InterContinental Hotels Group PLC First Quarter Trading Update 2017 (2600E)

TIDMIHG

RNS Number : 2600E

InterContinental Hotels Group PLC

05 May 2017

5 May 2017

InterContinental Hotels Group PLC

First Quarter Trading Update

 
 Highlights 
----------------------------------------------------------- 
 
    *    Global Q1 comparable RevPAR(1) up 2.7% 
 
 
    *    Enhanced global scale: 7k rooms opened, increasing 
         net system size 3.4% YoY to 767k rooms 
 
 
    *    Building future growth: 14k rooms (112 hotels) 
         signed; pipeline of 232k rooms 
 
 
 Richard Solomons, Chief Executive of InterContinental Hotels Group 
  PLC, said: 
--------------------------------------------------------------------------- 
 "We have made a good start to 2017, with 3.4% net system size growth 
  year-on-year and 2.7% RevPAR growth driven by increases in both rate 
  and occupancy, and benefitting from the later timing of Easter. 
 
  We continued our focus on building and leveraging scale in our priority 
  markets, opening 49 hotels in the quarter, including our 300(th) for 
  Greater China, and signing hotels into our pipeline at the fastest 
  rate for the first quarter since 2008. We also strengthened our boutique 
  portfolio with the opening of a Hotel Indigo property in downtown Los 
  Angeles. 
 
  Despite the uncertain economic and political environment in some markets, 
  we remain confident in the outlook for 2017 and our ability to deliver 
  sustainable growth into the future." 
 
 
 First Quarter RevPAR performance 
----------------------------------------------------------------------------- 
 Group 
  RevPAR was up 2.7%, with rate up 0.8% and occupancy up 1.2% points. 
  The shift in timing of Easter out of Q1 had a positive impact, especially 
  in the Americas and Europe, which we expect to reverse in Q2. 
 
  Americas 
  RevPAR was up 2.2%, with US RevPAR up 1.9%. Performance stabilised 
  in oil producing markets, where RevPAR was up 1% excluding the favourable 
  impact of Houston hosting the Super Bowl. This is the first quarter 
  of oil market growth since Q4 2014 as we begin to lap softer comparables. 
  We remain cautious on the outlook for oil producing markets due to 
  ongoing high levels of forecast supply growth. RevPAR in US non-oil 
  markets grew 1.9%. In the rest of the region, Mexico RevPAR grew 10%, 
  with Canada and Latin America both growing around 3%. 
 Europe 
  RevPAR was up 6.9%. In the UK, RevPAR outperformed the industry, growing 
  almost 8%, with rate up 5% and occupancy increasing 1.8%pts. London 
  RevPAR grew 12%, benefitting from increased international inbound travel, 
  and the provinces continued to grow mid-single digits. Germany RevPAR 
  grew 9%, due to a favourable trade fair calendar, which is not expected 
  to benefit the remainder of 2017. Russia RevPAR grew 7% driven by increased 
  corporate and leisure demand. Performance in markets impacted by terror 
  attacks in 2015 and 2016 improved, as we annualised against weaker 
  trading comparables. Most noticeably in France, RevPAR grew almost 
  6%, driven by over 8% growth in Paris as a result of increased leisure 
  demand. 
----------------------------------------------------------------------------- 
 Asia, Middle East & Africa 
  RevPAR was up 0.1% in Q1. Outside the Middle East, RevPAR grew 4%. 
  India RevPAR growth of 13% was driven by tourist arrivals following 
  the easing of visa conditions, whilst Australasia and Southeast Asia 
  were up low to mid-single digits. In the Middle East, RevPAR declined 
  7% due to the ongoing impact of low oil prices, high supply growth 
  and government austerity measures. 
 
 
   Greater China 
    RevPAR was up 3.8% in the quarter, with 4.3% growth in mainland China 
    led by growth in tier 1 and tier 2 cities. In Beijing and Shanghai, 
    RevPAR was up over 5%, attributable to strong corporate and meetings 
    demand. Hong Kong RevPAR grew 1.8%, the second consecutive quarter 
    of growth in the market, driven by strong corporate and transient demand. 
    Macau RevPAR was up over 2%, with a continuation of tough underlying 
    trading conditions mitigated by the ramp up of one new hotel. 
 
 Strategic progress 
      Strengthening our preferred brands 
        *    Expanded InterContinental Hotels & Resorts' position 
             as the largest luxury hotel brand, signing our first 
             hotel in Taiwan. We expect to open additional hotels 
             in key cities in 2017 including Los Angeles and 
             Singapore. 
 
 
        *    Signed 10k rooms (80 hotels) into the Holiday Inn 
             Brand family pipeline, its best first quarter 
             signings rate since 2008, and continued to roll out 
             our new room and public space design solutions across 
             the estate. 
 
 
        *    Broadened out our boutique, luxury, and lifestyle 
             portfolio with the opening of two Hotel Indigo 
             properties, including the largest for the brand, in 
             Los Angeles. We also opened our fifth HUALUXE, in 
             Zhangjiakou, China, host city for the 2022 Winter 
             Olympics. 
 
 
 
       Growing through targeted hotel distribution 
        *    Net system size up 3.4% year on year to 767k rooms 
             (5,175 hotels). 
 
 
        *    7k rooms (49 hotels) opened in the quarter, and 7k 
             rooms (48 hotels) removed. This was in line with our 
             expectation for the first quarter, typically our 
             smallest quarter for openings. 
 
 
        *    14k rooms (112 hotels) were signed; our highest Q1 
             hotel signings since 2008. 
 
 
        *    Opened our 300(th) hotel in China and continued to 
             expand our China franchising solution 'Franchise 
             Plus' with our 1(st) opening, the Holiday Inn Express 
             Shanghai Pujiang, and our 25(th) signing since launch 
             in May 2016. 
 
 
        *    232k pipeline rooms, up 5% year-on-year;  45% under 
             construction and 90% in our ten priority markets. 
 
 
 
 Financial position and capital allocation 
------------------------------------------------------------------------- 
 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 22 May we will return $400m to shareholders 
  by way of a special dividend with share consolidation. This will take 
  the total returned to shareholders, including from ordinary dividends, 
  to $12.8bn since demerger in 2003. 
 
 
 Foreign exchange 
-------------------------------------------------------------------------- 
 The strengthening of the US Dollar against many major currencies globally 
  reduced group RevPAR to 1.2% 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. 
 
  (1) RevPAR growth is at constant exchange rates (CER) unless otherwise 
  stated. 
-------------------------------------------------------------------------- 
 
 
 
   Appendix 1: First quarter RevPAR movement summary 
                        Q1 2017 
                RevPAR    Rate      Occ. 
               -------  -------  --------- 
    Group        2.7%     0.8%    +1.2%pts 
    Americas     2.2%     1.4%    +0.5%pts 
    Europe       6.9%     3.3%    +2.2%pts 
    AMEA         0.1%    (2.4)%   +1.9%pts 
    G. China     3.8%    (1.5)%   +3.0%pts 
   ----------  -------  -------  --------- 
 
 
   Appendix 2: RevPAR at constant exchange rates (CER) vs. actual exchange rates 
   (AER)                      Q1 2017 
                CER     AER     Difference 
               -----  -------  ----------- 
    Group       2.7%    1.2%    (1.5)%pts 
    Americas    2.2%    2.1%    (0.1)%pts 
    Europe      6.9%   (0.9)%   (7.8)%pts 
    AMEA        0.1%   (0.1)%   (0.2)%pts 
    G. China    3.8%   (0.4)%   (4.2)%pts 
   ----------  -----  -------  ----------- 
 
    Appendix 3: Q1 system & pipeline summary (rooms) 
   --------------------------------------------------------------------------------- 
                                    System                             Pipeline 
                Openings   Removals       Net     Total    YoY%   Signings     Total 
               ---------  ---------  --------  --------  ------  ---------  -------- 
    Group          6,847    (7,145)     (298)   766,837    3.4%     14,424   232,215 
    Americas       3,543    (5,726)   (2,183)   485,810    1.8%      8,134   102,729 
    Europe           585      (763)     (178)   109,891    3.5%      1,836    24,791 
    AMEA             454      (302)       152    76,203    5.3%      1,389    40,382 
    G. China       2,265      (354)     1,911    94,933   10.4%      3,065    64,313 
   ----------  ---------  ---------  --------  --------  ------  ---------  -------- 
 
     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 (Heather Wood; Neeral               +44 (0)1895     +44 (0)7808 
     Morzaria; Tom Yates):                                  512176          098724 
                                                           +44 (0)1895     +44 (0)7527 
    Media Relations (Yasmin Diamond; Mark Debenham):        512097          424046 
   -----------------------------------------------------  --------------  ----------------- 
    Conference call for Analysts and Shareholders: 
    A conference call with Richard Solomons (Chief Executive Officer) and 
    Paul Edgecliffe-Johnson (Chief Financial Officer) will commence at 9.00am 
    London time on 5 May and can be accessed on 

    https://www.ihgplc.com/investors/2017-first-quarter-trading-update 
    There will be an opportunity to ask questions. 
   ---------------------------------------------------------------------------------------- 
    International dial-in                      [phone] 
     Standard US dial-in                        [phone] 
    Passcode                                   IHG Investor 
   -----------------------------------------  --------------------------------------------- 
    A replay of the 9.00am conference call will be available following the 
     event - details are below: 
   ---------------------------------------------------------------------------------------- 
    International dial-in                      [phone] 
     Standard US dial-in                        [phone] 
    Replay pin                                 5900478# 
 
     US conference call and Q&A: 
     There will also be a conference call, primarily for US investors and 
     analysts, at 9.00am New York Time on 5 May with Richard Solomons (Chief 
     Executive Officer) and Paul Edgecliffe-Johnson (Chief Financial Officer). 
     There will be an opportunity to ask questions. 
   ---------------------------------------------------------------------------------------- 
    International dial-in                      [phone] 
     Standard US dial-in                        [phone] 
    Passcode                                   IHG Investor 
   -----------------------------------------  --------------------------------------------- 
    A replay of the 9.00am US conference call will be available following 
     the event - details are below: 
   ---------------------------------------------------------------------------------------- 
    International dial-in                      [phone] 
     Standard US dial-in                        [phone] 
    Replay pin                                 5899235# 
   -----------------------------------------  --------------------------------------------- 
 
    Website: 
    The full release and supplementary data will be available on our website 
    from 7.00am (London time) on 5 May. The web address is 
    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 
     InterContinental(R) Hotels & Resorts, Kimpton(R) Hotels & Restaurants, 
     Hotel Indigo(R), EVEN(R) Hotels, HUALUXE(R) Hotels and Resorts, Crowne 
     Plaza(R) Hotels & Resorts, Holiday Inn(R), Holiday Inn Express(R), Holiday 
     Inn Club Vacations(R), Holiday Inn Resort(R), Staybridge Suites(R) and 
     Candlewood Suites(R). 
 
     IHG franchises, leases, manages or owns nearly 5,200 hotels and 770,000 
     guest rooms in almost 100 countries, with nearly 1,500 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 350,000 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. 
 

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May 05, 2017 02:01 ET (06:01 GMT)