IHG Reports Strong Results for the First Six Months of 2023

August 8, 2023

$15.2bn total gross revenue +29% vs 2022, +12% vs 2019

 REPORTABLE SEGMENTS1: Reported Underlying1
  2023 20222 % change % change
Revenue1 $1,031m $840m +23% +27%
Revenue from fee business1 $799m $659m +21% +24%
Operating profit1 $479m $377m +27% +30%
Fee margin1 58.8% 55.5% +3.3%pts  
Adjusted EPS1 182.7¢ 121.7¢ +50%  
GROUP RESULTS:        
Total revenue $2,226m $1,794m +24%  
Operating profit $584m $361m +62%  
Basic EPS 265.3¢ 117.4¢ +126%  
Interim dividend per share 48.3¢ 43.9¢ +10%  
Net debt1 $2,270m $1,718m +32%  

KEY METRICS:

  • $15.2bn total gross revenue1 +29% vs 2022, +12% vs 2019
  • +24% global H1 RevPAR1 vs 2022, +8.7% vs 2019
  • +17% global Q2 RevPAR1 vs 2022, +9.9% vs 2019

1 Definitions for non-GAAP measures can be found in the ‘Use of key performance measures and non-GAAP measures’ section, along with reconciliations of these measures to the most directly comparable line items within the Financial Statements.
2 Re-presented for the adoption of IFRS 17 ‘Insurance Contracts’ (see note 1 to the Financial Statements).

  • Strong trading: H1 RevPAR up +24% YOY; further sequential improvement vs 2019 with Q1 +6.8% and Q2 +9.9%
  • Americas H1 RevPAR up +11% YOY, EMEAA +42% and Greater China +94%, reflecting the differing levels of travel restrictions that were still in place in H1 2022
  • Average daily rate up +7% vs 2022, +11% vs 2019; occupancy up +9%pts vs 2022, just (1.3)%pts lower vs 2019
  • Gross system growth +6.3% YOY; net system size growth of +4.8% YOY
  • Opened 21.0k rooms (108 hotels) in H1, +40% more than H1 2022; global estate now at 925k rooms (6,227 hotels)
  • Signed 34.2k rooms (239 hotels) in H1, +11% more than H1 2022; global pipeline now at 286k rooms (1,931 hotels), +2.9% YOY; 17.7k rooms (131 hotels) in Q2, +7% ahead of Q1 and +25% more than Q2 2022
  • Fee margin of 58.8%, up +3.3%pts vs 2022 on trading recovery in EMEAA and Greater China
  • Operating profit from reportable segments of $479m, +27% vs 2022; this included $5m adverse currency impact
  • Reported operating profit of $584m, including $87m of System Fund profit and an $18m exceptional profit
  • Net cash from operating activities of $315m (2022: $175m), with adjusted free cash flow1 of $277m (2022: $142m)
  • Net debt increase of $419m since start of the year includes $372m share buybacks, $166m dividends and a $112m net foreign exchange adverse impact
  • Interim dividend 48.3¢, +10% vs 2022; dividend payments in 2023 will return close to $250m to IHG’s shareholders
  • Trailing 12-month adjusted EBITDA1 of $996m, +23% vs 2022; net debt:adjusted EBITDA ratio of 2.3x
  • Current $750m buyback programme 47% complete; share buybacks together with ordinary dividends are on track to return approximately $1.0bn to shareholders in 2023
  • New midscale conversion brand launching, with strong interest from owners already expressed

Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, said:

“I am honoured to take over as IHG’s group CEO and excited to look ahead with our talented teams and owners all around the world to an important next chapter of growth. Our teams have delivered strong results in the first half, with financial performance, hotel openings and signings all significantly above prior year comparisons. Travel demand is very healthy, with RevPAR improving year-on-year across all our markets and exceeding 2019 pre-pandemic peaks for four consecutive quarters. In the Americas and EMEAA regions, leisure demand has remained buoyant and business and group travel continued to strengthen, while in Greater China, demand has rebounded rapidly.

The investments we’re making in our powerful enterprise platform are delivering results for guests and owners – be it the breadth of attractive brands we now have in place, the excellent impact of our new mobile app, or the strength of our IHG One Rewards programme, which has seen enrolments jump by +60% since launch a year ago. We opened 21 thousand rooms across 108 hotels in the half, keeping us on track for net system size growth expectations, and we signed over 34 thousand rooms across 239 hotels, +11% ahead of last year. More than a quarter of all signings were across our six Luxury & Lifestyle brands, as we accelerate growth in this higher fee income segment.

As we continue to grow our brand portfolio, we’re excited to announce we will soon launch a new brand targeted at midscale conversion opportunities. We’re proud of our industry-leading position in upper midscale with Holiday Inn and Holiday Inn Express. Our aim is that this new conversion brand will become the first choice for guests and owners in the midscale segment, accelerating our growth in a space that is already worth $14bn in the US market alone. Conversions represent a major growth opportunity for us, generating around 40% of first half openings and signings globally, and we see an increasing desire from owners to quickly realise the benefits of IHG’s scale and strong enterprise. We’re delighted that more than 100 hotels have already expressed definitive interest in the new brand.

The combination of RevPAR and system growth drove further expansion of our fee margin, leading to a +27% increase in operating profit from reportable segments. Our +50% growth in adjusted EPS includes the additional earnings accretion from our ongoing return of surplus capital via share buybacks. The combination of these drivers demonstrates how IHG creates value for our shareholders, and as this industry continues to power forward, we are confident in the strengths of our business model, scale and strategy to capture sustainable, profitable growth.”

Download the full announcement of our 2023 interim results here.

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