IHG Hotels & Resorts is nearing recovery to 2019 levels as it reported year-end and fourth-quarter results for 2021.
“Trading improved significantly in 2021, with RevPAR getting closer to pre-pandemic levels as the year went on, profitability and cash flow rebounding strongly and signings accelerating in Q4,” said Keith Barr, CEO, IHG Hotels & Resorts. “Working hand in hand, our colleagues and hotel owners have once again shown incredible efforts to navigate the ebbs and flows of recovery. As vaccination rates rise and restrictions are lifted around the world, we are seeing the demand for travel increase. While there may be unexpected challenges ahead, we are confident in our ability to respond and adapt to what consumers and owners need as we position IHG for strong future growth.”
Highlights of the report:
- Significant improvement in trading during the year, with RevPAR recovering to 70% of 2019 levels (83% in Q4)
- Particularly strong recovery in the U.S., resulting in Americas full-year (FY) RevPAR (20)% vs 2019, with Greater China (29)% and EMEAA (52)%; in Q4, Americas improved to (7)% vs 2019, with Greater China (33)% and EMEAA (33)%
- Global Q4 RevPAR of (17)% vs 2019 reflected rate attained broadly in line with 2019 levels and occupancy 11 percentage points lower; Q4 occupancy was 56% (53% FY), with the US reaching 61% (61% FY)
- Operating profit from reportable segments of $534 million, +144% vs 2020, (down 38% vs 2019); reported operating profit of $494 million, after system fund result of $(11) million and operating exceptionals of $(29) million
- Fee business cost savings of $75 million vs 2019 achieved and sustainable in future years; additional temporary reductions in the 2021 cost base of $25 million are not expected to be retained
- Net cash from operating activities of $636 million (2020: $137 million), with adjusted free cash flow of $571 million (2020: $29 million); result includes strong cash conversion and a system fund inflow following an outflow in the prior year
- Leverage substantially reduced, with our net debt: adjusted EBITDA ratio now 3.0x
- Final dividend of 85.9 cents proposed, equivalent to the withdrawn final payment in respect of 2019
- Gross system growth of +5.0% YOY; net (0.6)% YOY, after 49,700 rooms removed; ~70% of removals were across Holiday Inn and Crowne Plaza, driven by the completion of the estate review for these two brands
- Opened 44,000 rooms (291 hotels) over the year, +12% vs 2020; global estate now at 880,000 rooms (5,991 hotels)
- Significant acceleration in signings in Q4 at 23,00o, close to levels achieved in 2019; strongest increase in EMEAA
- Signed 68,900 rooms (437 hotels) in total in 2021, +23% vs 2020; global pipeline now at 271,000 rooms (1,797 hotels)
- Conversions ~25% of openings; first six properties secured for new Luxury & Lifestyle brand, Vignette Collection
“Through our strategic priorities, we continue to build a better, stronger company for guests and owners,” said Barr. “Our commitment to maintaining a high-quality estate and investing in operations, service and new designs is driving the success of our established brands. The addition of attractive new brands in multiple segments has opened up further growth opportunities globally. Our loyalty program will be transformed this year, alongside important enhancements to our digital channels and experiences, and we are committed to ensuring that as we grow around the world, we do so in the right way through our Journey to Tomorrow plan and joining campaigns such as Race to Zero.”
He continued, “Recognizing the scale of our ambitions and the strengths and efficiencies of our distribution and technology platforms, owner interest in our brands continues to increase. Development activity was well ahead of 2020, with 437 hotel signings contributing to a global pipeline that represents more than 30% of today’s system size.
“With the strong financial improvements delivered in 2021, including more than doubling our operating profit from reportable segments and substantially reducing our net debt, the board is pleased to be recommending the reinstatement of a dividend. The signs are encouraging that we are nearing the end of the pandemic, and we are confident in the strength of IHG’s enterprise, market positioning and ability to drive attractive levels of long-term, sustainable growth.”