IHG(US:IHG)2019-02-20 05:04Financial Data and Key Metrics Changes - Reported revenue increased by 12% to $1.9 billion and operating profit increased by 8% to $816 million [10] - Underlying earnings per share grew by 19%, driven by strong financial performance [11] - Underlying revenue and operating profit from the fee business grew by 7%, resulting in a fee margin increase of 10 basis points year-on-year at constant currency [10][11] Business Line Data and Key Metrics Changes - The company added 56,000 new rooms, the highest level of openings since 2009, while removing 18,000 rooms, resulting in a net system size growth of 4.8% [12] - Underlying profit in the Americas grew by 4%, with fee business profit also up by 4% [16] - In Europe, Middle East, Asia, and Africa, RevPAR increased by 2.7%, with fee revenue growth of 5% [17] - Greater China saw RevPAR growth of 7% and underlying revenue growth of 15% [18] Market Data and Key Metrics Changes - U.S. industry demand remains at record levels, with hotels in the Americas driving record occupancies of nearly 70% [15] - In the UK, RevPAR was up 1%, with nearly 3% growth in London [17] - In Greater China, RevPAR in Tier 1 and Tier 2 cities benefited from strong transient meetings and corporate demand [18] Company Strategy and Development Direction - The company is focused on long-term sustainable growth through strategic initiatives, including enhancing its brand portfolio and entering underserved market segments [5] - The acquisition of Six Senses and the launch of new brands like Avid and VOCO are part of the strategy to strengthen the luxury and upscale segments [5][44] - A new organizational structure has been implemented to improve focus and efficiency [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong performance and outlook, despite macroeconomic and geopolitical uncertainties [53] - The company anticipates continued growth in net rooms and fee revenue, with expectations for a 5% to 6% growth range in the medium term [60][61] Other Important Information - The company announced a 10% increase in total annual ordinary dividend, alongside a $500 million special dividend [4] - The adoption of IFRS 16 is expected to impact EBIT positively while increasing net debt [25][26] Q&A Session Summary Question: What is happening in China regarding signings and removals? - Management noted that the signings fell in Q4 due to timing and that there is no underlying drop in interest for signing brands [59] Question: What is the expected run rate for the Avid brand? - Management indicated that a run rate of 20 to 25 signings per quarter is expected moving forward, which is considered satisfactory [60] Question: Why did underlying margin increase only 80 basis points this year? - Management explained that the margin was impacted by one-off items and ongoing transformation efforts, with expectations for stronger growth in the future [63] Question: How does the acquisition of Six Senses compare to Regent in terms of return? - Management clarified that Six Senses has a significant pipeline and is expected to generate over $50 million in fee income over time, making it a different investment compared to Regent [64]