Post on 14-Apr-2018
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Andrew CosslettChief Executive
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IHG's journey
Faster growth by
making IHG’s brandsthe first-choice for
guests and hotel owners
Goal
By end 2008:Net, organic growth of 50,000 - 60,000 rooms
Target
Build the industry’s
strongest operating systemfocused on the biggestmarkets and segments
where scale really counts
• Brand performance
• Excellent hotel returns
• Market scale/knowledge
• Aligned organisation
Strategy Priorities
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Today’s agenda
Peter GowersChief Marketing Officer
The importance of brands
Jenifer Zeigler InterContinental Brand Director
How we applyconsumer insight Roland Fasel
General Manager InterContinental London Park Lane
How we drivehotel returns
Richard SolomonsFinance Director
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Today’s agenda
Peter GowersChief Marketing Officer
The importance of brands
Jenifer Zeigler InterContinental Brand Director
How we applyconsumer insight Roland Fasel
General Manager InterContinental London Park Lane
How we drivehotel returns
Richard SolomonsFinance Director
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Driving growth
By end 2008:Net, organic growth of 50,000 - 60,000 rooms
Target
Faster growth by
making IHG’s brandsthe first-choice for
guests and hotel owners
Goal
Royalty rateRoomsX XRevPAR
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Importance of brands continues to grow
• Customers want brands
– Growth in branded consumer products
– Growing use of internet to book - brands offer reassurance
• Lenders want brands
– Last two cycles showed trading resilience of branded hotels
– Branded hotels easier to resell
• Owners want brands
– Brands deliver guests and aid financing
– Brands drive higher revPAR; higher ROI
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Strong global growth in branded rooms
1995 2001 2004‘000 ‘000 ‘000
Worldwide Rooms 14,100 16,900 18,350
Worldwide Branded Rooms 2,900 4,400 6,713
Worldwide % Branded Rooms 21% 26% 37%
Source: Mintel/TTI/IHG analysis
3% CAGR growth in worldwide rooms over last decade
10% CAGR growth in worldwide branded rooms in last decade
Branding accelerates during downturn
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Still significant growth to come
BrandedRooms
'000
%BrandedRooms
TotalRooms
'000
2004
North America 5,650 65% 3,673
South America 850 20% 170Americas 6,500 59% 3,843
Europe 6,550 25% 1,638Middle East 355 25% 89
Africa 485 15% 73EMEA 7,390 24% 1,799
East Asia 3,500 25% 875South Asia 200 10% 20 Australia 200 60% 120Other AsiaPac 560 10% 56Asia Pacific 4,460 24% 1,071
Worldwide 18,350 37% 6,713
Source: Mintel/TTI/IHG analysis
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Strong branded revenue growth
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Unbranded Branded
dd
5.9% 16 year CAGR
3.0% 16 year CAGR
% g
r o w t h p e r a n n u m
US Industry revenue growth
Source: STR
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The importance of having a brand portfolio
• Meets customer needs
– Customers have different stay needs but like to stay withinthe same loyalty programme
• Meets owner needs
– Owners like to work with a small number of brand ownersbut have different development opportunities
• Common brand platform allows increased systems investment
– Funds from all brands contribute to reservation channels,loyalty club etc - allows extra investment and innovation
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IHG's 7 step process to build differentiated brands
1.DNA 2.Insight
3. Point of Difference
4.
Innovation
5.
Look & Feel
6.
Consistency
7.
Character
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What IHG does differently
Hotel Industry IHG
Intuition
Generic brands
Focused on product
Insight
Distinctive brands
Product and People
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Getting branding right - Holiday Inn Express
DNA Insight
Point of Difference “SMART”
Innovation:
Shower
Look & Feel:
Advertising
Consistency:
Breakfast
Character:
Training
Revenues growth +2.3ppt vs segment (2002-05)Segment pipeline share +4.6ppt (2002-05)
Royalty rate +1ppt (2005)
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Significant opportunity in the luxury segment
Global room revenueby segment
Forecast global room revenuegrowth by segment, 2005-10
0
5
10
15
20
25
30
35
40
Luxury Upscale Midscale Budget
0
20
40
60
80
100
120
140
Luxury Upscale Midscale Budget
2 0 0 5 R e v
e n u e s
( $ B i l l i o
n s )
R e v e n u e g r o w t h
( $ b i l l i o n )
Source: IHG estimates
Note: growth across top 20 global markets
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Luxury hotel brands currently undifferentiated
Bedding warsFine dining
Flat screen TVs….all expensive for owners
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Differentiating InterContinental
Customer preference
Owner ROI
Owner Focused
Brand Manager Research
Projects
Point of Difference
“IN THE KNOW”Owner input
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Today’s agenda
Peter GowersChief Marketing Officer
The importance of brands
Jenifer Zeigler InterContinental Brand Director
How we applyconsumer insight Roland FaselGeneral Manager
InterContinental London Park Lane
How we drivehotel returns
Richard SolomonsFinance Director
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Current InterContinental positioning
• Most global Five Star hotel brand
– 142 Hotels; 63 countries
• Strong representation in fast growing economies: – China : 6 open; 9 pipeline
– Rest of Asia Pacific: 23 open; 9 pipeline
– Middle East : 30 open; 4 pipeline
– United States & Mexico: 24 open; 6 pipeline
• 19% of IHG's total gross revenues – $2.1bn total gross revenues to 30 September 2006
– 11% total gross revenue growth to 30 September 2006
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Performance already strong
Global InterContinental RevPAR Growth
0
5
10
15
Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06
R e v P A R G r o w t h ( % )
• RevPAR growth outperformance vs global luxury sector – 2005: 2.2ppt outperformance
– H1 2006: 3.4ppt outperformance
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High growth opportunities
Leverages IHG's global footprint and
owners' development opportunities
Luxury segment growingaround the world
High revenue per hotel
means fits most locations- other brands need market scale
Creates its own scale
High value per management contract
$300k- $3m fees; average $800k
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InterContinental repositioning
Phase I:Portfolio repositioning
Phase II:Brand research
1998:InterContinental brandacquired - 117 hotels
2006:142 hotels; 33 pipeline
1998 - 2006: portfolio optimised35 Lower quality hotel exits
35 Hotel renovations
60 High quality hotel additions
1998:Older demographic targeted
Conservative positioning
2006:Brand repositioning launched
2004-2006: Consumer research Younger demographic identified
Advertising focus changed
"In the Know" positioning
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Getting branding right - InterContinental
DNA Insight
Point of Difference “IN THE KNOW”
Look & Feel:
Updatedbrand image
Consistency:
Localexperience
Character:
ColleagueEngagement
Innovation:
Concierge
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Nanjing
Dubai
ArizonaDavos
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Today’s agenda
Peter GowersChief Marketing Officer
The importance of brands
Jenifer Zeigler InterContinental Brand Director
How we applyconsumer insight Roland Fasel
General Manager InterContinental London Park Lane
How we drivehotel returns
Richard SolomonsFinance Director
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Bringing "In The Know" to life
DNA Insight
Point of Difference “IN THE KNOW”
Innovation:
Theo RandallSpa
Club Lounge
Look & Feel:Guest RoomsPublic Areas
Consistency:ArrivalService
Character:People
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Bringing "In The Know" to life
DNA Insight
Point of Difference “IN THE KNOW”
Innovation:
Theo RandallSpa
Club Lounge
Look & Feel:Guest RoomsPublic Areas
Consistency:ArrivalService
Character:People
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Theo Randall at the InterContinental
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Club InterContinental
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Bringing "In The Know" to life
DNA Insight
Point of Difference “IN THE KNOW”
Look & Feel:Guest RoomsPublic Areas
Consistency:ArrivalService
Innovation:
Theo RandallSpa
Club Lounge
Character:People
S
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Suite
L bb
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Lobby
B i i "I Th K " t lif
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Bringing "In The Know" to life
DNA Insight
Point of Difference “IN THE KNOW”
Consistency:ArrivalService
Innovation:
Theo RandallSpa
Club Lounge
Look & Feel:Guest RoomsPublic Areas
Character:People
S i
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Service
Bringing "In The Know" to life
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Bringing "In The Know" to life
DNA Insight
Point of Difference “IN THE KNOW”
Character:People
Innovation:
Theo RandallSpa
Club Lounge
Look & Feel:Guest RoomsPublic Areas
Consistency:ArrivalService
People
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People
Competitive Map 04 07
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Competitive Map 04 - 07
‘In the know’authentic
Modern
Contemporary
Classic
Traditional
Four Seasons
Ritz
Dorchester MandarinOriental
Connaught
ClaridgesLanesborough
SandersonGreat EasternChurchill Hyatt
RegencyThe LanghamThe
Metropolitan
GenericConsumer promise
Market position 2004-2007
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Market position 2004-2007
Club IntercontinentalSuites
Signature SuitesStandard Rooms Superior Rooms
60 Suites112 Rooms 275 Rooms
2007£200-250+£150+ £400-500+
2004 £150+£130+ £210+
Business mix 2004-2007
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Business mix 2004-2007
Wholesaleleisure
Corporaterates
Largemeetings
Individualcustomers
2007 20% 44%11%25%
Reduce IncreaseReduceReduce
200436% 21%16%27%
Today’s agenda
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Today s agenda
Peter GowersChief Marketing Officer
The importance of brands
Jenifer Zeigler InterContinental Brand Director
How we applyconsumer insight Roland Fasel
General Manager InterContinental London Park Lane
How we drivehotel returns
Richard SolomonsFinance Director
IHG's journey
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IHG s journey
Faster growth bymaking IHG’s brands
the first-choice for guests and hotel owners
Goal
By end 2008:
Net, organic growth of 50,000 - 60,000 rooms
Target
Build the industry’s
strongest operating systemfocused on the biggestmarkets and segments
where scale really counts
• Brand performance
• Excellent hotel returns• Market scale/knowledge
• Aligned organisation
Strategy Priorities
InterContinental London Park Lane refurbishment
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InterContinental London Park Lane refurbishment
Hotel Built 1973
1998: InterContinentalbrand acquisition
Property in need of refurbishment
Capex 1998-2005 Low capex spend - await refurbishment
£70m Renewal capex£5m Enhancement capex
£1m New brand standards
2005/06:Refurbishment
Ongoing capex 5-7% of revenues
Major owned and leased asset refurbishment profile
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Major owned and leased asset refurbishment profile
Refurbishment New Build
New York
Atlanta
Hong Kong
Boston
London Park Lane
Paris Le Grand
2000/2001
2002/2003
2004 Goal to meetWACC
across the cycle2004-2006
2006
2005-2006
InterContinental London Park Lane earnings profile
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g p
2000 Revenue £43m; EBITDA £20m; EBIT £18m
2001 Revenue £33m; EBITDA £15m; EBIT £13m
2002 Revenue £31m; EBITDA £13m; EBIT £11m
2003 Revenue £30m; EBITDA £11m; EBIT £9m
2004 Revenue £31m; EBITDA £11m; EBIT £10m
2005 Revenue £18m; EBITDA £(1m); EBIT £(3)m
2006 Revenue £3m; EBITDA £(4m); EBIT £(8)m
Revenue £45-50m; EBITDA £20-25m; EBIT £15 - 20mNet book value: £200m
ROCE 7.5% - 10%2009
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Andrew CosslettChief Executive
IHG's journey
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j y
Faster growth bymaking IHG’s brands
the first-choice for guests and hotel owners
Goal
By end 2008:
Net, organic growth of 50,000 - 60,000 rooms
Target
Build the industry’s
strongest operating systemfocused on the biggestmarkets and segments
where scale really counts
• Brand performance
• Excellent hotel returns• Market scale/knowledge
• Aligned organisation
Strategy Priorities
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