IHG Hotels & Resorts reported half-year results ending June 30, 2024. Highlights include company performance with operating profit from reportable segments (+12 percent) and Adjusted EPS (+12 percent); record signings; on track to return over $1 billion to shareholders; and positivity in long-term growth drivers.
Trading and revenue
- H1 Global RevPAR +3.0 percent (Q2 +3.2 percent), Americas +1.7 percent (Q2 +3.3 percent), EMEAA +7.5 percent (Q2 +6.3 percent), and Greater China -2.6 percent (Q2 -7.0 percent); U.S. RevPAR positive from April, and +2.5 percent for Q2
- Average daily rate +2.0 percent, occupancy +0.6 percentage points
- Total gross revenue1 $16.1 billion, +6 percent
System size and pipeline
- Gross system growth +4.9 percent YOY; net system growth +3.2 percent YOY
- Opened 18,000 rooms (126 hotels) in H1; global estate of 955,000 rooms (6,430 hotels)
- Signed 57,100 rooms (384 hotels) in H1, +67 percent YOY in total (or +15 percent adjusting for Iberostar and NOVUM); global pipeline of 330,000 rooms (2,225 hotels), +15 percent YOY
- Opened 11,700 rooms (80 hotels) in Q2, representing sequential improvement on 6,300 in Q1
- Signed 39,400 rooms (255 hotels) in Q2, compared to 17,700 in Q1; Q2 signings were up +123 percent YOY in total, or up +23 percent adjusting for Iberostar and NOVUM
Margin and profit
- Fee margin 60.6 percent, up +1.8 percentage points driven by trading performance and new revenue from the sale of loyalty points
- Operating profit from reportable segments of $535 million, up +12 percent, includes a $10 million adverse currency impact
- Reported operating profit of $525 million includes System Fund and reimbursable loss of $1 million (2023: $87 million profit) driven by planned reduction of prior System Fund surplus, and no exceptional items (2023: $18 million exceptional profit)
- Adjusted EPS of 203.9¢, up +12 percent, includes increased adjusted interest expense of $79 million (2023: $58 million), an adjusted tax rate of 27 percent (2023: 25 percent), and a 5.6 percent reduction in the weighted average number of ordinary shares
Cash flow and net debt
- Net cash from operating activities of $162 million (2023: $315 million) and adjusted free cash flow of $132 million (2023: $277 million), with the decrease driven by planned reduction of prior System Fund surplus
- Net debt increase of $510 million since start of the year, driven by $539 million of shareholder returns through dividend payments and share buybacks; $3 million foreign exchange adverse impact on net debt
- Trailing 12-month adjusted EBITDA of $1,140 million +14 percent YOY; net debt:adjusted EBITDA ratio of 2.4x
Shareholder returns
- $800 million share buyback program for 2024 was 47 percent completed as of June 30, 2024
- Interim dividend +10 percent to 53.2¢; together with buybacks, on track to return over $1 billion to shareholders in 2024
Elie Maalouf, CEO, IHG Hotels & Resorts, said, “With thanks to our teams around the world, we are making great progress on the delivery of our strategic priorities and the clear framework to drive future value creation that we set out in February. RevPAR growth accelerated in the latest quarter, reflecting a strong U.S. rebound in Q2, and the breadth of our global footprint, and development activity continues to increase. Together with system growth, notable margin expansion, and the benefit of returning surplus capital through buybacks, adjusted EPS growth was +12 percent.
We celebrated 126 hotel openings in the half and the signing of a record-breaking 384 properties, equivalent to more than two a day. These included the first six openings and 118 signings from the NOVUM Hospitality agreement, which doubles our presence in the important and attractive German market. After growth of +7 percent in Q1, a very busy Q2 saw +23 percent more signings year‑on‑year or a more than doubling when including NOVUM, and this keeps us on track for net system size growth expectations.”
