Intro to IHG
Investor Presentation
May 2024
Cautionary note regarding forward-looking statements
This presentation may contain projections and forward looking-statements. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company's financial position, potential business strategy, potential plans and potential objectives, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward- looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this document speak only as at the date of this presentation and the Company assumes no obligation to update or provide any additional information in relation to such forward-looking statements.
The merits or suitability of investing in any securities previously issued or issued in future by the Company for any investor's particular situation should be independently determined by such investor. Any such determination should involve, inter alia, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the transaction in question.
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IHG's strong business model: sustainable competitive advantage
A leading global hospitality company with 6,300+ open hotels in more than 100 countries and a further 2,000+ in the pipeline representing +31% rooms growth
Well-invested portfolio and enterprise platform
Proven ability to capture structural demand and supply growth
High-value geographic
and chain scale diversification
Efficient cost base,
increasing margins and
growing earnings
Asset-light,fee-based, mainly franchised
Strong cash conversion and capital allocation
Robust pipeline
delivering
multi-year growth
Built high barriers
to entry
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Underpinned by clear purpose, ambition and strategic priorities
OUR PURPOSE | OUR AMBITION | ||
WHAT WE DO | WHY WE DO IT | ||
Provide True | To be the hotel company of choice | ||
Hospitality for Good | for guests and owners |
OUR STRATEGIC PRIORITIES
HOW WE MAKE IT HAPPEN
RELENTLESS | BRANDS | LEADING | CARE FOR |
FOCUS ON | GUESTS AND | COMMERCIAL | OUR PEOPLE, |
GROWTH | OWNERS LOVE | ENGINE | COMMUNITIES |
AND PLANET
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Asset light, mainly franchised, and geographically diverse
System size and pipeline | |||||
System size (rooms): | Luxury | ||||
2% | <1% | 180k | 520k | 11% | |
27% | 70% | 19% 55% | Upscale/ | ||
Upper | |||||
946k | 247k 26% | 946k | Upscale | 946k | |
23% |
Franchised | Exclusive Partners | Americas | EMEAA | Greater China |
Managed | OLML | |||
Pipeline (rooms): | Luxury | |||||
1% | <1% | 111k | 110k | 11% | ||
41% | 58% | 36% 36% | Upscale/ | |||
Upper | ||||||
305k | 305k | Upscale | 305k | |||
37% | ||||||
28% | ||||||
Franchised | Exclusive Partners | 85k | Americas | EMEAA Greater China | ||
Managed | OLML | |||||
Note: data as at 31 March 2024
Strong competitive position in an industry where branded players are gaining market share
Midscale/ | With a larger share |
Upper | of the active pipeline |
Midscale | |
66% |
~2.5x | ~10% |
~4% |
Midscale/ | IHG share | IHG share |
Upper | of global | of global |
Midscale | room supply | active pipeline |
52% | >40% of IHG pipeline | |
under construction
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Our asset light business model
FranchisedManaged
70% | 27% |
Fee revenue: | Fee revenue: |
Royalty Fee: | Base Management Fee: |
fixed percentage of | fixed percentage of |
rooms revenue | total hotel revenue |
Incentive Management Fee: based on hotel's profitability or cash flows
Note: data as at 31 March 2024
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Exclusive Partners
2%
Fee revenue:
We receive marketing, distribution, technology and other fees for providing access to our enterprise platform.
Owned, Leased & Managed Lease <1%
We record the entire revenue and profit of the hotel in our financial statements.
This 'asset heavy' element of IHG's estate has reduced from >180 hotels 20 years ago, to 17 hotels as of 31 March 2024.
Brand portfolio expansion since 2015
Nine brands added to our industry-leading portfolio through a combination of organic launches, acquisitions and commercial partnerships
LUXURY & LIFESTYLE
Legend
New Brand |
PREMIUM
ESSENTIALS
SUITES
EXCLUSIVE PARTNERS
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Balanced portfolio mix of 19 preferred brands across segments
Luxury & Lifestyle and Premium now represent 29% of the system and 41% of the pipeline
LUXURY & LIFESTYLE
IHG SYSTEM
14%
IHG PIPELINE
22%
PREMIUM
IHG SYSTEM
15%
IHG PIPELINE
19%
ESSENTIALS
IHG SYSTEM
60%
IHG PIPELINE
46%
SUITES EXCLUSIVE PARTNERS
IHG SYSTEM | IHG SYSTEM | |||
9% | ||||
IHG PIPELINE | IHG PIPELINE |
12%
2%
1%
Note: data as at 31 March 2024
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Our growth algorithm
Strong track record, recovery and potential for future growth compounding and sustainable shareholder value creation
RevPAR
Net system size growth
Fee margin expansion
Cash conversion
Ordinary dividends
Total capital returned to shareholders
Adjusted EPS growth
IHG's strong track record through to 2019
+3.9% p.a.
+3.2% p.a.
+130bps p.a.
>100%
+11.0% CAGR
$13.7bn
+11.4% CAGR
IHG's strong recovery 2023 vs 2019
+11% ahead
System size +7% larger
+520bps higher
>100%
+21% higher
Further $1.7bn returned
+24% higher
IHG's strong potential looking ahead
HSD % CAGR in fee revenue through combination of RevPAR and system growth
+100-150bps p.a. from operating leverage, plus potential for additional improvements
~100% adjusted earnings into adjusted free cash flow
Continue sustainably growing
Continue returning surplus capital,
whilst targeting financial leverage 2.5-3.0x
+12-15% CAGR
Notes: track record of REVPAR, NSSG and fee margin are the average annual improvements and Adjusted EPS is the CAGR each for the decade through to 2019; cash conversion is cumulative adjusted earnings conversion into adjusted free cash flow for 2015 to 2019 and 2019 to 2023; ordinary dividends CAGR is 2003 to 2019; ordinary dividend for 2023 vs 2019 is that proposed for each year; total capital returned is cumulative for 2003 to 2019 and 2020 to 2023. Definitions for non-GAAP measures can be found in the 'Use of key performance measures and non-GAAP measures' section of IHG's FY23 results, along with reconciliations of these measures to the most directly comparable line items within the Financial Statements.
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Continuing our capital allocation approach to routinely return surplus capital to shareholders: $500m 2022, $750m 2023, $800m 2024
#1: Invest in the business | #2: Sustainably grow the | #3: Return surplus funds | ||
to drive growth | ordinary dividend | to shareholders | ||
Objective of maintaining an investment grade credit rating
2.5x - 3.0x Net Debt:Adjusted EBITDA under normalised conditions As of 31 December 2023: Net debt1 $2,272m / EBITDA2 $1,086m = 2.1x
$750m buyback completed in 2023
10.6m shares repurchased at average price £55.88
6.1% reduction in share count to 165.2m at 31 December 2023
FY23: ~$250m ordinary dividends + $750m buyback = ~$1.0bn or 10% of opening market cap
1. Definitions for non-GAAP measures can be found in the 'Use of key performance measures and non-GAAP measures' section of IHG's FY23 results, along with reconciliations of these measures to the most directly comparable line items within the Financial Statements.
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IHG - Intercontinental Hotels Group plc published this content on 21 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 May 2024 13:14:07 UTC.