Company Announcements
Third Quarter Trading Update
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By LSE RNS
20 October 2017
InterContinental Hotels Group PLC
Third Quarter Trading Update
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Highlights |
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· Global Q3 comparable RevPAR1 up 2.3%, and up 2.2% Q3 YTD · Enhanced global scale: 11k rooms opened, increasing net system size 4.1% YoY to 786k rooms · Building future growth: 20k rooms (137 hotels) signed; pipeline of 235k rooms |
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Keith Barr, Chief Executive of InterContinental Hotels Group PLC, said: |
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"We have delivered a good third quarter performance; RevPAR increased by 2.3% and net rooms growth of 4.1% was our strongest since 20102. We also signed hotels into our pipeline at the fastest third quarter rate since 2008, and have made an excellent start with our plans to accelerate the growth of our brands around the world.
Our new US midscale brand, avid hotels, is generating strong traction with our owner community. With over 150 written expressions of interest and more than 50 applications in the first four weeks of franchise sales, demand from owners has exceeded our original expectations.
The international expansion of our newest brands is gathering pace. This week we continued the global roll out of Kimpton Hotels & Restaurants, with a landmark signing in Bali and two signings in key Chinese urban and resort locations, Shanghai and Sanya Bay. We have several further deals in progress which will secure our presence for the brand in ten major markets around the world. We have also expanded the global footprint of EVEN Hotels, with signings in Shanghai, Sanya Bay and Auckland, New Zealand.
"Franchise Plus", our franchising solution for Holiday Inn Express in China, is gaining momentum with 6 hotels now open and a further 58 in the pipeline, including 19 signings in the quarter. We expect a further ramp up in activity over the next 12 months.
Looking ahead, despite macro-economic and geopolitical uncertainties around the world, we remain confident in the outlook for the remainder of the year."
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Third Quarter RevPAR performance |
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Americas RevPAR was up 0.8% in Q3, and 1.1% Q3 YTD. In the US, RevPAR was up 0.4% in Q3 and 0.6% Q3 YTD with performance in the quarter impacted by several events. Hurricanes Harvey and Irma had a mixed impact; displacement activity together with the relief and reconstruction efforts benefitted our franchise business; but performance across the managed estate was negatively impacted by the cancellation of group bookings at some hotels. Meanwhile the negative impact of calendar shifts was partially offset by incremental demand from the solar eclipse. Excluding the effect of the hurricanes and these one-off events, we estimate that underlying US RevPAR was marginally positive in the quarter. Elsewhere in the region, Canada and Latin America continued to grow well, up 7% and 8% respectively, whilst in Mexico RevPAR was flat due to the earthquake in Mexico City. |
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Europe RevPAR was up 7.1% in Q3, and 6.6% Q3 YTD. The UK delivered Q3 RevPAR growth of 4.0% with our brands driving outperformance in both London, up 3%, and the provinces, up 5%. RevPAR growth in Germany of 3% reflected a more moderate trade fair calendar as expected, and continued strong corporate and leisure demand drove mid-single digit RevPAR growth in Russia. Markets previously impacted by terrorist attacks grew strongly, including RevPAR growth of 6% in France, and double digit growth in Belgium and Turkey. Performance across several markets in Southern Europe was also strong due to increased demand over the summer months. |
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Asia, Middle East & Africa RevPAR was up 0.6% in Q3, and 1.2% Q3 YTD. Outside the Middle East, RevPAR grew 4%. India RevPAR growth of almost 10% continued to be driven by tourism, whilst Australasia and Southeast Asia were both up mid-single digits. In Japan, flat RevPAR reflects weak transient demand and disruption from a typhoon in September. In the Middle East, RevPAR declined 6% due to the timing of Ramadan, and the ongoing impact of low oil prices, high supply growth and government austerity measures. |
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Greater China RevPAR was up 7.8% in the quarter and 5.4% Q3 YTD. Q3 growth of 9% in mainland China was helped by weak comparables driven by one-off events in tier 2-3 cities in the quarter last year. Tier 1-3 cities all delivered high single digit RevPAR growth benefitting from strong corporate and meetings demand. Hong Kong RevPAR was down 1%, impacted by renovations at one property, whilst 15% RevPAR growth in Macau reflects improving leisure demand and the ongoing ramp up of one new hotel. |
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Strategic progress |
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Strengthening our portfolio of preferred brands - Launched avid hotels, our new build brand targeting a $20 billion underserved segment in the US. This will become another brand of scale for IHG and we are already gaining strong traction with owners with over 150 written expressions of interest since launch, and over 50 applications in the first 4 weeks of franchise sales. - Strengthened our position in the boutique segment with two openings and three signings for Kimpton in the US and, in October, the launch of the brand in our Greater China and AMEA regions. 10 signings and two openings for Hotel Indigo takes this brand to 163 open and pipeline properties. - Expanded our global presence for EVEN hotels, with two Q3 signings in Greater China and one in New Zealand. - Signed 13k rooms into the Holiday Inn Brand Family pipeline, including a record third quarter for Holiday Inn Express, and opened almost 7k rooms.
Increasing our pace of net system growth - Net system size up 4.1% year on year to 786k rooms (5,272 hotels), our fastest pace of growth since 20102, led by AMEA (14%) and Greater China (10%). - 11k rooms (70 hotels) opened in the quarter, our best Q3 for six years, and 3k rooms (19 hotels) removed. - 20k rooms (137 hotels) were signed; our highest Q3 signings since 2008. - Continued to expand our China franchising solution "Franchise Plus" with 19 new Holiday Inn Express deals signed in the quarter bringing the total to 63 signings after just 17 months. - 235k pipeline rooms with ~45% under construction.
Driving revenue delivery through technology and loyalty - Our innovative cloud-based Guest Reservations System remains on track for roll-out starting by the end of 2017 with full deployment expected by late 2018 / early 2019. - In September, the IHG App for mobile passed the milestone of $1 billion of gross room revenues booked through the platform, up fourfold over the past 3 years. Having been downloaded over 9 million times since its launch, it is one of the highest rated hotel mobile apps on the iOS app store. - In early 2018, Kimpton Karma Rewards, the loyalty program of Kimpton Hotels & Restaurants, will become a part of IHG® Rewards Club and offer all members one program with a single reward point system.
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Financial position and capital allocation |
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The financial position of the group remains robust, with an on-going commitment to an efficient balance sheet and an investment grade credit rating.
As previously announced, on 6 October we paid an interim ordinary dividend to shareholders of 33¢ per share. This takes the total returned to shareholders, including from ordinary dividends, to $12.9bn since demerger in 2003. |
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Foreign exchange |
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The weakening of the US Dollar against many major currencies globally increased group RevPAR to 2.7% 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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Appendix 1: Third quarter RevPAR movement summary |
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Appendix 2: RevPAR at constant exchange rates (CER) vs. actual exchange rates (AER)
Appendix 3: Q3 system & pipeline summary (rooms)
Appendix 4: Q3 YTD system & pipeline summary (rooms)
Appendix 5: Definitions
1 RevPAR growth is at constant exchange rates (CER) unless otherwise stated.
2 Organic growth
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