IHG’s 2022 Americas RevPAR surpasses 2019 level

Intercontinental Hotels Group (IHG) reported RevPAR for the Americas was up 3.3% for full-year 2022 vs. 2019. Worldwide ADR was up 8% vs. 2019, while occupancy was down 7 percentage points vs. 2019.

“In 2022, we saw demand return strongly in most of our markets, pushing group RevPAR back close to 2019 levels and fee margin ahead,” said Keith Barr, IHG Hotels & Resorts. “It’s particularly pleasing that in the second half of the year, we exceeded 2019 levels for both RevPAR and profitability. Looking to 2023, while there are economic uncertainties, we expect continued strong leisure demand in many markets, alongside further return of business and group travel and the ongoing reopening of China.”

He continued, “Our strategy over the last five years has significantly strengthened our brand portfolio and seen substantial investment to innovate our technology and distribution platforms. Our recent agreement with Iberostar adds our 18th brand and substantially increases our resort and all-inclusive presence, and we continue to explore further new opportunities like this for additional growth through exclusive partners. Meanwhile, the other six brands we have added since 2017 already contribute more than 10% of our pipeline, and our Luxury & Lifestyle portfolio is now 13% of our system size and 20% of our pipeline as we increase our exposure to higher fee income segments.”

Key 2022 highlights

  • Saw sequential improvement each quarter in global RevPAR vs. 2019
  • Strongest recovery in Americas, with RevPAR +3.3% vs. 2019 (Q4 +9.0%); EMEAA improving to (7.5)% (Q4 +8.8%); Greater China (38)% (Q4 (42)%) due to the scale of travel restrictions that were still in place
  • ADR +18% vs. 2021, +8% vs. 2019; occupancy +9% pts vs. 2021, (7)% pts vs. 2019
  • Iberostar Beachfront Resorts agreement signed in November 2022, with first 12,400 rooms added to IHG’s system in December 2022; continue to explore further opportunities with exclusive partners to drive additional system growth
  • Gross system growth +5.6% year-over-year (YOY); adjusted net system size growth of +4.3% YOY
  • Opened and added 49,400 rooms (269 hotels); global estate now at 912,000 rooms (6,164 hotels)
  • Signed 80,300 rooms (467 hotels); global pipeline now at 281,000 rooms (1,859 hotels), +3.9% YOY
  • Fee margin of 56.2%, +6.6% pts vs. 2021 (+2.1% pts vs. 2019’s 54.1%)
  • Operating profit from reportable segments of $828 million, +55% vs. 2021; this was held back by $17 million adverse currency impact and included $5 million of costs related to Iberostar agreement
  • Reported operating profit of $628 million, after $105 million system fund reported loss and $95 million net exceptional charges
  • Net cash from operating activities of $646 million (2021: $636 million), with adjusted free cash flow of $565 million (2021: $571 million); net debt movement includes $482 million share buybacks, $233 million dividends and a $230 million net foreign exchange benefit
  • Adjusted EBITDA of $896 million, +42% vs. 2021; net debt; adjusted EBITDA ratio reduced to 2.1x

“IHG’s enterprise platform strength helps our hotel owners capture demand and grow their business, with enterprise contribution increasing in 2022 to represent 77% of their total room revenue,” said Barr. “Critical to this was the launch of our new mobile app during the year, which has led to mobile now accounting for more than half of all digital bookings, while the transformation of our IHG One Rewards program has delivered significant improvements in both enrolments and loyalty contribution. Alongside substantial investments in revenue-generating technology platforms to support future growth, we have also continued to invest in our internal systems to maintain the health of the business, and in capabilities to help IHG and our hotel owners meet our 2030 Journey to Tomorrow responsible business commitments.”

System size and pipeline progress

  • Global system of 912,000 rooms (6,164 hotels) at Dec. 31, 2022, weighted 68% across midscale segments and 32% across upscale and luxury
  • Gross growth +5.6% YOY; 49,400 rooms (269 hotels) opened, of which 12,400 (33 hotels) added through the Iberostar agreement; adjusted gross growth, excluding Iberostar, of +4.2%
  • Removal of 18,100 rooms (96 hotels); includes the impact of ceasing all operations in Russia, resulting in the removal of 6,500 rooms (28 hotels), equivalent to 0.7% of IHG’s global system
  • Underlying removal rate -1.3% YOY, lower than the historical average underlying rate of ~1.5%a; fewer removals in Americas includes the effect of the 2021 Holiday Inn and Crowne Plaza review
  • Net system size growth +4.3%b YOY on an adjusted basis for Russia; net growth +2.9% excluding Iberostar
  • Global pipeline of 281,000 rooms (1,859 hotels), representing 31% of current system size; pipeline growth +3.9% YOY and broadly flat on the 283,000 pipeline at the end of 2019
  • Signed 80,300 rooms (467 hotels), +17% YOY; Q4 signings of 36,400 rooms, or 17,900 excluding Iberostar
  • Signings mix drives pipeline to be weighted 54% across midscale segments and 46% across upscale and luxury
  • Conversions have continued to grow in importance, representing around a quarter of signings and a third of openings in 2022 (excluding Iberostar)
  • More than 40% of the global pipeline is under construction, broadly in line with prior years

“In total, we signed 467 hotels in 2022 and opened 269, which led to net system growth of over 4%,” said Barr. “The further 1,800 hotels in our pipeline represents future growth of over 30% of today’s system size. The Holiday Inn brand family, with its global leadership position, delivered around a third of our hotel signings and half of openings.”

He concluded, “IHG’s overarching ambition is to deliver industry-leading growth in our scale, enterprise platform and performance, doing so sustainably for all stakeholders including our hotel owners, guests and society as a whole. We are a stronger and more resilient company than ever before, and we are proud of the advancements made in each of our strategic priorities. Reflecting the confidence we have in continued growth and the highly cash-generative nature of our business, the board is pleased to be recommending a 10% increase in the final dividend in respect of 2022 and to announce a further share buyback program to return an additional $750M to shareholders in 2023.”