IHG Hotels & Resorts Releases Half-Year 2022 Results

IHG Hotels & Resorts released its half-year 2022 results. Highlights include:

• Further improvement in trading: Americas Q2 RevPAR versus 2019 was up 3.5 percent with sequential improvement also in EMEAA to 10.3 percent; Greater China 48.9  percent due to localized travel restrictions
• H1 2022 average daily rate was up 24 percent versus 2021, up 4 percent versus 2019; occupancy up 10 percentage points versus 2021, 10 percentage points versus 2019
• Gross system growth was up 4.8 percent year-over-year (YOY), net up 3.0 percent YOY (adjusted for Holiday Inn and Crowne Plaza removals in H2 2021, and the impact of exiting Russia in H1 2022)
• Opened 14,900 rooms (96 hotels) in H1 2022; global estate now at 883,000 rooms (6,028 hotels)
• Signed 30,700 rooms (210 hotels) in H1 2022; global pipeline now at 278,000 rooms (1,858 hotels)
• Luxury & Lifestyle portfolio now 445 hotels, 12 percent of system size; a further 287 hotels represent 19 percent of group pipeline
• IHG One Rewards developments to enhance the company’s digital offerings
• Operating profit from reportable segments of $377 million, up 101 percent versus 2021, down 8 percent versus 2019; reported operating profit of $361 million, after system fund result of $3 million and operating exceptionals of $ 19 million
• Net cash from operating activities of $175 million (2021 was $173 million), with adjusted free cash flow1 of $142 million (2021 was $147 million); net debt reduction of $163 million since the start of the year includes $227 million of net foreign exchange benefit
• Trailing 12-month adjusted EBITDA1 of $812 million, up 78 percent on a year earlier; net debt adjusted EBITDA reduced to 2.1 times
• Resumption of interim dividend at 43.9, up 10 percent on prior interim payment in 2019
• Additional $500 million of surplus capital to be returned via a new share buyback program

Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said, “We saw continued strong trading in the first half of 2022 with increased demand for travel in most of our markets. This brought group RevPAR very close to pre-pandemic levels in the second quarter. Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG’s brands, loyalty program, and technology platform.

“The recovery in demand and pricing led to group profit more than doubling versus 2021, with profitability in the Americas now ahead of 2019. The EMEAA region also saw excellent improvement in performance. Whilst Greater China had a tough period as COVID-related travel restrictions were tightened, we have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains.

“Our overall performance reflects a continued focus to build a stronger business for our guests and owners. We have significantly enhanced and expanded our brand portfolio in recent years, and invested in our enterprise platform to drive performance and accelerate our growth. The investments we have made to innovate our technology and distribution channels continue to drive improvements in both the guest experience and owner returns. Some of the biggest achievements this year include the critical step of transforming our loyalty program, IHG One Rewards, and the redesign of our mobile app and digital channels to deliver a faster, simpler booking experience.

“We opened almost 100 hotels in the half, passing the 6,000 milestone globally, and signed more than 200 properties to take our pipeline to 1,858, representing over 30 percent of today’s system size. We continue to see growing interest in conversion opportunities, which represented more than a quarter of openings in the period. This illustrates the increasing appeal to hotel owners of accessing IHG’s brands and the significant scale and demand delivery capability of our enterprise platform.

“IHG’s clear strategy over the last five years has seen us emerge from the pandemic a stronger and more resilient company, delivering on key priorities and progressing our ambitious 2030 Journey to Tomorrow responsible business commitments. Whilst the economic outlook faces uncertainties as central banks and governments take action to manage inflation, we remain confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth. Having reinstated a final dividend in respect of 2021 six months ago, the strong performance seen in 2022 to date, together with the confidence we have in continued progress, has led us to reintroduce an interim dividend at a level 10 percent higher than when last paid and launch an initial $500 million share buyback.”