InterContinental Hotels Group PLC

Good morning everyone and welcome to IHG Hotel and Resorts conference call covering the 2026 third quarter trading update. I'm Stuart Ford, Senior Vice President and Head of Investor Relations at IHG and I'm joined this morning by Elie Wajih Maalouf, our Chief Executive Officer and Michael Glover, our Chief Financial Officer. Just to remind listeners on the call that in discussions today the company may make certain forward-looking statements as defined under US law. Please 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, may I remind you that in order to ask questions, you will need to have registered using the details on page two of this morning's R&S release. The release, together with the usual supplementary data pack for the third quarter, can be downloaded from the results and presentations section under the investors tab on isgplc.com. Now over to Elie.

Thank you, Stuart, and good morning, everyone. I will begin today's call by providing a brief overview of our global trading and development performance in the third quarter. I will then hand over to Michael to go through the performance in each of our three regions in more detail, and he will also cover the share buyback and financing updates. I will then provide some brief concluding remarks and we will open up the call for Q&A in about 15 minutes or so. Let me start by thanking our teams around the world for their hard work and dedication. We have delivered another strong performance with RFR growth accelerating in the third quarter and our development momentum continuing. The quarter once again demonstrated the benefits of ISG's strategic diversification across geographies and Stay Occasion. Turning first to trading, Global Rev Bar grew by 5.3% in the third quarter, taking growth for the year to date to 4.6%. The U.S. performance was very strong, with growth across every brand, every demand driver, and every location type. This reflects the ongoing strength and breadth of the U.S. economy and of ISG's enterprise platforms. The ENEAA region also saw very good growth overall, particularly in Europe and East Asia Pacific. The wider Middle East subregion improved to broadly flat, though there were still declines in the GCC countries. And in recent weeks, there have been escalations of the conflict in the Kingdom of Saudi Arabia. And we hope for a speedy and lasting resolution right across the region. In Greater China, Revbar eased in this last quarter, impacted by adverse weather and changes to public holiday timings. Revbar growth remains positive year-to-date, and we remain confident in the strength of the outlook. At a global level, both rate and occupancy contributed to the 5.3% Revbar growth, with average daily rate up 3.9% and occupancy increasing by 0.9 percentage points. By demand driver, rooms revenue on a comparable hotels basis was up 10% for groups, up 5% for leisure, and up 4% for business, further demonstrating the benefit of strategic diversification. Turning to development activity, we expect 2026 to be another record year and the fifth straight year of accelerating net system growth. In the quarter, we opened 12,900 rooms across 92 hotels, taking our year-to-date total to almost 300 and expanding our global system to 7,200 hotels. Net system growth was 4.9% year-on-year. Among openings in the quarter, we celebrated our 1,000th opening in Europe and globally our 200th for Hotel Indigo and our 150th for BoCo. and there were plenty more opening debuts to new countries. For example, the first vignette collection hotels into each of Spain, Germany and the Dominican Republic. We signed 21,100 rooms across 164 hotels in the quarter, almost twice the number of hotels we opened. With that momentum, year to date, signings have already topped 500 hotels. Our pipeline is more than 3% bigger than a year ago and equivalent to growth of 33% on our current system size. Development is split roughly evenly between new builds and conversions, the latter, of course, moving more quickly through the pipeline. Each of our collection and conversion-focused brands, VOCO, Vignette, Garner, and Noted Collection continue to expand around the world, demonstrating the breadth and attractiveness of our brand portfolio. With that, let me now hand over to Michael to run through the regions in more detail for you.

Thanks, Elie. Starting with the Americas, where rep part growth accelerated to 6.8% in the third quarter, taking year-to-date growth to 5.6%. Rate grew by 3.9%. and occupancy increased by 2.1 percentage points to 73.9%. You have to go all the way back to 2017 for a higher level of occupancy. In the U.S., Red Park grew by 6.9% in the quarter and 5.4% year-to-date. The tail end of the FIFA World Cup in July added 40 basis points to the region's Red Park growth in the third quarter. The quarter also had within it a small benefit from the timing of public holidays and events, which supported a further uptick in travel, rather than any sort of shift from the prior or following quarter. So aside from those small benefits, the vast majority of the strength of the performance in the U.S. is a reflection of the ongoing strength and breadth of the U.S. economy as we noted. That is also reflected in the growth of all three demand drivers. Roots was strongest with comparable rooms up 12% compared with 2025, followed by Leisure up 7% and Business up 6%. Turning to development in the region, gross system growth was 3.6% year-on-year and net system growth was 2.1%. We opened 4,000 rooms across 39 hotels in the quarter, 1,300 rooms more than the same period last year. Notable openings included the Intercontinental Presidency Mexico Miana, the new flagship Crown Plaza in Times Square, New York, 11 Holiday Inn Expresses, and eight more Garner properties. Moving to signings in the quarter, we signed 5,700 rooms across 65 hotels. These included 24 hotels for the Holiday Inn brand family, 22 across our extended stay brands, and 14 across our conversion-focused brands. Highlights included signing Intercontinental Bogota, further expanding the brand's presence to one of Latin America's most important gateway cities, as well as signings to take the BOCO brand into additional markets in Central America and the Caribbean. Moving on now to Europe, Middle East, Asia, and Africa region, where Repar grew by 5% in the third quarter, a significant improvement on the 0.6% growth in the prior quarter. This takes the region to 3.9% for the year to date. In Q3, rate grew by 4.1%, an occupancy increase by 0.6 percentage points to 75.5%. Looking at the major geographic submarkets, Repar increased by 3% in the UK, 4% in continental Europe, and grew 8% in East Asia and Pacific. A number of other markets were even stronger, for example, India and Africa, both growing in the mid-teens. The Middle East improved to be broadly flat in Q3, having been 19% lower in Q2. Within this Q3 improvement, Egypt and Turkey performed strongly, though countries closest to the ongoing conflict continue to experience declines. Across the six GCC countries of KSA, the UAE, Qatar, Kuwait, Bahrain, and Oman, there was a rep-hard decline of 12% in Q3. Turning to development in the EMEAA region, Grow System Growth was 7.1% year-on-year, and Net System Growth was 6%. We opened 3,600 rooms across 23 hotels in the quarter. We also signed 7,000 rooms across 47 hotels. These included 21 conversion deals and further signings for noted collections, which has already secured hotels in five countries since its launch in February. Elsewhere, we signed two further Vanette Collection properties in France, additional Kempton Hotels in Thailand and Italy, and a Ruby in Greece. Finally, moving on to Greater China, year-to-date repar has grown by 1%, although the third quarter it eased by 3%, with rate down 0.8% and occupancy decreasing by 1.6 percentage points to 62.3%. A number of adverse weather events impacted domestic travel during the first two months of the quarter, while changes to public holiday timings supported more international outbound leisure travel in late September. However, we did capture the benefit of that outbound travel in EMEAA during the quarter. So these factors contributed to repart declining by 7.5% in Tier 2 to 4 cities, Tier 1 cities grew by 0.2%. There was very strong growth in Hong Kong and Taiwan. We continue to remain confident in the attractive long-term fundamentals of the greater China market, underpinned by strong economic development, a growing middle class, and the continued underpenetration of hotel rooms per capita. Because of these strong fundamentals, development activity in the region remains excellent. Growth system growth was 12.1% year-on-year and net system growth was 10.3%. We opened 5,300 rooms across 30 hotels in the quarter, taking year-to-date openings to 20,500 rooms. A particular highlight was the opening of Holiday Inn Shanghai in the ECC, which brought the new Holiday Inn design to Shanghai and became our 90th hotel open in the city with a population of some 25 million. We signed 8,300 rooms across 52 hotels in the quarter including 20 Holiday Inn Express and 14 Holiday Inn properties. Increasing demand for conversions comprising both hotel rebranding and adaptive reuse projects have grown to represent approximately 40% of openings and signings in the year to date. A notable conversion example was the Harry Hotel in Hong Kong, which was both a signing and an opening within the quarter, and is part of a portfolio of three luxury hotels joining our vignette collection. Moving on next to update you on the share buyback. We are currently 74% of the way through this year's $950 million program, with $707 million spent today and 4.7 million shares repurchased. This has reduced the total number of voting rights in the company by a further 3.1% to $147 million. Together with the $285 million of ordinary dividend payments, Thank you for joining us. In September, we issued €850 million a bond across two tranches, and following the maturity of a £350 million bond in the prior month, we now have $4.6 billion a bond outstanding and a blended cost of 5.1%. The next scheduled maturity is the €500 million bond in May 2027. As previously described, our expected range for adjusted interest expense for 2026 remains $230 million to $240 million. Given the increase in our gross debt, as well as the modest increase in our blended borrowing weight following this year's refinancing activities, the adjusted interest expense expected to increase $40 to $60 million pre-tax in 2027. This is an expected feature of operating our growth algorithm, which includes returning surplus capital to shareholders and maintaining leverage within our target range as part of targeting EPS growth of 12% to 15% annually on average over the medium to long term. To conclude then with some comments on consensus for this year, our strong performance and the continued positive outlook for demand gives us confidence in achieving consensus expectations for 2026. We would expect consensus to increase modestly further given the successful Q3 we are reporting today. Consensus, as it currently stands for the 2026 full year, is global red part of 3.5%. Thank you, Michael. And to wrap up,