IHG(IHG) - 2023 Q4 - Annual Report

Financial Performance - Global RevPAR increased by 16.1%, with total gross revenue reaching $31.6 billion, up from $25.8 billion in 2022[13] - Operating profit from reportable segments rose to $1,019 million, a 23% increase compared to $828 million in 2022[13] - Adjusted EPS grew by 33% to 375.7¢, up from 282.3¢ in 2022[13] - RevPAR for 2023 reached $92.9, a significant increase from $50.7 in 2022 and $33.7 in 2021[80] - The fee revenue for 2023 was $2,164 million from franchised hotels and $2,460 million from the System Fund and reimbursable revenues[96] Shareholder Returns - Total dividend proposed for 2023 is 152.3¢, compared to 138.4¢ in 2022, with a completed share buyback of $750 million[23][25] - The company returned $1 billion to shareholders through dividends and a $750 million share buyback program, with an additional $800 million share buyback approved for 2024[42][53] - The Board proposed a final dividend of 104.0¢ for 2023, representing a 10% increase from 2022, with a total proposed dividend of 152.3¢ for the year[120] - The Board expects to routinely return additional capital to shareholders through share buybacks, leveraging the asset-light model[113] Growth and Expansion - Signings increased by 26% year-over-year, with a total of 79,220 rooms signed[23] - IHG opened 275 hotels in 2023, an increase from 269 in 2022, with 38% of total openings and signings attributed to the Holiday Inn® Brand Family[48] - IHG signed 556 new hotels in 2023, with 22% of the pipeline now represented by Luxury & Lifestyle brands, indicating a strategic shift towards higher-fee segments[49][58] - The total development pipeline consists of 296,954 rooms, with a system size of 946,203 rooms[85] - The Luxury & Lifestyle segment currently represents 14% of the system size but comprises 22% of the future growth pipeline, indicating strategic expansion in higher-fee categories[90] Customer Engagement and Loyalty - Loyalty membership grew to over 130 million, with a 20% increase in Reward Nights compared to 2022[23] - The IHG One Rewards program grew to over 130 million members, with members booking more than 55% of room nights globally in 2023[60] - Loyalty enrolments increased by 50% year-on-year, marking a record rise[200] - Loyalty members now responsible for over 55% of room nights globally[200] Technology and Innovation - The company launched a new midscale conversion brand, Garner, and enhanced its Guest Reservation System to drive revenue[23] - IHG's mobile app revenue increased by 38% in 2023, with downloads growing by 60% year-on-year, enhancing the guest experience[60] - The introduction of AI technologies increased end-to-end AI-led customer self-service by 53% in 2023, enhancing guest experience and operational efficiency[180] - The company continues to invest in technology, including a next-generation mobile app and AI-driven personalized guest experiences[138] Sustainability and Community Support - IHG's commitment to sustainability and community support was highlighted by its recognition as a Kincentric Global Best Employer and ongoing environmental initiatives[61] - 75% of travelers are looking to choose sustainable travel options, with 92% of business travel professionals prioritizing sustainability[132] - Sustainability tools and expertise developed to help hotels reduce energy, waste, and water consumption[197] - IHG is progressing towards its Science-Based Target (SBT) to enhance energy efficiency and access to renewable energy across its hotels[140] Operational Efficiency - The company achieved a record operating profit exceeding $1 billion for the first time, driven by strong average daily rates and occupancy rates[52][53] - The company achieved a record level of enterprise contribution at approximately 80%, up from 72% three years earlier, indicating improved operational efficiency[174] - Approximately 80% of enterprise contribution from IHG-managed channels and sources, up from 72% three years ago[200] - The asset-light business model allows for high returns on invested capital and strong cash flow, with fee margins expanding by approximately 130bps annually from 2009 to 2019[103] Market Trends - The company anticipates a 4.0% annual growth rate in global hotel room nights from 2023 to 2033, driven by population growth and rising middle classes in emerging markets[62] - Global hotel revenues have outpaced GDP growth and are now ahead of pre-COVID-19 levels, indicating strong recovery[77] - US disposable personal income grew on average by 1.6% per annum between 2000 and 2023, contributing to the attractiveness of the hotel industry[74] - Global hotel room net new supply increased at a CAGR of 2.4% from 2013 to 2023, with forecasts indicating a similar growth rate for the next five years[69] Guest Experience - The Guest Satisfaction Index maintained a four-year high, demonstrating the effectiveness of service enhancements and guest experience improvements[183] - More than 6,000 hotels now feature attribute upsell, allowing guests to personalize their stays[200] - Investment in technology and systems to enhance guest experience and strengthen owner returns[197] - The company expanded its procurement solutions, covering over 100,000 items, to create more resilient supply chains and reduce costs for hotel owners[187]