Intercontinental Hotels Group Plc · LSE:IHG
Intercontinental Hotels — H1 2021 Earnings Presentation
40 slides from Intercontinental Hotels's earnings presentation, Aug 10, 2021
Slide 1: 2021 Half Year Results
Holiday Inn Yerevan - Republic Square, Armenia 2021 Half Year Results 10th August 2021
Slide 2: Cautionary note regarding forward-looking statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation may contain projections and forward looking-statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of histori
Slide 3: Keith Barr, Chief Executive Officer
Keith Barr Chief Executive Officer 3
Slide 4: Capturing the return of travel; positioning for future growth
Capturing the return of travel; positioning for future growth RevPAR & Rooms Results • (42.6)% Global RevPAR decline vs 2019; (36.3)% in Q2 • Strong profitability rebound from fee-based business model • Rapid improvement in US and Greater China • $188m EBIT from reportable segments • System 884k roo
Slide 5: H1 2021 Financial Review
Paul Edgecliffe-Johnson Chief Financial Officer & Group Head of Strategy H1 2021 Financial Review 5
Slide 6: Financial performance overview
Financial performance overview Results from reportable segments1 Reported Underlying2 H1 2021 H1 2020 H1 2019 H1 2020 H1 2019 % change % change $m $m $m % change % change vs H1 2021 vs H1 2021 Revenue3 $565m $488m 16% $1,012m (44)% 14% (44)% Operating profit $188m $52m 262% $410m (54)% 314% (55)% Re
Slide 7: Fee-based business model shows relative resilience as demand returns
Fee-based business model shows relative resilience as demand returns H1 2021 fee revenue: $505m, down 31%1 and 32% underlying2 (vs 2019) H1 2021 Group comparable RevPAR growth H1 2021 Group system growth RevPAR (vs 2019) (vs 2019) 10.8% X • 17.4k rooms opened in H1 • 18.9k rooms removed in H1 Rooms
Slide 8: Sequential monthly improvement in both occupancy and rate from March
Sequential monthly improvement in both occupancy and rate from March IHG monthly RevPAR, Occupancy and ADR (vs 2019) Jan Feb Mar Apr May Jun (19)% (18)% (22)% (20)% (23)% (26)% (10)% (14)% (18)% (22)% (22)% (31)% (23)% (37)% (41)% (47)% (53)% (54)% Occ (%pt) ADR (%) RevPAR (%) 8
Slide 9: Recovery skewed to domestic leisure markets where restrictions have been lifted
Recovery skewed to domestic leisure markets where restrictions have been lifted IHG Q2 RevPAR (vs 2019) Americas EMEAA1 Greater China Global system mix: 58% 25% 17% 3% 33% -15% -2% -3% -33% -39% -26% -60% -67% -77% -52% -82% -73% -56% UK Asia & Korea South East Cont. Europe Japan Middle East Austral
Slide 10: Americas: US occupancy levels recovered to ~70% in June
Americas US occupancy levels recovered to ~70% in June • H1 RevPAR up 28% (down 34% vs 2019); US up 32% (down 30% vs 2019) H1 2021 growth in fee revenue drivers1 • Q2 US RevPAR up 150% (down 23% vs 2019) (vs 2019) - Franchised estate down 19% and Managed estate down 54% (vs 2019) -0.8% - Midscale/Up
Slide 11: Americas: US domestic leisure rebounds; business improving more recently
Americas US domestic leisure rebounds; business improving more recently IHG US estate 12m rolling revenue (vs 2019) 11% 7% -2% -4% -3% -10% -13% -33% -37% -37% -29% -43% -42% -42% -41% -42% -45% -37% -50% -40% -42% -44% -46% -46% -56% -47% -48% -51% -54% -53% -57% -65% -61% -72% -76% -88% Jan-2020 F
Slide 12: EMEAA: Improved trading in markets where travel restrictions have lifted
Europe, Middle East, Asia & Africa Improved trading in markets where travel restrictions have lifted H1 2021 growth in fee revenue drivers1 (vs 2019) • H1 RevPAR down 22% (down 68% vs 2019); Q2 up 179% (down 65% vs 2019) 3.9% • Q2 impacted by differing levels of government-mandated lockdown measures
Slide 13: Greater China: Recovery led by domestic leisure demand
Greater China Recovery led by domestic leisure demand in Tier 2-4 in Q2 H1 2021 growth in fee revenue drivers1 • H1 RevPAR up 95% (down 26% vs 2019); Q2 up 107% (down 16% vs 2019) (vs 2019) • Mainland China up 100% (down 19% vs 2019); Q2 up 109% (down 8% vs 2019) 19.4% • Tier 1 RevPAR up 101% (down
Slide 14: Rapid progress of the Holiday Inn and Crowne Plaza review
Rapid progress of the Holiday Inn and Crowne Plaza review • ~200 hotels (~10-15% of global estate) under review in Americas and EMEAA, focused on ensuring the health, consistency and quality of the estate reflects the expectations of IHG, our owners and guests • In total, 56 hotels (13.0k rooms) rem
Slide 15: Targeted capital expenditure to drive growth
Targeted capital expenditure to drive growth $m H1 2021 H1 2020 • Key money: used to secure hotel Maintenance capex, Maintenance capex (9) (32) signings key money and selective • Maintenance: relates to owned, Key money1 (16) (26) investments leased and managed lease hotels and Total (25) (58) corpo
Slide 16: Strong cash conversion
Strong cash conversion Cash flow H1 2021 ($m) (12) 32 5 (86) (25) (7) (8) (13) 233 (48) 172 147 71 EBITDA1 System Fund2 Working Exceptional Interest & tax Adjusted Maintenance Adjusted free Gross System Net Recyclable Deferred Lease Decrease capital & other cash flow items free cash capex and cash f
Slide 17: Our strategy for uses of cash remains unchanged
Our strategy for uses of cash remains unchanged Invest in the Restore an ordinary Return surplus business to dividend when funds to drive growth responsible to do so shareholders Objective of maintaining an investment grade credit rating 2.5x – 3.0x Net Debt : Adjusted EBITDA under normalised condit
Slide 18: Update on strategic priorities
Keith Barr Chief Executive Officer Update on strategic priorities 18
Slide 19: Well-placed during a recovery
Well-placed during a recovery Forward bookings Desire to travel indicating growing and experience; return of business build connections and groups activity Sustainability Growth in new informing guest build activity; preferences conversions gathering pace Technology becoming New tools and more integ
Slide 20: Focus on industry-leading net rooms growth, underpinned by strategic priorities
Focus on industry-leading net rooms growth, underpinned by our strategic priorities Our Purpose: True Hospitality for Good Our Priorities: Build loved Customer centric Create digital Care for our people, and trusted brands in all we do advantage communities and planet • Strengthening existing • Supp
Slide 21: Build loved and trusted brands - Essentials and Suites
Build loved and trusted brands - Continued resilience across Essentials and Suites Essentials Suites System1 3,004 1,234 38 312 360 - Pipeline1 667 250 175 152 82 19 Chain Upper Midscale Upper Midscale Midscale Upscale Midscale Midscale scale2 • ~65% occupancy in • Rapid progress • Outperformance •
Slide 22: Build loved and trusted brands - Premium and Luxury & Lifestyle
Build loved and trusted brands - Expanding our Premium and Luxury & Lifestyle offerings Premium Luxury & Lifestyle System1 19 407 20 14 17 7 206 75 128 Pipeline1 34 102 30 24 34 7 73 32 110 Chain Upscale Upscale Upscale Upscale Luxury Luxury Luxury Upper Upscale Upper Upscale scale2 • Signings pace
Slide 23: Build loved and trusted brands - Rounding out our brand portfolio
Build loved and trusted brands - Further rounding out our brand portfolio Existing brands Newer brands Portfolio evolution Luxury Six Senses and Regent: acquisitions to & Lifestyle expand IHG’s luxury presence New collection brand Organic development of new Luxury & Lifestyle collection brand voco h
Slide 24: A strong position in Luxury & Lifestyle to further grow from
Build loved and trusted brands - A strong position in Luxury & Lifestyle to further grow from IHG is already the second largest global player in Luxury & Lifestyle 30 June 2021 – Number of open and pipeline rooms (‘000) 269 • Building upon heritage of InterContinental Hotels & Resorts, the world’s s
Slide 25: A balanced portfolio across segments of Luxury and Upper Upscale
Build loved and trusted brands - A balanced portfolio across different segments of Luxury and Upper Upscale Upper Luxury New Traditional collection Lifestyle brand Upper Upscale 25
Slide 26: Guest and owner proposition for our new collection brand
Build loved and trusted brands - Guest and owner proposition for our new collection brand Compelling owner proposition • Access to world class revenue delivery systems including IHG Rewards • Leading global sales enterprise and revenue management tools to drive additional revenue to hotels • Strong
Slide 27: 2030 Responsible Business ambitions and commitments
Care for our people, communities and planet - 2030 Responsible Business ambitions and commitments Champion a diverse Improve the lives of 30 Reduce our energy use and Pioneer the transformation Conserve water and help culture where everyone million people in our carbon emissions in line with to a mi
Slide 28: Conclusions - Confident in IHG's positioning and growth prospects
Conclusions - Confident in IHG’s positioning and growth prospects • Significant improvement in demand over the course of H1; positive trends continuing through summer; return of corporate travel and groups activity underway; risk of trading volatility still remains • Hotel development environment st
Slide 29: Q&A
2021 Half Year Results Q&A 29
Slide 30: Appendices
Appendices Holiday Inn Yerevan - Republic Square, Armenia
Slide 31: Weekly RevPAR performance demonstrates the path of recovery by region
Weekly RevPAR performance demonstrates the path of recovery for each of our regions IHG weekly RevPAR performance by region (vs 2019) 20% 0% -20% -40% -60% -80% -100% Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 May 21 Jun 21 Americas EMEAA Greate
Slide 32: Growth rate analysis vs 2020
Growth rate analysis vs 2020 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % H1 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in H1 2021 and 30 June 2021 rooms available months being H1 2020 (incl vs 20
Slide 33: Growth rate analysis vs 2019
Growth rate analysis vs 2019 RevPAR growth % Net rooms growth % Underlying Fee Comments Revenue1 Growth % H1 2021 Comparable Total2 YoY Available2 All hotels Aggregate Hotels that have that were open number of traded in all in H1 2021 and 30 June 2021 rooms available months being H1 2019 (incl vs 20
Slide 34: Fee margin by region
Fee margin1 by region Americas Europe, Middle East, Asia & Africa H1 2021 79.7% H1 2021 -5.7% H1 2020 -14.3% H1 2020 67.3% H1 2019 57.8% H1 2019 77.3% Greater China Total IHG H1 2021 47.2% H1 2021 44.1% H1 2020 -50.0% H1 2020 20.1% H1 2019 54.5% H1 2019 54.1% 1 Fee margin excludes owned, leased and
Slide 35: Revenue and operating profit H1 2019-21
Revenue and operating profit H1 2019-21 Total Revenue Total Operating Profit Actual US$ H1 H1 2021 2020 2019 2021 2020 2019 Franchise and base management fees 292 224 411 n/a n/a n/a Incentive management fees 4 2 7 n/a n/a n/a Fee Business 296 226 418 236 152 323 Owned, Leased & Managed Leased 29 36
Slide 36: H1 2019 underlying fee business non-GAAP reconciliations
H1 2019 underlying fee business revenue and operating profit non-GAAP reconciliations Americas EMEAA Greater China Central Total IHG Operating Operating Operating Operating Operating Revenue Revenue Revenue Revenue Revenue Profit Profit Profit Loss Profit $m $m $m $m $m $m $m $m $m $m Per H1 2019 In
Slide 37: Currency translation
Currency translation Reportable Segments Reportable Segments Reported H1 2021 vs H1 2020 rates2 H2 2020 at 30 June 2021 spot rate vs reported H2 20203 Region1 Revenue EBIT Revenue EBIT Americas $1m $1m $1m - EMEAA $5m $(2)m $1m $(1)m Greater China $5m $2m $3m $2m Central Overheads $1m $(7)m $1m $(1)
Slide 38: 2021 notable items
2021 notable items Significant items H1 2021 FY 2021 Payroll tax credit Americas $5m $8m Individually significant Liquidated Damages Greater China $6m $6m 38
Slide 39: Ordinary shares
Ordinary shares Number of shares At 30 June 2021 At 30 June 2020 Opening balance at 1 January 187.7 187.7 Closing balance at 30 June 187.7 187.7 Basic weighted average shares 182.9 182.4 Dilutive potential ordinary shares1 1.0 - Basic diluted average shares 183.9 182.4 1. The effect of the notional
Slide 40: Cautionary note regarding forward-looking statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation may contain projections and forward looking-statements. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. All statements other than statements of histori
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