TIDMIHG
RNS Number : 0962N
InterContinental Hotels Group PLC
04 May 2018
4 May 2018
InterContinental Hotels Group PLC
2018 First Quarter Trading Update
Highlights
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* Global Q1 comparable RevPAR[1] up 3.5%
* 4.3% YOY net system size growth to 800k rooms, 8k
rooms opened (up 16% YOY)
* 20k rooms signed, strongest Q1 pace for 11 years, led
by avid hotels
* Good progress against new strategic growth
initiatives, particularly in expanding our luxury
footprint
* Efficiency programme underway; on track to deliver
$125m p.a. in savings to reinvest to drive growth
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Keith Barr, Chief Executive of InterContinental Hotels Group PLC, said:
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"In the first quarter we delivered RevPAR growth of 3.5%, net system
size growth of 4.3% and our best signings pace for eleven years. This
strong performance reflects our focus on driving industry leading net
rooms growth over the medium term, underpinned by our new strategic
initiatives.
There continues to be strong momentum across the business. We have
made excellent progress against our initiative to expand our footprint
in the $60 billion luxury segment, announcing the acquisition of a
51% stake in Regent Hotels & Resorts in March. In addition, this week
we entered into an agreement to rebrand and operate a high-quality
portfolio of 13 hotels in the UK. This will establish IHG as the leading
luxury operator in this market, launch our luxury boutique brand Kimpton
Hotels & Restaurants in the UK, and establish a position for our new
upscale brand, principally focused on conversion opportunities. Signings
for our new mainstream brand, avid hotels, continue to exceed our expectations,
and now total more than 100 hotels, one every other day since launch.
Our roll out of IHG Concerto, incorporating our new Guest Reservation
System, continues at pace, with more than 1,000 hotels now using the
platform, and we are on-track to complete roll-out by the end of 2018
/ early 2019.
The fundamentals for our industry remain strong, we have the right
strategy, and we are confident in the outlook for the year ahead."
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First Quarter RevPAR performance
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Group
RevPAR was up 3.5%, with rate up 1.9% and occupancy up 1.0%pt. The
earlier timing of the Easter weekend, which in 2018 was split evenly
between March and April, had a negative impact on RevPAR growth in
the Americas and Europe.
Americas
RevPAR was up 2.9%, with the US up 2.2%. Trading in the US was impacted
by a number of both positive and negative factors; we estimate that
underlying growth was approximately 2.5%. Elsewhere in the region,
Canada was up 7%, benefitting from a robust convention calendar, whilst
Latin America and the Caribbean were up 16%, aided by reduced industry
supply following hurricane activity in late 2017. In Mexico RevPAR
was flat, adversely impacted by the strengthening of the Mexican peso
against the US dollar.
Europe, Middle East, Asia & Africa
RevPAR was up 2.9% in Q1. Continental Europe RevPAR was up 6% with
continued recovery in terror impacted markets (France and Belgium both
up high single digits, Turkey up double digits) offset partly by an
adverse trade fair calendar in Germany (down 2%). In the UK, RevPAR
was down 1% (London down 3%, provinces up 1%) due to strong prior year
comparables and the shift in the timing of Easter. Elsewhere, Middle
East RevPAR was down 6% due to high supply growth, Australia was up
4% with strong corporate demand in key cities, whilst Japan, up 3%,
benefitted from strong transient demand related to the Chinese New
Year.
In February, IHG received liquidated damages totalling $15m relating
to the termination of a portfolio of 13 open hotels (2k rooms) and
6 pipeline hotels (1k rooms) in Germany, which will remain in IHG's
system until 2020. Under IFRS 15, the $15m will be recognised over
the period until they exit (H1 2018: $2.8m, FY 2018: $6.7m, FY 2019:
$7.7m, H1 2020: $1.0m).
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Greater China
RevPAR was up 11.0% in Q1, with 10% growth in mainland China, which
benefitted from an extended build up to Chinese New Year in February.
Double digit RevPAR growth in tier 1 and tier 2 cities was driven by
strong transient, corporate and meetings demand. Tier 3 and tier 4
cities continued to see mid-single digit growth, aided by the ongoing
ramp-up of our hotels. In Hong Kong, RevPAR was up 15%, with mainland
China inbound demand boosted by the strengthening of the Chinese renminbi
against the Hong Kong dollar. Macau RevPAR was up 25%, reflecting the
ongoing improvement in market conditions.
The acceleration in Q1 RevPAR and rooms growth in Greater China to
11% and 9% respectively reflects the ongoing benefit of our strong
strategic focus on this important market.
Strategic progress
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Good progress has been made against our new strategic priorities to
drive industry leading net rooms growth over the medium term.
Build and leverage scale
* Net system size up 4.3% year on year to 800k rooms
(5,367 hotels).
* 8k rooms (53 hotels) opened in the quarter, up 16% on
the prior year and including our highest ever Q1
openings in Greater China. 6k rooms (34 hotels) were
removed from the system.
* 20k rooms (146 hotels) signed, our highest Q1 rooms
signings since 2007. Includes our strongest Q1 in the
Americas since 2008, and our best ever Q1 in Greater
China.
* 252k pipeline rooms; 45% under construction.
Enhance revenue delivery
* Roll out of GRS and IHG Concerto continues at pace,
with over 1,000 hotels now migrated to the platform.
On track to complete the roll-out by the end of 2018
/ early 2019.
Evolve owner proposition
* Continued momentum with Holiday Inn Express Franchise
Plus in Greater China, with 11 properties (2k rooms)
signed in Q1. There are now 8 open and 77 pipeline
Holiday Inn Express Franchise Plus properties in the
region.
Optimise our preferred portfolio of brands for owners and guests
* Luxury - expanding our portfolio:
* Acquisition of Regent Hotels & Resorts; expected to
close in mid 2018; 6 open hotels (2.0k rooms) and 3
pipeline hotels (0.9k rooms); expected to grow to
more than 10,000 rooms (40 hotels) over the long
term.
* Agreement to rebrand a UK portfolio of hotels;
establishing IHG as the leading UK luxury operator;
launching Kimpton Hotels & Restaurants; expanding
InterContinental's presence.
* Upscale - growing our offer:
* UK portfolio deal will also strengthen IHG's upscale
presence and will establish a position for its new
upscale brand, principally focused on conversion
opportunities.
* Mainstream - continued strong signings pace for our
newest brand:
* More than 100 avid hotels now signed, including 51
hotels (4.8k rooms) signed in Q1 2018, two of which
were in Canada. This equates to one new deal signed
every other day since launch in September 2017.
Efficiency programme
* Confident in our ability to deliver $125m of annual
savings by 2020 for reinvestment to drive growth,
with our efficiency programme well underway.
* Continue to expect $200m exceptional cash costs to
achieve the savings; $31m in 2017 with majority of
the remainder in 2018.
Financial position and capital allocation
-------------------------------------------------------------------------
The financial position of the group remains robust, with an on-going
commitment to an efficient balance sheet and an investment grade credit
rating.
Foreign exchange
---------------------------------------------------------------------------
The weakening of the US dollar against many major currencies globally
increased group RevPAR to 6.5% in the quarter, when reported at actual
exchange rates. A breakdown of constant vs. actual currency RevPAR by
region is set out in Appendix 2.
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IFRS 15
---------------------------------------------------------------------------
On 17th April IHG issued new financial statements for 2016 and 2017
reflecting several reporting changes highlighted at our 2017 full year
results. These include the adoption of IFRS 15 Revenue from Contracts
with Customers, the Group's new regional structure, and the reporting
of Fee Business results. Further detail of these changes can be found
at https://www.ihgplc.com/investors/results-and-presentations.
Appendix 1: First quarter RevPAR movement summary
Q1 2018
RevPAR Rate Occ.
------- ----- --------
Group 3.5% 1.9% 1.0%pts
Americas 2.9% 2.0% 0.6%pts
EMEAA 2.9% 1.7% 0.8%pts
G. China 11.0% 3.9% 3.9%pts
---------- ------- ----- --------
Appendix 2: RevPAR at constant exchange rates (CER) vs. actual exchange rates
(AER) Q1 2018
CER AER Difference
------ ------ -----------
Group 3.5% 6.5% (3.0)%pts
Americas 2.9% 3.2% (0.3)%pts
EMEAA 2.9% 11.3% (8.4)%pts
G. China 11.0% 18.3% (7.3)%pts
---------- ------ ------ -----------
Appendix 3: Q1 system & pipeline summary (rooms)
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System Pipeline
Openings Removals Net Total YoY% Signings Total
--------- --------- ------ -------- ----- --------- --------
Group 7,920 (6,072) 1,848 799,923 4.3% 19,727 252,451
Americas 3,249 (3,519) (270) 497,190 2.3% 9,928 113,739
EMEAA 1,639 (1,825) (186) 198,890 6.9% 2,103 63,651
G. China 3,032 (728) 2,304 103,843 9.4% 7,696 75,061
---------- --------- --------- ------ -------- ----- --------- --------
Appendix 4: Definitions
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AER: Actual exchange rates used for each respective period.
CER: Constant exchange rates.
RevPAR: Revenue per available room.
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For further information, please contact:
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Investor Relations (Catherine Dolton; Tom +44 (0)1895 +44 (0)7527
Yates; Matthew Kay): 512176 419431
Media Relations (Yasmin Diamond; Zoe Bird; +44 (0)1895 +44 (0)7527
Mark Debenham): 512097 424046
--------------------------------------------------- ------------ ---------------
Conference call for Analysts and Shareholders:
A conference call with Paul Edgecliffe-Johnson (Chief Financial Officer)
will commence at 9.00am London time on 4 May and can be accessed on
https://www.ihgplc.com/investors/2018-first-quarter-trading-update.
There will be an opportunity to ask questions.
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International dial-in +44 203 936 2999
UK dial-in +44 (0) 203 936 2999
US dial-in +1 845 213 3398
Passcode 09 64 60
A replay of the 9.00am conference call will be available for 7 days
from 11:30am London time - details are below:
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International dial-in +44 203 936 3001
UK dial-in +44 (0) 203 936 3001
US dial-in +1 845 709 8569
Replay pin 70 95 40
----------------------------------------- ---------------------------------------
US conference call and Q&A:
There will also be a conference call, primarily for US investors and
analysts, at 9.00am New York (2pm London) Time on 4 May with Paul
Edgecliffe-Johnson (Chief Financial Officer). There will be an opportunity
to ask questions.
International dial-in +44 203 936 2999
US dial-in + 1 845 213 3398
UK dial-in +44 (0) 203 936 2999
Passcode 29 22 26
-------------------------------------------------------- ---------------------------------------------------------
A replay of the 2.00pm conference call will be available for 7 days
from 5pm London time - details are below:
-------------------------------------------------------------------------------------------------------------------
International dial-in +44 203 936 3001
US dial-in + 1 845 709 8569
UK dial-in +44 (0) 203 936 3001
Passcode 20 16 82
-------------------------------------------------------- ---------------------------------------------------------
Website:
The full release and supplementary data will be available on our website
from 7.00am (London time) on 4 May. The web address is www.ihgplc.com/investors/results-and-presentations.
Notes to Editors:
IHG(R) (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is
a global organisation with a broad portfolio of hotel brands, including
InterContinental(R) Hotels & Resorts, Kimpton(R) Hotels & Restaurants,
Hotel Indigo(R) , EVEN(R) Hotels, HUALUXE(R) Hotels and Resorts, Crowne
Plaza(R) Hotels & Resorts, Holiday Inn(R) , Holiday Inn Express(R)
, Holiday Inn Club Vacations(R) , Holiday Inn Resort(R) , avid(TM)
hotels, Staybridge Suites(R) and Candlewood Suites(R) .
IHG franchises, leases, manages or owns nearly 5,400 hotels and 800,000
guest rooms in almost 100 countries, with more than 1,700 hotels in
its development pipeline. IHG also manages IHG(R) Rewards Club, our
global loyalty programme, which has more than 100 million enrolled
members.
InterContinental Hotels Group PLC is the Group's holding company and
is incorporated in Great Britain and registered in England and Wales.
More than 375,000 people work across IHG's hotels and corporate offices
globally.
Visit www.ihg.com for hotel information and reservations and www.ihgrewardsclub.com
for more on IHG Rewards Club. For our latest news, visit: www.ihgplc.com/media
and follow us on social media at: www.twitter.com/ihg, www.facebook.com/ihg
and www.youtube.com/ihgplc.
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.
[1] RevPAR growth is at constant exchange rates (CER) unless
otherwise stated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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