InterContinental Hotels Group PLC

Ladies and gentlemen, hello and welcome to the IHG first quarter trading update to 31st of March 2023. My name is Maxine and I'll be coordinating today's call. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to Stuart Ford, VP and Head of Investor Relations to begin. Stuart, please go ahead when you're ready.

Thanks Maxine. So good morning everyone and welcome to IHG's call for the first quarter of 2023 trading updates. So I'm Stuart Ford, Head of Investor Relations at IHG and I'm joined this morning by Keith Barr, our Group Chief Executive and Michael Glover, our Chief Financial Officer. Just to remind listeners on the call that in the discussions today the company may make certain forward-looking statements as defined under US law. Please do refer to this morning's announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. For those analysts or institutional investors who are listening via our website, can I remind you that in order to ask questions, you will need to dial in using the details on page two of today's R&S release. The release, together with the usual supplementary data pack, can be downloaded from the results and presentation section under the Investors tab on ihgplc.com. I'll now hand over the call to Keith.

Thank you, Stuart, and good morning, everyone. Before turning to the trading update, I just want to acknowledge the other announcement we have made this morning regarding my stepping down as CEO and the appointment of Elie Malouf as my successor. It has been an incredible privilege to spend more than 30 years at IHG and be part of the many achievements and successes that the business has had so far. IHG is a very special company and to have spent the last six years as CEO has been an honor, as has working alongside our talented colleagues and in partnership with our hotel owners who all share our passion for hospitality. When I look at the business today, it is set for a very bright future with the breadth of our portfolio, our scale, and the strength of our enterprise platform, and a clear strategy ahead to grow the business. On a personal level, it's been a very difficult decision to make, But after nearly 20 years away from the US working in different countries, now is the right time for me and my family to return to the US, given my daughters will be studying there. I'm delighted that Ellie will be succeeding me. I will be here in an advisory capacity until the end of 2023. But from July, Ellie will take over as group CEO and be based here in the UK. Many of you already know Ellie, who has led the Americas region for the last eight years. Under Ellie's leadership, he's grown the America system by almost 700 hotels, or 20%. Launched new brands and formats, strengthened how we drive value for hotel owners, and delivered record profit levels. Ellie and I have worked incredibly closely together, including on key investments and on successfully delivering our strategic priorities. And I know IG will be in great hands and ready to continue a strong track record of growth and value creation. With that, let me turn to the subject matter of the call, our first quarter trading update, and it's great to be updating you on another strong quarter of trading. I'm here with Michael Glover, who, as you know, stepped up to Group CFO in March. Michael's been with IHG for some 19 years, most recently as CFO of the Americas region. He has previously served as IHG's Group Financial Controller and CFO for Greater China. Many of you had the opportunity to meet him in person for the first time when we were out on the road together following the release of our 2022 financial results a couple months back. I'll pass over to Michael in just a moment for him to review each of the regions for you in more detail. But before that, I want to summarize the group's performance. You will have seen that we are still providing monthly REVPAR data in our release, as well as giving you both the year-on-year movements and the performance relative to 2019, given the impact that COVID was still having, particularly during the first quarter of 2022. On a group-wide basis, REVPAR was up 33% on last year and up 6.8% on 2019. You'll recall that Q4 2022 was up 4.1% on 2019, but had we reverted back to the pre-COVID definition of comparable hotels, Q4 growth would have been around 2% higher. We have now reverted back, which aligns to the definition used by our US peers. Even taking that into account, Q1 growth of 6.8% still shows another quarter of sequential improvement. In terms of the component parts of Global REVPAR for the quarter, rate was up 11% versus last year, and up 10% on 2019. Occupancy of 62% was 10 percentage points better than last year, and has now recovered to be within 2 percentage points of 2019 occupancy levels. In terms of the split on stay occasions between leisure, business, and groups, we generated 30% more leisure-driven rooms revenue in total than in the same quarter last year. While this was particularly driven by the continued strong rates seen across the industry, It also reflects of the strength of our brands as they continue to grow in the luxury and lifestyle segment, as well in resort locations. Lapping last year's COVID-impacted comps meant that business and groups revenue was up by more than 30% on a year-on-year basis, and this reflects further normalization of global working habits and the return of more meetings, conferences, and events. When comparing to 2019, leisure revenue is up by around 25%, Business revenue is now broadly flat and group is down around 12%. We've talked before about groups being the last of the three demand drivers to be fully restored and we're confident that it will be. Turning now to group net system size. Over 8,000 rooms were open in the quarter, 25% more than the same quarter last year. This represents the strongest Q1 openings performance since the onset of the pandemic. This led to net system size growth of 4.2% year on year, adjusted for the impact of the removal of our Russian business in Q2 of 2022. It is worth noting that we generally experience seasonality in our system growth, with relatively fewer openings and more removals in the first quarter of each calendar year. Year-to-date net system size growth was therefore 0.4%, very similar to the 0.5% at this stage last year, and we expect the rate to accelerate through the rest of 2023. That said, there are economic uncertainties and clearly some financing challenges for the wider commercial real estate industry. These are holding back hotel development and opening activity from fully returning to normal, though improvements are anticipated as the year progresses. Turn to signings. We added more than 16,000 rooms into our pipeline in the quarter. matching the same quarter last year, which had been the strongest over the last three years. This takes the total pipeline to 287,000 rooms, which is an increase of 3.3% year on year. You can see the strength and the competitiveness of our brands across chain scales in that performance, with signing spread broadly across regions and segments. One area to call out is luxury and lifestyle, which is currently 13% of our system but represented 33% of all signings in the latest quarter. Our ability to increasingly capture conversion opportunities was also highlighted, representing over a third of both openings and signings in Q1. Interestingly, the 39 conversion signings in the latest quarter represented in absolute terms the third highest for any quarter across the last decade. I'll now hand over to Michael to provide more detail at a regional level.