Continued outperformance by IHG's brands delivers 33% operating profit growth.
Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said: “In the third quarter we delivered a strong set of results, with global revenue per available room (RevPAR) up 6.4%, including 2.8% rate growth. This was led by 10.8% RevPAR growth in Greater China and 8.0% in the US where we continued to outperform the industry driven by sustained results from the Holiday Inn relaunch. We are now rolling out a multi-year programme to reposition and drive stronger performance from our Crowne Plaza brand. We signed 5,927 rooms (18 hotels) in the quarter including a 1,224 room Holiday Inn in Macau, and the fourth hotel development for the Holiday Inn Express brand in Thailand, located along Patong Beach in Phuket. 3,870 rooms (11 hotels) were opened into the system, including a second Holiday Inn resort in Phuket. IHG now has 11 hotels open in Thailand with a further 10 in the development pipeline. “We are focused on supporting our owners by driving demand to their hotels through the most profitable channels. Our innovations in this area continue to lead the industry and we recently introduced our Best Price Guarantee, designed to drive more guests to book through our direct websites.“We have established firm foundations for high quality growth which we will deliver through driving market share, growing margins and investing behind the growth of our brands and our people. The economic environment continues to be uncertain, but we remain confident in our future due to our resilient business model, robust balance sheet and powerful brand portfolio, combined with low medium term supply growth in many markets.”Driving Market ShareThird quarter global RevPAR growth of 6.4%, 7.0% excluding Egypt, Bahrain and Japan. -* Americas 7.6% (US 8.0%); EMEA 3.6%; Asia Pacific 5.7%. -* Global rate growth of 2.8%, demonstrating progressive improvement from 2.4% growth in the second quarter. -* System size 666,476 rooms (4,520 hotels); pipeline 183,368 rooms (1,152 hotels). -* 12,945 rooms (75 hotels) added and 3,143 rooms (17 hotels) removed, with signings of 18,728 rooms (102 hotels). Openings and signings includes 4,796 rooms (25 hotels) managed on US army bases. -* Holiday Inn brand family signings of 9,653 rooms is up 16% on Q3 2010, taking the global brand pipeline to over 105,000 rooms, demonstrating the continued wider benefits of the relaunch.Growing MarginsContinued cost control -* Regional and central costs of $72m down $3m on Q3 2010 at constant currency (down $2m as reported). -* 2011 full year regional and central costs expected to be on target at c.$260m at constant currency (c.$265m at current exchange rates).Current trading updateOctober global RevPAR up 4.7%, including rate up 3.2%. -* Americas 6.2% (US 6.4%); EMEA 0.3%; Asia Pacific 5.3%. -* Operating profit impact of $2m in the quarter ($9m year to date) from events in Middle East, Japan and New Zealand with full year estimated impact still expected to be around $15m.Regional Highlights Americas – Strong brands drive industry outperformanceRevPAR increased 7.6%, including rate growth of 3.2%. US RevPAR was up 8.0%, including rate growth of 3.4%. On a total basis including the benefit of new hotels, US RevPAR grew 9.5%, outperforming the industry up 7.9%.Revenue increased 3% to $222m and operating profit increased 20% to $126m. After adjusting for owned hotel disposals and excluding the impact of a $4m benefit year on year from the conclusion of a specific guarantee negotiation relating to one hotel, revenue was up 5% and operating profit up 16%. This was driven by 9.7% owned hotel RevPAR growth and a 7% increase in franchise royalty fees. We signed 11,200 rooms (73 hotels) in the quarter and opened 8,003 rooms (54 hotels) into the system, both of which include 4,796 rooms (25 hotels) managed on US army bases. Two additional Holiday Inn Club Vacations hotels (694 rooms) were signed up, which will take the total number of properties operating under the timeshare alliance brand to eight (3,586 rooms). Openings include two Holiday Inn hotels in Colombia, marking a strong entry for the brand into that country.EMEA – Successfully growing our brands in new marketsRevPAR increased 3.6%, including rate growth of 2.8%. RevPAR grew 4.5% excluding Egypt (10 hotels) and Bahrain (2 hotels) where the political unrest continued to result in significant declines. RevPAR grew in other Middle East markets, including 10.9% in Saudi Arabia and 9.7% in the United Arab Emirates. Revenue increased 22% (17% at CER) to $128m and operating profit was in line with the prior year at $35m (down 3% at CER). After adjusting for properties that are structured for legal reasons as operating leases but with the same characteristics as management contracts, revenue increased 9% and operating profit was flat. This was driven by strong growth in the owned business where RevPAR was up 10.0% and a $2m increase in franchise royalties as a result of 3.8% RevPAR growth and a 4% increase in year on year room count. Managed profits were adversely impacted by $1.5m as a result of the unrest in the Middle East.We signed 1,601 rooms (11 hotels) in the quarter, including the first Hotel Indigo for Russia, in St Petersburg. 1,072 rooms (10 hotels) were opened into the system, including the InterContinental Porto, the first for the brand in Portugal.Asia Pacific – RevPAR and rooms growth drives a 20% profit increaseRevPAR increased 5.7%, including rate growth of 2.0%. Excluding Japan (32 hotels) where the earthquake and resultant events negatively impacted growth, RevPAR grew 8.6%. Greater China continues to be our strongest market with RevPAR up 10.8%, including rate growth of 4.9%.Revenue increased 19% (12% at CER) to $88m and operating profit increased 55% (45% at CER) to $31m. After adjusting for a $6m liquidated damages receipt, revenue increased 11% (4% at CER) and operating profit increased 25% (15% at CER). This was driven by strong RevPAR growth and an 8% increase in year on year room count, led by Greater China, up 14%. Excluding the $6m liquidated damages receipt, managed operating profit grew 20% (10% at CER). The natural disasters in Japan and New Zealand had a $0.5m negative impact in the quarter. We signed 5,927 rooms (18 hotels) in the quarter including a 1,224 room Holiday Inn in Macau, and the fourth hotel development for the Holiday Inn Express brand in Thailand, located along Patong Beach in Phuket. 3,870 rooms (11 hotels) were opened into the system, including a second Holiday Inn resort in Phuket. IHG now has 11 hotels open in Thailand with a further 10 in the development pipeline.
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