IHG Hotels & Resorts released full-year 2023 financial results. Information from the results includes:
Trading and revenue
- Global RevPAR up 16.1 percent year-over-year (YoY) (Q4 up 7.6 percent); global RevPAR up 10.9 percent versus 2019 (Q4 up 12.7 percent)
- Americas FY RevPAR up 7.0 percent YoY (Q4 up 1.5 percent), EMEAA up 23.7 percent (Q4 up 7.0 percent), and Greater China up 71.7 percent (Q4 up 72.0 percent), reflecting the differing levels of travel restrictions that were still in place in 2022
- Average daily rate up 5 percent versus 2022, up 13 percent versus 2019; occupancy up 6 percentage points versus 2022, just 1 percentage point lower versus 2019
- Total gross revenue of $31.6 billion, up 23 percent versus 2022, up 13 percent versus 2019
System size and pipeline
- Gross system growth up 5.3 percent; net system size growth of up 3.8 percent
- Opened 47,900 rooms (275 hotels), up 16 percent YoY (ex. Iberostar); global estate 946,000 rooms (6,363 hotels)
- Signed 79,200 rooms (556 hotels), up 26 percent YoY (ex. Iberostar); global pipeline 297,000 rooms (2,016 hotels), up 5.5 percent YoY
- Q4 opened 19,200 rooms (117 hotels) and signed 28,300 rooms (194 hotels), one of the highest quarters on record
Margin and profit
- Fee margin of 59.3 percent, up 3.4 percentage points, driven by trading recovery in EMEAA and Greater China
- Operating profit from reportable segments of $1,019 million, up 23 percent; this included $13 million adverse currency impact
- Reported operating profit of $1,066 million, including a profit of $19 million from System Fund and reimbursables (2022: loss of $105 million) and a $28 million exceptional profit (2022: $95 million net exceptional charges)
Cash flow and net debt
- Net cash from operating activities of $893 million (2022: $646 million), with adjusted free cash flow of $819 million (2022: $565 million), the latter representing 129 percent conversion of adjusted earnings (2022: 111 percent)
- Net debt increase of $421 million reflects the strong adjusted free cash flow, $1.0 billion of shareholder returns, and a $105 million net foreign exchange adverse impact
- Adjusted EBITDA of $1,086 million, 21 percent versus 2022; net debt:adjusted EBITDA ratio of 2.1x
Shareholder returns
- Completion of 2023’s $750 million share buyback program, and payment of $245 million in ordinary dividends
- Final dividend of 104.0¢ proposed, up 10 percent versus 2022, resulting in a total dividend for the year of 152.3¢
- New $800 million buyback program launched, which together with ordinary dividends is expected to return over $1bn to shareholders in 2024
Clear framework to drive future value creation over the medium to long term
- High single-digit percentage growth in fee revenue, though combination of RevPAR and system size growth, together with 100-150bps fee margin expansion, annually on average over the medium to long term
- 100 percent conversion of adjusted earnings into adjusted free cash flow, supporting investment in the business to optimize growth, sustainably growing the ordinary dividend, and returning surplus capital
- 12-15 percent adjusted EPS compound annual growth rate, including the assumption of ongoing share buybacks
Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, said, “I was honored to take over as IHG’s group CEO in July and would like to thank our teams for delivering an excellent set of results. Travel demand was strong across all markets, with RevPAR up 16 percent on last year and 11 percent ahead of the 2019 pre-pandemic peak. Combined with the power of our enterprise and efficient operating model, profit from reportable segments grew 23 percent and exceeded one billion dollars for the first time, and adjusted EPS grew 33 percent. Today we are announcing a further $800 million share buyback program, which together with ordinary dividends is expected to return over $1 billion to shareholders in 2024.
Alongside strong trading and financial performances, we continued to grow our portfolio and the global footprint of our brands. We opened 275 hotels in 2023 and signed more than double that amount—556 hotels—into our pipeline. Adjusting for the effect of the Iberostar hotels joining IHG’s system, openings for the fourth quarter grew by 27 percent year-on-year and signings were up by 50 percent, representing one of our biggest-ever quarters for development activity.
As we look ahead, our evolved strategic priorities and clear plans will further reinforce IHG Hotels & Resorts as the hotel company of choice for guests and owners. The travel industry has attractive, long-term drivers of demand, and the strength of our brand portfolio and enterprise platform will continue to boost our RevPAR and system size growth. Combined with our scale and cost base efficiencies, this will further expand fee margin. IHG’s strong cash generation supports investment in growth initiatives, sustainably increasing our ordinary dividend, and the regular return of surplus capital such as through buybacks. We look forward to an important next chapter of growth for IHG that creates long-term sustainable value for our shareholders and benefits our employees, hotel owners, and communities.”
