InterContinental Hotels Group PLC: First Quarter Results to 31 March 2009
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InterContinental Hotels Group PLC: First Quarter Results to 31 March 2009
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Catégorie : Monde - Économie du secteur -
Chiffres et études
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Financial results 2009 2008 % change % change (CER)
Total Excluding Total Excluding
LDs1 LDs1
Continuing revenue $342m $448m (24)% (22)% (19)% (17)%
Continuing operating profit $69m $124m (44)% (41)% (48)% (45)%
Total operating profit $72m $127m (43)% (39)% (47)% (44)%
Adjusted continuing EPS 14.8¢ 22.9¢ (35)%
Adjusted total EPS 15.5¢ 23.6¢ (34)%
Total basic EPS 2 9.5¢ 21.2¢ (55)%
Net debt $1,287m $1,679m
All figures are before exceptional items unless otherwise noted. See appendix 3 for analysis of financial headlines. Constant exchange rate comparatives shown in appendix 4. (% CER) = change in constant currency.
1 excluding $3m of significant liquidated damages receipts in Q1 2009 and $13m in Q1 2008.
2 Total basic EPS after exceptional items
Business headlines
* Global constant currency RevPAR decline of 13.6%. IHG's brands outperformed the industry in each of its three regions.
* 1,845 net rooms (36 hotels) added in the quarter taking total system size to 621,696 rooms (4,222 hotels).
* 12,440 rooms (98 hotels) added to the system, 10,595 rooms (62 hotels) removed in line with our quality growth strategy.
* 10,551 rooms (76 hotels) signed, taking the pipeline to 236,343 rooms (1,697 hotels).
* Net debt of $1.3bn held flat on the position as at 31 December 2008.
* Exceptional operating items of $26m relate to a $21m previously committed final payment into the UK pension fund and $5m associated with the Holiday Inn relaunch.
Recent trading
* April was impacted by the movement of Easter from March to April. April global constant currency RevPAR decline of 19.8%; -18.8% Americas, -22.4% EMEA and -20.6% Asia Pacific.
* No further deterioration in demand is visible in forward bookings, but room rates remain under pressure.
Update on priorities
* Open rooms. Currently 90,000 rooms under construction, at least 38,000 of which are scheduled to open in the balance of the year (12,440 rooms opened in the quarter). Continued focus on driving up the overall quality of the system means room removals in the balance of the year will be in the region of 25,000.
* Drive share. US RevPAR outperformed the market by 3.5 percentage points (IHG US brands Q1 RevPAR decline of 14.2% compared to US industry of 17.7%).
* Relaunch Holiday Inn. 729 hotels operating under the new standards year to date. Early indications from the first relaunched hotels continue to show RevPAR outperformance of more than 5% compared to a control group.
* Reduce costs. In February, IHG announced a cost saving programme which would reduce 2009 regional and central costs by $30m at constant currency. Q1 regional and central costs were $7m below 2008 levels on a constant currency basis ($18m on a reported basis). The full year cost savings are on track, and at current exchange rates and including some additional savings, reported regional and central overheads are now expected to be $70m below 2008 levels.
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC said:
"As expected the start to the year has been very challenging for the industry. Occupancy showed signs of stabilisation in the quarter, but room rates, which held up well during 2008, declined under the pressure of a very competitive market. Our brands continue to perform strongly across all three of our regions, and in the US our RevPAR outperformance has improved further from the last quarter of 2008, mostly as a result of our portfolio bias to midscale hotels, primarily Holiday Inn.
"The lack of liquidity in the lending markets has slowed our deal pace but we still signed 76 hotels in the quarter. We also opened close to 100 hotels, more than in the same period last year. This opening programme combined with our continued removal of underperforming hotels is driving up the quality of our estate. We are continuing to invest in our business with the major focus being the relaunch of Holiday Inn. We now have over 700 relaunched hotels in the system and remain committed to completing the programme by the end of 2010. Feedback from relaunched hotels continues to be positive, with RevPAR outperformance in line with expectations.
"Our strong balance sheet and long term bank facility provide a strong platform for our capital light, cash generative, fee based model. The outlook remains tough but we are taking decisive action on costs without compromising our ability to continue to grow market share."
Americas: midscale resilience
Revenue performance
RevPAR declined 13.5% driven by both occupancy and rate. In the US, IHG brands outperformed the industry by 3.5 percentage points, driven by the resilience of the midscale brands which represent 80% of IHG's rooms in this market. Continuing revenues declined 26% to $170m. Excluding one $13m liquidated damages receipt in the first quarter of 2008, continuing revenues declined 22%.
Operating profit performance
Operating profit from continuing operations declined 46% from $112m to $60m. Excluding the liquidated damages, continuing operating profit declined 39%. The contribution from continuing owned and leased hotels declined from a profit of $7m to a loss of $4m driven by a 28.2% decline in RevPAR and the absence of any contribution from the Holiday Inn Jamaica which was sold in September 2008. Excluding the $13m liquidated damages receipt in the first quarter of 2008, managed hotels profit declined by $14m to a loss of $4m. This was primarily due to guarantee payments where the commitments are phased evenly through the year, but the hotel cash flows which fund them are seasonally low in the first quarter. Franchised hotels profit decreased by $17m to $80m driven by an 11% decline in royalty fees and a $5m reduction in non-royalty fees.
EMEA: resilience in the Middle East
Revenue performance
RevPAR declined 11.6% driven by both occupancy and rate. The Middle East remained the strongest market with a decline in RevPAR of 2.3%. IHG hotels in the UK outperformed the market with a RevPAR decline of 9.0%. Continuing revenues declined 24% (10% at constant exchange rates (CER)) to $87m. Excluding one $3m liquidated damages receipt in the first quarter of 2009, continuing revenues declined 27% (12% CER).
Operating profit performance
Operating profit from continuing operations declined 20% (13% CER) from $30m to $24m or 30% (23% CER) excluding the $3m liquidated damages receipt. Owned and leased profits declined by $4m to $1m, with a strong performance at the InterContinental London Park Lane being offset by the impact of a weak market on the InterContinental Paris Le Grand. Managed hotels profit declined by $5m to $16m. Continued growth in the Middle East was offset by the annualisation of the reduced contribution from a portfolio of hotels in the UK, first reported in the third quarter of 2008. Excluding the $3m liquidated damages receipt in the first quarter of 2009, franchised hotels profit declined 13% to $13m, but grew 7% at CER as the contribution from a 5% increase in the number of franchised rooms partially offset an 11.8% RevPAR decline.
Asia Pacific: RevPAR outperformance
Revenue performance
RevPAR declined 17.2% driven by both occupancy and rate. Trading in the major cities of Greater China remained very soft driving RevPAR down 19.9%, significantly better than the industry down 32.5% which was heavily impacted by oversupply in major markets. Continuing revenues declined 22% (19% CER) to $56m.
Operating profit performance
Operating profit from continuing operations declined 41% (35% CER) from $17m to $10m. Operating profit at owned and leased hotels decreased by $3m to $7m primarily reflecting a RevPAR decline of 21.1% at the InterContinental Hong Kong. Managed hotels profit decreased 43% (29% CER) to $8m.
Interest and tax
The interest charge for the quarter fell $16m to $14m due to a reduction in interest rates and lower average net debt.
Based on the position at the end of the quarter, the tax charge has been calculated using an estimated annual tax rate of 24% (Q1 2008: 29%). The reported tax rate may continue to vary year-on-year but is expected to increase in the medium to long term.
Cash flow & net debt
Capital expenditure of $18m was $10m below 2008 levels and as disclosed previously, full year maintenance capital expenditure is expected to be c.$75m, down 25% on 2008 levels.
IHG's net debt was maintained at $1.3bn at the end of the quarter, including the $202m finance lease on the InterContinental Boston. IHG remains well placed in terms of its banking facilities, with a $1.6bn revolving credit facility expiring May 2013 and a $0.5bn term loan expiring November 2010.
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