hotels presentation

7/31/2019 Hotels Presentation

1/24

The China OpportunityKeith Barr

Hotel Indigo, Shanghai on the Bund1


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Greater China in the context of IHG

2011 Operating profit* Q112 open rooms Q112 pipeline rooms

10% 9%

70%

Rest of IHGGreater China

2

* Full Year 2011 operating profit excludes $10m individually significant damages receipts in the Americas and $6m in AMEA, atconstant currency and before central overheads


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Chinas hotel market is expected toovertake the U.S. b 2025

Projected industry room supply for China

9.110

Million rooms

China7.5

6.1 7.87

8USA

4.96.7

4

5By 2039 Chinas room supplywill be:

2.31

2

3 4x the size it is today

Almost 2x the size of the USmarket today

0

3

4.9% CAGR12.1% CAGRSource: NBS; United Nations World Travel Organization (UNWTO); IHG


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Luxury / upper upscale / upscale is growingfast while midscale remains sizeable

2010 2020 (likely) 2039 (likely)

.= 2.3m

.= 4.8m

.= 9.1m

Upper Upscale /Upscale

Midscale

Economy

4Source: NBS; China Economy Hotel Survey, IHG


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Significant opportunity for upscale /midscale branded la ers

China branded rooms share growth Other markets branded rooms share

US = 70%20202010 2030

Branded35%

20%

=

Continental Europe = 40%Unbranded

IHG share of China branded rooms Q1 2012

IHG share China branded rooms

10%

All China branded rooms

5Source: China Statistical Yearbook; China Economy Hotel Survey; STR Global; IHG

Branded market defined as operators with more than ten outlets(IHG research) or based on STR Globals classification scheme..


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IHG is well established as the leadinginternational hotel o erator

IHG System Size and Pipeline by Brand, rooms (000)

100

110

80

90

Pipeline

60

70

30

40

10

20

6

0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1'12

Source: IHG


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IHG will continue to be the leadinginternational hotel o erator in China

Greater China system & pipeline

100 System Pipeline

80

60

oms00

0

40

N

oofro

0

20

7

IHG Wyndham Accor Starwood Marriott Shangri La Hyatt Hilton

Source: IHG 31 Mar 2012; other data is STR Global 31 Mar 2012


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Industry leading upscale & midscaledistribution

100

80

000 Pipeline

56%*

60

froom

s86%*

40No

System20

8

Source: IHG 31 Mar 2012

* 56% of IHG open/ pipeline rooms are 5 star brands in Greater China, this is 86% when the 4 star rated Holiday Inn brand is added


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Our pipeline is not only large, but robust

IHG Greater China pipeline by Construction Phase (total number of hotels)

40

15575

9

Pre-Construction UnderConstruction

Pre Opening Total

Source: IHG 31 Mar 2012


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Sustainable growth strategy hi h ualit rowth

Clear, focused development strategy Targeting emerging middleclass Tier 2 and Tier 3

Aligned with go westdevelo ment lans

Presence* in 94 cities including

All four tier one cities

cities

36 out of 38 tier two cities

Extend leadership inLeveraging relationships-

Crowne Plaza Chongqing Holiday Inn Nanjing Aqua City

Deepening penetration inBrand defining resorts

Crowne Plaza Kunming InterContinental Shanghai Expo

10

InterContinental Resort Sanya Hotel Indigo Hong Kong

* Presence defined as hotel currently open or in the development pipeline


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Brand strength- IHGs new brand for Greater China

HUALUXE Hotels & Resorts - upscale Consumer need for an international Chinese 5-star hotel

IHG name reassurance over quality & consistency

20 letters of intent signed

First hotel expected to open early 2014

12


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Brand strength- In r n in n l H l R r

The second largest international luxury hotel brand in

Source: IHG 31 March 2012, Millward Brown Brand Tracker report H2 2011, STR April 2012.

Open Pipeline Total

Hotels 23 22 55

, , ,

Competitive set includes: Westin, Hyatt, JW Marriott, Conrad, Shangri-La and Sofitel13


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Brand strength- r wn Pl

The fastest growing international upscale (five star)

Source: IHG 31 March 2012, Horwath hotel openings report 2011

Open Pipeline Total

Hotels 52 58 110

, , ,

Competitive set includes: Hilton, Marriott, Sheraton, Pullman and Renaissance14


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Brand strength- H el Indi

First international branded

Source: IHG 31 March 2012

Open Pipeline Total

Hotels 2 5 7

Competitive set includes: Independent boutique hotels and W Hotels (Hong Kong)15


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Brand strength- H li Inn

The most widely recognised international full service

Source: IHG 31 March 2012, Millward Brown Brand Tracker report H2 2012

Open Pipeline Total

Hotels 58 42 100

, , ,

Competitive set includes: Doubletree, Four Points by Sheraton, Courtyard and Novotel16


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Brand strength- H li Inn Ex r

The most widely recognised international

Source: IHG 31 March 2012, Millward Brown Brand Tracker report H2 2012

Open Pipeline Total

Hotels 35 28 63

, , ,

Competitive set includes: Ibis17


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Why IHG is winning in China

Well established as the leading international hotel operator

Broad portfolio of strong brands in key locations

Lon est established lo alt ro ramme

The deepest relationships with key strategic partners

Localisation of brands and business model

Only international hotel company with dedicated, stand alone regionreporting directly to the CEO

Largest people in rastructure

18


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A highly profitable business

China financial results

$m 2007 2011

Revenue 35 79

Costs (27) (49)

EBIT 8 30

2011 total ross revenues of 1.9bn from all hotels

Margin 23% 38%

Continued investment to support growth plans

Fee revenue now drivin mar ins

85% of managed hotels paying incentive fees in 2011

No ca ital ex enditure re uirements

19

1: Managed and Franchise business only2: Total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels, It is not all attributable to IHG.


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Our share potential

China industry rooms growth IHG illustrative rooms potential

c.20%

c.48% branded

Maintain c.10% of branded share

7

8

(m)

7.5m

300

350

400

ms(000)

. m

4

5

telrooms

360k200

250

Chinar

oo

3.9m0.5m2

3

Chinah

2.3m100

150

G

Greater

.

0

2010 2030Unbranded Branded

48.5k0

2010 2030

IH

20Source: NBS; China Economic Hotel Survey; Global STR; IHG

Branded market defined as operators with >10 outlets


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Summary

Rapid economic growth and urbanisation will drive hotel market

Huge opportunity for growth in branded rooms

Most established relationships with key strategic partners

The most focused development strategy

ur ns g s secon o none

21


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Q&A

Crowne Plaza, Harbour City, [Shanghai]22


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A managed model with minimal capitalex enditure

Management contract focus (98% of system and pipeline)

Ensures consistent delivery of guest experience

Imbeds operational capability

Potential to franchise Holiday Inn Express given the morestandardised operating model

Contract terms Base fee = 2% gross revenues

ncen ve ee = - o gross opera ng pro

Length of contract: 10 15 years

No requirements for guarantees

Use of capex

To date no capital expenditure requirements23


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The China OpportunityKeith Barr

Hotel Indigo , Harbour View, [Xiamen]24

hotels presentation

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