IHG Reports Q3 2016 Results: Slow but Steady Growth with a 1.3% Increase in RevPar
October 21, 2016 8:03am
Richard Solomons, Chief Executive of InterContinental Hotels Group PLC, said:
“We delivered a solid performance in the third quarter, leveraging our global scale to drive 3.8% net system growth and 1.3% RevPAR growth.
We remain focused on executing our commercial strategy to drive competitive advantage. This includes broadening the footprint of our global portfolio of brands, across which we drove our highest signings for eight years, including our best ever third quarter performance for Greater China.
Enhancements to IHG Rewards Club, including the roll-out of our preferential member pricing initiative, ‘Your Rate’, continue to drive excellent results. This, together with our initiatives to utilise digital innovation to enhance all stages of the guest journey, means we will continue to generate more customised and informed interactions with our guests and deliver improved returns for owners.
Looking ahead, while industry RevPAR growth has slowed, the fundamentals for the sector, and particularly for IHG, remain compelling. This, combined with our winning strategy and the strength of our cash generative business model, will enable us to drive sustainable growth into the future. Despite the uncertain environment in some markets, we remain confident in the outlook for the remainder of the year.”
Third Quarter RevPAR performance
RevPAR was up 1.9% in Q3, and 2.2% Q3 YTD. In the US RevPAR was up 1.4% in Q3, and 1.9% in the first 9 months, with occupancy levels of more than 75% driven by continued record levels of industry demand. Performance continued to be impacted by our concentration in oil producing markets, where RevPAR was down 7.3%, compared to 2.5% growth in the rest of the estate. Elsewhere in the region, Mexico delivered double digit RevPAR growth, we drove a solid performance in Latin America and the Caribbean, and Canada was up 6.7% due to strong trading in urban markets.
RevPAR was flat in Q3, and up 1.2% Q3 YTD. Germany delivered mid-single digit RevPAR growth in Q3, and Russia/CIS drove 20% growth benefiting from increased domestic travel. 2.5% RevPAR growth in the UK reflects solid trading in the provinces partially offset by flat performance in London, where industry–wide supply increases continue to have an impact. Ongoing challenging trading conditions in France, Turkey and Belgium resulted in significant RevPAR declines in those countries.
Asia, Middle East & Africa
RevPAR was down 0.1% in Q3, and down 0.2% Q3 YTD. Performance in the region outside the Middle East was strong, with 3.9% RevPAR growth in Q3 overall. India delivered RevPAR growth of 21%, Japan was flat, and Australasia and Southeast Asia were up low to mid-single digits, the latter led by Vietnam and Thailand. In the Middle East, RevPAR was down 7.7% due to the ongoing impact of low oil prices.
RevPAR was up 0.9% in Q3, and 1.8% Q3 YTD. Q3 growth of 2.2% in mainland China continued to be led by tier one cities, where RevPAR was up nearly 6%. A low single digit RevPAR decline in Hong Kong reflects some improvement in trading, but Macau continues to be affected by industry-wide challenging conditions with RevPAR down 14%.
Strengthening our preferred brands
Building and leveraging scale
Driving revenue delivery through technology and loyalty
Financial position and capital allocation
The financial position of the group remains robust, with an on-going commitment to an efficient balance sheet and an investment grade credit rating.
In August the group issued a £350m, 10-year bond at a 2.125% coupon rate, the lowest funding rate IHG has achieved in the Sterling bond market.
The US Dollar continued to strengthen through Q3 which reduced group RevPAR to flat (0.0%) in the quarter when reported at actual exchange rates. A breakdown of constant currency vs. actual currency RevPAR by region is set out in Appendix 2.
Currency markets continue to be volatile and we expect foreign exchange to have an impact on 2016 reported profit. If current spot exchange rates3 had existed throughout H2 2015, reported operating profit for that period would have been $9m higher.
Note that whilst the UK comprises around 5% of our group revenues, approximately 50% of our gross central overhead and 40% of Europe regional overhead are in sterling. At 30 June 2016 exchange rates, approximately 70% of our debt was denominated in sterling.
To view full financial release and corresponding tables please click the PDF icon or visit:
q3 2016 results
IHG® (InterContinental Hotels Group) [LON:IHG, NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of hotel brands, including InterContinental® Hotels & Resorts, Kimpton® Hotels & Restaurants, HUALUXE® Hotels and Resorts, Crowne Plaza® Hotels & Resorts, Hotel Indigo®, EVEN® Hotels, Holiday Inn® Hotels & Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites®.
IHG franchises, leases, manages or owns more than 5,000 hotels and nearly 750,000 guest rooms in almost 100 countries, with more than 1,400 hotels in its development pipeline. IHG also manages IHG® Rewards Club, the world's first and largest hotel loyalty programme, with more than 96 million members worldwide.
InterContinental Hotels Group PLC is the Group's holding company and is incorporated in Great Britain and registered in England and Wales. More than 350,000 people work across IHG's hotels and corporate offices globally.
Visit www.ihg.com for hotel information and reservations
Contact: Investor Relations: Heather Wood; Adam Smith; Neeral Morzaria
+44 (0)1895 512176 or
+44 (0)7808 098724
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