…
Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC, said: “2010 was an excellent year for IHG. After a slow start to the year, the industry staged the sharpest recovery in its history, exceeding all expectations. By focusing on our brands and using our scale, we delivered 6% growth in revenue per available room (RevPAR). We signed more rooms into our pipeline than in 2009 and despite the planned exceptional number of removals to drive up quality, we grew the number of rooms in our system, led by a 12% increase in China.
“The $1bn Holiday Inn relaunch is almost complete, delivering RevPAR outperformance and improved guest satisfaction. We are now working with our hotel owners to refresh Crowne Plaza, already the fourth largest upscale hotel brand in the world, and one with great future potential.
“Our focus on efficiency has increased fee-based margins 1.1 percentage points. In line with our asset light strategy we have started the initial marketing for sale of the InterContinental New York Barclay today.
“The 21% growth in the final dividend reflects our confidence in IHG’s prospects. Our priority is to increase market share and improve margins in an industry set for strong growth over the next few years.”
Asia Pacific Regional Highlights
RevPAR increased 12.4%, with 11.5% growth in the fourth quarter. Greater China was our strongest market with RevPAR up 25.8% for the year, including 55.9% in Shanghai which was boosted by the World Expo which took place between May and October. Asia Australasia RevPAR grew 5.6% and at InterContinental Hong Kong RevPAR was up 15.3%.
Revenue increased 24% (20% at CER) to $303m and operating profit increased 71% (67% at CER) to $89m. This was predominantly driven by RevPAR growth; the contribution from new managed rooms (2010: 9% growth; 2009: 10% growth) and a $4m benefit to managed operating profit due to the collection of bad debts which had previously been provided for.
We continue to build on our leading position in Greater China with 48,527 rooms (145 hotels) open (a 12% increase year on year) and 50,236 rooms (147 hotels) in the pipeline. We opened 24 hotels in 17 cities across China, including Asia Pacific’s first Hotel Indigo on the Bund and the InterContinental at the Expo site, both in Shanghai. In Asia Australasia, we signed six hotels in India, taking our pipeline there to 10,073 rooms. In Vietnam, we signed two new Holiday Inn resorts in the prime beachfront locations of Cam Ranh Bay and Phu Quoc, and we also signed the Crowne Plaza Lumpini Park in Bangkok which opened in December.
Driving Market Share
- Total gross revenue from hotels in IHG’s system of $18.7bn, up 11%.
- 2010 global RevPAR growth of 6.2%, with 8.0% in the fourth quarter.
- Total system size of 647,161 rooms (4,437 hotels), up 0.1% year on year. 35,744 rooms (259 hotels) added, with 35,262 rooms (260 hotels) removed. Signings of 55,598 rooms (319 hotels), up on 2009 levels in all regions. Total pipeline of 204,859 rooms (1,275 hotels); half outside the Americas; 75,000 rooms currently under construction. 2011 net system growth is expected to be modest as remaining Holiday Inn relaunch exits are completed. Post 2011, robust pipeline should drive medium term net system growth of 3% – 5% per annum.
- Holiday Inn relaunch is substantially complete with refreshed hotels performing strongly. 3,002 hotels now operating under the new standards (91% of the estate). RevPAR growth for hotels relaunched for more than one year was c.6% points higher than non-relaunched hotels in the US and c.5% points higher globally.
- Strong system delivery. Record enrolments in Priority Club Rewards (PCR) took total membership to 56m (2009: 48m). 68% of rooms revenue delivered through IHG’s Channels or by PCR members direct to hotel (2009: 68%).
Growing Margins
- Continued focus on costs. Regional and central costs broadly in line with 2009 excluding the impact of performance based incentives.
- Sustainable efficiencies drive fee-based margins up 1.1%pts to 35.7%. At constant currency, and reflecting the current trading outlook, total 2011 regional and central costs expected to be in the region of $250m to $260m compared to $258m in 2010.
Current trading update
- January global RevPAR up 8.4%. Americas 8.2%; EMEA 7.0%; and Asia Pacific 10.9%.
- $10m liquidated damages receipt in Americas managed revenue and operating profit in first quarter 2011.
- Initial estimate of impact on 2011 from unrest in Egypt of $3m.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
