IHG(IHG) - 2023 Q3 - Quarterly Report

Financial Performance - Revenue for the first half of 2023 reached $2,226 million, a 24% increase compared to$ 1,794 million in 2022[5] - Adjusted EPS rose by 50% to 182.7 cents, up from 121.7 cents in the previous year[5] - Total revenue increased by $432 million (24.1%) to$ 2,226 million, driven by improved trading conditions[61] - Revenue from reportable segments rose by $191 million (22.7%) to$ 1,031 million, with underlying revenue increasing by $220 million[61] - Operating profit improved by$ 223 million (61.8%) to $584 million, including a$ 37 million net change in operating exceptional items[62] - Adjusted earnings rose by $92 million (41.1%) to$ 316 million, with adjusted earnings per share increasing by 50% to 182.7¢[58] - Adjusted EBITDA for the six months ended June 30, 2023, was $513 million, an increase of$ 100 million compared to $413 million in 2022[82] - Underlying revenue for the reportable segments increased by 27.1% to$ 1,031 million in 2023, compared to $811 million in 2022[194] - Underlying fee revenue grew by 23.7% to$ 799 million in 2023, up from $646 million in 2022[197] - Underlying operating profit rose by 29.8% to$ 479 million in 2023, compared to $369 million in 2022[194] Room Growth and Development - The company opened 21,000 rooms across 108 hotels in H1 2023, a 40% increase from H1 2022, bringing the total global estate to 925,000 rooms[8] - A total of 34,200 rooms were signed across 239 hotels in H1 2023, an 11% increase from the previous year, with a global pipeline of 286,000 rooms[8] - The global system consists of 925,320 rooms across 6,227 hotels, with a gross growth of 6.3% year-over-year, and 21,000 rooms opened in H1 2023, which is a 40% increase compared to the prior year[33] - In H1 2023, IHG signed 34,167 rooms (239 hotels), representing an 11% increase year-over-year, with a total pipeline of 286,228 rooms (1,931 hotels) which is 31% of the current system size[33] - The total number of hotels increased by 63 to 6,227, with total rooms rising by 13,693 to 925,320[101] - The global pipeline includes 1,931 hotels, representing an increase of 72 hotels compared to the previous year, with a total of 286,228 rooms[103] Shareholder Returns and Dividends - The interim dividend per share was raised by 10% to 48.3 cents, with total dividend payments in 2023 expected to return close to$ 250 million to shareholders[5][23] - The current $750 million share buyback program is 47% complete, with$ 349.5 million spent repurchasing shares[23] - The Group declared an interim dividend of 48.3¢, representing a 10% increase from the 43.9¢ interim dividend paid in 2022[78] Market Trends and Travel Demand - Leisure travel revenue in the US was up 24% compared to 2019, while business travel was up 1%, and group travel was down 14%[32] - IHG's Q2 group RevPAR increased by 9.9% compared to 2019, with occupancy just 1.5 percentage points behind and ADR up 12%[32] - The expected recovery in business demand is ongoing, with STR forecasting RevPAR to be 13% ahead of 2019 levels in 2023 and 24% ahead by 2025[32] - EMEAA region RevPAR increased by 41.6% (CER) for the first half of 2023 compared to 2022, but decreased by 4.4% when considering actual exchange rates[98] - G. China RevPAR surged by 93.7% (CER) for the first half of 2023 compared to 2022, but showed a decline of 3.8% compared to 2019[98] Digital and Loyalty Programs - The number of IHG mobile app downloads, users, bookings, and revenue all increased by 40-50% compared to 2022 levels[52] - IHG's digital direct channels now contribute approximately 25% of global hotel revenue, with mobile channels accounting for over 50% of all digital bookings[52] - IHG's loyalty program, IHG One Rewards, has over 115 million members, with enrolments up 60% year-over-year and Reward Nights up over 40% compared to 2019 levels[46] Financial Health and Debt Management - Net debt increased by 32% to $2,270 million compared to$ 1,718 million in 2022, influenced by share buybacks and dividends[5] - The net debt at the end of June 2023 was $2,270 million, an increase of$ 419 million from December 2022[88] - The leverage ratio at June 30, 2023, was 2.30, with an interest cover ratio of 11.32, indicating strong financial health[91] - The Group's total liquidity as of June 30, 2023, was $1,970 million, down from$ 2,224 million at the end of 2022[89] Strategic Initiatives - The company is launching a new midscale conversion brand, targeting a market worth $14 billion in the US, with over 100 hotels expressing interest[10] - The new midscale conversion brand aims to reach over 500 hotels in the next 10 years and 1,000 hotels in the next 20 years, targeting a 25% lower cost per key for conversions compared to Holiday Inn Express[38][39] - The integration of Iberostar Beachfront Resorts as an Exclusive Partner brand has added 10 properties to IHG's system in H1 2023, with a total of 43 properties now integrated[45]