Intercontinental Hotels : Investor pack

November 11, 2020 at 04:55 am EST

Regent Shanghai Pudong, Greater China

Investor presentation

Post 2020 Q3 results

Proprietary and confidential - further reproduction or distribution is prohibited

Cautionary note regarding forward-looking statements

This presentation may contain projections and forward looking statements. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company's financial position, potential business strategy, potential plans and potential objectives, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future

business strategies and the environment in which the Company will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. The forward-looking statements in this document speak only as at the date of this presentation and the Company assumes no obligation to update or provide any additional information in relation to such forward-looking statements.

The merits or suitability of investing in any securities previously issued or issued in future by the Company for any investor's particular situation should be independently determined by such investor. Any such determination should involve, inter alia, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the transaction in question.

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Strong portfolio of preferred brands, geographically diverse and asset light

Strong portfolio

of brands

Asset light and geographically diverse

High quality fee

stream

Mainstream	Upscale	Luxury

	Owned, Leased		Luxury

	& Managed	140k	10%		Mainstream

Managed	Leases		96k
16%
	68%
30%	1%		34%	109k

Total		Total	Upscale	Total	Pipeline	38%
rooms:		rooms:	rooms:		rooms:
	16%
890k	222k	890k		890k		286k

	25%
Franchised			527k			80k
69%			59%			28%	Americas



		~95% of profits from fee business
						EMEAA
	~80% of fee revenue linked to hotel revenues

	~10% of fee revenue linked to hotel profits					Greater China

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Why owners choose to partner with IHG

Trust and track record

Global Sales organisation

• Developed a leading global sales enterprise to drive higher quality, lower cost revenue to our hotels

Drives ~25% of Group gross revenue

Technology Leadership

• Roll out of cloud-based IHG Concerto including Guest Reservation System

Revenue management for hire tools
IHG Connect and IHG Studio enhance guest experience

Investment in hotel lifecycle management and operations

Accelerating hotel signings into openings and maximising owner ROI
Faster ramp up of new hotel openings
Extensive infrastructure for franchise

support

1 Loyalty contribution on a room revenue basis for 2019

Strength of brands

Breadth and depth of brand portfolio
Includes Holiday Inn Brand Family, the largest global hotel brand and InterContinental, the largest luxury hotel brand
Deliver RevPAR premiums
Strong owner ROI

Strong loyalty and enterprise contribution

~45% loyalty contribution1
>100m IHG Rewards Club members
Significant portion of room revenue booked through IHG's direct channels

Procurement

Programs for hotel operating goods and services
IHG Marketplace - hotel procurement buying programme / platform

November 2020

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IHG is well placed to capitalise on the long-term industry fundamentals

Industry

IHG

Growing	•	Industry total revenue ↑ 5% CAGR1
industry demand •	Attractive long-term structural growth drivers

Reallocated

resources

•	Embedded more effective regional structure
•	Operating closer to market

Shift to scale

brands

Attractive

asset class

Consumer

trends shifting

Technology

Sustainability

Branded share2: 54% Open Rooms / 81% Pipeline
Top 3 share2: 17% Open Rooms / 44% Pipeline
Near record absolute RevPAR in 2019
Owners generating high ROI albeit against some rising cost pressures
Increasing demand for distinctive brands
Integral to the entire guest journey
Scale needed to support investment
Increasingly informing guest preferences
Scale helps owners seeking support

Growing

market share

Strengthening existing brands

Launched

new brands

Cloud-based

capabilities

Responsible

Business focus

• Accelerated net rooms growth from ~3% to 5.6%

in three years to 2019

• Continual innovation driving guest preference

• Cost effective build and operational prototypes

• Five new brands launched or acquired

• Targeting under-served segments

• Rolled out IHG Concerto across estate

• Enhanced Wi-Fi platform with IHG Connect

• Continuous focus on sustainable solutions

• Sustainability credentials facilitate owner needs

1 Source: STR; 2016-19;2 Source: STR census data; based on room share

November 2020

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Strong competitive position in an industry where branded players are gaining market share

IHG has over 4% share of global

room supply

Share of global room supply (%)

Marriott

7.2% Hilton

5.1% IHG

4.4%

4.2% Wyndham

3.8% Accor

75.3%

With a larger share of the active		In an industry where branded
pipeline		players have gained share

IHG share of global rooms and		Global share of top 5 branded
active pipeline (%)		players
10.9%
	24.9%
	19.8%
4.4%

Other

2015

2019

Share of global room supply Share of global active pipeline

IHG is largely asset-light and weighted

~40% of IHG pipeline under construction

Strong conversion opportunity

towards mainstream select service

potential to drive further share gains

Source: STR

November 2020

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IHG's ~$1.4 bn1 System Fund supports our brand marketing and our revenue delivery system

Brands

Sources of Income

Marketing & Reservations

Assessment

~3.0% of gross rooms revenue

IHG Rewards Club Point Sales ~4.75% IHG Rewards Club bill

Other fees for value add services

e.g. pay for performance programmes

Sources of Spend

IHG Rewards Club

Advertising & Marketing

Distribution

(Reservation & Channels)

Systems & Technology

1For year ending December 2019

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

IHG's business model provides a level of resilience relative to the wider industry

As of the end of

September, ~97% of our

hotels are open

Hotels by region (%)

2%9%

98% 91% 100%

Americas EMEAA Greater

China

Closed Open

Q3 occupancy		Occupancy1 has been re-
	building fastest in our largest
running at 44%
	segment of mainstream

Q3 occupancy by region		US weekly occupancy1 (%)

			60%
		57%				Mainstream
		50%

46%			40%

						Upscale
	31%		30%
						Luxury
			20%
			10%
Americas	EMEAA	Greater	0%
		China	Apr'20	May'20 Jun'20 Jul'20 Aug'20	Sep'20	30 Sep '20

				1 - Comparable open hotels

November 2020

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Our mix places us well to benefit from the expected shape of demand recovery

Mainstream, our largest segment, is outpacing overall industry RevPAR

US rooms distribution

84%

10%

Mainstream Upscale Luxury

Domestic travel is

leading the recovery

US demand mix

International

Domestic

Non-urban1 areas

strongly

outperforming urban

US rooms distribution

Urban

Non Urban

Groups is toughest

area of demand; IHG's

lowest exposure

2019 US guest stays

Business transient

Leisure

Groups

1Non-urban regions includes hotels located in small metro towns, suburban districts, interstate, airport and resort locations

November 2020

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The Upper Midscale segment, which accounts for ~65% of our rooms in the US, has historically recovered faster than other segments

US RevPAR Performance 2008 - 2015 (12m rolling)

US Industry Chain Scale RevPAR Change (12m rolling)

15.%

10.%

5.%

0.%

-5.%

-10.%

-15.%

-20.%

-25.%

-30.%


1988	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
				Luxury Chains							Upper Upscale Chains			Upper Midscale Chains

				Midscale Chains						Economy Chains

Source: STR

November 2020

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Highly cash generative business, driving strong shareholder returns

Strong cash flows driving consistent shareholder returns
Total returns of ~$13.6bn since 2003, ~40% from operations
- $2.4bn ordinary dividend
- $11.2bn additional returns
Strong financial position:
- $2.75bn Bonds1
- $1.4bn RCF2
- $2.9bn available liquidity

Ordinary dividend progression 2014-2019 (¢ per share)

Final		Interim
				+10% CAGR		114
				104
77		85	94		78

		71

		64





			58
52
							40


								40
							36
						33
					30
			28
25


2014	2015	2016	2017	2018	20194

Strong free cash flow generation ($m)3

				611			Shareholder returns 2003-19 ($bn)	13.6
		551
	466	516		509
				5.8

				7.9

321
						Asset disposals	Operational cash flows	Total

2014	2015	2016	2017	2018	2019

1 Next bond maturity in November 2022 (£173m); 2 Maturity of the $1.35bn RCF extended by 18 months to September 2023; 3 2017 and 2018 Free Cash Flow Restated for the adoption of IFRS 16; 4 2019 final dividend recommendation withdrawn in response to Covid-19

November 2020

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Our commitment to operate a responsible business

Supporting our communities through the crisis and beyond

Ensuring long-term environmental		Taking action to build a more
resilience		diverse & inclusive culture

Accommodation for the most vulnerable in society
Donation to food banks across 70+ countries
Developing a new strategic Communities approach

ESG

rankings

2030 Science Based Target
Task Force for Climate-related Financial Disclosures
Engaging in forums with other business leaders and governments

Responsible

business

credentials

Launch of new Americas D&I commitments
Creation of new ethnic diversity network in Europe
Developing a long term D&I ambition for the Group

November 2020

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Q3 2020 and Covid-19 response

Navigating the Covid-19 crisis effectively and responsibly

Q3 2020 Rooms & RevPAR

890k rooms (5,977 hotels), +2.9% net growth YoY
Global RevPAR decline (53)% in Q3; (52)% YTD
97% of estate open as of 30th September
Q3 occupancy ~44%, up from April trough ~20%
RevPAR outperformance in key markets

H1 2020 Results

(83)% underlying H1 operating profit decline
(90)% H1 adjusted EPS decline
$(66)m H1 Free Cash Flow; broadly neutral FCF in Q2 (positive FCF in Q3)
$2.1bn available liquidity at end September - rising to $2.9bn on a PF basis for bonds repaid and issued

Protecting the business

Decisive cost action; robust liquidity and cash flow
Providing support to owners to help keep hotels open, lower their costs and manage cash
New operating procedures to protect colleagues and deliver guest safety
Ensuring guests have confidence to stay with flexibility and rapid implementation of the IHG Clean Promise

Focusing on growth

263 signings YTD (82 in Q3), 173 openings (82 in Q3)
27% signings from conversions, up from 20% last year
~40% of pipeline under construction; 43 ground breaks in Q3
Leveraging investment in technology and loyalty
Planning business recovery in a responsible way

November 2020

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Americas - US

Our weighting to mainstream has helped drive market outperformance

Q3 2020 US RevPAR change - IHG vs industry (%)

-38%

-42%

-47%-49%-47% -50%

US Industry

IHG Weighted Segments Holiday Inn Express

IHG1 Industry2

September 2020 US Occupancy distribution by brand segment (% of estate)

		13%
60%	63%	26%


41%


		35%

30%	29%				46%
				39%


10%
8%

		Total		Mainstream		Premium	Luxury
	Occ: >50%		Occ: 30% - 50%		Occ: <30%

1 Includes the adverse impact of hotels temporarily closed as a result of Covid-19.2 Industry data per STR, which excludes hotels that have been closed for >1 month

November 2020

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IHG's response to the Covid-19 pandemic

Colleagues

New operating procedures for frontline colleagues
Support services to those affected by job losses
Aiding flexible and remote working

Communities

Accommodation to frontline workers
Partnership with aid organisations to fund disaster relief
Enable IHG Rewards Club members to donate points

Guests

Flexible cancellation policy
Protecting membership status of IHG Rewards Club members
Global IHG Clean Promise

Cost reduction

Up to $150m cost reduction in Fee Business
~50% sustainable into 2021
System Fund cost base reduced

Liquidity and cash flow

$2.9bn available liquidity
Cash preservation and disciplined working capital management

Owners

Temporary fee relief
Relaxation of brand standards
Operational support
Government advocacy

November 2020	© 2020 All Rights Reserved	Proprietary and confidential - further reproduction or distribution is prohibited	16

Owners: the value of our rapid response, system scale and ongoing operating and technology developments

Immediate support

Leveraging our scale

Maximising

demand

Brand

standards

Operational

advice

Fee relief

Cash

Flow

Government

advocacy

Enhanced demand driver mapping
Coordinated Covid-related demand
Temporary relaxation of brand standards
Help owners protect cash flow
Support with closing and re-opening hotels
Flexing operations and reducing costs
Temporary discount on fees including technology and System Fund assessments
Allow owners to manage cash flow through utilisation of maintenance reserves
Secure broader government support
Help owners access government schemes

Payment flexibility

Safety

standards

IHG

Concerto

Technology development

Procurement

Responsible

business focus

•

Case-by-case consideration of payment plans

Enhancement of IHG Way of Clean Introduction of new operating procedures

Automating front desk operations such as Contactless Check-in

New Owner Engagement Portal

Enhancement to revenue management services

Loyalty and mobile developments

Supporting supplier negotiations

Scale leverage to secure improved terms

Reducing carbon footprint in line with our Science Based Target

Strengthened Diversity & Inclusion focus

November 2020

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Guests: the value of our branded flexibility and "stay safe" peace of mind

Immediate support

Leveraging our scale

Cancellation

fees

Cleanliness &

Safety

Loyalty

Promotional

activity

Meet with

Confidence

Waived from the onset of the crisis
IHG Clean Promise
Face coverings in Americas
Protected membership status
Paused point expiry until end of year
Reduced Elite status qualification requirements
IHG's Heroes room rate for key workers
Key worker leisure rate introduced
Providing corporate bookers with greater flexibility
Enhanced approach to health and safety

Booking	• Extension of Book Now, Pay Later policies
flexibility

Cleanliness &	•	IHG Clean Promise
Safety	•	Mobile check-in and check-out

Targeted campaigns for individual guests
Personalisation • Engagement and click through rate

doubled

Global	• WebEx for 1,500 Corporate Travel
Managers to update on Covid-19
Sales
response

Guest	• IHG's Guest Satisfaction Index1 has been
net positive every month
satisfaction	• Each month showing sequential
	improvement

1 Guest Satisfaction Index (GSI) is an IHG metric that uses third party aggregated social media review data to benchmark IHG guest satisfaction performance against that of our competitors

November 2020

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Cleaning standards developed with industry-leading experts to enhance guest safety and reassurance

Strengthening IHG Way of Clean

New global standard of hotel cleanliness and hygiene
Science-ledprotocols developed with the Cleveland Clinic, Ecolab and Diversey
Provide assurance throughout the guest experience e.g. sanitiser stations, social distance floor markers, grab-and-go breakfast options
Working with scientific advisors to determine appropriate new technologies to pilot
Innovating food and beverage to incorporate new operating procedures, social distancing, contactless room service
Protecting hotel colleagues with standards on PPE, installing shields at front desk, training and certification
Supported by a new verification procedure

Over 30% uplift in percentage of positive third-party

social review comments on cleanliness from guests following

launch of the IHG Clean Promise

InterContinental Mark Hopkins, San Francisco, United States

November 2020

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Leveraging our investments in loyalty and technology to drive competitive advantage

Enhancing value

of loyalty

programme

Dynamic pricing

for Reward Nights

IHG Concerto

Revenue

management

Loyalty members driving increasing share of occupancy as hotels begin to reopen
Points promotion to encourage more frequent stays
Our most loyal guests have been returning first
Dynamic pricing for Reward Nights rolled out globally
Over 80% of hotels have reduced their points pricing to deliver ~25% more value for guests outside of peak times
Investment in cloud-based Concerto platform allows rapid deployment of mobile Check-in/out
Owner Engagement Portal providing real-time scorecard metrics, allowing owners to rapidly respond
Use of machine learning to enhance revenue management algorithms ensuring pricing and owner returns are maximised during periods of volatile demand

November 2020

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Measures to reduce costs, preserve cash and maintain liquidity

Cost actions and cash preservation

On track to achieve ~$150m of fee business cost savings in 2020, driven by salaries and wages reductions and challenges to discretionary spend
Targeting for ~50% of cost savings to be sustainable beyond 2020, alongside continued investment in growth initiatives
Scaling down marketing spend across the System Fund, reflecting lower levels of assessment income
Taken cost containment action across our owned, leased and managed lease hotels, with ~$130m overall reduction to the cost base in H1
Targeting a FY2020 reduction in gross capex of ~$100m over FY2019

Liquidity profile

~$2.9bn of available liquidity at end September on PF basis following bonds subsequently issued and repaid
Secured covenant waivers over $1.35bn syndicated and bilateral RCF until December 2021
Extended maturity of our $1.35bn RCF by 18 months until
September 2023
Issued £600m of commercial paper under UK
Government's CCFF
Have a staggered bond maturity profile, with next bond maturity in November 2022 (£173m)

November 2020

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Conclusions

Decisive action taken to manage through Covid-19 crisis effectively and responsibly to protect our stakeholders
Domestic mainstream demand returning first, with group and international travel taking more time
Near-termoutlook remains uncertain and the time period for market recovery is unknown
Well placed with our industry-leading mainstream presence, and predominantly domestically-focused business
Leveraging the benefit of our scale and strength of brands for owners and guests
We have continued to sign and open new hotels, underscoring the confidence owners have in our system and brands
The industry continues to have attractive structural growth drivers and IHG's cash-generative, resilient fee-based model, gives us confidence to emerge strongly when markets recover

November 2020

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Optimise our preferred portfolio of brands for owners & guests

Our brand portfolio

- Breadth and depth of brand portfolio will drive future growth

Mainstream		Upscale		Luxury

Brands

Established

New Brands



Q3 hotel openings/signings	62/57	14/17	6/8
% of Q3 signings that are	25%	28%	11%
conversions

November 2020

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Optimising our brand portfolio

we have taken a strategic approach to identify opportunities
Categories

Mainstream1

Upscale

Luxury

IHG's New

Offering

•

New build only

•

New build led

•

Existing hotel owners

•

New build and

•

New build and

•

Select service model

•

Focused service model

conversions

Owner

•

Access to IHG systems

•

Attractive returns enabled

•

Attractive returns enabled

•

High-end specification

•

Premium asset locations

Opportunity

and revenue delivery

Criteria

by an efficient operating

•

Sizeable returns per

•

Sizeable returns per

•

Ideal for conversions

model

asset

•

The basics done

•

Stylish experiences and

•

Top tier luxury, leisure

exceptionally well at a

•

Hotels connected by their

focused offering

functional benefits at

•

Top tier luxury offering

Guest

price point ~$10-15 less

individual characters,

•

World renowned, resort

mainstream price

catering to our most

Opportunity

than Holiday Inn Express

making memorable travel

locations

•

Options and flexibility for

sophisticated guests

•

Streamlined and efficient

dependable

•

Reputation for wellness

longer stay guests

design

and sustainability

Industry leading revenue

IHG's

Industry leading midscale

Track record of delivery with

management & reservation

Operator of largest global

Competitive Offer

brand expertise

longer stay brands

tools, strong B2B offer and

Luxury brand2

loyalty programme

1. Mainstream classified as Midscale and Upper-Midscale;2. As per STR data

November 2020

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Mainstream

Continued momentum for avid and Atwell Suites
- 14 hotels open; strong guest satisfaction
- 7 hotels opened in H1
- First avid hotel opened in Mexico
- >200 signings (20k rooms) since launch, including 15 hotels in H1
- ~90 hotels under construction or with plans approved for construction
- Continued franchise applications from current and potential IHG owners
- Applications approved in diverse markets such as Miami (Florida), Denver (Colorado) and Charlotte (North Carolina)
- 19 franchise agreements executed or approved since launch
- First hotels are expected to break ground in 2020 and open in 2021

November 2020

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Upscale

- Global expansion of voco to Americas and Greater China

voco Paris Montparnasse, France (due to open Q3 2020)	voco Hangzhou Minghao Bingjiang, Greater China (due to open Q3 2020)

• Signed 40 hotels since launch in June 2018

• Attractive option for the conversion of high-quality individual and locally-branded hotels; numerous new-build opportunities

• Simplified hotel conversion process

• Following success of 36 open and pipeline hotels in EMEAA, expansion of brand to Americas and Greater China

• First signings in Greater China in June

• Strong owner interest in the Americas with key signings in landmark locations such as New York and Florida

voco Melbourne Central, Australia (due to open Q1 2021)

Continued signings across our luxury brands

InterContinental Grand Pacific Hotel, Fiji (due to open in 2022)	Kimpton Shanghai New Bund, Greater China (due to open in 2023)

Regent Shanghai Pudong, Greater China (signed and opened in H1)	Six Senses Antognolla, Italy (due to open in 2023)

Strengthen Loyalty Programme & Enhance Revenue Delivery

Enhance revenue delivery

- Investment in technology and global sales driving low cost revenue for our owners

Enhancements to GRS

Piloting attribute pricing functionality for Guest Reservation System
Trials commencing through H1 2020

Global sales organisation

Centralised corporate negotiations
Driving higher quality, lower cost revenue to our hotels

IHG Connect

Implemented or being installed in >4,500 hotels
Driving Guest Love uplifts of >14%pts

Revenue Management for Hire

Adopted in >3,500 hotels
Driving RGI uplift

OTAs

Renegotiated more favourable terms on behalf of our owners

IHG's revenue

delivery

enterprise

IHG Studio

New digital in-room entertainment solution
Implemented or being installed in >100 hotels

IHG Mobile

App downloads up 11%, with $1.5bn app revenue, up 18% YoY
JD Power Best App award in 2019

Digital check out

Accounted for ~$5.6bn of revenue, up 7% in 2019

November 2020

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IHG Concerto™

- initial phase of rollout now complete

IHG Concerto is our proprietary cloud based, hotel technology platform
Initial functionality is now live across all our 5,900+ hotels
Includes our new Guest Reservations System, developed in partnership with Amadeus
Comprises industry-leading, plug and play architecture
Gives IHG the flexibility to adapt to market demands

Today

Employee	Efficiencies	Guest Love
Satisfaction

Competitive

advantage

Scalability Performance Industry

Leadership

Future

Reservations,

Yielding &

Dashboard &

Arrival, Departure,

Service Delivery

Rate & Inventory

Price

Guest Folio

Owner Portal

and more

Insights

& Optimisation

Management

Optimisation

Management

November 2020

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Guest Reservation System

- Piloting enhanced functionality, including attribute pricing

The next phase for our GRS will involve developing and piloting attribute pricing
At present, guests are typically offered a choice of room type when making a booking
Attribute pricing will instead allow guests to choose rooms based on specific attribute type
This will give guests a much greater opportunity to customise their stay
It will also give owners the ability to unlock value through optimising pricing for desirable attributes
Functionality will only be available to guests who book direct through IHG channels

From: Hidden value

Room rate: $150

King

Illustrative only

To:

Highlighted value

Room rate: $150+

King

High floor

+$$

Ocean View

+$$$

Quiet Zone

Illustrative only

Executive

$$$

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Appendices

Financial performance

Results from reportable segments1		Reported		Underlying2
$ million	H1 2020	H1 2019	% Change	H1 2020

Revenue3	$488m	$1,012m	(52)%	(51)%

Operating profit	$74m	$410m	(82)%	(83)%

Revenue from fee business	$375m	$730m	(49)%	(48)%

Operating profit from fee business	$97m	$394m	(75)%	(75)%

Fee margin4	26.1%	54.1%	(28.0)%pts
Adjusted Interest5	$62m	$66m	(6)%

Reported tax rate	(127)%	21%	(148)%pts

Adjusted EPS6	14.3¢	148.6¢	(90)%

Interim Dividend	-	39.9¢	(100)%

1 Reportable segments excludes System Fund results, hotel cost reimbursements and exceptional items. 2 Reportable segment results excluding significant liquidated damages, current year disposals and stated at constant H1 2020 exchange rates (CER). 3

Comprises the Group's fee business and owned, leased and managed lease hotels. 4 Excludes owned, leased and managed lease hotels, significant liquidated damages and the results of the Group's captive insurance company. 5 Adjusted interest adds back $4m of interest charges in relation to the System Fund. 6 Calculated using results from Reportable Segments and Adjusted Interest, and excluding changes in fair value to contingent consideration.

November 2020

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Fee-based business model shows relative resilience in spite of RevPAR downturn

H1 2020 fee revenue: $375m, down 49%1 and 48% underlying2

RevPAR

Rooms

Royalty Rate

H1 2020 Group comparable RevPAR

	growth
-12.1%
	-30.6%pts
		-51.7%
ADR	Occupancy	RevPAR

H1 2020 system growth (%YoY)

5.5%	• 12k rooms opened in H1

	• 12k3 rooms removed in H1
	3.2%
Gross	Net

-53.0% Total RevPARgrowth4

+4.5% Growth in availablerooms4

Growth stated at AER. ² Underlying fee revenue excludes owned, leased and managed lease hotels, significant liquidated damages, current year disposals and stated at constant H1 2020 exchange rates (CER). 3 Removals include 2.1k rooms relating to a previously flagged hotel portfolio in Germany. 4 Growth stated for underlying fee business.

November 2020

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Growth rate analysis

	RevPAR growth %	Net rooms growth %	Underlying Fee
					Comments
H1 2020	Comparable	Total2	YoY	Available2	Revenue1 Growth %


	Hotels that have	All hotels		Aggregate
	that were open		number of
	traded in all
	in H1 2020 and	30 June 2020	rooms available
	months being
	H1 2019 (incl	vs 2019	for sale in
	compared (i.e.
	hotels that are		H1 2020 vs
	steady state)
	ramping up)		H1 2019


Americas	(47.6)%	(47.6)%	1.7%	2.7%	(45.7)%

EMEAA	(58.9)%	(59.0)%	2.9%	3.8%	(62.9)%

						• Total RevPAR impacted by number of properties in ramp up
Greater	(61.7)%	(65.1)%	9.9%	13.5%	(71.9)%	and openings in less developed cities
China	• Fee revenue growth impacted by lower levels of incentive

						management fee income

Total	(51.7)%	(52.6)%	3.2%	4.5%	(47.9)%

Underlying fee revenue and excludes owned, leased and managed lease hotels, significant liquidated damages, current year disposals, System Fund results and hotel cost reimbursements at constant H1 2020 exchange rates (CER).
Underlying fee business Total RevPAR and Available rooms.

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Americas

Q2 US RevPAR outperformance in the weighted segments in which we compete

H1 Comparable RevPAR down 47.6%; US down 46.8%
Q2 US RevPAR down 69.3%
- Franchised estate down 66% and Managed estate down 86%
- Upper Midscale and Extended Stay proving most resilient segments
July RevPAR expected to be down ~54%; occupancy in comparable open hotels ~45%
97% of the estate open as of the end of the month
YoY net rooms growth 1.7% (gross: up 3.9%)
- Development continuing with >30 ground breaks in Q2

H1 2020 Growth in fee revenue drivers1

	1.7%
-47.6%		-45.9%
Comp. RevPAR	Net rooms	Fee revenue

Underlying fee revenue1 down 46%, underlying fee operating profit2 down 49%:
- Impact from higher levels of temporary hotel closures in US managed estate partially offset by fee business cost savings, a $4m payroll tax credit benefit and a $4m litigation settlement benefit
Owned, leased and managed lease profit down $31m to a loss of $10m, impacted by the temporary closure of a number of hotels; results include a $4m benefit from business interruption insurance
Pipeline: 116k rooms; 9k signed
Signings include 15 avid and 7 Atwell Suites hotels

H1 2020 Net rooms growth ('000s)

525
			523
	(6)	5

FY 2019	Exits	Openings	H1 2020

1 Underlying fee revenue excludes owned, leased and managed lease hotels, significant liquidated damages, current year disposals and stated at constant H1 2020 exchange rates (CER). 2 Underlying fee operating profit excludes owned, leased and managed lease hotels, significant liquidated damages and current year disposals at constant H1 2020 exchange rates (CER). 3 Growth stated at CER.

November 2020

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Europe, Middle East, Asia and Africa

Challenging trading conditions with mandated closures and travel restrictions

Comparable RevPAR down 58.9% (Q2 down 87.6%)
UK down 59%; London down 63%; Provinces down 57%
H1 trough in April, with small but sequential improvements through May and June
July RevPAR expected to be down ~74%; occupancy in comparable open hotels >30%
84% of the estate open as of the end of the month
YoY net rooms growth 2.9% (gross: up 5.6%)
Removals include 2.1k rooms relating to a previously flagged hotel portfolio in Germany

H1 2020 Growth in fee revenue drivers1

	2.9%
-58.9%	-63.9%

Comp. RevPAR

Net rooms

Fee revenue1

Underlying fee revenue1 down 63% ($95m) and underlying fee operating profit2 down $91m to a loss of $4m, impacted by lower incentive management fee income
Owned, leased and managed lease loss3 increased $8m; hotel closures partially offset by: significant cost reduction measures; rent reductions; $3m of disposal gains
Rental payments relating to UK and German leased hotels now fully variable through the income statement; no lease liability or right-of-use asset on the balance sheet
Pipeline: 80k rooms; 4k signed
Signings include 4 Hotel Indigo, 4 InterContinental and 2 Six Senses properties

H1 2020 Net rooms growth ('000s)

223
	(5)		221

		3
FY 2019	Exits	Openings	H1 2020

November 2020

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Greater China

Occupancy levels recovered to >50% through July

Comparable RevPAR down 61.7% (Q2 down 59.2%)
- Mainland China down 59% (Q2 down 56%)
- Tier 1 RevPAR down 66% in Q2, with Tier 2-4 RevPAR down 50%
- ~80% of our demand in Greater China is domestic driven
- Hong Kong SAR down 86% (Q2 down 90%)

H1 2020 Growth in fee revenue drivers1

9.9%

-61.7%

-72.7%

•	July RevPAR expected to be down ~36%; occupancy in comparable open hotels >50%	Comp. RevPAR	Net rooms	Fee revenue1
•	>99% of the estate open as of the end of the month

YoY net rooms growth 9.9% (gross: up 12.2%)
Underlying fee revenue1 down 72% ($46m) and operating profit2 down $40m to a loss of $5m driven by lower incentive management fee income
Pipeline: 92k rooms, with construction resumed on >95% of 2020 projects
• 13k rooms signed, including first voco properties in the region

H1 2020 Net rooms growth ('000s)

			139
136		4

	(1)
FY 2019	Exits	Openings	H1 2020

November 2020

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Fee margin1 by region

Americas

Europe, Middle East, Asia and Africa

H1 2020

72.1%

H1 2020 -7.1%

H1 20192

77.3%

H1 20192

57.8%

Greater China

Total IHG

H1 2020 -27.8%

H1 2020

26.1%

H1 20192

54.5%

H1 20192

54.1%

1 Fee margin excludes owned, leased and managed lease hotels, significant liquidated damages and the results of the Group's captive insurance company; is stated at AER. 2 H1 2019 fee margin updated to exclude the results of the Group's captive insurance company.

November 2020

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Exceptional Items

Category	Detail	Rationale	Charge ($m)

	Property, plant and equipment	• Carrying book value of owned, leased and managed leased assets in the Americas and	(85)
	EMEAA

	Intangible assets	• Acquired open and pipeline management agreements	(47)
	Trade deposits and loans	• Discounted value of deposits and loans held by owners in connection to managed hotels	(41)
Impairment	Contract assets	• Remaining undiscounted amount of trade deposits and loans	(37)
	Investment in associates	• Stakes in associates held by IHG; shown net of a $13m fair value gain on a put option over	(21)
	part of IHG's investment in the New York Barclay associate

	Trade and other receivables	• Impaired as a result of estimated expected credit losses arising from Covid-19	(22)
	Right-of-use assets	• Relates to the fixed element of an individual hotel lease agreement	(5)
	Derecognition of right of-use-assets	• Resulting from leases now being recognised as fully variable	(49)
	Derecognition of lease liabilities	71

Cost of sales &	Onerous expenditure provision	• In respect of future contractual expenditure	(10)

admin expenses	Reorganisation, acquisition and	• Relates to UK leased portfolio and Six Senses acquisition	(7)
	integration costs

	Provision for guarantees on 3rd	• Commercially similar in nature to key money or trade deposits	(2)
	party debt


Total operating exceptional items		(255)
Non-operating expenses: Fair value gains on contingent purchase consideration	21

Total exceptional items before tax		(234)

November 2020

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Exceptional Items: UK leased portfolio

Our total exceptional items before tax of $(234)m includes the below items in respect of the UK leased portfolio:

Leases now considered to be fully variable and so the associated lease liabilities and right of use assets have been derecognised from the balance sheet
FY 2019 reported results benefited from charging $17m of rental guarantee lease payments against the IFRS 16 liability held on the balance sheet
All remaining property, plant and equipment has been fully impaired to nil
Provision recognised against the estimated value of future contractual expenditure
Fair value adjustment to contingent purchase consideration resulting in a reduction to the value of the liability to nil

H1 2020 Exceptional Items	$m

Derecognition of right-of-use assets	(22)

Derecognition of lease liabilities	40

Impairment of property, plant and equipment	(50)

Provision for onerous contractual expenditure	(10)
Reorganisation costs	(4)

Fair value gains on contingent purchase	21
consideration


Total	(25)

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

2020 notable items

Significant items		H1 2020	FY 2020


Payroll tax credits	AMER	$4m	$11m
Litigation settlement in relation to a single hotel	AMER	$4m	$4m
Individually significant Liquidated Damages1	EMEAA	$1m	$1m
Gain on disposal of Holiday Inn Melbourne Airport	EMEAA	$3m	$3m

1 In February 2018, IHG received liquidated damages totalling $15m relating to the termination of a portfolio of 13 open hotels (2k rooms) and 6 pipeline hotels (1k rooms) in Germany, which exited IHG's system in Q1 2020. Under IFRS15, the $15m was recognised over the period from receipt until exit (H1 2018: $2.8m, FY 2018: $6.7m, FY 2019: $7.7m, H1 2020: $1.0m).

November 2020

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Revenue & Operating Profit 2018-2019

		Total Revenue			*
			Total Operating Profit
		Full Year		Full Year
		2019			2019		2018**
		2018
Fee Business		853	853		663	638
Owned, Leased & Managed Leases		187	198		37	35
Total Americas		1,040	1,051		700	673
Fee Business		337	320		202	202
Owned, Leased & Managed Leases		386	249		15	4
Total EMEAA		723	569		217	206
Fee Business		135	143		73	70
Total Greater China		135	143		73	70
Central Results		185	170		(125)	(117)
Total Reportable Segments			1,933			832
	2,083		865
Reimbursement of Costs		1,171	1,171		-	-
System Fund		1,373	1,233		(49)	(146)
Total IHG		4,627	4,337		816	686

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Free Cash Flow Generation

$m			12 months to 31 Dec 2019	Restated for IFRS 16 Leases
		12 months to 31 Dec 2018


Operating profit from reportable segments1		865	832
System Fund result2		(21)	(99)
Depreciation & amortisation3		170	164
Working capital & other movements		(82)	4
Loyalty programme deferred revenue net movement		52	124
Equity-settledshare-based cost		42	38
Retirement benefit contributions, net of cost		(3)	(12)
Purchase of shares by employee share trusts		(5)	(3)
Cash flows relating to exceptional items4		(55)	(137)
Net interest paid & similar charges		(107)	(85)
Tax paid5		(141)	(66)
Principal element of lease payments		(59)	(35)
Capital expenditure: key money (net of repayments)		(61)	(54)
Capital expenditure: maintenance		(86)	(60)

Free cash flow		509	611

1.	Before System Fund result and exceptional items.
2.	System Fund result stated before exceptional cost of $28m (12 months to 31 December 2018	$47m) in relation to efficiency programme.
3.	Includes System Fund depreciation & amortisation of $54m (12 months to 31 December 2018	$49m).
4.	Includes $46m (12 months to 31 December 2018 $106m) relating to the efficiency programme ($28m in relation to the System Fund).
5.	Excludes tax paid on disposals.

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

Uses of Free Cash Flow

$m	12 months to 31 Dec 2019	Restated for IFRS 16 Leases
12 months to 31 Dec 2018


Free cash flow	509	611

Capital expenditure: Recyclable investments	(19)	(38)
Capital expenditure: System Fund investment	(98)	(99)
Acquisitions	(292)	(34)
Payment of contingent purchase consideration	(8)	(4)
Distributions from associates and joint ventures	-	32
Disposal receipts: Other	4	8
Tax paid - disposals	-	(2)
Ordinary dividend	(211)	(199)
Special dividend	(510)	-
Dividends paid to non-controlling interests	(1)	(1)
Currency swap proceeds	-	3
Transaction costs relating to shareholder returns	(1)	-

Net cash inflow/(outflow)	(627)	277

Exchange, lease repayments & other non-cash items	(73)	11

Opening net debt	(1,965)	(2,253)

Closing net debt	(2,665)	(1,965)

November 2020

Proprietary and confidential - further reproduction or distribution is prohibited

2020 current trading

Comparable RevPAR, ADR & occupancy growth

November 2020

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Comparable RevPAR - 3 months to 30 September 2020 Fee business and owned, leased & managed leases

November 2020

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Comparable RevPAR - 3 months to 30 September 2020 total

November 2020

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Hotel & room count as at 30 September 2020

*Does not include one open hotel that will be re-branded to voco.	© 2020 All Rights Reserved	Proprietary and confidential - further reproduction or distribution is prohibited
November 2020

Pipeline as at 30 September 2020

Does not include one pipeline hotel that will be re-branded to voco.* Includes one voco Pipeline hotel	Proprietary and confidential - further reproduction or distribution is prohibited
November 2020	© 2020 All Rights Reserved

Investor Relations team contact details:

Stuart Ford	Rakesh Patel	Kavita Tatla	Karolina Nadolinska
stuart.ford@ihg.com	rakesh.patel2@ihg.com	kavita.tatla@ihg.com	karolina.nadolinska@ihg.com
+44 (0)1895 512176	+44 (0)1895 512176	+44 (0)1895 512176	+44 (0)1895 512176

November 2020

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IHG - Intercontinental Hotels Group plc published this content on 11 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 November 2020 09:54:09 UTC

Market Closed - London S.E. Other stock markets 11:35:27 2024-04-17 am EDT			5-day change	1st Jan Change
7,794 ^GBX	+0.36%		-1.34%	+9.93%

Apr. 15	Caliber Hospitality Trust Inc. acquired Holiday Inn Newport News from InterContinental Hotels Group PLC.	CI
Apr. 09	Google Deploys Generative AI Technology in Several Collaborations	MT

Caliber Hospitality Trust Inc. acquired Holiday Inn Newport News from InterContinental Hotels Group PLC.	Apr. 14	CI
Google Deploys Generative AI Technology in Several Collaborations	Apr. 09	MT
IHG Hotels & Resorts Builds a New Travel Planner Powered by Google Cloud AI	Apr. 09	CI
London stocks edge higher with economic data in focus	Apr. 04	RE
London stocks edge higher with economic data in focus	Apr. 04	RE
Sector Update: Consumer Stocks Edge Higher in Late Afternoon Trading	Mar. 13	MT
Intercontinental Hotels Group Shares Fall After Downgrade From Jefferies	Mar. 13	MT
Accor: share price rises, analyst upgrades to buy	Mar. 13	CF
INTERCONTINENTAL HOTELS : Jefferies downgrades its recommendation	Mar. 13	CF
Not a care in the world	Mar. 13
Jefferies Downgrades InterContinental Hotels Group to Hold from Buy, Boosts PT	Mar. 13	MT
Bernstein Downgrades InterContinental Hotels Group to Underperform from Market Perform	Mar. 13	MT
Jefferies Downgrades Intercontinental Hotels Group to Hold From Buy	Mar. 13	MT
ANALYST RECOMMENDATIONS : Broadcom, Tesla, Walmart, Entain, Virgin Money UK	Mar. 13
JPMorgan raises Flutter and cuts Entain	Mar. 13	AN
JPMorgan Raises InterContinental Hotels PT, Affirms at Underweight	Feb. 28	MT
Berenberg Boosts InterContinental Hotels PT, Keeps Hold Rating	Feb. 28	MT
Berenberg, JPMorgan raise price target for IHG	Feb. 28	AN
Reckitt revenue misses; Halfords profit warning	Feb. 28	AN
Barclays Boosts InterContinental Hotels Group PT, Affirms Equalweight Rating	Feb. 23	MT
Barclays raises Breedon but cuts Domino's Pizza	Feb. 23	AN
Coca-Cola Europacific completes Philippines buy	Feb. 23	AN
UBS Boosts Intercontinental Hotels' PT, Keeps Neutral Opinion	Feb. 22	MT
Berenberg raises Moneysupermarket.com to 'buy'	Feb. 22	AN
Accor: confident for 2024 after 'record' 2023 results	Feb. 22	CF

	1st Jan change	Capi.
INTERCONTINENTAL HOTELS GROUP PLC	+9.93%	15.7B
MARRIOTT INTERNATIONAL, INC.	+5.74%	70.8B
HILTON WORLDWIDE HOLDINGS INC.	+10.10%	50.9B
HYATT HOTELS CORPORATION	+14.13%	15.15B
ACCOR	+13.41%	10.32B
THE INDIAN HOTELS COMPANY LIMITED	+33.15%	9.9B
MINOR INTERNATIONAL	+7.63%	5.1B
HILTON GRAND VACATIONS INC.	+7.17%	4.53B
ASSET WORLD CORP	+23.03%	3.89B
EIH LIMITED	+87.25%	3.49B

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