InterContinental Hotels (IHG) 28 Oct 212021 Q3 Earnings call transcript

Thank you, Stephanie and good morning everyone and welcome from me to IHG’s Conference Call for the Third Quarter 2021 Trading Update. I am Stuart Ford, Head of Investor Relations at IHG and I am joined this morning by Paul Edgecliffe-Johnson, our Chief Financial Officer and Group Head of Strategy.

Just to remind listeners on the call that in the discussions today the company may make certain forward-looking statements as defined under U.S. law. Do please refer to this morning’s announcement and the company’s SEC filings for factors that could lead actual results to differ from those expressed in, or implied by any such forward looking statements.

dial institutional remind are to the you you need or website, via ask RNS analysts details will I the may that to release. any investors two listening who our questions on For page using of in in order from Investors The together tab downloaded of usual & Presentations pack can supplementary ihgplc.com. release, Results data section the be with the of the I to will that, With Paul. hand over

of I'll everyone. start usual our morning trading good review performance. and Stuart Thanks, with as a

almost and of markets around and parity quarter of number back XX% are a resulted we my announcement XX% in Strong Group, was rate back at our morning's latter and this rate XXXX. for in with that improvement in XXXX. meaningful. a focus demand occupancy see down both recovering This saw only summer. XX% the achieved against percentage increased in I'll Absolute domestic franchised as most prior leisure XXXX has to the to was points. decline trading, of point led and RevPAR XX particularly The in sequential estate comments trending improvements which XXXX in and quarter quarter comparing the $XX, XXXX with the our $XX the You'll performance the which the one. to XX% only occupancy Americas comparable further Starting is sensitivity, per million it But stronger is also RevPAR now in to levels below closer significant the RevPAR. to from occupancy on

regards rates of for to a reinvesting vacancy reductions temporary cost largely reduction corporate fee million headcount-related calculated and to costs. this additional while we referring remain roles costs $XX driven other growth. year Further by sustainable only, for $XX XXXX and on before track reminder, XXXX expect for deliver these, around a now As to still is we sensitivity business cost In savings. savings, RevPAR is million in to our versus

more in the discretionary demand room This is improvement XX% a the improvements each firm. than Turning levels similarly exceeded our Express regional in the included the Stay X%, quarter prior consumed demand third XX%. performance; levels. and exceeded in was resulted in is has Estate XXXX absolute through. strong, XXXX business saw XXXX. nights business in Americas, on We've that RevPAR on seeing Inn across room and now What level essential only seen demand. recovered for the business the were U.S., are X% performances XX% group Rates Leisure and we leisure was now locations Stay hotels which with quarter the U.S. under and our to RevPAR RevPAR of Extended Inn summer quarter group Rate seen months overall our over increasing Holiday across or Strong Group down and up occupancy quarters. brands, during less a business to In of demand in peak for amounts activity, X% resilient demand pricing COVID. occupancy XX% focus It's demand, throughout where XX% in we the of XXXX lower. stayed the has by with ahead been was little estate. nearly nights have to non-urban July slightly consumed Holiday down Express we pausing two up moment travel X,XXX the trends Extended a and around the worth rate brands. only XXXX being on resulted demand ahead the XX%. travel by almost XX% Standout coming marked holding

demand strong only down is see continue build each down still encouraging we demand nearly rate rate room The segment was as environment While XX%, were nights back. to consumed X%. across

X,XXX of gross particularly our around activity the sequential through opened rooms, Turning pace growth We We've pipeline also Encouragingly, now picked signings more X.X% Americas year-on-year. during of the quarter. leading XX,XXX. taking to applications size, in signed a development pickup quarter seen to to the deal X,XXX in September. system we up rooms than Americas the third accelerating with through year,

a of was demand, weighting now UK, differing to In restrictions a and deficit XXXX. below below. to which reintroduction of and Europe, saw RevPAR. to This of vary contrast, where has restrictions. Europe impacted Africa of outside East, markets Moving Asia Middle Middle travel the deficit a achieving compared the XX% XXXX's to reflecting the In XX%. deficit only region as XX%, by XX% to improved eased. RevPAR London a toward XX% the RevPAR higher to XX% RevPAR XX% East Continental international saw within improved Australia Performance down continued the restrictions. London, levels travel

September the region, With the of reopening temporarily and the of in rooms accounted the and resulting our demand of travel further quarter. growth expect activity development number further the opened general increasing compared we for over the rooms Conversions pick than gross at across more X,XXX period in into at fourth of X,XXX up X% the start half to year. a to signed was of We year-on-year down XXX and in pipeline. over end to the just XX hotels of closed the signings

locations, then quarter. restrictions meant X a particular to the July historical continued to XX% deficit as to given RevPAR September international inbound temporary Mainland China, down their of demand a was restrictions X% that to the weighted quarter. domestic where Greater level RevPAR up August Sanya. down X,XXX with domestic and the over in the fourth in saw XX%. development Tier to some resort reintroduction Tiers of continued In again, to strong we deficit. Across size XXXX more swiftly deficit, signings the are which pace rooms X in RevPAR The in fluctuated in from demand. was year-on-year quarter. in leisure We recovery RevPAR deficit. the including and weighting restrictions significantly see cities, the July, given back XX.X% cities system leisure into ahead signed X region Net period, X travel. X,XXX RevPAR demand of lifting XX% just increased benefited added the levels was pick Tier now the the expect XX% rooms greater COVID Turning With significantly in RevPAR pipeline. a recovered XX% held to and activity China, in by strong

By with made group the this that after with around XXX underway or covers X.X% this netted line X.X%, annual Over openings our for remain review in to seen Year-to-date, progress year. two-thirds removals. Inn review, years. to confirmed this with exit been than of of have exits, system momentum for rate one-off we've to across growth which the end year exited already a as of We and size now Moving the by on conclude initiatives gross we rapid the was five expected, continued improvement quality our size, down The to been removals more year-on-year. our mean which around this year-on-year. on the accounted of flat last further Plaza has Holiday that hotels. Crowne system Further hotels strong other year-to-date are plans. have has XX removals this around rate to broadly review XX hotels contrast, committed brands track

this over the course the our interest is signings hotel carry of to took continues us and expected accelerated rooms. on deals quarter to as in XXX,XXX Signings XX trajectory strengthen. quarter owner pipeline doing fourth the Our to through with

pricing a improve, domestic So significantly strong and to leisure demand strong conclude, by trading environment. driven continued to

pace openings We growth are encouraged corporate Holiday brands and by we pick and through We the X.X%. the up Inn outside return X% and the of expect our with other fourth bookings. group Plaza in rate and line our for of Crowne over of more this to gross in quarter review, around again travel rate saw removals the annualized quarter. improved Signings significantly

short the of Stephanie, years. size at platforms, levels restrictions ahead, may and up well deliver could for COVID scale our our coming in certain prior exceed underpins and brands, term, questions call the open still very trading that levels With you profitability to volatile looking further industry-leading system growth markets, the make strength of Looking but of confidence net please? the in fluctuating to

Rollo from question open. Morgan first the comes Our line Stanley. is your at Jamie, Jamie line on

morning good questions got three please. I've Thanks, everyone.

is could and of what negotiation recovery expectations season. Paul corporate on give can on may see sort you can and sort that It recent which anything looking there on First, us to too or RevPAR think so is you QX, the therefore, QX better early of indications for. any otherwise, consensus any trading early, of of similar be QX on is sort color and I sort any continue, whether corporate

not in still forwards? in two of going appreciate weak Secondly, mean XXXX nearly think Americas, of Thank fully they the years. but on now there we market it dragging the one EMEA I other been I China savings, on of sort thinking And end half permanent quite how just you. you openings I the aspects were to sort were from down, next $XX million putting do why open, there level. for and million still that frame savings, is your about that year? does more, up given going then was in mean they've are a temporary. and just signings $XXX

Thanks, Jamie.

are rate and up renegotiation and question, markets to keen strong, well think referenced, process, of continued lock very pricing. pricing the pricing in has terms corporate what first I been I The in the environment as our XXXX. very in be customers to So has on leisure seeing many corporate in we're

are much make but I been the so it. things conversation that that's XXXX. not So pull constructive But it's our prices are looking key customers too to up going of particular the nothing for can one far, is of in out sure

again, of in through continuing. third we and beyond, that where a quarter see the see and being we this in saw numbers trading, it's continuing in yes, and is on are at it the first the but continued to not recent quite it's an to are that were terms bounce sequentially back encouraging we it, we what saw immediate rebound improvement half. to corporate achieved industry It's see certainly encouraging XXXX, looking rates significant In demand to

In in Remember after on businesses, terms legal their get on in when ink have teams XXXX, quite their an we that stabilizing we're owner an to saw of period time, doing place. we third step-up quarter time that And go a starts us for for there is extended to what of actually with U.S. focused a lead the quite course. a of interested It in looking signings with a been cetera. the deal saw from yes, getting a the and in page signing to et our owners a is signings, long still below in in pleased contract

a normalizes. take will it before while encouraging, so a of pre-application. big is step that seen very have we the though, And is in sort What up

new to are who open the calling banks saying more environment, a signing to they we intent us to So of our people business, want look want site regional and on also letters your calling us, say lend in with the are we project. the been and for owners have lending at

So course. again, due in a up that's step as back doubling a good in of early indicator to sort the signings

people On a the the of the growth additional, to is be intent resources, looking have savings find we're business million because growth, of all we that which to the we're of we system aspire and becomes that the permanent in deliver are to. size muscle not wanting this to savings, net $XX place part for. level caliber the It tough the is all to able

had So intent our but positions fill is we year, some this those. open have to

it's million. $XXX not intent run to with our So

million. find we'll $XX the to that take hope people we down So to

numbers, of to QX. back on know formally QX sound and on sort for that I be you guide, down XX%, any expectations Does similar just Thanks, RevPAR but circa the thoughts don't market to reasonable?

partly depend can and think see on we've China seen in will we very what it be China is what think volatile. I I

negative negative to on by back quarter, look XX X negative month. XX it what we to saw You went from sequentially third in the

puts government think it it where on very depend we again, to Chinese I very quickly restrictions quite will of level up if So there. place strong a open what see and in all it go fully back trading will ends the

tougher be a will it factor. swing restrictions, the quite big that's and With

mind. very call still So in it factor with is difficult to that

China fully to needs than XX% Sorry, is you for and be sort are if back you be China to or to to saying it normal? normal be could better down of back that open

now. in swing saying what impossible I'm to it's the a a whole tell big where out group right will printed be factor come and as that's for going to it's

could it close be it If that China, be will impossible it minus XX, sort out for all at if XX, moment. positive. and the out if it's comes a of things minus down than So negative a again which then at call that that will at to comes

much. very you Thank great. Okay,

Thanks, Jamie.

Stern your comes Vicki open. Our line next question from at Vicki, is Barclays.

Yeah, good morning.

growth Just from net achieving the X.X% plus back firstly on to of unit next sort year.

guys If a within confidence. Obviously, the things building few are side us the sort those through of you've for just as there on a pre-COVID the much how strength that, color color in business in getting terms that that pricing perhaps of year at of next second soon signings but we're that And leisure assuming think pricing, leisure you lower just about next levels you sort your price. rates given in is what not back XXXX thought driving if the pre-indications XXXX, quickly churn, really been signaled how business gross of I even normal at those level to levels suppose, sort over up blocks that of following we in there's if why a up the get that about as lot momentum pre-COVID stage, think seen opening see or side. you Thanks. phasing again to to of is so. dynamic next really, walk as the could signings back just conversion just year over on perhaps you as activity of in of finally that back sort coming price next as the terms have open sort And there indications, with you then more could quickly mix. comments getting, was continue year the wanting is have more Obviously, on but and for demand quarters. do of example. on you talk question, lock that give there And even on rate positive you more how confidence Wouldn't from to expectation we seeing swift we recovery Jamie's look we'd could unknowns, how this the leisure sustainable can think into then given of in and on decent

Thanks, Vicki.

we're were gross seen level level look about delivered in at of growth, X.X. in of if a And would you growth have think your I that that terms be normalized to seeing seeing what if next of exits our of X.X. So of similar back before, the level to of confidence so we terms -- -- XXXX. think expecting what X.X, is back getting in in to we we're saw And we the we've year-on-year saying to we're us what year then

then something So four. talking about you starting are a with

we the just reasonable So, sequentially a pretty look openings think but we've think when yes, if date. step-up been seeing, saw you'd a then have few thousands. that And more I you you not to about it's this seeing at trading are year, to few lot, see than we and a

nothing more So that. than

delivery the that that of You voco into for large their like very look brands at in benefit look very with all revenue particular. the and we number are Vignette, There's brands a of pipeline, the with attractive across move you take hotels lot conversions, these owners so have. who to would at of

So that. that's driving what's

What on and before. long have as sign And the it's precise the saw In on deals to Once remember terms the of the frankly as they real of of a plus of pricing is basis. economy, of new our inflation deal to question And terms levels XXXX. summer will on high and seeing guests a think momentum, just of achieved than very us. the get available, which on debt it's I existing the me to basis and some And well, relatively that parity signed it's when then the we're ahead the on a that that, the levels they do, the be be confident and price think business we're stabilize, demand more is with hard if it's years seeing when being with so get what's broader closer signings want encouraging we slightly will we and back they because that whether leisure surprised their from a when of U.S., number inquiries But months owners that in ready nominal you capital of it level one the our XX% of in we're of ahead is broadly rather was statistics up. the driving about supply mean a in of I the do one think hotels in it of inflation, what was I might is levels sorts over the XXXX project. to basis. real

So leisure off pricing I into next think back business, group that pricing will I as pricing be strong the in seeing the and that as that. continue translating think then seeing is we'll the leisure through we'll very year then of get a level good to we're have demand that we're of sustained for think high in summer well and I that

very much. Great, thanks

Thanks, Vicki.

Bilal, your Our comes Instructions] line Bilal from from [Operator question next is Aziz UBS. open.

quick morning, Thanks everyone. for my please. me, ones Good for taking questions. Three

number next about additions missed do Secondly, quarter I QX. were gross you into Firstly, spoke that please? percentage apologies and conversions but if you perhaps a as into into evolves think year this China how what it, of the going

and and or Christmas very do finally, QX? to your quick you perhaps $XX soften guess improvement improve can out of comment to you. will in $X.XX gradually the is and Thanksgiving as particularly now next to that you starts please. what now close on expecting leg think Are driven U.S. what the and fees [Phonetic] on into just be of million you Thank year by I said a then into you please. leisure sensitivity flesh and next improve both Just incentive will business into to RevPAR, EMEA And leisure your

Bilal. Thanks,

of revenue So conversions XX%; about a give normally, that lots owners, EMEA, conversion but don't see. about don't it. strong they encouraging demand to didn't brands of the deliver in given conversions, talked think we the benefits on for is We level which to but higher quarter miss were that it. you our I granularity and

leisure, the of see I there's a terms out it managed to people the the In lot we some frankly how there will there, strong is trips season? haven't soften travel demand like take given they done. have into Thanksgiving summer would people to who of was, think wanting leisure season to and all

so good. continued has the be And to across very leisure industry

a that to bit Thanksgiving think industry probably that will the then I the Season, point. which at strong probably pattern, but normal else build in the and be that say is particularly soften can the think I we for will it up Christmas, nothing

of leased now point the to Remember, went of terms sensitivity, on million. sensitivity $XX and it next and hotels profitability. really when to back their to per of it the year, RevPAR. and all contracts close It used remaining depend be normal up trending owned million $XX level going In of does get into big management

as XXXX. through So we'll keep course. an output it come loop back than the but we will rather in in you trend input, It's due

Brilliant, thank Paul. you,

Bilal. Thanks,

open. your Our James is line Ainley next Citi. James, question at comes from

Good morning, Three everybody. questions please. you. Thank

why it have I underperformed if picture. by slightly Crowne different I Kind the look like of Holiday Plaza segment, perhaps exiting, are data we'd in think the if you Firstly, materially. those Inn purged is? for and a do the mean that data at quite you industry you U.S. hotels looks

on So in that. your interested perspectives

gave review related terms XXX It Where exit now numbers. on of kind to looks in of time land that Secondly, that still question of exits you those us in you labor kind might you faring? see hotels re-investors? you do do hotel the more to of Are limits seeing hotels? hotels. the And like last of you you occupancy of some you're services the rather review than think any signs the to choosing and how Thank easing? labor more on think do third or supply then the availability are broadly, you. And sort you your

James. Thanks,

there that comparisons Holiday lot ago, quite nature differential the So travelers in boxes make particular remembering given have you business Holiday in a built of Plaza a level which group and the some a that's lot We of historically brand, Crowne in the in hotel, you're small would than the been old by Inn think and terms normally, level [indiscernible] have box. of of has time of Inn of higher typical thing a them the I still segments, seeing. have higher and a a there were and really worth business is they

what In Crowne what rate, terms to see. actually exit very of guided and and Plaza in expecting much the I've Holiday line with we're and it's Inn to

So XX up. going they're who have now to exited or signed who've XX exit, said

So I the is similar proportion see program. what a would it's end by the to expect of

or XXX may great will will that it the significant us and raise which of going be and improvement, over remainder committing significantly to a the brands those long-term. grow help quality it will the XXX, them be So because so

doing the they to stay tools that own a and most who make think the it's find challenge of skilled as are plans the teams very supply, course entrepreneurs at people they linkages. providing a a markets. and teams to owners local important and lot are for businesses that are hotels system of our terms like how our the initiative help really army owners and a hotels still ours our have there's they resourceful. benefits their also there of And to people is procurement we're and through our rostering that have. of but It an of with their been running part in I And So is for human the one They resources being challenge, owners we've of there. labor going very that of clearly need, find know everybody those labor large that's our we out to

placed Thanks, very are they do with that think I our So well James. to help.

Alex next Alex, Redburn. question Instruction] from Brignall is [Operator at open. The comes your line

taking the thank morning, questions. you. Thanks Good for

similar sort a theme Following rate of and please. signings opening of

first just strong talking about you're and between signings and that lag on XXXX openings. is The time Clearly, XXXX.

you at the a look of the came sort strong financial got Obviously, slowdown that. pipeline. crisis, You after

assumptions theorizing hear drop rate, signings start There making it's comments signings XXXX. is the would data some in on, question openings current The now, out that X% second which lower or you but encouraging to at about So have current usage, through into about hotel to CoStar rate please? when from [ph] below applications. the in the about is land for still acquisitions year this levels is

sort to absolute pre-pandemic? below well we basis go absolute level is that very we why And level of an pre-pandemic question I not level on just but I first, of application then financing about build. work just if So conversions, total. guess on conversions conversions of guys, of data an on still you've guess talk you there's not it's are as could you sort my Do sort see the buying conversions the you of versus And comes that Could you new needing then order knows versus percentage they as be? the that an then explain given chronologically? how first the nobody on an might Could think I signings. sort would on be a what's absolute numbers wrong land saw I pre-pandemic. think events? of and up Should those

actually versus might much. pre-pandemic down be they Thanks why So [Phonetic]. so

Thanks, Alex.

in it to would and mean of period across terms does, imagine it it the as that So varies significantly brands. openings I the think you as as you signings I know, takes,

could part months. of be which InterContinental, might large an a XX for complex, So talking you be

year. rapidly, could done to owners less is the break boxes for more And brand of that's hotel take attractions Holiday simple with but Inn Some ground relatively to are time a of Candlewood, Avid the the does it that a Avid great and than with similarly build. an be one they By contrast when time. by for opens, Express are the some example, you

with hotel and hotel So no ground signed good the the the real is once the the afterwards. there. then is will that's thing a there's ground broken been then the key manifest and get signed change then get I always and mean case and broken, certain period owners

In terms is debt have And debt be to things of finance to key the by able us. the application get the to obviously, the happen, approved which you'll well, an for order in land. to need an acquire owner finance

So land. they'll the necessarily key but own have up. land thing they Often, will will mean or identified, for franchise rights getting an it a they that land owner our doesn't have signed is over the

have Some do. it They may our of are one. it arrangement. build they deconstructing on part have another that as hotel a historic They new may to

conversion discussions stepped before. we've to first. get businesses and EMEA So up absolute I a in than but at fewer contract and us have you have there's terms on absolute actually more, their would look do in hotels the seen hotels ever have with that numbers more what seen have the and back variety, operating will conversions and an normally I And basis. to an basis, less we in to of mean see significantly the to on used owners having you to that my building refresh mind as next XXXX getting on their But on done. focus conversions, we mean

absolute is Thanks, be reason an Nothing Alex. if else will that the behind there differential. So it.

Thanks very Paul. much,

questions further no the on have line. We registered

to call So back the Stuart remarks. to closing I'm going for hand

me. add? remarks is there to Paul No thanks, Many from closing anything Stephanie.

you forward listening a great catching to and soon. with for up day. Have everybody Thanks look very

Thanks, all.