News

Recent trading

October global constant currency RevPAR decline of 13.5%, -14.5% Americas, -12.7% EMEA and -9.9% Asia Pacific, reflecting weaker comparables in the prior year period.

Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:

"The trading environment remains challenging. We see signs of occupancy stabilising, but rate is still under considerable pressure across the board.  

"Our signings pace remains impacted by the continued scarcity of financing for hotel developments.  We are taking action to improve our operating efficiency and support the performance of our hotels; the relaunch of Holiday Inn is gaining pace and continues to make a significant difference to the prospects of our biggest brand.

"The partnership we enjoy with our owners has been a key factor in our system's resilience through this downturn and underpins our optimism for the future.  This unique relationship combined with our global scale, diverse brand portfolio, fee based business model and powerful system positions us to lead the industry when the upturn comes."

Americas

Revenue performance

RevPAR declined 15.5% in the third quarter with US RevPAR falling 15.7%.  Revenues declined 19% to $206m.  

Operating profit performance

Operating profit declined 36% from $129m to $82m.  Operating profit in the owned and leased hotels fell from $13m to $3m driven by an overall RevPAR decline of 22.6% and a particularly tough trading environment in New York.  Operating profit in the managed business declined by $24m to a loss of $12m in the quarter, driven by a 20.0% drop in RevPAR which resulted in IHG continuing to fund shortfalls to the owner's priority return on a number of hotels managed for one owner.  This operating profit decline is in line with the disclosed sensitivity that a 1% change in RevPAR has a $4m impact on annual operating profit in the Americas managed business.  Franchised hotels' operating profit decreased by 13% to $104m driven by a decline in royalty fees of 10% and a 48% reduction in initial franchising, relicensing and termination fees.

EMEA

Revenue performance

RevPAR declined 15.2% in the third quarter driven primarily by rate. The UK and France saw the smallest declines with RevPAR down 11.2% and 10.2% respectively.  Excluding one $7m liquidated damages receipt in the third quarter of 2008, revenues declined 22% to $101m (15% decline at constant exchange rates (CER)).

Operating profit performance 

Operating profit declined 8% (3% CER), excluding the $7m liquidated damages receipt in the third quarter of 2008, to $36m.  Owned and leased hotels' operating profit was down only $2m to $12m with an improved trading environment at the InterContinental Le Grand, Paris and a relatively strong performance at the InterContinental London, Park Lane.  A 17.7% RevPAR decline across the European estate drove managed hotels' operating profit to decrease by $4m to $15m, but margins were held flat at constant currency. Excluding the $7m liquidated damages receipt in the third quarter of 2008, franchised hotels' operating profit declined by $2m to $16m (6% at CER) driven by a RevPAR decline of 15.4% partially offset by a 6% increase in room count.

Asia Pacific

Revenue performance

RevPAR declined 13.4% driven entirely by rate with occupancy improving by 1.3 percentage points.  Greater China RevPAR declined 19.8%, which was four percentage points better than in the second quarter and showed occupancy growth for the first time this year.  Excluding one $4m liquidated damages receipt received in the third quarter of 2008, revenues declined 10% to $62m (13% at CER).

Operating profit performance 

Excluding the liquidated damages receipt received in 2008, operating profit increased by 21% (14% CER) from $14m to $17m.  Operating profit at owned and leased hotels decreased by $2m to $5m driven by a 22.3% RevPAR decline at the InterContinental Hong Kong. Managed hotels' operating profit increased by $1m to $18m (0% at CER), with a 13.4% RevPAR decline offset both by the contribution from 12% more rooms and cost benefits from the reorganisation of the region.

Interest and tax 

The interest charge for the quarter fell $15m to $13m due to a reduction in interest rates and lower average net debt.

Based on the position at the end of the quarter, the tax charge has been calculated using an estimated annual tax rate of 19% (Q3 2008: 25%).  The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term.

Cash flow & net debt

Growth capital expenditure of $81m included $65m payment on completion of the Hotel Indigo San Diego which opened in July.  Maintenance capital expenditure was $15m and, as disclosed previously, the full year amount is expected to be c.$75m, down 25% on 2008 levels. 

IHG's net debt was reduced to $1.2bn at the end of the quarter, including the $204m finance lease on the InterContinental Boston.  IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.

Americas

EMEA

Asia Pacific

Total

Openings

10,983

1,711

2,877

15,571

Removals

(2,856)

(557)

(772)

(4,185)

Net openings

8,127

1,154

2,105

11,386

Signings

8,950

1,681

6,014

16,645

Three months to

30 September $m

Total

Americas

EMEA

Asia Pacific

Central

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

Owned and leased operating profit 

20

34

3

13

12

14

5

7

-

-

Managed operating profit

21

48

(12)

12

15

19

18

17

-

-

Franchised operating profit

122

149

104

120

16

25

2

4

-

-

Regional overheads

(28)

(38)

(13)

(16)

(7)

(12)

(8)

(10)

-

-

Operating profit pre central overheads

135

193

82

129

36

46

17

18

-

-

Central overheads

(11)

(40)

-

-

-

-

-

-

(11)

(40)

Operating profit

124

153

82

129

36

46

17

18

(11)

(40)

Americas

EMEA

Asia Pacific

Total***

Actual currency*

Constant currency**

Actual currency*

Constant currency**

Actual currency*

Constant

Currency**

Actual currency*

Constant currency**

Growth

(36.4)%

(36.4)%

(21.7)%

(17.4)%

(5.6)%

(11.1)%

(19.0)%

(20.3)%

Exchange rates

GBP:USD

EUR: USD

2009

0.61: 1

0.70: 1

2008

0.53: 1

0.67: 1

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2009

9 months ended 

30 September

$m

2008

9 months ended 

30 September

$m

Profit for the period

39

254

Other comprehensive income

Gains on valuation of available-for-sale assets

9

8

Losses on disposal of available-for-sale assets

-

(17)

Cash flow hedges:

(Losses)/gains arising during the period

(5)

1

Transferred to financial expenses

9

2

Actuarial losses on defined benefit pension plans, net of asset restriction

(39)

(27)

Exchange differences on retranslation of foreign operations

24

(21)

Tax related to above components of other comprehensive income:

Actuarial losses

1

(4)

Tax related to share schemes

1

(2)

Tax related to pension contributions

-

13

____

____

Other comprehensive income/(loss) for the period

-

(47)

____

____

Total comprehensive income for the period 

39

207

====

====

Attributable to:

Equity holders of the parent

38

207

Minority equity interest

1

-

____

____

39

207

====

====

9 months ended 30 September 2009

Equity share capital

Other reserves*

Retained earnings

Minority interest

Total equity

$m

$m

$m

$m

$m

At beginning of the period

118

(2,748)

2,624

7

1

Total comprehensive income for the period

-

37

1

1

39

Issue of ordinary shares

7

-

-

-

7

Movement in shares in employee share trusts

-

47

(50)

-

(3)

Equity-settled share-based cost, net of payments

-

-

-

-

-

Equity dividends paid

-

-

(83)

-

(83)

Exchange adjustments

13

(13)

-

-

-

____

____

____

____

____

At end of the period

138

(2,677)

2,492

8

(39)

====

====

====

====

====

9 months ended 30 September 2008

Equity share capital

Other reserves*

Retained earnings

Minority interest

Total equity

$m

$m

$m

$m

$m

At beginning of the period

163

(2,720)

2,649

6

98

Total comprehensive income for the period

-

(27)

234

-

207

Issue of ordinary shares

2

-

-

-

2

Purchase of own shares

(3)

-

(136)

-

(139)

Transfer to capital redemption reserve

-

3

(3)

-

-

Movement in shares in employee share trusts

-

21

(38)

-

(17)

Equity-settled share-based cost, net of payments

-

-

21

-

21

Equity dividends paid

-

-

(86)

-

(86)

Exchange adjustments

(16)

16

-

-

-

____

____

____

____

____

At end of the period

146

(2,707)

2,641

6

86

====

====

====

====

====

*

Other reserves comprise the capital redemption reserve, shares held by employee share trusts, other reserves, unrealised gains and losses reserve and currency translation reserve.

2009

30 September

2008

30 September

2008

31 December

$m

$m

$m

ASSETS

Property, plant and equipment

1,851

1,766

1,684

Goodwill

80

215

143

Intangible assets

283

308

302

Investment in associates

46

46

43

Retirement benefit assets

9

33

40

Other financial assets

165

169

152

_____

_____

_____

Total non-current assets

2,434

2,537

2,364

_____

_____

_____

Inventories

4

4

4

Trade and other receivables

399

458

412

Current tax receivable

5

28

36

Cash and cash equivalents

64

238

82

Other financial assets

5

14

10

_____

_____

_____

Total current assets 

477

742

544

Non-current assets classified as held for sale

-

195

210

______

______

______

Total assets (note 3)

2,911

3,474

3,118

=====

=====

=====

LIABILITIES

Loans and other borrowings 

(24)

(16)

(21)

Trade and other payables

(714)

(860)

(746)

Current tax payable

(345)

(403)

(374)

_____

_____

_____

Total current liabilities

(1,083)

(1,279)

(1,141)

_____

_____

_____

Loans and other borrowings

(1,199)

(1,573)

(1,334)

Retirement benefit obligations

(142)

(99)

(129)

Trade and other payables

(403)

(288)

(392)

Deferred tax payable

(123)

(134)

(117)

_____

_____

_____

Total non-current liabilities

(1,867)

(2,094)

(1,972)

Liabilities classified as held for sale

-

(15)

(4)

_____

_____

_____

Total liabilities

(2,950)

(3,388)

(3,117)

=====

=====

=====

Net (liabilities)/assets 

(39)

86

1

=====

=====

=====

EQUITY

Equity share capital

138

146

118

Capital redemption reserve

11

12

10

Shares held by employee share trusts

(5)

(55)

(49)

Other reserves

(2,901)

(2,908)

(2,890)

Unrealised gains and losses reserve

23

33

9

Currency translation reserve

195

211

172

Retained earnings

2,492

2,641

2,624

______

______

______

IHG shareholders' equity 

(47)

80

(6)

Minority equity interest

8

6

7

______

______

______

Total equity

(39)

86

1

=====

=====

=====

1.

Basis of preparation

These condensed interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and IAS 34 'Interim Financial Reporting'. Other than the changes listed below, they have been prepared on a consistent basis using the accounting policies set out in the InterContinental Hotels Group (the Group or IHG) Annual Report and Financial Statements for the year ended 31 December 2008.

With effect from 1 January 2009, the Group has implemented IAS 1 (Revised) 'Presentation of Financial Statements', IAS 23 (Revised) 'Borrowing Costs', IFRS 8 'Operating Segments' and IFRIC 13 'Customer Loyalty Programmes'. Except for certain presentational changes, including the introduction of a 'Group Statement of Changes in Equity' as a primary financial statement, the adoption of these standards has had no material impact on the financial statements and there has been no requirement to restate prior year comparatives.

These condensed interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. The auditors have carried out a review of the financial information in accordance with the guidance contained in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board.

The financial information for the year ended 31 December 2008 has been extracted from the Group's published financial statements for that year which contain an unqualified audit report and which have been filed with the Registrar of Companies.  

Two hotels, which, prior to 30 June 2009, were classified as assets held for sale and whose results were presented as discontinued operations, no longer meet the criteria for designation as held for sale assets. Consequently, the results of these hotels are now reported as continuing operations and comparative data has been represented on a consistent basis. The impact has been to increase revenue from continuing operations for the three months ended 30 September by $8m (2008 $10m) and for the nine months ended 30 September by $25m (2008 $32m) and to increase operating profit from continuing operations, before exceptional items, for the three months ended 30 September by $1m (2008 $3m) and for the nine months ended 30 September by $6m (2008 $10m).

2.

Exchange rates

The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of sterling, the translation rate for the nine months ended 30 September is $1= £0.65 (2009 3 months, $1 = £0.61; 2008 9 months, $1 = £0.51; 2008 3 months, $1=£0.53). In the case of the euro, the translation rate for the nine months ended 30 September is $1 = €0.73 (2009 3 months, $1 = €0.70; 2008 9 months, $1 = €0.66; 2008 3 months, $1 = €0.67).

Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the period. In the case of sterling, the translation rate is $1=£0.62 (2008 31 December $1 = £0.69; 30 September $1 = £0.56). In the case of the euro, the translation rate is $1 = €0.68 (2008 31 December $1 = €0.71; 30 September $1= €0.70).

Profit

2009

3 months

ended 30 September

$m

2008

3 months

ended 30 September

$m

2009

9 months

ended 30 September

$m

2008

9 months

ended 30 September

$m

Americas (note 4)

82

129

231

378

EMEA (note 5)

36

46

94

135