announcements

RNS Number : 3300V
InterContinental Hotels Group PLC
09 August 2022
 

 

InterContinental Hotels Group PLC

Half Year Results to 30 June 2022

 

9 August 2022

 

Reported

 

Underlying1

 

2022

2021

% change2

 

% change

 

REPORTABLE SEGMENTS1:







   Revenue1

$840m

$565m

+49%


+53%


   Revenue from fee business1

$664m

$505m

+31%


+33%


   Operating profit1

$377m

$188m

+101%


+91%


   Fee margin1

55.9%

44.1%

+11.8%pts



   Adjusted EPS1

121.7¢

40.4¢

+201%


KEY METRICS:

GROUP RESULTS:

 

 

 

 

·  $11.7bn total gross revenue1

   Total revenue

$1,794m

$1,179m

+52%


+48% vs 2021, (14)% vs 2019

   Operating profit

$361m

$138m

+162%


·  +51% global H1 RevPAR1

   Basic EPS

117.4¢

26.2¢

+348%


vs 2021, (10.5)% vs 2019

   Interim dividend per share

43.9¢

- ¢

NM


·  +44% global Q2 RevPAR1

   Net debt1

$1,718m

$2,458m

(30)%


vs 2021, (4.5)% vs 2019

1   Definitions for non-GAAP measures can be found in the 'Use of key performance measures and 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.

 

Further significant improvement in trading: Americas Q2 RevPAR vs 2019 +3.5%, strong sequential improvement also in EMEAA to (10.3)%; Greater China (48.9)% due to localised travel restrictions

H1 average daily rate +24% vs 2021, up +4% vs 2019; occupancy +10%pts vs 2021, (10)%pts vs 2019

Gross system growth +4.8% YOY, net +3.0% YOY (adjusted for Holiday Inn and Crowne Plaza removals in H2 2021, and the impact of exiting Russia in H1 2022)

Opened 14.9k rooms (96 hotels) in H1; global estate now at 883k rooms (6,028 hotels)

Signed 30.7k rooms (210 hotels) in H1; global pipeline now at 278k rooms (1,858 hotels)

Luxury & Lifestyle portfolio now 445 hotels, 12% of system size; a further 287 hotels represent 19% of group pipeline

IHG One Rewards transforms our loyalty programme; further developments to enhance our digital advantage

Operating profit from reportable segments of $377m, +101% vs 2021, (down (8)% vs 2019); reported operating profit of $361m, after System Fund result of $3m and operating exceptionals of $(19)m

Net cash from operating activities of $175m (2021: $173m), with adjusted free cash flow1 of $142m (2021: $147m); net debt reduction of $163m since start of the year includes $227m of net foreign exchange benefit

Trailing 12-month adjusted EBITDA1 of $812m, +78% on a year earlier; net debt:adjusted EBITDA reduced to 2.1x

Resumption of interim dividend at 43.9¢, +10% on prior interim payment in 2019

Additional $500m of surplus capital to be returned via new share buyback programme

 

Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said:

 

"We saw continued strong trading in the first half of 2022 with increased demand for travel in most of our markets. This brought group RevPAR very close to pre-pandemic levels in the second quarter. Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform.

 

The recovery in demand and pricing led to group profit more than doubling versus 2021, with profitability in the Americas now ahead of 2019. The EMEAA region also saw excellent improvement in performance. Whilst Greater China had a tough period as Covid-related travel restrictions were tightened, we have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains.

 

Our overall performance reflects a continued focus to build a stronger business for our guests and owners. We have significantly enhanced and expanded our brand portfolio in recent years, and invested in our enterprise platform to drive performance and accelerate our growth. The investments we have made to innovate our technology and distribution channels continue to drive improvements in both the guest experience and owner returns. Some of the biggest achievements this year include the critical step of transforming our loyalty programme, IHG One Rewards, and the redesign of our mobile app and digital channels to deliver a faster, simpler booking experience.

 

We opened almost 100 hotels in the half, passing the 6,000 milestone globally, and signed more than 200 properties to take our pipeline to 1,858, representing over 30% of today's system size. We continue to see growing interest in conversion opportunities which represented more than a quarter of openings in the period. This illustrates the increasing appeal to hotel owners of accessing IHG's brands and the significant scale and demand delivery capability of our enterprise platform.

 

IHG's clear strategy over the last five years has seen us emerge from the pandemic a stronger and more resilient company, delivering on key priorities and progressing our ambitious 2030 Journey to Tomorrow responsible business commitments. Whilst the economic outlook faces uncertainties as central banks and governments take action to manage inflation, we remain confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth. Having reinstated a final dividend in respect of 2021 six months ago, the strong performance seen in 2022 to date, together with the confidence we have in continued progress, has led us to reintroduce an interim dividend at a level 10% higher than when last paid and launch an initial $500m share buyback."

 

For further information, please contact:

Investor Relations:         Stuart Ford (+44 (0)7823 828 739); Aleksandar Milenkovic (+44 (0)7469 905 720);
Joe Simpson (+44 (0)7976 862 072)

Media Relations:           Amy Shields (+44 (0)7881 035 550); Claire Scicluna (+44 (0)7776 778 808)

 

Presentation for analysts and institutional 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 9 August 2022 and can be accessed at www.ihgplc.com/en/investors/results-and-presentations or directly on https://www.investis-live.com/ihg/62cea1f8d9438014007fbae3/ihgq2

 

Analysts and institutional shareholders wishing to ask questions should use the following dial-in details for a Q&A facility:

 

UK:

0800 640 6441

UK local:

0203 936 2999

US:

+1 855 979 6654

US local:

+1 646 664 1960

All other locations:

+44 203 936 2999

Passcode:

91 98 94

 

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. 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:

07 07 21

 

Website:

The full release and supplementary data will be available on our website from 7:00am (London time) on 9 August. The web address is www.ihgplc.com/en/investors/results-and-presentations.

 

About IHG Hotels & Resorts:

IHG Hotels & Resorts [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 One Rewards, one of the world's largest hotel loyalty programmes, IHG has over 6,000 open hotels in more than 100 countries, and more than 1,800 in the development pipeline.

 

-     Luxury & Lifestyle: Six Senses Hotels Resorts Spas, Regent Hotels & Resorts, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo

-     Premium: voco hotels, HUALUXE Hotels & Resorts, Crowne Plaza Hotels & Resorts, EVEN Hotels

-     Essentials: Holiday Inn Hotels & Resorts, Holiday Inn Express, avid hotels

-     Suites: Atwell Suites, Staybridge Suites Holiday Inn Club Vacations, Candlewood Suites

 

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 and IHG One Rewards. To download the new IHG One Rewards app, visit the Apple App or Google Play stores.

 

For our latest news, visit our Newsroom and follow us on LinkedIn, Facebook and Twitter.

 

 

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.

 

 

System size and pipeline progress

 

The long-term attractiveness of IHG's brands and the markets we operate in have supported continued openings and signings activity in the first half of 2022:

 

Global system of 883k rooms (6,028 hotels) at 30 June 2022, weighted 68% across midscale segments and 32% across upscale and luxury

Gross growth of +4.8% YOY, with 14.9k rooms (96 hotels) opened in H1, of which 8.3k (51 hotels) in Q2

Removal of 12.4k rooms (59 hotels) in H1; this includes the impact of ceasing all operations in Russia, resulting in the removal of 6.5k rooms (28 hotels), equivalent to 0.7% of IHG's global system

Underlying removal rate of 1.8% YOY; the removals in H1 2022 equate to an annualised underlying rate of 1.4%, broadly in line with historical average underlying rate of ~1.5%

Net system size growth of +3.0% YOY (adjusted for Holiday Inn and Crowne Plaza removals in H2 2021, and for Russia operations in H1 2022); unadjusted YOY growth of (0.2)%

Global pipeline of 278k rooms (1,858 hotels), which represents over 30% of current system size; pipeline growth YTD of +2.7% (+3.5% excluding 2.2k rooms impact from 7 pipeline hotels in Russia)

Signed 30.7k rooms (210 hotels) in H1, of which 14.1k (90 hotels) in Q2

Signings mix drives pipeline to be weighted 56% across midscale segments and 44% across upscale and luxury

More than 40% of the global pipeline is under construction, broadly in line with prior years

 

System and pipeline summary of movements in H1 2022 and total closing position (rooms):

 


System

Pipeline

Openings

Removals

Net

Total

YTD%

YOY%

Adjusted YOY%a

Signings

Total

Group

14,949

(12,379)

2,570

882,897

+0.3%

(0.2)%

+3.0%

30,732

278,275

Americas

4,287

(2,188)

2,099

501,188

+0.4%

(1.8)%

+0.6%

11,504

100,401

EMEAA

6,828

(8,844)

(2,016)

222,184

(0.9)%

(0.6)%

+5.2%

8,111

80,079

G. China

3,834

(1,347)

2,487

159,525

+1.6%

+5.9%

+8.2%

11,117

97,795

 

a Adjusted for: 1) the removal of Holiday Inn and Crowne Plaza rooms that occurred in H2 2021, driven by the review that was completed that year with 34.3k (151 hotels) exiting IHG's system for these two brands for the year as a whole, of which 13.3k (57 hotels) exited in H1 2021 and 21.1k (94 hotels) exited in the H2 2021; 2) the removal of 6.5k rooms (28 hotels) in Russia, following IHG's announcements regarding ceasing all operations in that country.

 

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

 

Our four strategic priorities put the expanded brand portfolio we have built in recent years at the heart of our business, and our owners and guests at the heart of our thinking. Our priorities recognise the crucial role of a sophisticated, well-invested digital approach, ensure we meet our growing responsibility to care for and invest in our people, and make a positive difference to our communities and planet.

 

We have increased our level of investment spending to meet these priorities, including on developing our brand portfolio and hotel formats further, the critical step of transforming our loyalty programme, and rolling out more digital solutions. We have also invested in the resiliency and flexibility of our core revenue-generating technology platforms to support future growth, alongside enhancing the capabilities of our core HR systems and in developments that help IHG and our hotel owners meet our Journey to Tomorrow responsible business commitments.

 

We will continue to be agile and thoughtful on how we focus and shift our own cost resources, together with those of the System Fund, as part of building out competencies and capturing the significant opportunities for growth of IHG's enterprise system. In 2021, fee business cost savings of $75m were achieved and are sustainable into this and future years. As intended, the additional temporary reductions in the 2021 cost base of $25m have been redeployed this year. Whilst there is some pressure to the underlying level of cost inflation in our overheads base, IHG is adept at driving incremental efficiencies and scale advantage to help offset these, and delivering productivity gains to further support our hotel owners.

 

 

1.   Build loved and trusted brands

 

We continue to invest in all our brands, helping achieve scale and focusing on design, service and quality. Recent highlights included:

 

Continued growth of our most established brands.

The InterContinental brand opened three hotels in the period; growing to 205 across more than 60 countries. Its pipeline of 83 hotels and resorts represents growth equivalent to 30% of current system size.

Having reached 3,000 hotels in its 30th year last year, Holiday Inn Express is now in 50 countries, and has a pipeline for a further 26% growth. Holiday Inn Express achieved more than 60 signings in the period, with our Candlewood Suites and Staybridge Suites extended stay brands together adding over 40 more.

 

Strengthening Holiday Inn and Crowne Plaza. Our review in 2021 addressed the consistency and quality of the estates for these two brands, resulting in the removal of 151 hotels or 10% of their combined estate, and owners committing to improvements in 83 hotels.

Both brands have pipelines equivalent to over 20% of their current system size.

Two-thirds of the Americas Holiday Inn estate and three-quarters of the Crowne Plaza estate will have been recently updated. As part of this, 28 Crowne Plaza hotels are being renovated in 2022, equivalent to the combined number renovated over the previous four years. Recently renovated hotels are showing strong performance metrics across occupancy, room rate, revenue market share and guest satisfaction scores.

 

Driving more conversion to our brands. Conversions have grown to represent around a quarter of signings and openings thanks to growing demand for access to our revenue-generating systems, marketing and loyalty programmes to support performance, increase efficiencies and drive returns for owners.

Vignette Collection, our Luxury & Lifestyle conversion brand that launched last August, has secured its first eight properties, with further strong progress expected over the remainder of 2022.

Our upscale conversion brand, voco, has reached 80 open and pipeline hotels. With nine openings in the period, these included the first all-suites format in Doha, a flagship property for the brand in Melbourne, and a presence in four new country markets. The brand was recognised as the World's Leading Premium Hotel Brand at the World Travel Awards, and is achieving top guest satisfaction scores versus equivalent competing brands.

Portfolio opportunities are also increasing, due to the broader suite of brands and the overall enterprise system we can offer owners to support their growth; three portfolio deals in EMEAA in H1 added 10 hotels across six brands.

 

Excellent progress in growing our Luxury & Lifestyle presence. We have grown this category to 12% of IHG's system size, and the proportion of our pipeline is bigger still at 19%, up from 13% five years ago.

A number of brand halo properties opened in the period, including an all-suites-and-villas Regent property in Phu Quoc (Vietnam) and Australia's first Kimpton (Sydney).

There were six further Kimpton signings in the period and more resort destinations for the brand including Kimpton Aysla Mallorca will be opening soon.

Signings for Six Senses increased its pipeline to 35 hotels, on top of 21 currently open.

Hotel Indigo is set for a record year of openings; it has reached 134 properties across more than 20 countries, which is set to nearly double with a pipeline of 120 hotels. There were 16 signings for the brand in the half, including new resort properties in Barbados and Grand Cayman.

 

First Atwell Suites openings and the rapid scale of avid.

The first two Atwell Suites properties to open have been the prototype new-build at Denver Airport and an adaptive re-use at Miami Brickell, with 23 further hotels in the pipeline.

Five new avid hotels opened in the half, taking the brand's presence to 53 locations, with the first opening in Canada later this year. The avid pipeline totals 157 properties and the brand is outperforming peers in guest satisfaction.

 

 

2.   Customer centric in all we do

 

Delivering True Hospitality for Good means creating seamless and tailored guest experiences that generate increased demand, whilst delivering high returns for our owners.

 

IHG's Guest Satisfaction Index (GSI) has continued to maintain a global score of over 100, which reflects outperformance against peers. The score on a rolling 12-month basis to June 2022 was higher than the equivalent 2019 pre-Covid benchmark.

 

Transforming loyalty

Our 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, they 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 for owners.

 

This year we launched our transformed loyalty programme, IHG One Rewards, to offer industry-leading value, richer benefits and greater choice for members to enhance their stays. It also aims to attract more next-generation travellers. The enhanced rewards include free breakfast for Diamond Elite members and the ability for guests to choose the rewards that matter to them most through the introduction of Milestone Rewards. To date:

14% more points have been redeemed year-to-date compared to 2019, with an 18% increase in reward nights booked.

Enrolments in Q2 2022 were more than 30% higher than the comparable period last year, and year-on-year 11 million more loyalty members have been added.

Within a month of launching Milestone Rewards, engagement has exceeded our expectations and over 800,000 rewards have been earned.

We also launched our largest marketing campaign in more than a decade to help raise awareness and drive more revenue to our hotels for our owners.

 

Lowering costs and driving efficiencies for our owners

With increasing supply costs and supply chain issues, together with labour shortages, our owners around the world rely heavily on IHG to help them run an efficient business. We have continued to expand the benefits for owners of being part of the IHG system, whilst also improving guest experience.

We have further expanded the scale and reach of our procurement solutions for operating supplies and equipment. More than 2,900 hotels in the Americas are now participating in our F&B purchasing programme. These programmes support menu optimisation, help owners mitigate inflationary pressures and achieve absolute savings. Smaller owner groups recently onboarded in the UK have seen typical savings of 7-15% on food costs and 10‑15% on beverage costs.

We are also helping owners lower construction and refurbishment costs in our latest format upgrades and helping reduce other costs associated with operating and maintaining their building infrastructure.

IHG Voice Cloud, our enhanced intelligent call services solution, will be supporting several hundred hotels by the end of the year. This typically saves an owner around 50 hours a month of on-premises call handling, whilst also driving better guest experiences, boosting loyalty enrolment and delivering revenue up-sell.

We are piloting renewable energy sourcing on behalf of our owners and developing a power purchase agreement in a very competitive market. Owners have also been able to lock-in substantial savings though our fixed negotiated rates on other energy costs.

The rollout of our IHG NextGen Payments system during 2022 and 2023 adds more guest payment options including e-wallet, and lowers transaction and support fees for our owners.

 

 

3.   Create digital advantage

 

Our digital-first approach drives a higher percentage of direct bookings, creates cost efficiencies, and delivers data and insights to optimise revenue management decisions. Developments to date in 2022 included:

 

Booking flow improvements. Newly designed webpages that combine rooms and rates choices have contributed to increases in booking conversion of up to one percentage point and revenue uplift of 2 to 3%. This new web experience has also driven a 10 percentage point increase in enrolments to our IHG One Rewards programme.

 

Stay enhancements and attribute pricing. Pilots progressing well to drive cross-sell of non-room extras and for room up-sell which enable owners to generate maximum value from the unique attributes of their room inventory.

 

Next generation IHG mobile app released. The IHG mobile app is our fastest-growing revenue channel. Amongst many enhancements, the new app offers streamlined booking and allows guests to check-in faster, and it powers IHG One Rewards to provide members with seamless access to their loyalty benefits, including the ability to choose and redeem Milestone Rewards. Enhancements are expected to further increase direct bookings and loyalty engagement, and drive incremental spend during stays. Since its relaunch, revenue driven by our mobile app for the Americas and EMEAA regions has been at 30% higher levels than 2019.

 

 

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.

 

People

Creating a culture where everyone feels valued and able to thrive is a vital part of our ability to attract, develop and retain a more diverse range of talent with different experiences and backgrounds. We are making investments in multiple areas to achieve this:

 

Over the next three years we are investing significantly to enhance the capabilities of our core HR platforms and technology, to deliver a more seamless user experience and the right data and insights needed to drive performance. A new flagship learning and development offering is also being developed across the business to support talent.

We continue to make progress on our commitment to increase ethnic minority leadership representation at a corporate level, notably US ethnic minority leadership where we have committed to doubling representation between 2020 and 2025 (was 13%, now 20%, with a goal of 26% in 2025). Conscious inclusion training is being extended to frontline hotel employees and we are also piloting new inclusive hiring practices in different markets.

As one of many programmes to diversify representation in leadership roles, more than 100 colleagues have so far graduated from our RISE programme to increase the number of women in General Manager and other senior positions in our managed hotels.

 

Communities

IHG is proud to be at the heart of thousands of communities around the world, as we strive to make a difference every day by delivering our purpose of True Hospitality for Good.

 

The IHG Skills Academy, a free virtual learning platform, is being translated into more languages to broaden the global reach of our IHG Academy programme and continue to break down barriers to education and training.

In response to the war in Ukraine and the humanitarian crisis it has caused, IHG made significant donations to our humanitarian charity partners, and has committed to work with our hotel owners in other countries to shelter and recruit refugees. We have a dedicated Refugees Careers Site at careers.ihg.com/Ukraine-support.

 

Planet

As part of our Journey to Tomorrow commitments, our 2030 science-based target is to reduce scope 1, 2 and 3 greenhouse gas emissions by 46%.

 

New training has been rolled out for our Hotel Energy Reduction Opportunities (HERO) tool, which gives owners bespoke sustainability recommendations, costs and savings based upon their hotel's individual data and characteristics.

We continue to roll-out automated data collection across our business to make it easier for our hotels to understand and measure their environmental impacts, identify areas for reduction and track progress.

An energy metric has been introduced for all hotels as part of our strategy to decarbonise the existing estate, as well as adding further measures to our brand standards to conserve energy and water.

As part of our commitments to tackle waste, we recently announced a global collaboration with Unilever to replace bathroom miniatures with bulk amenities for 4,000 more hotels. The initiative is expected to save at least 850 tonnes of plastic annually in the Americas region alone and provide hotels with savings of 10-30% versus current costs.

 

 

Capital allocation: resumption of interim dividend at 10% increased level and $500m share buyback

 

IHG's 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.

 

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 that drives long-term shareholder value creation, funding a sustainably growing dividend, and then returning surplus capital to shareholders, whilst targeting our leverage ratio within a range of 2.5-3.0x net debt:adjusted EBITDA to maintain an investment grade credit rating. IHG's capital allocation approach delivered a strong track record of returning $13.6bn to shareholders since demerger in 2003 through to 2019, $2.4bn through ordinary dividends and $11.2bn via additional returns.

 

In February, we announced the results for 2021 showing that trading had improved significantly, leading to profitability rebounding, accompanied by strong cash flow and a reduction in net debt. This resulted in our net debt:adjusted EBITDA ratio returning to 3.0x at 31 December 2021. As a consequence, a final dividend of 85.9¢ in respect of 2021 was proposed by the Board and subsequently paid in May 2022, resulting in a cash outflow of $154m. This dividend was equivalent to the final payment in respect of 2019 that was withdrawn in 2020 in response to the onset of Covid.

 

With the further improvement in profitability and reduction in net debt in the first half of 2022, our net debt:adjusted EBITDA ratio reduced to 2.1x at 30 June 2022. The Board is therefore recommending an interim dividend of 43.9¢, which represents growth of 10% on the 39.9¢ interim dividend paid in 2019 (no interim dividend was paid in respect of 2020 or 2021). The ex-dividend date is Thursday 1 September 2022 and the Record date is Friday 2 September 2022. The dividend will be paid on Thursday 6 October 2022, resulting in a cash outflow of around $80m. This will result in total dividends paid to shareholders in 2022 amounting to approximately $235m.

 

Furthermore, the Board has reviewed the opportunity to return surplus capital to shareholders. As a result, an additional $500m is expected to be returned through a share buyback programme that will commence immediately and end no later than 31 January 2023. This initial additional return is considered appropriate in the current environment, maintaining our disciplined approach to investing in the business to drive future growth, which in 2022 includes significant increases in capital expenditure as well as substantial operating cost investment to deliver our strategic priorities.

 

It is expected that substantial additional capacity will be generated in the coming years to enable continued investment to drive growth, the funding of a sustainably growing ordinary dividend, and further surplus capital to be returned to shareholders. The Board will continue to actively assess these opportunities as the trading environment further evolves.

 

 

Summary of financial performance

INCOME STATEMENT SUMMARY


            6 months ended 30 June


 



 

2022

2021

%

 

$m

$m

change

Revenue

 



Americas

471

325

44.9

EMEAA

239

84

184.5

Greater China

36

59

(39.0)

Central

94

97

(3.1)


____

____

____

Revenue from reportable segmentsa

840

565

48.7


 



System Fund revenues

554

378

46.6

Reimbursement of costs

400

236

69.5


_____

_____

_____

Total revenue

1,794

1,179

52.2


_____

_____

_____

Operating profit

 



Americas

351

224

56.7

EMEAA

59

(27)

NMb

Greater China

5

31

(83.9)

Central

(38)

(40)

(5.0)


_____

____

_____

Operating profit from reportable segmentsa

377

188

100.5

Analysed as:

 

 

 

            Fee Business excluding central

410

264

55.3

            Owned, leased and managed lease

5

(36)

NMb

            Central

(38)

(40)

(5.0)


 



System Fund result

3

(46)

NMb


____

____

____

Operating profit before exceptional items

380

142

167.6

Operating exceptional items

(19)

(4)

375.0


____

____

____

Operating profit

361

138

161.6


 



Net financial expenses

(69)

(72)

(4.2)

Analysed as:

 

 

 

            Adjusted interest expensea

(64)

(72)

(11.1)

            System Fund interest

3

-

NMb

            Foreign exchange losses

(8)

-

NMb

 

 

 

 

Fair value gains on contingent purchase consideration

7

1

600.0


____

____

____

Profit before tax

299

67

346.3


 



Tax

(83)

(19)

336.8

Analysed as;

 



            Tax before exceptional items and System Funda

(88)

(42)

109.5

            Tax on exceptional items and exceptional tax

5

23

(78.3)


____

____

____

Profit for the period

216

48

350.0


 



Adjusted earningsc

224

74

202.7


 



Basic weighted average number of ordinary shares (millions)

184

183

0.5


____

____

____

Earnings per ordinary share

 




Basic

117.4¢

26.2¢

348.1


Adjusteda

121.7¢

40.4¢

201.2



 



Dividend per share

43.9¢

-

NMb



 



Average US dollar to sterling exchange rate

$1: £0.77

$1: £0.72

6.9


 



a   Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim 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 over the first half of 2022, with Group comparable RevPARa at the end of the first half reaching near pre-pandemic levels. Through the first half, trading conditions improved as government-mandated restrictions eased across many markets. Strong trading in Americas was predominantly driven by leisure demand in the US, supported by improving corporate and group bookings. Trading in the EMEAA region also saw strong sequential improvement whilst Greater China was impacted by localised travel restrictions for much of the first half.

 

Group comparable RevPARa improved 60.8% in the first quarter, then grew 43.9% in the second quarter and 50.7% in the half. When compared to the pre-pandemic levels of 2019, Group comparable RevPARa declined 17.7% in the first quarter, 4.5% in the second quarter and 10.5% in the half.

 

Our other key driver of revenue, net system size, decreased by 0.2% year-on-year to 882.9k rooms, impacted by 21.1k Holiday Inn and Crowne Plaza removals in H2 2021 related to last year's review of the estates of these two brands and by 6.5k of removals relating to Russia in H1 2022. Adjusting for these, net system size increased 3.0%.

 

During the six months ended 30 June 2022, total revenue increased by $615m (52%) to $1,794m, including a $164m increase in cost reimbursement revenue. Revenue from reportable segmentsb increased by $275m (49%) to $840m, driven by the improved trading conditions. Underlying revenueb increased by $287m to $833m, with underlying fee revenueb increasing by $162m. Owned, leased and managed lease revenue increased by $116m.

 

Operating profit and margin

Operating profit improved by $223m from $138m to $361m, including a $15m increase in charges from operating exceptional items and a $49m improvement in the System Fund result, from a $46m deficit to a $3m surplus.

 

Operating profit from reportable segmentsb increased by $189m (101%) to $377m, driven by improvement in trading conditions. Underlying operating profitb increased $175m to $368m.

 

Fee marginb increased by 11.8 percentage points to 55.9%, benefitting from the improvement in trading and focussed cost management.

 

The impact of the movement in average USD exchange rates for the first half of 2021 compared to the first half of 2022 netted to a $3m gain on operating profit from reportable segmentsb.

 

If the average exchange rate during July 2022 had existed throughout the first half of 2022, the 2022 operating profit from reportable segments would have been $4m 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 Group's loyalty programme, IHG One 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 six months to 30 June 2022, System Fund revenues increased $176m (46%) to $554m, primarily driven by the recovery in travel demand yielding higher assessment revenues.

 

The System Fund result improved from a $46m deficit to a $3m surplus, primarily due to the rebound in travel demand and associated assessment income, partially offset by increased investments in consumer marketing, loyalty and direct channels.

 

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 six months to 30 June 2022, reimbursable revenue increased by $164m (70%) to $400m. The increase reflects the overall recovery in US trading conditions.

 

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 key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim Financial Statements.



Operating exceptional items

Operating exceptional items totalled $19m and comprises the costs of ceasing operations in Russia and the impairment of contract assets relating to managed and franchised hotels in Russia. Further information on exceptional items can be found in note 5 to the Interim Financial Statements.

 

Net financial expenses

Net financial expenses decreased by $3m to $69m. Adjusted interesta, which excludes exceptional finance expenses, and adds back interest relating to the System Fund, reduced by $8m compared to 2021, driven by favourable translation of sterling bond interest expense.

 

Fair value gains on contingent purchase consideration

Contingent purchase consideration arose on the acquisition of Regent. The net gain of $7m (2021: $1m) relates to a favourable movement in the bond rates used in the valuation. The total contingent purchase consideration liability at 30 June 2022 is $66m (31 December 2021: $73m).

 

Taxation

The interim effective rate of tax on profit, before exceptional items and System Fund, was 28% (2021: 36%). This lower effective tax rate ('ETR') is a result of the continued recovery of the business, in particular, changes to the Group's profit mix and a lesser impact of fixed items of tax within the ETR (due to the higher profit base). Taxation within exceptional items totalled a credit of $5m (2021: $23m) and predominantly relates to the tax reliefs on the costs of ceasing business in Russia. Further information on tax within exceptional items can be found in note 5 to the Interim Financial Statements. Net tax paid totalled $124m (2021: $47m). Further information on tax can be found in note 6 to the Interim Financial Statements.

 

Earnings per share

The Group's basic earnings per ordinary share is 117.4¢ (2021: 26.2¢). Adjusted earnings per ordinary sharea increased by 81.3¢ to 121.7¢.

 

Dividends and shareholder returns

With the further improvement in profitability and reduction in net debt in the first half of 2022, our net debt:adjusted EBITDA ratio reduced to 2.1x at 30 June 2022. The Board is therefore recommending an interim dividend of 43.9¢, which represents growth of 10% on the 39.9¢ interim dividend paid in 2019 (no interim dividend was paid in respect of 2020 or 2021).

 

The ex-dividend date is Thursday 1 September 2022 and the Record date is Friday 2 September 2022. The corresponding dividend amount in Pence Sterling per ordinary share will be announced on 15 September 2022, calculated based on the average of the market exchange rates for the three working days commencing 12 September 2022. The dividend will be paid on Thursday 6 October, resulting in a cash outflow of around $80m. This will result in total dividends paid to shareholders in 2022 amounting to approximately $235m.

 

In addition to the interim dividend, in line with its strategy to return surplus capital to shareholders, in August 2022 the Board also approved a $500m share buyback programme that will commence on 9 August and end no later than 31 January 2023.

 

 

a   Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim Financial Statements.

 

 

Summary of cash flow, working capital, net debt and liquidity

 

Adjusted EBITDA reconciliation

 

            6 months ended 30 June

 


2022      

2021

 


   $m

 

$m

Restateda

 

 

 

 

 

Cash flow from operations

  336

259

 

Cash flows relating to exceptional items

    15

12

 

Impairment loss on financial assets

    (5)

(8)

 

Other non-cash adjustments to operating profit/loss

  (34)

(35)

 

System Fund result

    (3)

46

 

System Fund depreciation and amortisation

  (42)

(41)

 

Other non-cash adjustments to System Fund result

  (13)

(10)

 

Working capital and other adjustments

  124

(6)

 

Capital expenditure: contract acquisition costs (key money)

    35

16

 


  ________   

               ________   

 

Adjusted EBITDA

   413

233

 


 ____

 ____

 

 

 

CASH FLOW SUMMARY

            6 months ended 30 June

 

 

2022

2021

$m

 

$m

$m

change

 

 



Adjusted EBITDAb

413

233

180


 



Working capital and other adjustments

(124)

6


Impairment loss on financial assets

5

8


Other non-cash adjustments to operating profit/loss

34

35


System Fund result

3

(46)


Non-cash adjustments to System Fund result

55

51


Capital expenditure: contract acquisition costs (key money) net of repayments

(35)

(16)


Capital expenditure: maintenance

(15)

(9)


Cash flows relating to exceptional items

(15)

(12)


Net interest paid

(37)

(39)


Tax paid

(124)

(47)


Principal element of lease payments

(18)

(17)



____

____

____

Adjusted free cash flowb

142

147

(5)


 



Capital expenditure: gross recyclable investments

(1)

(9)


Capital expenditure: gross System Fund capital investments

(18)

(7)


Deferred purchase consideration paid

-

(13)


Disposals and repayments, including other financial assets

7

1


Dividends paid to shareholders

(154)

-



____

____

____

Net cash flow before other net debt movements

(24)

119

(143)


 



Add back principal element of lease repayments within adjusted free cash flow

18

17


Exchange and other non-cash adjustments

169

(65)



____

____

____

Decrease in net debtb

163

71

92


 



Net debt at beginning of the period

(1,881)

(2,529)



______

______

____

Net debt at end of the period

(1,718)

(2,458)

740

 

 

______

______

____

a The definition and reconciliation of Adjusted EBITDA has been amended to reconcile to the nearest GAAP measure, cash flow from operations, reflecting the fact Adjusted EBITDA is primarily used by the Group as a liquidity measure. The value of Adjusted EBITDA is unchanged from 2021.

b Definitions for non-GAAP measures can be found in the 'Use of key performance measures and non-GAAP measures' section along with reconciliations of these measures to the most directly comparable line items within the Interim Financial Statements.

 

 

Cash flow from operations

Cash flow from operations was $336m for the six months ended 30 June 2022, an increase of $77m on the previous year, primarily reflecting the increase in operating profit, offset by negative working capital movements (see below).

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 $10m to $27m, largely due to the non-recurrence of deferred consideration paid in H1 2021 of $13m in relation to the acquisition of the Regent brand. There was an overall increase in purchases of property, plant and equipment and intangible assets of $17m, partially offset by reduced investment in other financial assets of $9m. The Group had committed contractual capital expenditure of $26m at 30 June 2022 (31 December 2021: $17m).

 

Cash used in financing activities

Net cash outflows from financing activities totalled $172m (2021: $845m) primarily comprising payment of ordinary dividends of $154m. There were no debt repayments in H1 2022 (H1 2021: repayment of the £600m commercial paper under the UK Covid Corporate Financing Facility (CCFF)).

 

Adjusted free cash flow

Adjusted free cash flowa was an inflow of $142m, a reduction of $5m on the six months to June 2021, reflecting an improvement in operating profit from reportable segmentsa and system fund result, offset by related tax payments and net working capital outflows. Exceptional cash costs of $15m increased by $3m and include the cost of ceasing operations in Russia.

 

Working capital

Trade and other receivables increased by $117m, from $574m at 31 December 2021 to $691m, primarily due to the significant increase in RevPAR in the second quarter of 2022 compared to the fourth quarter of 2021. Trade and other payables reduced by $66m primarily driven by payment of the 2021 bonus. The cash inflow related to deferred revenue was $65m driven by an increase in the future redeemable points balance related to the loyalty programme.

 

Net and gross capital expenditure

Net capital expenditurea was $22m (2021: $1m) and gross capital expenditure was $72m (2021: $42m). Gross capital expenditure comprised: $53m maintenance capex and key money; $1m gross recyclable investments; and $18m System Fund capital investments. Net capital expenditure includes the offset from $4m proceeds from other financial assets, $3m net disposal proceeds, $3m key money repayments and $40m System Fund depreciation and amortisationb.

 

Net debt

At 30 June 2022, net debta was $1,718m (31 December 2021: $1,881m), after favourable foreign exchange of $227m driven by translation of the Group's sterling bond debt, offset by $58m of other non-cash adjustments.

 

Sources of liquidity

As at 30 June 2022, the Group had total liquidity of $2,613m (31 December 2021: $2,655m), comprising $1,350m of undrawn bank facilities and $1,263m of cash and cash equivalents (net of overdrafts and restricted cash). The change in total liquidity from December 2021 is due to the decrease in cash and cash equivalents, net of overdrafts, of $24m and unfavourable foreign exchange movement on cash of $70m, offset by the change in restricted cash balances of $52mc.

 

The Group currently has $2,550m 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.

 

a.     Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim Financial Statements.

b.     Excluding $2m depreciation of right-of-use assets.

c.     See note 10 within the Interim Financial Statements for further details. 

 

 

In April, IHG entered into a new $1.35bn syndicated bank revolving credit facility (RCF). The previous $1.275bn syndicated facility and $75m bilateral facility have been cancelled. The covenant amendments to the previous facilities announced in December 2020, which included a relaxation of covenants for June 2022 and December 2022 and the $400m minimum liquidity covenant, are no longer in effect. The new five-year RCF matures in April 2027. Two one-year extension options are at the lenders' discretion. There are two financial covenants: interest cover and leverage ratio. Covenants 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 below 4.0:1. These covenants now include the impact of IFRS 16, Leases, which was previously excluded due to 'frozen GAAP' treatment in the previous agreement. The new facility uses alternative reference rates instead of LIBOR.

 

At 30 June 2022 the leverage ratio was 2.16x and the interest cover ratio was 6.11x. See note 10 in the Interim Financial Statements for further information. The facility was undrawn at 30 June 2022.

 

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 had net liabilities of $1,175m at 30 June 2022 ($1,474m at 31 December 2021).

 

 

Additional revenue, global system size and pipeline analysis

 

 

Total gross revenue

Total gross revenuea 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.

 


6 months ended 30 June

 







2022

 

2021


%

 

$bn

 

$bn


changeb

Analysed by brand







 

 




InterContinental

1.7

 

1.0


65.6

Kimpton

0.6

 

0.3


116.9

Hotel Indigo

0.3

 

0.2


92.8

Crowne Plaza

1.3

 

1.0


35.8

Holiday Inn

2.4

 

1.6


46.7

Holiday Inn Express

3.8

 

2.7


40.4

Staybridge Suites

0.6

 

0.4


35.7

Candlewood Suites

0.4

 

0.3


20.3

Other

0.6

 

0.4


50.0


____


____


____

Total

11.7


7.9


48.0


____

 

____


____


 

 




Analysed by ownership type

 





Fee business

11.5

 

7.8


46.9

Owned, leased and managed lease

0.2

 

0.1


189.1


____

 

____


____

Total

11.7

 

7.9


48.0


____

 

____


____

 

  Total gross revenue in IHG's system increased by 48% (50% increase at constant currency) to $11.7bn, driven by the improvement in trading conditions in many markets.

 

a.     Definitions for the key performance measures can be found in the Use of key performance measures and non-GAAP measures section.

b.     Year-on-year percentage movement calculated from source figures.

 


RevPARa movement summary

 


Half Year 2022 vs 2021

Half Year 2022 vs 2019


RevPAR

ADR

Occupancy

RevPAR

ADR

Occupancy

Group

50.7%

24.4%

10.1%pts

(10.5)%

3.9%

(9.5)%pts

Americas

45.2%

22.1%

10.2%pts

(1.6)%

5.6%

(4.7)%pts

EMEAA

138.4%

35.3%

24.2%pts

(20.9)%

1.0%

(15.7)%pts

G. China

(27.2)%

(4.3)%

(11.9)%pts

(45.9)%

(17.9)%

(20.1)%pts

 


Q2 2022 vs 2021

Q2 2022 vs 2019


RevPAR

ADR

Occupancy

RevPAR

ADR

Occupancy

Group

43.9%

23.5%

9.0%pts

(4.5)%

7.4%

(8.1)%pts

Americas

37.0%

20.2%

8.5%pts

3.5%

9.0%

(3.7)%pts

EMEAA

146.8%

35.8%

28.8%pts

(10.3)%

4.0%

(10.4)%pts

G. China

(39.5)%

(8.9)%

(19.8)%pts

(48.9)%

(18.7)%

(23.5)%pts

 

 

RevPARa movement at constant exchange rates (CER) vs. actual exchange rates (AER)

 


Half Year 2022 vs 2021

Half Year 2022 vs 2019


CER

AER

Difference

CER

AER

Difference

Group

50.7%

48.6%

2.1%pts

(10.5)%

(11.2)%

0.7%pts

Americas

45.2%

45.1%

0.1%pts

(1.6)%

(1.9)%

0.3%pts

EMEAA

138.4%

121.7%

16.7%pts

(20.9)%

(23.7)%

2.9%pts

G. China

(27.2)%

(27.4)%

0.2%pts

(45.9)%

(43.6)%

(2.3)%pts

 


Q2 2022 vs 2021

Q2 2022 vs 2019


CER

AER

Difference

CER

AER

Difference

Group

43.9%

41.0%

2.9%pts

(4.5)%

(5.6)%

1.1%pts

Americas

37.0%

36.8%

0.2%pts

3.5%

3.2%

0.3%pts

EMEAA

146.8%

124.9%

21.9%pts

(10.3)%

(14.9)%

4.6%pts

G. China

(39.5)%

(40.9)%

1.4%pts

(48.9)%

(47.4)%

(1.5)%pts

 

 

Monthly RevPARa (CER)

 

2022 vs 2021

Jan

Feb

Mar

Apr

May

Jun

Group

54.8%

72.3%

56.9%

50.1%

43.8%

39.2%

Americas

53.7%

65.1%

55.7%

48.1%

37.6%

28.0%

EMEAA

92.7%

122.7%

146.1%

165.1%

156.3%

126.0%

G. China

5.6%

36.9%

(39.8)%

(51.5)%

(45.6)%

(17.7)%

 

 

2022 vs 2019

Jan

Feb

Mar

Apr

May

Jun

Group

(24.4)%

(18.1)%

(12.1)%

(7.9)%

(5.4)%

(0.6)%

Americas

(14.2)%

(8.2)%

(2.6)%

2.9%

2.0%

5.5%

EMEAA

(41.9)%

(36.6)%

(22.5)%

(17.2)%

(8.3)%

(6.0)%

G. China

(38.4)%

(31.7)%

(53.1)%

(58.6)%

(51.6)%

(35.5)%

 

 

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 2022 vs 2021, 2022 vs 2019, 2021 vs 2019 and 2020 vs 2019. See Use of key performance measures and non-GAAP measures section for further information on the definition of RevPAR.

 




            Hotels

 

          Rooms

 

Global hotel and room count

 

Change over


 

Change over

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

               21

                 -


               1,439

                 27

Regent

               8

                 1


               2,532

                 342


InterContinental

               205

                 1


               69,525

                 123


Vignette Collection

               2

                 1


               539

                 393


Kimpton

               75

                 -


               13,304

                 21


Hotel Indigo

               134

                 4


               17,056

                 713


voco

               40

                 9


               9,447

                 2,002


HUALUXE

               18

                 2


               5,147

                 544


Crowne Plaza

               402

                 (2)


             110,317

                 (861)


EVEN Hotels

               22

                 1


               3,180

                 186


Holiday Inna

           1,206

                 (12)


             220,860

                 (3,824)


Holiday Inn Express

            3,044

                 28


             320,970

                 3,641

avid hotels

               53

                 5


               4,771

                 491


Atwell Suites

2

2


186

186


Staybridge Suites

               314

                 (1)


               33,924

                 (382)


Candlewood Suites

               363

                 2


               32,222

                 197


Otherb

               119

                 (4)


               37,478

                 (1,229)



 _____

 ____


 _______

 ______

Total

6,028

37


882,897

                 2,570



 _____

 ____


 _______

 ______

Analysed by ownership type







Franchised

5,078

                 45


630,895

                 4,780


Managed

931

                 (8)


247,381

                 (2,210)


Owned, leased and managed lease

19  

-


4,621   

-



 _____

 ____


 _______

 ______

Total

6,028

                 37


882,897

                 2,570



 _____

 ____


 _______

 ______



 



 


 

a.   Includes 28 Holiday Inn Club Vacations properties (8,822 rooms) (2021: 28 Holiday Inn Club Vacations properties (8,679 rooms)).

b.   Includes three open hotels that will be re-branded to voco.




         Hotels

 

           Rooms

 

Global Pipeline

 

Change over


 

Change over

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

               35

                 2


               2,532

                 108

Regent

               8

                 -


               1,806

                 (132)


InterContinental

               83

                 4


               20,859

                 1,180


Vignette Collection

               1

                 1


               40

                 40


Kimpton

               40

                 5


               7,952

                 1,100


Hotel Indigo

               120

                 6


               19,403

                 951


voco

               34

                 (4)


               9,360

                 (730)


HUALUXE

               21

                 (2)


               5,506

                 (539)


Crowne Plaza

               114

                 18


               29,448

                 4,187


EVEN Hotels

               28

                 (1)


               4,776

                 (131)


Holiday Inn

               245

                 1


               47,234

                 (844)


Holiday Inn Express

               650

                 5


               82,079

                 (947)

avid hotels

               157

                 (7)


               13,601

                 (894)


Atwell Suites

               23

                 -


               2,268

                 (7)


Staybridge Suites

               164

                 8


               18,140

                 1,297


Candlewood Suites

               111

                 18


               9,213

                 1,448


Othera

               24

                 7


               4,058

                 1,228



 _____

 ____


 _______

 _____

Total

1,858

61


278,275

                 7,315



 _____

 ____


 _______

 _____

Analysed by ownership type







Franchised

1,328

38


162,276

                 4,444


Managed

529

23


115,844

                 2,871

Owned, leased and managed lease

1

-


155

                 -



 _____

 ____


 _______

 _____

Total

1,858

61


278,275

                 7,315



 _____

 ____


 _______

 _____

 

a.     Includes three voco pipeline hotels and five Vignette Collection pipeline hotels.

 

 

Regional performance reviews, system size and pipeline analysis

 

 

AMERICAS

 

            
            6 months ended 30 June

 

Americas Results

 



 

 

2022

2021

%

 

 

$m

$m

change

 

Revenue from the reportable segmenta




 


Fee business

413

296

39.5

 


Owned, leased and managed lease

58

29

100.0

 


____

____

____

 

Total


471

325

44.9

 


____

____

____

 

Operating profit from the reportable segmenta

 



 


Fee business

342

236

44.9

 


Owned, leased and managed lease

9

(12)

NMc

 


____

____

____

 



351

224

56.7

 

Operating exceptional items


-

(4)

NMc

 


____

____

____

 

Operating profit

351

220

59.5

 


____

_____

_______

 

 

 

Americas Comparable RevPARb movement on previous year

 

6 months ended

30 June 2022

Fee business

 


InterContinental

162.3%


Kimpton

101.0%


Hotel Indigo

62.8%


Crowne Plaza

83.2%


EVEN Hotels

108.9%


Holiday Inn

50.0%


Holiday Inn Express

34.2%


Staybridge Suites

29.1%


Candlewood Suites

20.1%


All brands

44.9%

 

Owned, leased and managed lease

 


All brands

119.5%



 

H1 Comparable RevPARb was up +45% vs 2021 (down (1.6)% vs 2019). Trading in January was challenging given the initial impacts on travel volumes as a result of the Omicron variant of Covid-19; sequential improvements in RevPARb resumed in February. Leisure demand continued to be strongest, with business demand strengthening as the period went on with more corporate bookings and group activity and events returning. Q2 RevPARb was up +37% vs 2021 (up +3.5% vs 2019) with occupancy of 70%; occupancy was four percentage points lower than 2019, which was more than offset by rate 9% higher than 2019 levels. US Q2 RevPARb was up +3.9% vs 2019 with occupancy four percentage points lower and rate 9% higher than 2019 levels. As the recovery has broadened, the range of performance has narrowed. Across our US franchised estate, which is weighted to domestic demand in upper midscale hotels, Q2 RevPARb increased by +5% vs 2019. The US managed estate, weighted to upscale and luxury hotels in urban locations, declined by (2)% vs 2019.

 

Revenue from the reportable segmenta in H1 increased by $146m (+45%) to $471m (a decrease of $49m or 9% vs 2019). Operating profit increased by $131m to $351m, driven by the increase in revenue. Operating profit from the reportable segmenta increased by $127m (+57%) to $351m (an increase of $7m or 2% vs 2019). There were $7m of incentive management fees recorded for the period (2021: $4m; 2019: $7m).

 

Fee business revenuea increased by $117m (+40%) to $413m. Fee business operating profita increased by $106m (+45%) to $342m, driven by the improvement in trading. Also benefiting from the prior delivery of sustainable fee business cost savings, H1 fee margina increased to 82.8%, compared to 79.7% in 2021 and 77.3% in 2019. Operating profit from the reportable segment included $2m of ongoing support received in the form of tax credits which relate to the Group's corporate office presence in certain locations, down from $5m benefit in the comparable period.

 

Owned, leased and managed lease revenue increased by $29m to $58m, with comparable RevPARb up 120% (down 23% vs 2019) leading to an owned, leased and managed leased operating profit of $9m compared to a $12m loss in the comparable period. Excluding the results of three owned EVEN hotels which were disposed and retained under franchise contracts in November 2021, revenue increased by $34m and operating profit improved by $17m.

 

 

a.     Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim 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

 

Americas hotel and room count

 

Change over


 

Change over

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

1

-


20

-


InterContinental

43

-


15,652

1


Kimpton

63

(1)


10,857

(151)


Hotel Indigo

70

4


9,282

537


voco

5

-


469

-


Crowne Plaza

112

-


28,035

105


EVEN Hotels

19

-


2,743

-


Holiday Inna

716

-


120,911

61


Holiday Inn Express

2,451

15


222,944

1,217

avid hotels

53

5


4,771

491


Atwell Suites

2

2


186

186


Staybridge Suites

296

-


30,992

(105)


Candlewood Suites

363

2


32,222

197


Otherb

99

(2)


22,104

(440)



 _____

 ____


 _______

 ______

Total

4,293

25


501,188

2,099



 _____

 ____


 _______

 ______

Analysed by ownership type







Franchised

4,118

31


463,430

3,173


Managed

172

(6)


36,431

(1,074)

Owned, leased and managed lease

3

-


1,327

-



 _____

 ____


 _______

 ______

Total

4,293

25


501,188

2,099



 _____

 ____


 _______

 ______

 

 

a.     Includes 28 Holiday Inn Club Vacations properties (8,822 rooms) (2021: 28 Holiday Inn Club Vacations properties (8,679 rooms)).

b.     Includes two open hotels that will be re-branded to voco.

 

 

 

 

 

 

 

 

 

 

 

 

            Hotels

 

             Rooms

 

Americas Pipeline

 

Change over


 

Change over

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

5

(1)


338

(133)


InterContinental

9

-


2.252

-


Kimpton

23

4


4,300

869


Hotel Indigo

28

(1)


4.009

(61)


voco

4

(1)


920

(125)


Crowne Plaza

8

-


1,644

1


EVEN Hotels

10

-


1,161

(5)


Holiday Inn

73

(1)


9,444

(24)


Holiday Inn Express

352

14


34,336

1,635

avid hotels

157

(7)


13,601

(894)


Atwell Suites

23

-


2,268

(7)


Staybridge Suites

143

6


14,910

860


Candlewood Suites

111

18


9,213

1,448


Othera

13

2


2,005

234



 ____

 ____


 ______

 ______

Total

959

33


100,401

3,798



 ____

 ____


 ______

 ______

Analysed by ownership type







Franchised

922

33


94,367

3,635


Managed

37

-


6,034

163



 ____

 ____


______

 ______

Total

959

33


100,401

3,798



 ____

 ____


 ______

 ______

 

a.     Includes one pipeline hotel that will be re-branded to voco.

 

Gross system size growth was +2.3% year-on-year. We opened 4.3k rooms (42 hotels) during the first half, including 25 hotels across the Holiday Inn Brand Family. There were five avid hotels opened, including Fort Lauderdale Airport, and four Hotel Indigo properties. The first two Atwell Suites properties opened in Miami and Denver. There were 2.2k rooms (17 hotels) removed in the first half.

 

Net system size declined (1.8)% year-on-year; on an adjusted basis (for the Holiday Inn and Crowne Plaza removals that occurred in the second half of 2021, driven by last year's review of the estates of these two brands), net system size growth was +0.6%.

 

There were 11.5k rooms (108 hotels) signed during the first half (including 3.7k (35 hotels) during Q2). There were 45 hotel signings across the Holiday Inn Brand Family and 38 across Staybridge Suites and Candlewood Suites. Other notable signings included a strong period for Kimpton with four signings, nine further avid hotels and four further Atwell Suites.

 

The pipeline stands at 100.4k rooms (959 hotels), which represents 20% of the current system size in the region.

 

 

 

  EMEAA


              6 months ended 30 June

EMEAA results

 



 

2022

2021

%

 

$m

$m

change

Revenue from the reportable segmenta





Fee business

121

53

128.3


Owned, leased and managed lease

118

31

280.6


____

____

____

Total


239

84

184.5


____

____

____

Operating profit/(loss) from the reportable segmenta

 




Fee business

63

(3)

NMc


Owned, leased and managed lease

(4)

(24)

(83.3)


____

____

____



59

(27)

NMc

Operating exceptional items


(19)

-

NMc



____

____

_____

Operating profit/(loss)

40

(27)

NMc


____

____

_____

 

 

 

 

 

EMEAA comparable RevPARb movement on previous year

6 months ended

30 June 2022

 

 

Fee business



Six Senses

161.6%


Regent

39.9%


InterContinental

115.8%


Kimpton

334.5%


Hotel Indigo

375.6%


voco

95.4%


Crowne Plaza

120.7%


Holiday Inn

143.5%


Holiday Inn Express

157.6%


Staybridge Suites

53.9%


All brands

135.1%




Owned, leased and managed lease



All brands

422.6%







H1 Comparable RevPARb was up +138% vs 2021 (down (20.9)% vs 2019). The industry faced some renewed challenges to travel volumes at the start of the year from the Omicron variant of Covid-19. However, from February and over subsequent months, easing of previous restrictions on international travel contributed to strong sequential improvements in RevPAR. Leisure stays and transient business were the strongest categories, with corporate bookings and group activity picking up in their pace of recovery as the period went on. Q2 RevPARb was up +147% vs 2021 (down (10.3)% vs 2019) with occupancy of 64%; occupancy was 10 percentage points lower relative to 2019, partially offset by rate 4% higher than 2019 levels. Variance in performance within the region continued to predominantly reflect the timing of the lifting of restrictions. The UK, which saw one of the earlier easing of restrictions, saw RevPARb down (8)% in H1 vs 2019 and down (2)% in Q2 vs 2019. Strong improvements in London trading saw Q2 RevPARb down (10)% vs 2019, rapidly closing the performance gap with the provinces which saw RevPARb up +1% vs 2019. Elsewhere, Q2 RevPARb vs 2019 was down (3)% in Australia, (6)% in Continental Europe, (8)% in the Middle East, (34)% in South East Asia & Korea and (50)% in Japan.

 

Revenue from the reportable segmenta in H1 increased by $155m (+185%) to $239m (a decrease of $99m or 29% vs 2019). Operating profit increased by $67m to a $40m profit, driven by the increase in revenue, partially offset by $19m of operating exceptional charges relating to ceasing all operations in Russia. Operating profit from the reportable segmenta increased by $86m to a $59m profit (a decrease of $29m vs 2019). There were $25m of incentive management fees recorded for the period (2021: $11m; 2019: $41m). Revenue and operating profit from the reportable segmenta also included the benefit of a $7m individually significant liquidated damages settlement.

 

Fee business revenuea increased by $68m (+128%) to $121m. Fee business operating profita increased to a $63m profit from a $3m loss in the comparable period, driven by the improvement in trading. Together with the prior delivery of sustainable fee business cost savings, H1 fee margina was 49.1%, compared to -5.7% in 2021 and 57.8% in 2019.

 

Owned, leased and managed lease revenue sharply increased by $87m to $118m, with comparable RevPARb up 423% (down 36% vs 2019) leading to an owned, leased and managed leased operating loss that decreased to $4m compared to a $24m loss in the comparable period. The lifting of travel restrictions, predominantly in the UK, began to ease the trading challenges on this largely urban-centred portfolio. Excluding the result of one InterContinental hotel which was disposed of in January 2022, revenue increased by $91m and operating loss decreased to $6m.

 

a.     Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim 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

 

2022

                2021


2022

2021

 

30 June

 31 December


30 June

31 December

Analysed by brand







Six Senses

19

-


1,289

19

Regent

4

1


1,113

342


InterContinental

109

1


32,667

106


Vignette Collection

2

1


539

393


Kimpton

11

1


2,318

172


Hotel Indigo

49

1


5,488

305


voco

29

8


7,758

1,876


Crowne Plaza

179

(3)


43,671

(1,157)


Holiday Inn

370

(10)


67,389

(3,435)


Holiday Inn Express

335

2


48,977

429


Staybridge Suites

18

(1)


2,932

(277)


Other

11

(2)


8,043

(789)



 _____

 ____


 _______

 ______

Total

1,136

(1)


222,184

(2,016)



 _____

 ____


 _______

 ______

Analysed by ownership type







Franchised

772

5


125,560

(147)


Managed

348

(6)


93,330

(1,869)

Owned, leased and managed lease

16

-


3,294

-



 _____

 ____


 _______

 ______

Total

1,136

(1)


222,184

(2,016)



 _____

 ____


 _______

 ______

 

 

 

 

 

         Hotels

 

           Rooms

 

EMEAA Pipeline

 

Change over


 

Change over

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

26

3


1,961

241

Regent

5

(1)


999

(342)


InterContinental

47

4


10,709

1,189


Vignette Collection

1

1


40

40


Kimpton

9

-


1,626

(48)


Hotel Indigo

45

1


7,068

64


voco

26

(5)


7,695

(1,058)


Crowne Plaza

44

4


11,040

579


Holiday Inn

94

(4)


18,803

(2,211)


Holiday Inn Express

96

(3)


14,855

(738)


Staybridge Suites

21

2


3,230

437


Othera

11

5


2,053

994



 ____

 ____


 ______

 _____

Total

425

7


80,079

(853)



 ____

 ____


 ______

 _____

Analysed by ownership type







Franchised

167

(8)


24,957

(2,088)


Managed

257

15


54,967

1,235

Owned, leased and managed lease

1

-


155

-



 ____

 ____


 ______

 _____

Total

425

7


80,079

(853)



 ____

 ____


 ______

 _____

 

a.     Includes two voco pipeline hotels and five Vignette Collection pipeline hotels.

 

Gross system size growth was +7.3% year-on-year. We opened 6.8k rooms (35 hotels) during the first half. There were 16 openings across the Holiday Inn Brand Family, including resort locations such as Holiday Inn Resort Ho Tram Beach (Vietnam) and Holiday Inn & Suites Sydney Bondi Junction, and urban locations such as Holiday Inn Express Auckland City Centre and at Cambridge West in the UK. There were eight voco properties opened, including Doha West Bay, Johannesburg and a flagship new-build at Melbourne Central. Other notable openings included InterContinental properties in Bali, Ras Al Khaimah and Appi Kogen Resort, Japan, and the first Vignette Collection hotel to open in Asia at Sindhorn Midtown Hotel Bangkok. There were 8.8k rooms (36 hotels) removed in the first half, of which 6.5k (28 hotels) related to our ceasing of operations in Russia.

 

Net system size declined (0.6)% year-on-year; on an adjusted basis (for the Holiday Inn and Crowne Plaza removals that occurred in the second half of 2021, driven by last year's review of the estates of these two brands, and also adjusting for the removal of hotels in Russia following IHG's announcement regarding ceasing all operations in that country), net system size growth was +5.2%.

 

There were 8.1k rooms (49 hotels) signed during the first half (including 5.8k (34 hotels) during Q2). This included 14 across the Holiday Inn Brand Family and a particularly strong period for the InterContinental brand with seven signings. Other notable signings included the fourth Kimpton in Thailand with Kimpton Hua Hin Resort, voco Osaka Central (the first for the brand in Japan) and a three-brand portfolio signing in Vietnam, bringing the Hotel Indigo, Crowne Plaza and Holiday Inn Express brands to Hoi An and its UNESCO world heritage site.

 

The pipeline stands at 80.1k rooms (425 hotels), which represents 36% of the current system size in the region.

 

 




GREATER CHINA


 

       6 months ended 30 June


 



Greater China results

2022

2021

%

 

$m

$m

change

 




Revenue from the reportable segmenta





Fee business

36

59

(39.0)



____

____

_____

Total


36

59

(39.0)


____

____

_____

Operating profit from the reportable segmenta

 




Fee business

5

31

(83.9)


____

____

____

Operating profit

5

31

(83.9)


____

____

____

 

 

 

Greater China comparable RevPARb movement on previous year

6 months ended

30 June 2022

 

 

Fee business



Regent

(20.0)%


InterContinental

(40.3)%


Hotel Indigo

(23.8)%


HUALUXE

(28.5)%


Crowne Plaza

(23.9)%


Holiday Inn

(18.5)%


Holiday Inn Express

(21.8)%


All brands

(27.2)%


 

 




 

H1 Comparable RevPARb was down (27.2)% vs 2021 (down (45.9)% vs 2019). Localised travel restrictions were reimplemented following increased Covid-19 cases, which saw the industry substantially impacted. At the peak of these restrictions, around 40% of IHG's estate was repurposed for quarantine hotels or temporarily closed. The monthly RevPARb performance bottomed in April at down (59)% vs 2019 levels, and saw sequential improvements resume in May; by June, overall RevPAR was down (36)% vs 2019. Tier 1 cities were the most severely impacted by the latest restrictions, declining (56)% in H1 vs 2019. Tier 2-4 cities, which are more weighted to domestic and leisure demand, performed better with a decline of (39)%; these cities were still significantly impacted given the larger Tier 1 cities represent much of the source markets for travellers into these locations. As many of the restrictions have now been lifted or reduced, a rapid recovery has begun. However, future intermittent lockdowns would continue to cause further trading volatility.

 

Revenue from the reportable segmenta in H1 decreased by $23m (39%) to $36m (a decrease of $30m or 45% vs 2019). Operating profit decreased by $26m to $5m driven by the reduction in revenue. Operating profit from the reportable segmenta decreased by $26m (84%) to $5m (a decrease of $31m vs 2019). The impact on trading of the Covid-related restrictions at our managed hotels led to $5m recognition of incentive management fees compared to $15m in 2021 (2019: $24m). H1 fee margina reduced to 13.9%, compared to 47.2% in 2021 and 54.5% in 2019.

 

a.     Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most directly comparable line items within the Interim 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

 

2022

2021


2022

2021

 

30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

1

-


130

8

Regent

4

-


1,419

-


InterContinental

53

-


21,206

16


Kimpton

1

-


129

-


Hotel Indigo

15

(1)


2,286

(129)


voco

6

1


1,220

126


HUALUXE

18

2


5,147

544


Crowne Plaza

111

1


38,611

191


EVEN Hotels

3

1


437

186


Holiday Inn

120

(2)


32,560

(450)


Holiday Inn Express

258

11


49,049

1,995


Othera

9

-


7,331

-



 ____

 ____


 _______

 _____

Total

599

13


159,525

2,487



 ____

 ____


 _______

 _____

Analysed by ownership type







Franchised

188

9


41,905

1,754


Managed

411

4


117,620

733



 ____

 ____


 _______

 _____

Total

599

13


159,525

2,487



 ____

 ____


 _______

 _____

 

a.     Includes one open hotel that will be re-branded to voco.

 


              Hotels

 

             Rooms

 

Greater China Pipeline

 

Change over


 

Change over

 

2022

2021


2022

2021

 

        30 June

31 December


30 June

31 December

Analysed by brand







Six Senses

4

-


233

-

Regent

3

1


807

210


InterContinental

27

-


7,898

(9)


Kimpton

8

1


2.026

279


Hotel Indigo

47

6


8,326

948


voco

4

2


745

453


HUALUXE

21

(2)


5,506

(539)


Crowne Plaza

62

14


16,764

3,607


EVEN Hotels

18

(1)


3,615

(126)


Holiday Inn

78

6


18,987

1,391


Holiday Inn Express

202

(6)


32,888

(1,844)


Other

-

-


-

-



 ____

 ____


 ______

 _____

Total

474

21


97,795

4,370



 ____

 ____


 ______

 _____

Analysed by ownership type







Franchised

239

13


42,952

2,897


Managed

235

8


54,843

1,473



 ____

 ____


 ______

 _____

Total

474

21


97,795

4,370



 ____

 ____


 ______

 _____

 

 

 

Gross system size growth was +10.1% year-on-year. The Covid-related restrictions in the latest period have however significantly impacted the ability for new hotels to open. There were 3.8k rooms (19 hotels) added to our system during the first half, a sharp reduction from the 7.0k rooms (36 hotels) in the comparable period. Those that were able to open included Holiday Inn & Suites Sanya Yalong Bay, Hualuxe Qingdao Licang, voco Nanjing Garden Expo and EVEN Hotel Chengdu Jinniu. There were 1.3k rooms (6 hotels) removed in the first half.

 

Net system size growth was +5.9% year-on-year; on an adjusted basis (for the Holiday Inn and Crowne Plaza removals that occurred in the second half of 2021, driven by last year's review of the estates of these two brands), net system size growth was +8.2%.

 

There were 11.1k rooms (53 hotels) signed during the first half (including 4.5k (21 hotels) during Q2). Of 30 franchise contracts signed during the first half, 13 were for Holiday Inn Express. This was a particularly strong period for Crowne Plaza, with a total of 16 signings growing its pipeline to 62 hotels. Other notable signings included: Regent Shenzhen Bay, a key market given the city's leading economic importance; our second Kimpton property in Suzhou; Hotel Indigo and the accompanying Holiday Inn Resort at Kanas Hemu, a rapidly growing ski resort; and Hotel Indigo Shanghai Harbour City, the first example of an online signing ceremony.

 

The pipeline stands at 97.8k rooms (474 hotels), which represents 61% of the current system size in the region.

 

 

Central


6 months ended 30 June


 




2022

2021

%

Central results

$m

$m

change

 




Revenue

94

97

(3.1)

Gross costs

(132)

(137)

(3.6)


____

____

____

Operating loss

(38)

(40)

(5.0)


____

____

____

 

 

Central revenue, which is mainly comprised of technology fee income, decreased by $3m (3%) to $94m, driven by the impact of localised travel restrictions for much of the first half in Greater China.

 

Gross costs decreased by $5m (3.6%) year-on-year, due to timing of spend.

 

The operating loss decreased by $2m.

 

 

Use of key performance measures and 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 managed and franchised hotels are owned by third parties.

 

Total gross revenue is used to describe this measure as it aligns with terms used in the Group's management and franchise agreements and therefore is well understood by owners and other stakeholders.

 

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 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 does 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 interim 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 foreign exchange gains / losses primarily related to the Group's internal funding structure and the following items of interest which are recorded within the System Fund:

Interest income is recorded in the System Fund on the outstanding cash balance relating to the IHG loyalty programme. These interest payments are recognised as interest expense for IHG.

Other components of System Fund interest income and expense, including capitalised interest, 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 page 28).

 

The exclusion of foreign exchange gains / losses provides greater comparability with covenant interest as calculated under the terms of the Group's revolving credit facility.

 

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 Interim 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 and foreign exchange gains / losses as excluded in adjusted interest (above), 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 interim 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 cash flow from operations, excluding cash flows relating to exceptional items, cash flows arising from the System Fund result, other non-cash adjustments to operating profit or loss, working capital and other adjustments, and contract acquisition costs (key money).

 

Adjusted EBITDA is useful to investors as an approximation of operational cash flow generation and is also relevant to the Group's banking covenants, which use Covenant EBITDA in calculating the leverage ratio. Details of covenant levels and performance against these is provided in note 10 to the Interim Financial Statements.

 

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 recovered from 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.

 

Changes in definitions to the 2021 Annual Report and Accounts

The following definitions have been amended:

 

Adjusted interest and adjusted earnings per ordinary share have been amended to exclude foreign exchange gains / losses recorded within financial expenses. Since the gains / losses are principally as a result of the Group's internal funding structure they are not reflective of the performance of the Group, excluding these amounts provides a more comparable year-on-year measure for investors and other users, aligned to how management monitor the business. Comparatives have not been restated as the impact of these changes are not material in 2021.

The definition and reconciliation of Adjusted EBITDA has been amended to reconcile to the nearest GAAP measure, cash flow from operations, reflecting the fact Adjusted EBITDA is primarily used by the Group as a liquidity measure. The value of Adjusted EBITDA is unchanged from 2021.

 

 

Revenue and operating profit non-GAAP reconciliations         

Highlights for the 6 months ended 30 June

 

Reportable segments

Revenue

 

Operating profit










2022

2021

%


2022

2021

%


$m

$m

change


$m

$m

change









Per Group income statement

1,794

1,179

52.2


361

138

161.6

System Fund

(554)

(378)

46.6

  

(3)

46

NMa

Reimbursement of costs

(400)

(236)

69.5


-

-

-

Operating exceptional items

-

-

-


19

4

375.0


_____

_____

_____


_____

_____

_____

Reportable segments

840

565

48.7


377

188

100.5


_____

_____

_____


_____

_____

_____

Reportable segments analysed as:








Fee business

664

505

31.5


372

224

66.1

Owned, leased and managed lease

176

60

193.3


5

(36)

NMa


_____

_____

_____


_____

_____

_____

Reportable segments

840

565

48.7


377

188

100.5

 

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

 

 








 


2022

2021

%


2022

2021

%


$m

$m

change


$m

$m

Change





  




 

Reportable segments (see above)

840

565

48.7

  

377

188

100.5

Significant liquidated damagesb

(7)

(6)

16.7

  

(7)

(6)

16.7

Owned and leased asset disposalsc

-

(6)

NMa

  

(2)

8

NMa

Currency impact

-

(7)

NMa

  

-

3

NMa


____

_____

_____

  

_____

_____

_____

Underlying revenue and underlying operating profit

833

546

52.6


368

193

90.7

 

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.

b. $7m recongnised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA and $6m recognised in 2021 reflects the significant liquidated damages related to one hotel in Greater China.

c. The results of one InterContinental Hotel have been removed in 2022 (being the year of disposal) and the prior year to determine underlying growth. The results of the hotels removed in 2021 (being the year of disposal of these hotels) have also been removed to determine underlying growth.

 

Underlying fee revenue and underlying fee operating profit


Revenue

Operating profit

 

 








 


2022

2021

%


2022

2021

%


$m

$m

change


$m

$m

change









Reportable segments fee business (see above)

664

505

31.5


372

224

66.1

Significant liquidated damagesb

(7)

(6)

16.7


(7)

(6)

16.7

Currency impact

-

(4)

NMa


-

1

NMa


_____

_____

_____


_____

_____

_____

Underlying fee revenue and underlying fee operating profit

657

495

32.7


365

219

66.7

 

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.

b.     $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA and $6m recognised in 2021 reflects the significant liquidated damages related to one hotel in Greater China.

Americas


Revenue

 

Operating profita

 

 








 


2022

2021

%


2022

2021

%


$m

$m

change


$m

$m

change









Per Interim financial statements

471

325

44.9


351

224

56.7









Reportable segments analysed as:








Fee business

413

296

39.5


342

236

44.9

Owned, leased and managed lease

58

29

100.0


9

(12)

NMb


_____

_____

_____


_____

_____

_____


471

325

44.9


351

224

56.7









Reportable segments (see above)

471

325

44.9


351

224

56.7

Owned and leased asset disposalsc

-

(5)

NMb

  

-

4

(100.0)

Currency impact

-

(1)

NMb


-

(1)

NMb


_____

_____

_____


_____

_____

_____

Underlying revenue and underlying operating profit

471

319

47.6


351

227

54.6









Owned, leased and managed lease included in the above

(58)

(24)

141.7


(9)

8

NMb


_____

_____

_____


_____

_____

_____

Underlying fee business

413

295

40.0


342

235

45.5

 

 

a.      Before exceptional items.

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.     The results of the hotels removed in 2021 (being the year of disposal of these hotels) have been removed to determine underlying growth.

 

EMEAA


Revenue

 

Operating profita

 









2022

2021

%


2022

2021

%

 


$m

$m

change


$m

$m

change

 





  




 

Per Interim financial statements

239

84

184.5

  

59

(27)

NMb

 









 

Reportable segments analysed as:








 

Fee business

121

53

128.3


63

(3)

NMb

 

Owned, leased and managed lease

118

31

280.6


(4)

(24)

83.3

 


_____

_____

_____


_____

_____

_____

 


239

84

184.5


59

(27)

NMb

 









 

Reportable segments (see above)

239

84

184.5


59

(27)

NMb

 

Significant liquidated damages

(7)

-

NMb


(7)

-

NMb

 

Owned and leased asset disposalsc

-

(1)

NMb


(2)

4

NMb

 

Currency impact

-

(5)

NMb


-

2

NMb

 


_____

_____

_____

  

_____

_____

_____

 

Underlying revenue and underlying operating profit

232

78

197.4


50

(21)

NMb

 





  




 

Owned, leased and managed lease included in the above

(118)

(27)

337.0


6

18

(66.7)

 


_____

_____

_____


_____

_____

_____

 

Underlying fee business

114

51

123.5


56

(3)

NMb

 

 

 

 

 

a.     Before exceptional items.

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.     The results of one InterContinental Hotel have been removed in 2022 (being the year of disposal) and the prior year to determine underlying growth.


Greater China


Revenue

 

Operating profita

 

 








 


2022

2021

%

  

2022

2021

%


$m

$m

change

   

$m

$m

change

Per Interim financial statements




  




Reportable segments analysed as:

36

59

(39.0)

   

5

31

(83.9)


_____

_____

_____

  

_____

_____

_____

Fee business

36

59

(39.0)

  

5

31

(83.9)









Reportable segments (see above)

36

59

(39.0)

  

5

31

(83.9)

Significant liquidated damagesc

-

(6)

NMb

  

-

(6)

NMb


_____

_____

_____

  

_____

_____

_____

Underlying revenue and underlying operating profit

36

53

(32.1)


5

25

(80.0)

 

a.     Before exceptional items.

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.     $6m recognised in 2021 reflects the significant liquidated damages related to one property.

 

 

Fee margin reconciliation

 


6 months ended 30 June

2022





 

 

Americas

EMEAA

Greater China

Central

Total

Revenue $m

 





Reportable segments analysed as fee business (see above)

413

121

36

94

664

Significant liquidated damages

-

(7)

-

-

(7)

Captive insurance company

-

-

-

(8)

(8)

 

_____

_____

_____

_____

_____

 

413

114

36

86

649

 






Operating profit $m

 





Reportable segments analysed as fee business (see above)

342

63

5

(38)

372

Significant liquidated damages

-

(7)

-

-

(7)

Captive insurance company

-

-

-

(2)

(2)

 

_____

_____

_____

_____

_____

 

342

56

5

(40)

363

 






Fee margin %

82.8%

49.1%

13.9%

(46.5%)

55.9%

 

 


6 months ended 30 June

2021





 

 

Americas

EMEAA

Greater China

Central

Total

Revenue $m

 





Reportable segments analysed as fee business (see above)

296

53

59

97

505

Significant liquidated damages

-

-

(6)

-

(6)

Captive insurance company

-

-

-

(9)

(9)

 

_____

_____

_____

_____

_____

 

296

53

53

88

490

 






Operating profit $m

 





Reportable segments analysed as fee business (see above)

236

(3)

31

(40)

224

Significant liquidated damages

-

-

(6)

-

(6)

Captive insurance company

-

-

-

(2)

(2)

 

_____

_____

_____

_____

_____

 

236

(3)

25

(42)

216

 






Fee margin %

79.7%

(5.7%)

47.2%

(47.7%)

44.1%

 

 


Net capital expenditure reconciliation


    6 months ended

     30 June

 




2022

2021


$m

$m




Net cash from investing activities

(27)

(37)

Adjusted for:



    Contract acquisition costs, net of repayments

(35)

(16)

    System Fund depreciation and amortisationa

40

39

    Deferred purchase consideration paid

-

13


_____

_____

Net capital expenditure

(22)

(1)


_____

_____

Analysed as:



Capital expenditure: maintenance (including contract acquisition costs, net of repayments of $35m (2021: $16m))

(50)

(25)

Capital expenditure: recyclable investments

6

(8)

Capital expenditure: System Fund capital investments

22

32


_____

_____

Net capital expenditure

(22)

(1)


_____

_____

 

a.     Excludes depreciation of right-of-use assets.

 

 

Gross capital expenditure reconciliation


6 months ended

30 June

 




2022

2021


$m

$m




Net capital expenditure

(22)

(1)

Add back:



    Disposal receipts

(7)

(1)

    Repayments of contract acquisition costs

(3)

(1)

    System Fund depreciation and amortisationa

(40)

(39)


_____

_____

Gross capital expenditure

(72)

(42)


_____

_____

Analysed as:



Capital expenditure: maintenance (including contract

(53)

(26)

   acquisition costs of  $38m (2021: $17m))

Capital expenditure: recyclable investments

(1)

(9)

Capital expenditure: System Fund capital investments

(18)

(7)


_____

_____

Gross capital expenditure

(72)

(42)


_____

_____

 

a.     Excludes depreciation of right-of-use assets.

 

 


Adjusted free cash flow reconciliation

 

    6 months ended

    30 June

 

 


2022

2021


$m

$m




Net cash from operating activities

175

173

Adjusted for:



Principal element of lease payments

(18)

(17)

Capital expenditure: maintenance (excluding contract acquisition costs)

(15)

(9)


_____

_____

Adjusted free cash flow

142

147


_____

_____

 

 

Adjusted interest reconciliation

The following table reconciles net financial expenses to adjusted interest.


    6 months ended

    30 June

 



2022

2021

 


$m

$m

 

Net financial expenses

 


 

Financial income

5

1

 

Financial expenses

(74)

(73)

 


_____

_____

 


(69)

(72)

 

Adjusted for:



 

Interest attributable to the System Fund

Foreign exchange losses*

(3)

8

-

n/a

 


_____

_____

 


5

-

 




 

Adjusted interest

(64)

(72)

 

 

* The definition of adjusted interest has been updated. The impact to the prior year is not material, and as such has not been restated.

 

 

Adjusted earnings per ordinary share reconciliation


      6 months ended

      30 June


 



2022

2021


$m

$m

Profit available for equity holders

216

48

Adjusting items:



   System Fund revenues and expenses

(3)

46

   Interest attributable to the System Fund

(3)

-

   Operating exceptional items

19

4

   Fair value gain on contingent purchase consideration

(7)

(1)

   Foreign exchange losses*

8

n/a

   Tax on foreign exchange losses*

(1)

n/a

   Tax on exceptional items

(5)

(1)

   Exceptional tax

-

(22)


_____

_____

Adjusted earnings

224

74


 


Basic weighted average number of ordinary shares (millions)

184

183

Adjusted earnings per ordinary share (cents)

121.7

40.4


 


 

* The definition of adjusted earnings per share has been updated. The impact to the prior year is not material, and as such has not been restated.

 

 

Highlights for the 6 months ended 30 June vs 2019

 

Reportable segments

Revenue

 

Operating profit










2022

2019

%


2022

2019

%


$m

$m

change


$m

$m

change









Per Group income statement

1,794

2,280

(21.3)


361

442

(18.3)

System Fund

(554)

(675)

(17.9)

  

(3)

(47)

(93.6)

Reimbursement of costs

(400)

(593)

(32.5)


-

-

-

Operating exceptional items

-

-

-


19

15

26.7


_____

_____

_____


_____

_____

_____

Reportable segments

840

1,012

(17.0)


377

410

(8.0)


_____

_____

_____


_____

_____

_____

Reportable segments analysed as:








Fee business

664

730

(9.0)


372

394

(5.6)

Owned, leased and managed lease

176

282

(37.6)


5

16

(68.8)


_____

_____

_____


_____

_____

_____

Reportable segments

840

1,012

(17.0)


377

410

(8.0)

 

 

 

Americas


Revenue

 

Operating profita

 

 








 


2022

2019

%


2022

2019

%


$m

$m

change


$m

$m

change









Per Interim financial statements

471

520

(9.4)


351

341

2.9









Reportable segments analysed as:








Fee business

413

418

(1.2)


342

323

5.9

Owned, leased and managed lease

58

102

(43.1)


9

21

(57.1)


_____

_____

_____


_____

_____

_____


471

520

(9.4)


351

344

2.0









 

 

a.  Before exceptional items.

 

EMEAA


Revenue

 

Operating profita

 









2022

2019

%


2022

2019

%

 


$m

$m

change


$m

$m

change

 





  




 

Per Interim financial statements

239

338

(29.3)

  

59

88

(33.0)

 









 

Reportable segments analysed as:








 

Fee business

121

158

(23.4)


63

93

(32.3)

 

Owned, leased and managed lease

118

180

(34.4)


(4)

(5)

(20.0)

 


_____

_____

_____


_____

_____

_____

 


239

338

(29.3)


59

88

(33.0)

 









 

 

 

 

 

a.  Before exceptional items.


Greater China


Revenue

 

Operating profita

 

 








 


2022

2019

%

  

2022

2019

%


$m

$m

change

   

$m

$m

change

Per Interim financial statements




  




Reportable segments analysed as:

36

66

(45.5)

   

5

36

(86.1)


_____

_____

_____

  

_____

_____

_____

Fee business

36

66

(45.5)

  

5

36

(86.1)









 

a.  Before exceptional items.

 

 

 

Fee Margin Reconciliation

 


6 months ended 30th June

2019





 

 

Americas

EMEAA

Greater China

Central

Total

Revenue $m

 





Reportable segments analysed as fee business (see above)

418

158

66

88

730

Significant liquidated damages

-

(4)

-

-

(4)

Captive insurance company

-

-

-

(7)

(7)

 

_____

_____

_____

_____

_____

 

418

154

66

81

719

 






Operating profit $m

 





Reportable segments analysed as fee business (see above)

323

93

36

(58)

394

Significant liquidated damages

-

(4)

-

-

(4)

Captive insurance company

-

-

-

(1)

(1)

 

_____

_____

_____

_____

_____

 

323

89

36

(59)

389

 






Fee margin %

77.3%

57.8%

54.5%

(72.8%)

54.1%



PRINCIPAL RISKS AND UNCERTAINTIES

 

The principal and emerging risks and uncertainties that could substantially affect IHG's business and results are set out on pages 40 to 47 of the IHG Annual Report and Form 20-F 2021 (the "Annual Report").

 

We have continued to face dynamic risks relating to macro-economic and geo-political factors, including those related to our Greater China operations, the war in Ukraine and as central banks and governments take action to manage inflation. These factors also create wider accumulated uncertainties across our principal risk portfolio, for example relating to global supply chains, inflationary cost pressures and cyber security, which we will continue to monitor closely over the remainder of the year. There may also be unknown risks or risks currently believed to be inconsequential that emerge and could become material.

 

Our Board and management continue regularly to review our risk profile and risk trends arising externally or internally, and risk management and internal control arrangements.

 

As an example of active senior executive and Board evaluation of risks and considering the interests of our stakeholders, local and global management teams have closely monitored and reported on the developing situation in Ukraine, reviewing both local operational matters and triggers of potential impact on IHG outside of the immediate area which may require a more active response. This has included monitoring of potential risk factors relating to national / international sanctions; payment systems; cybersecurity and technology threats; and procurement and supply chain arrangements for key geographies and commodities.

 

Following the outbreak of the war, we announced the suspension of future investments, development activity and new hotel openings in Russia and that we did not intend to resume any investment or development activity in the foreseeable future. We also closed our corporate office in Moscow. These steps followed significant donations to our humanitarian charity partners and a commitment to work with hotel owners in other countries to shelter refugees.

 

Subsequently, we announced that we were in discussions with our owners in Russia regarding the complex, long-term management and franchise contracts under which these hotels operate. We are ceasing all operations in Russia, consistent with evolving UK, US and EU sanction regimes and the ongoing and increasing challenges of operating there.

 

The following summarises the risks and uncertainties set out in the 2021 Annual Report, which continue to apply:

 

Macro external factors, such as political and economic disruption, or the emerging risk of infectious diseases, could have an impact on IHG's ability to perform and grow; commercial performance, financial loss and undermine stakeholder confidence;

Failure to deliver IHG's preferred brands and loyalty programme could impact IHG's competitive positioning, IHG's growth ambitions and reputation with guests and owners;

Failure to effectively attract, develop and retain talent in key areas could impact IHG's ability to achieve its growth ambitions and execute effectively;

Threats to cybersecurity and information governance could lead to the disruption or loss of IHG's critical systems and sensitive data and could impact IHG financially, reputationally or operationally;

Failure to capitalise on innovation in booking technology, and maintain and enhance IHG's functionality and resilience of its channel management and technology platforms could impact IHG's revenues and growth ambitions;

Failure to manage risks associated with delivering investment effectiveness and efficiency may impact commercial performance, lead to financial loss, and undermine stakeholder confidence;

Failure to ensure contractual, legal, regulatory and ethical compliance would impact IHG operationally and reputationally;

Failure to effectively safeguard the safety and security of colleagues and guests and respond appropriately to operational risk could result in reputational and / or financial damage, and undermine stakeholder confidence;

A material breakdown in financial management and control systems could lead to increased public scrutiny, regulatory investigation and litigation; and 

Environment and social mega-trends have the potential to impact performance and growth in key markets.

 

These principal and emerging risks and uncertainties are supported by a broader description of risk factors set out on pages 231 to 236 of the Annual Report 

 

 

RELATED PARTY TRANSACTIONS

 

There were no material related party transactions during the six months to 30 June 2022.

 

 

GOING CONCERN

 

As at 30 June 2022 the Group had total liquidity of $2,613m, comprising $1,350m of undrawn bank facilities and $1,263m of cash and cash equivalents (net of overdrafts and restricted cash).

 

There remains a wide range of possible planning scenarios over the going concern period. The scenarios considered and assessment made by the Directors in adopting the going concern basis for preparing these financial statements are included in note 1 to the Interim Financial Statements.

 

Based on the assessment completed, the Directors have a reasonable expectation that the Group has sufficient resources to continue operating until at least 31 December 2023. Accordingly, they continue to adopt the going concern basis in preparing the interim financial statements.

 

 

DIRECTORS' RESPONSIBILITY STATEMENT

 

The Directors confirm that to the best of their knowledge:

•     The condensed set of Financial Statements has been prepared in accordance with UK-adopted IAS 34;

•     The Interim Management Report includes a fair review of the important events during the first six months, and their impact on the financial statements and a description of the principal risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; and

•     The Interim Management Report includes a fair review of related party transactions and changes therein, as required by DTR 4.2.8R.

 

On behalf of the Board

 

 

 

Keith Barr                                                                     Paul Edgecliffe-Johnson

 

Chief Executive Officer                                                  Chief Financial Officer

 

8 August 2022                                                               8 August 2022

 

 

 

InterContinental Hotels Group PLC

GROUP INCOME STATEMENT

For the six months ended 30 June 2022

 

 

2022

6 months ended

30 June

$m

2021

6 months ended

30 June

$m




Revenue from fee business

664

505

Revenue from owned, leased and managed lease hotels

176

60

System Fund revenues

554

378

Reimbursement of costs

400

236

 

_____

_____

Total revenue (notes 3 and 4)

1,794

1,179




Cost of sales and administrative expenses

(450)

(321)

System Fund expenses

(551)

(424)

Reimbursed costs

(400)

(236)

Share of losses of associates

-

(5)

Other operating income

14

2

Depreciation and amortisation

(36)

(45)

Impairment loss on financial assets

(5)

(8)

Other impairment charges (note 5)

(5)

(4)


_____

_____

Operating profit (note 3)

361

138

 

 

 

Operating profit analysed as:

 

 

  Operating profit before System Fund and exceptional items

377

188

  System Fund

3

(46)

  Operating exceptional items (note 5)

(19)

(4)

 

_____

_____

 

361

138

 

 

 

Financial income

5

1

Financial expenses

(74)

(73)

Fair value gains on contingent purchase consideration

7

1


_____

_____

Profit before tax

299

67




Tax (note 6)

(83)

(19)


_____

_____

Profit for the period from continuing operations

216

48


_____

_____

 

 

 

Attributable to:




Equity holders of the parent

216

48


_____

_____

Earnings per ordinary share (note 7)

 

 


Basic

117.4¢

26.2¢


Diluted

116.8¢

26.1¢


 

 

 

 

 

 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2022

 

 

2022

6 months ended

30 June

$m

2021

6 months ended

30 June

$m




Profit for the period

216

48




Other comprehensive income






Items that may be subsequently reclassified to profit or loss:

 

 


Gains/(losses) on cash flow hedges, including related tax credit of $1m (2021: $3m charge)

 

13

 

(54)


Costs of hedging

-

2


Hedging (gains)/losses reclassified to financial expenses

(17)

66


Exchange gains/(losses) on retranslation of foreign operations, including related tax credit of $6m (2021: $nil)

 

                      198

 

(38)


_____

_____


194

(24)

Items that will not be reclassified to profit or loss:




Gains on equity instruments classified as fair value through other comprehensive income, net of related tax charge of $2m (2021: $1m)

 

 

3

 

 

9


Re-measurement gains on defined benefit plans, net of related tax charge of $5m (2021: tax credit of $1m)

 

15

 

5


Tax related to pension contributions

-

2



_____

_____



18

16

 

_____

_____

Total other comprehensive income/(loss) for the period

212

(8)


_____

_____

Total comprehensive income for the period

428

40


_____

_____

Attributable to:




Equity holders of the parent

429

40


Non-controlling interest

(1)

-


_____

_____



428

40

 

_____

_____

 

 

 

 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2022

 

 

6 months ended 30 June 2022

 

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

 

At beginning of the period

154

(2,539)

904

7

(1,474)







Total comprehensive income for the period

-

198

231

(1)

428

Release of own shares by employee share trusts

 

-

 

17

 

(17)

 

-

 

-

Equity-settled share-based cost

-

-

25

-

25

Equity dividends paid

-

-

(154)

-

(154)

Exchange adjustments

(16)

16

-

-

-


_____

_____

_____

_____

_____

At end of the period

138

(2,308)

989

6

(1,175)


_____

_____

_____

_____

_____

 

 

 

6 months ended 30 June 2021

 

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

Total equity

 

$m

$m

$m

$m

$m

 

 

 

 

 

 

 

At beginning of the period

156

(2,581)

568

8

(1,849)







Total comprehensive income for the period

-

(15)

55

-

40

Transfer of treasury shares to employee share trusts

 

-

 

(14)

 

14

 

-

 

-

Release of own shares by employee share trusts

 

-

 

13

 

(13)

 

-

 

-

Equity-settled share-based cost

-

-

19

-

19

Tax related to share schemes

-

-

1

-

1

Exchange adjustments

3

(3)

-

-

-


_____

_____

_____

_____

_____

At end of the period

159

(2,600)

644

8

(1,789)


_____

_____

_____

_____

_____

 

 *   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.

 

Total comprehensive income is shown net of tax.

 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF FINANCIAL POSITION

30 June 2022

 

2022

30 June

 

$m

$m

ASSETS

 

 

Goodwill and other intangible assets

1,160

1,195

Property, plant and equipment

126

137

Right-of-use assets

282

274

Investment in associates

76

77

Retirement benefit assets

2

2

Other financial assets

169

173

Deferred compensation plan investments

213

256

Non-current tax receivable

-

1

Deferred tax assets

130

147

Contract costs

73

72

Contract assets

328

316

 

______

______

Total non-current assets

2,559

2,650

 

______

______

Inventories

4

4

Trade and other receivables

691

574

Current tax receivable

11

1

Other financial assets

-

2

Cash and cash equivalents

1,361

1,450

Contract costs

5

5

Contract assets

30

30

 

______

______

Total current assets

2,102

2,066


______

______

Total assets

4,661

4,716


_____

_____

LIABILITIES



Loans and other borrowings

(278)

(292)

Lease liabilities

(25)

(35)

Trade and other payables

(518)

(579)

Deferred revenue

(658)

(617)

Provisions

(51)

(49)

Current tax payable

(26)

(52)

 

______

______

Total current liabilities

(1,556)

(1,624)

 

______

______

Loans and other borrowings

(2,336)

(2,553)

Lease liabilities

(402)

(384)

Derivative financial instruments

(37)

(62)

Retirement benefit obligations

(69)

(92)

Deferred compensation plan liabilities

(213)

(256)

Trade and other payables

(84)

(89)

Deferred revenue

(1,016)

(996)

Provisions

(36)

(41)

Deferred tax liabilities

(87)

(93)


______

______

Total non-current liabilities

(4,280)

(4,566)

 

______

______

Total liabilities

(5,836)

(6,190)

 

_____

_____

Net liabilities

(1,175)

(1,474)

 

_____

_____

EQUITY

 

 

IHG shareholders' equity

(1,181)

(1,481)

Non-controlling interest

6

7

 

______

______

Total equity

(1,175)

(1,474)

 

_____

_____




 

 

InterContinental Hotels Group PLC

GROUP STATEMENT OF CASH FLOWS

For the six months ended 30 June 2022

 

 

2022

6 months ended

30 June

2021

6 months ended

30 June

 

$m

$m

 

 

 

Profit for the period

216

48

Adjustments reconciling profit for the period to cash flow from operations (note 9)

120

211


_____

_____

Cash flow from operations

336

259

Interest paid

(42)

(40)

Interest received

5

1

Tax paid (note 6)

(124)

(47)

 

_____

_____

Net cash from operating activities

175

173

 

_____

_____

Cash flow from investing activities



Purchase of property, plant and equipment

(12)

(3)

Purchase of intangible assets

(21)

(13)

Investment in associates

(1)

-

Investment in other financial assets

-

(9)

Deferred purchase consideration paid

-

(13)

Disposal of property, plant and equipment

3

-

Repayments of other financial assets

4

 

1

 

_____

_____

Net cash from investing activities

(27)

(37)

 

_____

_____

Cash flow from financing activities



Dividends paid to shareholders (note 8)

(154)

-

Principal element of lease payments

(18)

(17)

Repayment of commercial paper

-

(828)


_____

_____

Net cash from financing activities

(172)

(845)


_____

_____

Net movement in cash and cash equivalents, net of overdrafts, in the period

 

(24)

 

(709)




Cash and cash equivalents, net of overdrafts, at beginning of the period

1,391

1,624

Exchange rate effects

(70)

20

 

_____

_____

Cash and cash equivalents, net of overdrafts, at end of the period

1,297

935


_____

_____



 

 

interContinental Hotels Group plc

NOTES TO THE INTERIM FINANCIAL STATEMENTS

 

1.

Basis of preparation

 


These condensed interim financial statements have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and UK-adopted IAS 34 'Interim Financial Reporting'. They have been prepared on a consistent basis using the same accounting policies and methods of computation set out in the InterContinental Hotels Group PLC ('the Group' or 'IHG') Annual Report and Form 20-F for the year ended 31 December 2021.

 

These condensed interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 435 of the Companies Act 2006. The auditors have carried out a review of the financial information in accordance with the guidance contained in ISRE (UK) 2410 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council.

 

Financial information for the year ended 31 December 2021 has been extracted from the Group's published financial statements for that year which were prepared in accordance with UK-adopted international accounting standards and with applicable law and regulations and which have been filed with the Registrar of Companies. The report of the auditor was unqualified 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.

 

There are no changes in the Group's critical judgements, estimates and assumptions from those disclosed in the 2021 Annual Report and Form 20-F. An updated sensitivity related to expected credit losses is included in note 12(e).

 

Going concern

 

Trading in the first half of 2022 continued to recover with ongoing relaxation of travel restrictions supporting an increasing return of travel demand, resulting in Global RevPAR recovering to approximately 90% of 2019 levels. Continued focus on cash conversion led to reported net cash from operating activities in the first half of $175m and net debt reducing to $1,718m.

 

The Group's bank facilities were refinanced in April 2022 with a new revolving credit facility of $1,350m maturing in 2027, with options to extend for a further two years. Previously negotiated covenant relaxations and the $400m liquidity covenant, which were applicable at 30 June and 31 December 2022 test dates, will no longer apply.  The leverage covenant has been adjusted to incorporate the effects of IFRS 16 'Leases' and has been reset at 4.0x covenant net debt:covenant EBITDA (see note 10).

 

A period of 18 months has been used, from 1 July 2022 to 31 December 2023, to complete the going concern assessment. In adopting the going concern basis for preparing these condensed interim financial statements, the Directors have considered a 'Base Case' scenario which is based on continued improvement in demand as travel restrictions are reduced, with RevPAR continuing to recover towards pre-pandemic 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. 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. Under the Base Case 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 covenant requirements of the new bank facility. 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 Directors have also reviewed a 'Downside Case' based on a recession scenario which assumes performance during the second half of 2022 starts to worsen and then RevPAR decreases by 5% in 2023.  The Directors have also reviewed a 'Severe Downside Case' which is based on a severe but plausible scenario equivalent to the market conditions experienced through the 2008/2009 global financial crisis. This assumes that the performance during the second half of 2022 starts to worsen and then RevPAR decreases significantly by 17% in 2023. It is assumed that the additional shareholder return of $500m announced on 9 August 2022 is completed in full in all scenarios before additional actions are taken.  Under the Downside Case and Severe Downside case, the bank facilities remain undrawn.

 

 

 

Under the Severe Downside scenario, there is limited headroom to the bank covenants at 31 December 2023 to absorb additional risks. However, based on experience in 2020, the Directors reviewed a number of actions to reduce discretionary spend, creating substantial additional headroom.  After these actions are taken, there is significant headroom to the bank covenants to absorb the principal risks and uncertainties which could be applicable.

 

In the Severe Downside Case, the Group has substantial levels of existing cash reserves available after additional actions are taken (over $850m at 31 December 2023) and is not expected to draw on the bank facilities.

 

The Directors reviewed a reverse stress test scenario to determine what decrease in RevPAR would create a breach of the covenants, and the cash reserves that would be available to the Group at that time. 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 up to 31 December 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 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 Group's fee based model and wide geographic spread have been proven to leave it well-placed to manage through uncertain times.  Having reviewed these scenarios, the Directors have a reasonable expectation that the Group has sufficient resources to continue operating until at least 31 December 2023. Accordingly, they continue to adopt the going concern basis in preparing these condensed interim financial statements.

 

 

 

2.

Exchange rates

 


The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of sterling, the translation rate is $1 = £0.77 (2021: $1 = £0.72). In the case of the euro, the translation rate is $1 = €0.92 (2021: $1 = €0.83).

 

Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the period. In the case of sterling, the translation rate is $1 = £0.83 (31 December 2021: $1 = £0.74; 30 June 2021: $1 = £0.72). In the case of the euro, the translation rate is $1 = €0.96 (31 December 2021: $1 = €0.88; 30 June 2021: $1 = €0.84).

 



 

3.

Segmental Information

 

 

 

Revenue

2022

6 months ended

30 June

2021

6 months ended

30 June



$m

$m






Americas 

471

325


EMEAA 

239

84


Greater China

36

59


Central

94

97



_____

_____

 

Revenue from reportable segments

840

565


System Fund revenues

554

378


Reimbursement of costs

400

236



_____

_____

 

Total revenue

1,794

1,179



_____

_____

 

 

 

 

 

 

Profit

2022

6 months ended

30 June

$m

2021

6 months ended

30 June

$m






Americas 

351

224


EMEAA

59

(27)


Greater China

5

31


Central

(38)

(40)



_____

_____

 

Operating profit from reportable segments

377

188


System Fund

3

(46)


Operating exceptional items (note 5)

(19)

(4)



_____

_____

 

Operating profit

361

138


Net financial expenses

(69)

(72)


Fair value gains on contingent purchase consideration

7

1



_____

_____

 

Profit before tax

299

67



_____

_____


 

 

 

 

4.

Revenue

 

 

Disaggregation of revenue

 

 

6 months ended 30 June 2022

 

 

 

 

 

 

Americas

 

$m

EMEAA

 

$m

Greater China

$m

Central

 

$m

Group

 

$m

 

 

 

 

 

 

Franchise and base management fees

406

96

31

-

533

Incentive management fees

7

25

5

-

37

Central revenue

-

-

-

94

94


_____

_____

_____

_____

_____

Revenue from fee business

413

121

36

94

664

Revenue from owned, leased and managed lease hotels

58

118

-

-

176


_____

_____

_____

_____

_____


471

239

36

94

840


_____

_____

_____

_____


System Fund revenues





554

Reimbursement of costs





400

 





_____

Total revenue





1,794






_____

 

6 months ended 30 June 2021

 

 

 

 

 

 

Americas

 

$m

EMEAA

 

$m

Greater China

$m

Central

 

$m

Group

 

$m

 

 

 

 

 

 

Franchise and base management fees

292

42

44

-

378

Incentive management fees

4

11

15

-

30

Central revenue

-

-

-

97

97


_____

_____

_____

_____

_____

Revenue from fee business

296

53

59

97

505

Revenue from owned, leased and managed lease hotels

 

29

 

31

 

-

 

-

 

60


_____

_____

_____

_____

_____


325

84

59

97

565


_____

_____

_____

_____


System Fund revenues





378

Reimbursement of costs





236

 





_____

Total revenue





1,179






_____

 


 

At 30 June 2022, the maximum exposure remaining under performance guarantees was $80m (31 December 2021: $85m).

 

 

5.

Exceptional items

 

 

 

2022

6 months ended

30 June

$m

2021

6 months ended

30 June

$m







Cost of sales and administrative expenses




Costs of ceasing operations in Russia

(14)

-






Other impairment charges