Finance & DevelopmentFinanceIHG Hotels & Resorts Releases Full-Year 2022 Financial Results

IHG Hotels & Resorts Releases Full-Year 2022 Financial Results

IHG Hotels & Resorts formally released its full-year 2022 financial results report. Key metrics from the report include:

  • $25.8 billion in total gross revenue, up 33 percent versus 2021 and 8 percent versus 2019.
  • Up 37 percent global full-year RevPAR versus 2021, 3.3 percent versus 2019
  • Up 26 percent global Q4 RevPAR versus 2021, 4.1 percent versus 2019

IHG reported further significant improvement in trading with sequential improvement each quarter in global RevPAR versus 2019. The strongest recovery was in the Americas with RevPAR up 3.3 percent versus 2019 (Q4 up 9.0 percent); EMEAA improving to 7.5 percent (Q4 up 8.8 percent); and Greater China 38 percent (Q4 42 percent) due to the scale of travel restrictions that were still in place.

Other findings include:

  • Average daily rate up 18 percent versus 2021, up 8 percent versus 2019; occupancy up 9 percentage points versus 2021, 7 percentage points versus 2019
  • Iberostar Beachfront Resorts agreement signed in November 2022 with the first 12,400 rooms added to IHG’s system in December 2022; continue to explore further opportunities with exclusive partners to drive additional system growth
  • Gross system growth up 5.6 percent YOY; adjusted net system size growth of up 4.3 percent YOY
  • Opened and added 49,400 rooms (269 hotels); global estate now at 912,000 rooms (6,164 hotels)
  • Signed 80,300 rooms (467 hotels); global pipeline now at 281,000 rooms (1,859 hotels), up 3.9 percent YOY
  • Fee margin of 56.2 percent, up 6.6 percentage points versus 2021 (up 2.1 percentage points versus 2019’s 54.1 percent)
  • Operating profit from reportable segments of $828 million, up 55 percent versus 2021; this was held back by $17 million adverse currency impact and included $5 million of costs related to Iberostar agreement
  • Reported operating profit of $628 million, after $105 million System Fund reported loss and $95 million net exceptional charges
  • Net cash from operating activities of $646 million (2021: $636 million), with adjusted free cash flow of $565 million (2021: $571 million); net debt movement includes $482 million share buybacks, $233 million dividends, and a $230 million net foreign exchange benefit
  • Adjusted EBITDA1 of $896 million, up 42 percent versus 2021; net debt: adjusted EBITDA ratio reduced to 2.1x
  • Final dividend of 94.5 cents proposed, up 10 percent versus 2021, resulting in a total dividend for the year of 138.4 cents
  • Share buyback program to return an additional $750 million of surplus capital in 2023

Keith Barr, CEO, IHG Hotels & Resorts, said, “In 2022 we saw demand return strongly in most of our markets, pushing group RevPAR back close to 2019 levels and fee margin ahead. It’s particularly pleasing that in the second half of the year, we exceeded 2019 levels for both RevPAR and profitability. Looking to 2023, while there are economic uncertainties, we expect continued strong leisure demand in many markets, alongside further return of business and group travel and the ongoing reopening of China.

Our strategy over the last five years has significantly strengthened our brand portfolio and seen substantial investment to innovate our technology and distribution platforms. Our recent agreement with Iberostar adds our 18th brand and substantially increases our resort and all-inclusive presence, and we continue to explore further new opportunities like this for additional growth through exclusive partners. Meanwhile, the other six brands we have added since 2017 already contribute more than 10 percent of our pipeline, and our Luxury & Lifestyle portfolio is now 13 percent of our system size and 20 percent of our pipeline as we increase our exposure to higher fee income segments.

In total, we signed 467 hotels in 2022 and opened 269, which led to net system growth of over 4 percent. The further 1,800 hotels in our pipeline represent future growth of over 30 percent of today’s system size. The Holiday Inn brand family, with its global leadership position, delivered around a third of our hotel signings and half of openings.

IHG’s enterprise platform strength helps our hotel owners capture demand and grow their business, with enterprise contribution increasing in 2022 to represent 77 percent of their total room revenue. Critical to this was the launch of our new mobile app during the year, which has led to mobile now accounting for more than half of all digital bookings, while the transformation of our IHG One Rewards program has delivered significant improvements in both enrolments and loyalty contribution. Alongside substantial investments in revenue-generating technology platforms to support future growth, we have also continued to invest in our internal systems to maintain the health of the business, and in capabilities to help IHG and our hotel owners meet our 2030 Journey to Tomorrow responsible business commitments.

IHG’s overarching ambition is to deliver industry-leading growth in our scale, enterprise platform, and performance, doing so sustainably for all stakeholders including our hotel owners, guests, and society as a whole. We are a stronger and more resilient company than ever before, and we are proud of the advancements made in each of our strategic priorities. Reflecting the confidence we have in continued growth and the highly cash-generative nature of our business, the Board is pleased to be recommending a 10 percent increase in the final dividend in respect of 2022 and to announce a further share buyback program to return an additional $750 million to shareholders in 2023.”

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