Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, comments:
“We continued to make strong progress against our winning strategy in the first half, strengthening our brands, loyalty programme and owner proposition. We delivered our best first half for signings since 2008, underlying fee revenue growth of 9%, and underlying profit growth of 10%, giving us the confidence to increase the interim dividend by 10%.
“Our preferred brands demonstrated their continued momentum as we signed the highest number of Holiday Inn rooms ever in the first half, including the two largest properties for the brand, and strengthened our leadership position in the fast growing boutique segment. Alongside this we continue to make great progress delivering against our technology objectives, introducing a number of new digital initiatives that have helped drive almost 50% growth in mobile revenue.
“The completion of the sale of InterContinental Paris – Le Grand for €330m, and agreement to sell InterContinental Hong Kong for $938m, marks the successful finalisation of our major owned asset disposal programme, which has realised gross proceeds of $8bn.
“Looking forward, based on current trading trends, we remain confident in the outlook for the rest of the year.”
Ahead of our expectations
Wyn Ellis of Numis commented: “IHG has reported H1 FY15 operating profit up 9% to $337m and a 23% increase in adjusted EPS. This is a little ahead of our expectations. The outlook statement is confident, “Looking forward, based on current trading trends, we remain confident in the outlook for the rest of the year.” There have been concerns about China, but whilst there has been a slowdown in the rate of RevPAR growth (and Hong Kong and Macau are weak), IHG continues to outperform strongly.”
Financial Summary | Reported |
Underlying at 2014 constant rates |
||||
2015 | 2014 | %Change | 2015 | 2014 | %Change | |
Revenue | $915m | $908m | 1% | $801m | $740m | 8% |
Fee revenue | $626m | $600m | 4% | $652m | $600m | 9% |
Operating profit | $337m | $310m | 9% | $329m | $299m | 10% |
Adjusted EPS | 87.2¢ | 70.7¢ | 23% | 85.2¢ | 68.0¢ | 25% |
Basic EPS | 156.2¢ | 93.0¢ | 68% | – | – | – |
Total dividend per share | 27.5¢ | 25.0¢ | 10% | – | – | – |
Net debt | $1,710m | $1,533m | 12% | – | – | – |
Financial Highlights
- Strong fee revenue growth in all regions
- Global comparable H1 RevPAR up 5.1%, with growth across all regions. Q2 comparable RevPAR growth of 4.4%.
- $11.2bn total gross revenue from hotels in IHG’s system (up 1% year-on-year; 7% CER).
- Underlying fee revenue up 9%, leveraging both RevPAR and room growth. Reported fee revenue up 4%, negatively impacted by foreign exchange translation.
- Focus on disciplined execution
- Finalised major owned asset disposal programme with agreed sale of InterContinental Hong Kong for $938m.
- Underlying operating profit growth up 10% (reported up 9%) driven by our focus on efficient execution.
- Group fee-based margin up 1.8%pts year on year to 46.8%, benefiting from scale growth.
- 10% increase in interim dividend to 27.5¢ demonstrating strong momentum behind the business.
Strategic Progress
- Enhancing the portfolio of preferred brands
- Holiday Inn brand family continues to deliver global growth with highest ever number of first half room signings, eight years on from commencing the industry’s most successful brand relaunch.
- Extended stay brands accelerating scale with highest number of openings and signings since 2010, and over 100 Staybridge Suites hotels in the pipeline.
- Boutique hotel brands continue to grow strongly. Five new Kimpton hotels opened since its acquisition in what is expected to be the best year for additions in the brand’s history, and opened Hotel Indigo in two new geographic markets.
- Building and leveraging scale
- Added 28k rooms (including Kimpton acquisition), increasing total system size to 724k rooms, representing year-on-year net system size growth of 4.5%.
- 41k first half room signings, the most since 2008, delivered a closing pipeline of 214k rooms, with almost 100k rooms under construction, the highest ever.
- 86% of open rooms and 90% of pipeline in the 10 priority markets.
- 5% share of global industry supply, 13% share of active industry pipeline; well positioned to drive future growth.
- Driving digital capability and enhancing loyalty
- Pioneering partnership with Amadeus to develop the industry’s first cloud-based Guest Reservation System.
- Digital channel delivery tracking at over $4bn per annum, driving revenue at a low cost of sale to owners.
- Introduced more guest solutions for the #1 rated mobile app, driving over 50% growth in mobile app downloads and 48% growth in mobile revenue to over $1bn on an annualised basis.
- Enhanced the loyalty offer through IHG Rewards Club, launching a new top tier, Spire Elite, and rolling out new in-hotel customer relationship management capability across the global estate.
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