InterContinental Hotels Group PLC · LSE:IHG

InterContinental Hotels — FY2014 Earnings Presentation

50 slides from InterContinental Hotels's earnings presentation, Feb 17, 2015

1. Slide 1: Full Year Results Presentation

   Hotel Wilshire, a Kimpton Hotel, Los Angeles Full Year Results Presentation 17 February 2015 IHG© 1

2. Slide 2: 2014 highlights and market perspectives

   2014 highlights and market perspectives • Delivered strong financial performance 2014 was an • Made excellent strategic progress, enhancing our portfolio excellent year of preferred brands for IHG • Disciplined approach to capital allocation generated over $1bn of shareholder returns • Globalisation

3. Slide 3: Financial Review

   Hotel Indigo, Paris Financial Review Paul Edgecliffe-Johnson CFO IHG© 3

4. Slide 4: Strong underlying financial performance

   Strong underlying financial performance Reported Underlying1 Full year 2014 Full year 2013 % change % change Revenue $1,858m $1,903m (2)% 6% Fee Revenue2 $1,255m $1,176m 7% 7% Operating profit $651m $668m (3)% 10% Interest $(80)m $(73)m 10% Tax rate3 31% 29% 2%pts Adjusted EPS4 158.3¢ 158.3¢ - 12% W

5. Slide 5: Global demand growth for IHG branded hotels

   Global demand growth for IHG branded hotels RevPAR X Rooms X Royalty Rate 2014 fee revenue1 $1,255m, up 7% 2014 Group RevPAR growth 2014 system growth (%) 6.1% 6.0% 3.4% 2.7% 2.2%pts ADR Occupancy RevPAR Gross Net 2014: 5.5% total2 RevPAR growth 2014: 41k rooms opened, 18k rooms removed 1 Fee revenu

6. Slide 6: Business model drives revenue growth in all regions

   Business model drives revenue growth in all regions RevPAR X Rooms X Royalty Rate 2014 fee revenue¹ growth 9.5% 7.8% 7.2% 6.8% 5.0% $22m $6m $3m $1m 2014 fee $1,255m $688m $173m $162m $103m revenue1 Group2 Americas Europe AMEA Greater China ¹ Fee revenue excludes revenue from owned and leased hotels

7. Slide 7: The Americas – strong RevPAR and highest net rooms growth in 5 years

   The Americas – strong RevPAR and highest net rooms growth in 5 years 2014 Growth in fee revenue drivers1 Comparable RevPAR up 7.4%; Q4 up 7.0% • US FY and Q4 7.5% 7.4% 7.8% • Record US demand for 46 months in a row $22m Net rooms growth 1.9% 1.9% • Highest net growth since 2009 • Gross rooms growth

8. Slide 8: The Americas – high quality growth drives Holiday Inn brand family RevPAR premium

   The Americas – high quality growth drives Holiday Inn brand family RevPAR premium • 28% share of US upper midscale room openings, 7% ahead of nearest competitor1 • RevPAR growth out performance from recent openings • Rate driven $5 premium to industry segment 2014 US comparable RevPAR growth for rec

9. Slide 9: Europe – strong performance in UK and Germany

   Europe – strong performance in UK and Germany 2014 Growth in fee revenue drivers1 Comparable RevPAR up 5.1%; Q4 up 4.2% 6.8% • UK 8.9%; Germany 4.1% 5.1% Net rooms growth 2.1% $22m 2.1% • Gross rooms growth 5.2% Fee revenue1 up 6.8% RevPAR Net rooms Fee revenue Total underlying revenue2 up 1% • Unde

10. Slide 10: AMEA – robust performance led by established markets

    AMEA – robust performance led by established markets 2014 Growth in fee revenue drivers1 Comparable RevPAR up 3.8%; Q4 up 3.1% • Middle East up 5.6%; Indonesia up 9.1% 4.7% 5.0% • Japan up 6.7%; Australia up 3.9% 3.8% $22m Total RevPAR up 2.2%; Q4 up 2.1% • Increasing mix from developing markets Net

11. Slide 11: Greater China – double digit underlying profit growth

    Greater China – double digit underlying profit growth 2014 Growth in fee revenue drivers1 Comparable RevPAR up 1.6%; Q4 down (2.0%) • 2.5%pts ahead of the industry 14.1% • Tier 1 cities up 4.1%; Q4 up 1.0% 9.5% $22m Total RevPAR down (3.4%) • Mix impact from tier 2 and 3 cities 1.6% Net rooms growth

12. Slide 12: Greater China – building on our leading scale position

    Greater China – building on our leading scale position • Record year for openings with 2x more than nearest competitor • Increase in rooms drives growth in fee revenue 2014 room openings (k)1 IHG Managed fee revenue progression ($m) 10.6 25% CAGR 99 53 5.2 4.0 3.9 3.6 32 14 1.7 IHG Starwood Marriott

13. Slide 13: Greater China – long-term mainstream opportunity in tier 2/3 cities

    Greater China – long-term mainstream opportunity in tier 2/3 cities • Established in tier 1 cities with 7k more rooms than any International competitor • Growth in Chinese middle class will benefit tier 2/3 cities • IHG has the largest pipeline in tier 2/3 but is yet to open a hotel in +200 cities C

14. Slide 14: Fee margin progression driven by scale and efficiency benefits

    Fee margin progression driven by scale and efficiency benefits Fee margin up 1.5%pts to 44.7%1 in 2014 • Americas: strong RevPAR growth in our most scalable region • Greater China: managed business margin improved; re-investment in 2015 • AMEA: impacted by investment expected to continue into 2015 •

15. Slide 15: Capital allocation strategy – disciplined approach maintains flexibility and maximises returns

    Capital allocation strategy – disciplined approach maintains flexibility and maximises returns Efficient balance sheet with an investment grade credit rating • 2.0 to 2.5x net debt / EBITDA • Towards top end in favourable economic conditions • Currently 2.6x post Kimpton acquisition Reduce asset int

16. Slide 16: Capital expenditure philosophy

    Capital expenditure philosophy Medium-term per annum capital expenditure guidance – Gross: up to $350m1; Net ~$150m1 Maintenance capex & key money • Hotel maintenance reducing in line Medium term p.a. 2014 with asset intensity Maintenance $60m - $85m $101m O&L Hotel maintenance • Key money deployed

17. Slide 17: Shareholder returns – consistent ordinary dividend growth and special dividends

    Shareholder returns – consistent ordinary dividend growth and special dividends Total shareholder returns of over $1.0bn in 2014 • Proposed total dividend of 77¢, 10% growth in 2014, 11% CAGR since 2004 • Special dividends and share buybacks of $0.9bn completed in 2014 Annual ordinary dividend (¢ pe

18. Slide 18: IHG is a highly cash generative business with a disciplined approach to capital allocation

    IHG is a highly cash generative business with a disciplined approach to capital allocation • Net capital expenditure of $203m covered ~3x by underlying cash from operations • Shareholder returns funded by operations, disposals, and efficient balance sheet Cash inflows 2014 sources and uses of cash (

19. Slide 19: Operating Review

    InterContinental Hotel, Double Bay, Sydney Operating Review Richard Solomons IHG© CEO 19

20. Slide 20: IHG is delivering against its winning strategy for long-term sustainable growth

    IHG is delivering against its winning strategy for long-term sustainable growth Value creation: superior shareholder returns Value creation: Superior shareholder returns Winning Model Targeted Portfolio Attractive markets Highest opportunity segments Managed & franchised model • Scale and efficiency

21. Slide 21: We have strengthened our brand portfolio

    We have strengthened our brand portfolio Luxury Price Point Midscale Wellbeing Family Time Romantic Getaway Short Break Experience Rest & Go Mixing Business with Pleasure Business Productivity Building Business Interactions Social Identity IHG© 21

22. Slide 22: Holiday Inn Brand Family – World's only global mainstream hotel brand

    Holiday Inn Brand Family – World’s only global mainstream hotel brand • Largest global hotel brand with largest global pipeline Unprecedented • 2x larger than nearest competitor scale • Only global brand with meaningful presence outside of US - 20% share of non-US open rooms in segment • Brand debut

23. Slide 23: 2014 growth in new markets

    2014 growth in new markets Holiday Inn Express, Nicaragua Holiday Inn Express, Clarke Quay, Singapore Holiday Inn Resort, Sanya Bay, China Holiday Inn Express, Voronezh, Russia IHG© 23

24. Slide 24: Holiday Inn Brand Family – Continuing evolution of guest experience

    Holiday Inn Brand Family – Continuing evolution of guest experience • Open lobby delivered in 5 markets across Europe Holiday Inn - Rollout continuing into 2015 Brand Innovation • US restaurant concept (Burger Theory) expanding to new locations - Initial pilot hotel has seen 30%+ increase in F&B rev

25. Slide 25: InterContinental Hotels & Resorts – Momentum behind world's largest luxury brand

    InterContinental Hotels & Resorts – Momentum behind world’s largest luxury brand • 2x larger than nearest competitor Unrivalled global luxury brand • Voted “World’s Leading Hotel Brand” in World Travel Awards for 6th consecutive year • 8 iconic openings and 11 signings Global Highlights - New openin

26. Slide 26: Landmark openings and signings

    Landmark openings and signings IHG© 26

27. Slide 27: Crowne Plaza – Making Business Travel Work

    Crowne Plaza – Making Business Travel Work • Opened 400th Crowne Plaza globally Leading global upscale brand • Pre eminent 5-star hotel brand in Greater China with more than 115 open and pipeline hotels • Total revenue up 5% Strong 2014 - Americas revenue up 10%, largest annual increase since 2006 p

28. Slide 28: Next Generation Guest Room – Unique and innovative

    Next Generation Guest Room – Unique and innovative Next Generation Guest Room, Floor Plan IHG© 28

29. Slide 29: HUALUXE Hotels and Resorts – Industry first in an untapped market

    HUALUXE Hotels and Resorts – Industry first in an untapped market • First global hotel brand designed specifically Innovative brand for Chinese guest developed for • Based on four Chinese guest priorities – tradition, rejuvenation, Chinese guest status recognition and enabling spaces • Developed in

30. Slide 30: First openings in the heart of China

    First openings in the heart of China OPEN & PIPELINE HOTELS BEIJING SHANGHAI CHINA NANCHANG ● Opening in H1 2015 ● Population: 5.0m* ● High tech zone and gateway to SE China YANGJIANG ● Opened February ● Population: 2.8m* HUALUXE Hotel & Resort, Nanchang Open hotels ● Popular leisure and Pipeline ho

31. Slide 31: Hotel Indigo – Delivering quality openings and signings

    Hotel Indigo – Delivering quality openings and signings • RevPAR premium to segment doubled since 2012 Strong US business • Entering high RevPAR markets • Best year for signings since 2008 • Tripled non-US business in past 3 years Entering attractive • 2014 debut in prime European gateway cities glo

32. Slide 32: Recent openings – distinctive and authentic neighbourhoods

    Recent openings – distinctive and authentic neighbourhoods Hotel Indigo, St Petersburg Hotel Indigo, Paris Hotel Indigo, Manhattan Financial District Hotel Indigo, Bangkok Wireless Road IHG© 32

33. Slide 33: Kimpton hotels & restaurants – Good progress post acquisition

    Kimpton hotels & restaurants – Good progress post acquisition • Transaction completed on 16 January 2015 Recently closed • Largest independent boutique operator acquisition • 62 open hotels, 16 pipeline hotels at closing • Purchase price of $430m • Creates world’s largest boutique hotel business • F

34. Slide 34: Unique hotel portfolio

    Unique hotel portfolio Hotel Monaco, a Kimpton Hotel, Philadelphia Cypress Hotel, a Kimpton Hotel, California Epic Hotel, a Kimpton Hotel, Miami FireSky Resort & Spa, a Kimpton Hotel, Scottsdale IHG© 34

35. Slide 35: Our winning strategy is underpinned by great technology

    Our winning strategy is underpinned by great technology Value creation: superior shareholder returns Value creation: Superior shareholder returns Winning Model Targeted Portfolio Attractive markets Highest opportunity segments Managed & franchised model • Scale and efficiency of operations Disciplin

36. Slide 36: Our approach to technology

    Our approach to technology Dream Plan Book Stay Share Insight into guest needs across the entire Guest Journey • Know the market and leverage current trends to enhance the guest experience • Understanding needs of different demographics, e.g. Boomers vs. Millennials • Own the ‘stay’ experience • Foc

37. Slide 37: Technology is changing engagement and ownership of the customer across the guest journey

    Technology is changing engagement and ownership of the customer across the guest journey Mobile Social media Personalisation Internet of things IHG© 37

38. Slide 38: IHG has led the industry to create a powerful distribution platform

    IHG has led the industry to create a powerful distribution platform • 1st computerised reservation system History of hotel • 1st online bookings industry innovation and firsts • 1st to introduce best price guarantee • 1st to have apps on all mobile platforms • Websites in 16 languages Strong direct

39. Slide 39: Our technology roadmap drives market leading innovation across the guest journey

    Our technology roadmap drives market leading innovation across the guest journey Dream Plan Book Stay Share Digital Connect and engage with guests throughout the journey and broaden 1 content role of the brand Interface with customers 2 Property level capabilities Robust and efficient in hotel execu

40. Slide 40: Enhanced digital content is growing IHG direct channel revenue contribution

    1 Enhanced digital content is growing Digital content 3 IHG direct channel revenue contribution Data & analytics Dream Plan Book Stay Share Targeted digital • Efficient digital marketing platform enables better guest marketing targeting at the dream and plan stage Tailored offerings • Personalised l

41. Slide 41: Enhanced digital content is growing IHG direct channel revenue contribution

    1 Enhanced digital content is growing Digital content 2 Property level IHG direct channel revenue contribution capabilities Dream Plan Book Stay Share Mobile check in / • Mobile check-in and check-out launched at over 500 hotels out launched at – Deliver in 3,300 US hotels in 2015, then roll-out glo

42. Slide 42: Our mobile app delivers a seamless experience across the guest journey

    1 Our mobile app delivers a seamless Digital content experience across the guest journey Dream Plan Book Stay Share Mobile check-in InterContinental Past stays and Points & cash Post reviews at over 500 concierge nearby hotels options hotels IHG© 42

43. Slide 43: IHG remains well positioned for high quality growth

    IHG remains well positioned for high quality growth Positive long-term industry dynamics Asset light business model delivers high quality income Excellent progress in delivering our strategy Industry leading technology platforms and digital content Disciplined approach to capital allocation Heighten

44. Slide 44: Q&A

    Hotel Monaco, a Kimpton Hotel, Philadelphia Q&A IHG© 44

45. Slide 45: Appendices

    Holiday Inn, Sanya Bay, China Holiday Inn Express, Yancheng’ China Appendices IHG© 45

46. Slide 46: Foreign exchange translation exposure

    Foreign exchange translation exposure $9m impact from currency translation in 2014 • Recent trends indicate further impact in 2015 Reported EBIT ($m) Foreign exchange impact on 2014 EBIT ($m) Major non USD Region 2014 actual rates vs. Jan 20152 vs. 2014 currency exposure 2014 2013 actual rates1 actu

47. Slide 47: 2014/2015 significant one offs

    2014/ 2015 significant one offs • $7m significant liquidated damages receipt in Americas franchise • $(5)m impact in Americas managed from the InterContinental New York Barclay renovation • $(3)m impact in Americas managed from devaluation of the Venezuelan Bolivar 2014 • $(5)m impact in Americas ov

48. Slide 48: Hotel franchising

    Hotel franchising Total gross revenue¹ $bn (rooms only) Group royalty drivers 2014 YoY Average 2014 13.4 rooms 0.7% 2013 12.5 RevPAR 6.1% 2012 12.0 Royalty fees 7.5% Franchise Fees2 $m Franchise EBIT2 $m (margin %) 2014 747 2014 632 (85%) 2013 690 2013 586 (85%) 2012 653 2012 547 (84%) Based on actu

49. Slide 49: Hotel management

    Hotel management Total gross revenue1 $bn (total hotel) Management Fees² $m 2014 9.0 2014 379 2013 8.5 2013 365 2012 8.6 2012 368 Managed lease revenue and EBIT $m Managed EBIT² $m (margin %) $m 2014 2013 2014 222 (59%) Americas Revenue 38 34 Americas EBIT 0 0 Europe Revenue 90 89 2013 207 (57%) Eur

50. Slide 50: Owned & Leased

    Owned & Leased O&L revenue $m O&L EBIT $m (margin %) 2014 404 2014 79 (20%) 2013 398 2013 86 (22%) 2012 378 2012 76 (20%) O&L Revenue and EBIT from disposals ($m) O&L EBITDA $m $m 2014 2013 2014 107 InterContinental Barclay Revenue 14 75 InterContinental Barclay EBIT (1) 14 InterContinental Mark Hop

InterContinental Hotels Group — FY2014 Earnings Presentation on 6ix