Intercontinental Hotels Group Plc · LSE:IHG
Intercontinental Hotels — H1 2009 Earnings Presentation
34 slides from Intercontinental Hotels's earnings presentation, Aug 11, 2009
Slide 1: IHG Interim Results Presentation
IHG Interim Results Presentation 11th August 2009
Slide 2: Agenda
Agenda Financial Operating Overview Q&A Review Review 2
Slide 3: Agenda
Agenda Financial Operating Overview Q&A Review Review 3
Slide 4: Progress on key priorities
Overview Progress on key priorities 1. Focus on efficiency; conserve cash – Exceeding 2009 cost savings target, more identified – 2010 regional and central costs will be $65-$70m below 2008 levels – Savings net of reinvestment and inflation 2. Support hotel performance – Drive share of available rev
Slide 5: Near term outlook remains challenging
Overview Near term outlook remains challenging z Occupancy levels stabilising but rates under pressure z Forward bookings indicate no improvement z Leisure picking up ahead of business demand z July trading boosted by leisure – global RevPAR –14.4%* – Americas –14.2%*; EMEA –15.1%*; APAC –14.5%* z R
Slide 6: Agenda
Agenda Financial Operating Overview Q&A Review Review 6
Slide 7: H1 2009 results summary – Outperforming in a difficult market
H1 2009 results summary – Financial Review Outperforming in a difficult market z Global constant currency RevPAR down 16 16.2% 2% – Second quarter decline of 18.6% z Underlying* revenue down 20%**, EBIT down 38%** z Exceeding cost saving targets z Business B i model d l generating i free f cash h fl
Slide 8: Financial results
Financial Review Financial results* 6 mths 6 mths CER*** Change % $ million Change % to 30 June 09 to 30 June 08 Excluding LDs**** Turnover 726 974 (25)% (20)% Operating Profit Profit** 179 291 (38)% (38)% Operating Profit Margin 25% 30% -5ppts -6ppts Interest (28) (55) 49% Profit before tax** 151 2
Slide 9: Reducing costs & driving efficiencies
Financial Review Reducing costs & driving efficiencies Regional & central cost savings $ million 6 mths 12 mths 2010 vs. 2008 to 30 June 09 to 31 Dec 09 as expected as reported as expected Sustainable 21 40 65 - 70 Currency* 20 c 20 c.20 - Non-recurring 10 20 - Total 51 c.80 65 - 70 z Non Non-recurr
Slide 10: Global occupancy stabilisation
Financial Review Global occupancy stabilisation Cumulative global monthly RevPAR decline Jan YTD Feb YTD Mar YTD Apr YTD May YTD June YTD July YTD 0% -2% -4% ent (%) -6% AR moveme -8% YoY RevPA -10% -12% 14% -14% -16% -18% Occupancy Rate Source: IHG 10
Slide 11: H1 RevPAR outperformance in the US
Financial Review H1 RevPAR outperformance in the US H1 2009 RevPAR change, IHG vs. segment -1% -3% -5% ovment (%) -7% -9% RevPAR mo -11% 11% -13% -15% YoY R -17% 17% -19% -21% -23% 23% -25% US Industry InterContinental - Crowne Plaza - Holiday Inn - US Holiday Inn Candlewood & US US Express - US Sta
Slide 12: H1 RevPAR outperformance in non-US markets
Financial Review H1 RevPAR outperformance in non-US markets H1 2009 RevPAR change, IHG vs. segment -1% -3% -5% -7% ment (%) -9% -11% -13% vPAR movem -15% -17% -19% -21% YoY Rev -23% -25% -27% -29% -31% IHG Segment -33% -35% All brands - UK InterContinental brand- EMEA All brands - China Source: IHG;
Slide 13: Hotel franchising – Rooms growth impact
Hotel franchising g– Financial Review Rooms growth impact Total gross revenue $bn* (rooms only) Group royalty drivers H1’09 vs. H1’08 H1'09 4.6 5% Rooms H1'08 H1 08 56 5.6 (16)% RevPAR (13)% Royalty fees H1'07 5.0 Franchise fees $m Franchise EBIT $m (margin%) H1'09 H1'09 206 (80%) 257 H1'08 309 H1'0
Slide 14: Hotel management – Structure of our managed business
Hotel management g - Financial Review Structure of our managed business z Standard contract – Base fee: revenue related – Incentive fee: performance related e.g. gross profit or cash flow z In rare cases IHG provides financial support to owners – Payments y triggered gg by y certain events z Hospita
Slide 15: Hotel management – Resilient margins in EMEA and Asia Pacific
Hotel management g - Financial Review Resilient margins in EMEA and Asia Pacific Management fees $m Managed EBIT $m (margin%)* Group H1'09 38 (31%) H1'09 121 181 H1'08 93 (51%) H1'08 H1'07 78 (50%) H1'07 156 EMEA & Asia Pacific H1'09 102 H1'09 50 (49%) H1'08 144 H1'08 73 (51%) H1'07 120 H1'07 57 (48
Slide 16: Owned and leased estate – Successful margin protection
Owned and leased estate – Financial Review Successful margin protection O&L revenues $m O&L EBITDA $m H1'09 (23)%(34)% 250 H1'09 48 45% 27% 28% H1'08 H1 08 352 H1'08 92 17% 40% 43% H1'07 341 H1'07 71 O&L EBIT $m (margin%) H1’09 revenue & profit declines* $m H1'09 25 (10%) Revenue 90 H1'08 65 (18%) (
Slide 17: Exceptional operating charges
Financial Review Exceptional operating charges P&L Impact p ($m) ( ) Impairment: z Goodwill (57) z Intangible assets (32) z Property, Property plant and equipment (28) z On reclassification of hotels from assets held for sale (45) Total impairment (162) Other (39) (201) z Additional $5m P&L deprecia
Slide 18: Cash flow and net debt
Financial Review Cash flow and net debt $ million 6 months to 30 June 09 6 months to 30 June 08 EBITDA* 230 348 Tax & Interest (70) (22) Maintenance capital expenditure (31) (33) Operating exceptionals (43) (17) Other (including working capital) (26) 4 Free cash flow 60 280 Investment capital net of
Slide 19: Agenda
Agenda Financial Operating Overview Q&A Review Review 19
Slide 20: Agenda
Agenda Financial Operating Overview Q&A Review Review 20
Slide 21: Our scale model – driving market share
Operating Review Our scale model – driving market share Guest 1 p preference RevPAR Reinvestment 1 1 out-performance Scale O ner Owner 1 1 efficiencies ROI Higher royalties/ 1 more deals 21
Slide 22: Priority 1 – Focus on efficiency
Priority 1 – Operating Review Focus on efficiency z Focus for the whole business, business three year journey z Sustainable net cost savings of $65m-$70m* by 2010 – Organisation streamlined and restructured – Headcount reduction (over 300 corporate positions) – Offshoring/outsourcing – Global procur
Slide 23: Focus on efficiency – global procurement benefits
Focus on efficiency – Operating Review global procurement benefits Targeting +$750m expenditure z Direct IHG purchases – New internal disciplines – Consolidation of strategic partners – Global purchasing and maintenance contracts – Estimated 2010 net benefit $20m z System fund – Consolidated global
Slide 24: Priority 2: Support hotel performance
Priority 2: Operating Review Support hotel performance Percentage of booked room nights delivered by IHG systems 2008: 2003: 68% of room 60 nights 49% of room nights 54 56 52 booked through g IHG booked through IHG channels 46 channels 43 H1 2004 H1 2005 H1 2006 H1 2007 H1 2008 H1 2009 24
Slide 25: Support hotel performance – enhanced sales and loyalty programme
Support hotel performance – Operating Review enhanced sales and loyalty programme z Global sales – 25% increase in team – Increase in share of business from major accounts z Priority Club Rewards (PCR) – PCR revenue contribution up over 4%pts to 41% – Introduction of “Points Points & Cash Cash” – Mo
Slide 26: Support hotel performance – enhanced sales and loyalty programme
Support hotel performance – Operating Review enhanced sales and loyalty programme 26
Slide 27: Support hotel performance – tactical marketing activity
Support hotel performance – Operating Review tactical marketing activity z Friends and Family programme – 140,000 room nights booked z Free Nights Offer – 42% increase in promotion registration YoY z EasyGroups meetings – Conversion of enquiries up by 10 percentage points. 27
Slide 28: Support hotel performance – cost management initiatives
Support hotel performance – Operating Review cost management initiatives z 200 standards t d d temporarily t il relaxed l d z Benchmarking project across key owned hotels z Internal Operations group established to drive best practice z Green G Engage E – estimated ti t d $75 $75,000 000 saving i per
Slide 29: Priority 3: Build quality distribution
Ju n 99 100 101 102 Ju -06 A l-0 u 6 Se g-0 p 6 O -06 c N t-0 o 6 D v-0 Priority 3: ec 6 Ja -06 n Fe -0 7 M b-0 a 7 A r -07 p M r-0 ay 7 Ju -07 n Ju -07 A l-0 u 7 Se g-0 p 7 O -07 c Build quality distribution N t-0 ov 7 D -0 ec 7 Ja -07 n Fe -0 8 M b-0 a 8 A r -08 p M r-0 ay 8 Ju -08 *Indexed from J
Slide 30: Operating Review
cf | Operating woes Review nn J 30
Slide 31: RevPAR out-performance maintained at c.5%
Operating Review z RevPAR out-performance maintained at c.5% 31
Slide 32: Conclusions
Operating Review Conclusions z Industry outlook challenging z Clear management priorities in place z Strong net rooms growth but slowing z System and brands driving outperformance z Continued momentum with Holiday Inn relaunch z Exceeding E di costt saving i targets t t 32
Slide 33: Agenda
Agenda Financial Operating Overview Q&A Review Review 33
Slide 34: IHG Interim Results Presentation
IHG Interim Results Presentation 11th August 2009
InterContinental Hotels Group — H1 2009 Earnings Presentation on 6ix