TIDMIHG
RNS Number : 5421E
InterContinental Hotels Group PLC
19 October 2018
This announcement contains inside information
19 October 2018
InterContinental Hotels Group PLC
2018 Third Quarter Trading Update
Highlights
-----------
-- 5.1% YOY net system size growth, up 4.6% excluding Regent
Hotels & Resorts and the UK portfolio deal
-- 27k rooms signed, 19k rooms opened (up 70% YOY) strongest Q3 pace for each in 10 years
-- Global Q3 comparable RevPAR(1) up 1.0%, with Q3 YTD RevPAR up 2.7%
-- Roll out of GRS and IHG Concerto now substantially complete
-- 150 avid hotels signed into the Americas pipeline, the first
property is now open, and last week the brand was launched in
Germany
-- Regent Hotels & Resorts' first signing since acquisition,
and voco on track for >15 signings by year end
-- $500m to be returned to shareholders by means of special dividend with share consolidation
Keith Barr, Chief Executive of InterContinental Hotels Group PLC, said:
------------------------------------------------------------------------
"We delivered a good third quarter performance. Our strategic
focus on improving our rooms growth yielded strong results, driving
net system size up 5.1% and our best performance for signings and
openings in a decade. Global RevPAR grew 1.0%, with performance in
the US impacted by strong prior year demand from the 2017
hurricanes.
We continue to make good progress against the series of new
strategic initiatives we outlined in February. The international
expansion of Kimpton Hotels & Restaurants is accelerating, with
presence secured in 14 countries, voco is on track for more than 15
signings by year end, ahead of our initial expectations, and just
this week we announced the first signing for our recently
relaunched Regent Hotels & Resorts brand. Our first avid hotel
is now open and owner demand continues to be strong, with 150
hotels signed across the Americas and the recent launch of the
brand in Europe.
The roll-out of IHG Concerto, featuring our innovative new Guest
Reservation System, is substantially complete, with over 95% of our
global estate operational on the new system, and the remaining
hotels due to be migrated over the coming weeks.
Reflecting this rapid implementation of our strategic
initiatives and in line with our well-established strategy of
returning surplus cash to shareholders, we are today announcing a
$500m special dividend with share consolidation, to be paid in
early 2019.
The fundamentals for our industry remain strong. We are
confident in the outlook for the remainder of the year and in our
ability to deliver industry-leading net rooms growth over the
medium term."
Third Quarter RevPAR performance
---------------------------------
Americas
RevPAR was flat in Q3 and up 2.0% Q3 YTD. In the US, rate was up
1.1% and occupancy down 1.2%pts driven by a mid-single digit
occupancy decline in markets which benefited from the
hurricane-related demand which commenced in Q3 2017. As a result,
US RevPAR was down 0.5% in Q3 2018 but up 1.5% Q3 YTD, in line with
the performance of the industry upper-midscale segment. Elsewhere
in the region, Canada was up 2.4%, benefitting from continued
strength in urban markets, whilst Latin America and the Caribbean
were up 6.5%, with strong demand in Colombia and Brazil. In Mexico
RevPAR was up 5.4%, aided by soft prior year comparables from the
earthquake in the Mexico City area.
Europe, Middle East, Asia & Africa
RevPAR was up 2.5% in Q3 and 2.7% Q3 YTD. Continental Europe
RevPAR was up 4.3% with France up 9.8% as the market recovery
continues, and Germany up 2.4% due to a more favourable trade fair
calendar. Russia saw double digit growth, benefitting from the FIFA
World Cup. In the UK, RevPAR was up 1.1% (London up 3.6%, Provinces
down 0.4%), with strong demand in London from leisure guests and
the biennial air show, offsetting softer occupancy in the
Provinces. Elsewhere, there was a low single digit RevPAR decline
in the Middle East and Australia, with both markets impacted by new
supply, whilst Japan, up 2.5%, benefitted from rate growth in key
cities.
Greater China
RevPAR was up 4.8% in Q3 and 8.2% Q3 YTD. Mainland China growth
of 4.5% was driven by continued transient and corporate demand, but
as expected was lower than H1 levels, due to the strong comparables
which commenced in Q3 2017. There was mid-single digit RevPAR
growth in tier 1 and tier 2 cities and a slight decline in tier 3
and tier 4 cities which was driven by new supply in Sanya and
difficult trading conditions in Changbaishan; excluding these
locations, tier 3 and tier 4 cities also saw mid-single digit
RevPAR growth. Hong Kong SAR was up 5.2% and Macau SAR up 3.8%,
both driven by gains in rate.
(1) RevPAR growth is at constant exchange rates (CER) unless
otherwise stated
Update on strategic initiatives
--------------------------------
Build and leverage scale
-- Net system size up 5.1% year on year to 826k rooms (5,518
hotels), up 4.6% excluding Regent Hotels & Resorts and the UK
portfolio deal.
-- 19k rooms opened in the quarter, up 70% on the prior year,
and our best Q3 performance in 10 years. This includes the rooms
associated with Regent Hotels & Resorts (2.0k rooms) and the UK
portfolio deal (1.7k rooms, with a further 0.5k to be added), which
completed in the quarter. Our portfolio in Greater China continues
to expand at pace, with 17% net system size growth year on
year.
-- 27k rooms signed, our highest Q3 rooms signings since 2008,
and with Greater China on track to have its best ever full year
performance in 2018.
-- Pipeline now stands at 267k rooms.
Optimise our preferred portfolio of brands for owners and
guests
-- Mainstream
- avid hotels: first property opened for the brand in Oklahoma
City, with a further 25 hotels (2.4k rooms) signed in Q3, taking
the total Americas pipeline to 150 hotels. Last week we announced
the launch of the brand in Europe, signing a Multiple Development
Agreement with one owner to open 15 hotels in Germany over the next
5 years, the first by 2020.
-- Upscale
- voco: first property expected to open in Australia later this
year; with six signings to date in addition to the four properties
that will rebrand as part of the UK portfolio deal, we are on track
for more than fifteen signings in total for the brand by year end,
ahead of our initial expectations.
-- Luxury
- Regent Hotels & Resorts: 51% acquisition completed in
July, adding 6 properties to our system and 2 to our pipeline. A
relaunch of the brand was announced this week together with the
first signing since the acquisition, Regent Kuala Lumpur, with
numerous further sites under discussion.
- Kimpton Hotels & Restaurants: international expansion
continues at pace, with the Kimpton Fitzroy due to open in London
in the coming weeks, and further signings in Q3, including sites in
Bangkok, Barcelona and Tokyo, taking the brand's global presence to
14 countries.
Enhance revenue delivery
-- Roll out of GRS and IHG Concerto is substantially complete,
ahead of schedule and on budget.
-- >95% of hotels have successfully migrated to the platform
with the remaining hotels scheduled to migrate over the coming
weeks.
Superior returns for shareholders and owners
-- $500m will be returned to shareholders via a special dividend
with share consolidation to be paid in Q1 2019, subject to
shareholder approval*.
-- This will bring the total returns IHG has made to shareholders since 2003 to $13.5bn.
-- We remain on track to deliver $125m in annual savings from
our reorganisation plan, including System Fund, by 2020 for
reinvestment to drive growth.
-- Exceptional cash cost to achieve the savings remains
unchanged at $200m; $48m in H1'18 ($31m in 2017), with $70m
expected in H2'18 and the remainder in 2019.
-- The financial position of the group remains robust, with an
on-going commitment to an efficient balance sheet and an investment
grade credit rating.
*Further details regarding the General Meeting required to
approve the share consolidation and the timing of the dividend
payment will be released in due course.
Foreign exchange
-----------------
The strengthening of the US dollar against many major currencies
globally decreased group RevPAR to a 0.1% decline in the quarter,
when reported at actual exchange rates. A breakdown of constant vs.
actual currency RevPAR is set out in Appendix 2.
Appendix 1: Third quarter RevPAR movement summary
Q3 2018
RevPAR Rate Occ.
------- ----- -------
Group 1.0% 1.7% (0.7)%
Americas 0.0% 1.4% (1.4)%
EMEAA 2.5% 2.2% 0.3%
G. China 4.8% 3.6% 1.2%
------- ----- -------
Appendix 2: RevPAR at constant exchange rates (CER) vs. actual
exchange rates (AER)
Q3 2018
CER AER Difference
----- ------- -----------
Group 1.0% (0.1)% (1.2)%pts
Americas 0.0% (0.7)% (0.6)%pts
EMEAA 2.5% 0.2% (2.2)%pts
G. China 4.8% 3.0% (1.8)%pts
----- ------- -----------
Appendix 3: Q3 system & pipeline summary (rooms)
System Pipeline
Openings Removals Net Total YoY% Signings Total
--------- --------- ------- -------- ------ --------- --------
Group 18,648 (2,791) 15,857 825,746 5.1% 27,491 267,235
Americas 5,670 (1,621) 4,049 505,325 2.7% 10,501 117,977
EMEAA 4,339 (329) 4,010 205,829 5.5% 9,938 72,101
G. China 8,639 (841) 7,798 114,592 16.6% 7,052 77,157
--------- --------- ------- -------- ------ --------- --------
Appendix 4: Definitions
AER: Actual exchange rates used for each respective period.
CER: Constant exchange rates.
RevPAR: Revenue per available room.
For further information, please contact:
Investor Relations (Catherine Dolton; Matthew +44 (0)1895 512 +44 (0)7527 419
Kay) 176 431
+44 (0)1895 512 +44 (0)7527 424
Media Relations (Yasmin Diamond; Mark Debenham) 097 046
------------------------------------------------- ---------------- ----------------
Conference call for Analysts and Shareholders:
A conference call with Paul Edgecliffe-Johnson, Chief Financial
Officer will commence at 9:00am London time on 19(th) October and
can be accessed at
https://www.ihgplc.com/investors/2018-third-quarter-trading-update-teleconference-details.
There will be an opportunity to ask questions:
UK: +44 (0) 203 936 2999
US: +1 845 709 8568
All other locations: +44 (0) 203 936 2999
Participant Access
Code: 199 747
A recording of the conference call will be available for 7 days
from 11.30am London time; details are below:
UK: +44 (0)203 936 3001
US: +1 845 709 8569
All other locations: +44 (0)203 936 3001
Participant Access
Code: 028 707
Website:
The full release and supplementary data will be available on our
website from 7:00am (London time) on 19(th) October. The web
address is
https://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 Regent Hotels & Resorts, InterContinental(R)
Hotels & Resorts, Kimpton(R) Hotels & Restaurants, Hotel
Indigo(R) , EVEN(R) Hotels, HUALUXE(R) Hotels and Resorts, Crowne
Plaza(R) Hotels & Resorts, voco(TM), Holiday Inn(R) , Holiday
Inn Express(R) , Holiday Inn Club Vacations(R) , Holiday Inn
Resort(R) , avid(R) hotels, Staybridge Suites(R) and Candlewood
Suites(R) .
IHG franchises, leases, manages or owns more than 5,500 hotels
and approximately 826,000 guest rooms in almost 100 countries, with
more than 1,800 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.
This information is provided by RNS, the news service of the
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END
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