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According to preliminary results – full year results to 31 December 2008:
– 34,757 net rooms (237 hotels) added taking total system size to 619,851 rooms (4,186 hotels), up 6%.
– 98,886 rooms signed, including 25,058 rooms (173 hotels) in the fourth quarter.
– Global constant currency RevPAR growth of 0.9%. IHG brands outperformed in all major markets.
– Strong free cash flow generation reduces net debt by $386m to $1.3bn. Long term debt facilities refinanced.
– Final dividend maintained at 29.2p, equivalent to 20.2p (+36%). Total dividend up 2% to 41.4p.
– Exceptional operating charge of $132m including $19m severance costs and $96m impairment charge.
Recent trading
– Sharp deterioration in fourth quarter trading. Global constant currency RevPAR down 6.5% in Q4. IHG brands outperformed in each region.
– January global constant currency RevPAR decline of -12.2%; -11.7% in Americas, -11.8% in EMEA and -14.8% in Asia Pacific. Forward bookings data shows no sign of improvement in levels of demand.
– January signings of 1,713 rooms (13 hotels); January openings of 3,969 rooms (27 hotels).
Priorities
– Open rooms. Currently 85,000 rooms under construction, around 50,000 scheduled to open in 2009.
– Drive share. The $1bn marketing and reservations system fund has been reprioritised.
– Holiday Inn relaunch. 350 hotels operating under the new standards; c.220 expected conversions in remainder of Q1 2009. Early results from the first relaunched hotels show a RevPAR uplift of 5% compared to a control group.
– Reduce costs. Major initiative to reduce costs which will keep 2009 regional and central costs $30m below – 2008 levels on a constant currency basis, whilst still investing to support growth.
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said: “We produced good results in 2008 and comfortably exceeded our three year target to add 50,000 to 60,000 net rooms by the end of 2008 – adding over 82,000 rooms. We opened 20% more rooms than in 2007 and signed almost 100,000 rooms into our pipeline.
“The $1 billion Holiday Inn relaunch is progressing well. We will have almost 600 hotels operating under the new standards by the end of the first quarter and are committed to completing the global programme by the end of 2010. The first relaunched hotels show a strong increase in revenue per available room which is a big motivation for other owners to convert.
“The trading environment is very tough. The sharp deterioration that we reported on last November has continued into 2009 and we see no signs of improvement at this stage. It has been clear for some time that 2009 will be a challenging year and we have taken action to prepare the business, including strict management of cash and a significant reduction in costs. The actions we have taken to move the business to an asset light model with strong brands, scale advantage and leading technology and reservation systems position us well to grow market share in the testing times ahead.”
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
