View from Hotel Indigo shanghai on the Bund, china

Where we compete

We operate 4,602 hotels and 675,982 rooms in nearly 100 countries and territories around the world. Our business reflects the profile of our major markets and is structured into four operating regions: The Americas; Europe; Asia, Middle East and Africa; and Greater China.

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Responsible Business and Where we compete 37

Performance highlights

Revenueperavailableroom(RevPAR)up6.1%

Revenueup0.8%to$837m†

Operatingprofit*up7.8%to$486m†

†Includesonesignificantliquidateddamagesreceiptin2012of$3m.

*Beforeexceptionalitems.

Number of rooms by business model

Franchised407,849

Managed39,583

Owned&leased2,185

Room and hotel numbers

Totalroomsopen449,617

Roomsinpipeline72,573

Totalhotelsopen3,555

Hotelsinpipeline670

A vital regionThisyearwehaveopened148hotelsinTheAmericasregionandincreasedourRevPARby6.1percentwiththeUSoutperformingtheindustry.TheUSaloneaccountsformorethanaquarterofglobalhotelspendingandoverthenextdecade,willcontinuetobeasignificantgrowthmarketforIHG.

EVENTM HotelsInFebruary,welaunchedournewEVENHotelsbrandandinOctober,wesignedthefirsthotelunderthebrand–anewbuildinNewYorkCity.Itisthefirsthotelbrandinthelifestylespacethatismainstreamandaimedathelpinghealthy-mindedguestsstaybalancedwhiletravelling.Asthewellnesssectorcontinuestogrow,sotoodoestheneedforthebrand.

Extended stayExtendedstayhotelsareabigsegmentinNorthAmerica–whereweopened22newhotels.HospitalityPropertiesTrust,anowner,committed$165milliontorenovate80StaybridgeSuitesandCandlewoodSuiteshotelswithdesignandfunctionalityimprovements.

Focussed expansionIHGisthelargesthotelcompanyinMexico,with121hotelsand38inthepipeline.ThisyearweopenedthePresidenteInterContinentalSantaFeMexicoandtheHotelIndigobrand’sonlypropertyinMexico–HotelIndigoVeracruz

BocadelRio.WeremainapreferredemployerinCanadawhereourrobustpipelineof33hotelswillcreateevenmoreneedfortoptalent.Withthegrowthofthemiddleclassthroughouttheregion,wehavealsoseenactivedevelopmentinLatinAmericaandtheCaribbeanacrosstheHolidayInnfamilyofbrandswithopeningsorsigningsinBrazil,ColombiaandGrandCayman.

Army hotelsOurArmyhotelsportfoliocontinuestotakeshapeaspartoftheUSgovernment'sPrivatizationofArmyLodgingsinitiative.FormerArmy-runpropertiesintheUSandPuertoRicowererenovatedduringtheyear.Thenumberofhotelswillcontinuetogrowin2013,reachingabout80hotelsand12,000roomsonArmyinstallations.

IHG Shelter in a Storm ProgrammeWhenHurricaneSandydevastatedtheEastCoastinOctober,wepartneredwiththeIHGOwnersAssociationtoraisemoneythroughemployees,ownersandPriorityClubRewardsmembersanddonationswenttotheIHGShelterFund(partoftheIHGShelterinaStormProgramme).Over$100,000wasallocatedfromtheIHGShelterFundtoprovidetemporaryshelterandemergencysuppliestoaffectedemployeesandthecommunity.

“In 2013, IHG launched the EVEN Hotels brand in the US, within a month of launching HUALUXE – an entirely different hotel brand in an entirely different market. This tells you something about our ambition as a company and the ability of our People to deliver.”

Kirk Kinsell President, The Americas

The Americas

The Americas accounts for more than a third of global hotel spending and represents two-thirds of IHG’s hotel rooms. Over the next decade, The Americas will continue to be a significant growth market for the hotel industry and we are a key player.

HotelIndigoVeracruzBocaDelRio,Mexico

38 IHG Annual Review and Summary Financial Statement 2012

Performance highlights

Revenueperavailableroom(RevPAR)up1.7%

Revenueup7.7%to$436m

Operatingprofit*up10.6%to$115m

*Beforeexceptionalitems.

Number of rooms by business model

Franchised79,899

Managed21,211

Owned&leased917

Room and hotel numbers

Totalroomsopen102,027

Roomsinpipeline15,184

Totalhotelsopen628

Hotelsinpipeline91

2012hasbeenanexcellentyearforEuropeinspiteofthetoughmacroeconomicclimate.Weopened39hotelsandsignedanother48.

Priority markets

TheUKcontinuestobeourbiggestmarketwhereweexceededthenumberofsigningsfromlastyearandalsoopenedourfirstnewInterContinentalHotelinLondonforover36years–InterContinentalLondon-Westminster.

InGermany,whereourstrategyfordevelopmenthasfocussedonpartneringwithownerswhocanunlockmultipledeals,wesignedsevenindividualhoteldealsandonenewmultipledevelopmentagreement.

Inadditiontothelarger,scalemarkets,weareactivelygrowinginRussiaandtheCommonwealthofIndependentStates(CIS).Ourextensivelocalresearchhashighlightedasignificantopportunityinthemidscalesegmentandamongstbusinesstravellers.ThisisaneedthatHolidayInnandHolidayInnExpressareperfectlysetuptomeet.

Ourlong-termgoalistogrowourestateinRussiaandtheCIStoover100hotels.Someofthehighlightsin2012werethelaunchofaRussianlanguagewebsiteandtheopeningofanIHGAcademyinMoscowtosupportthetraininganddevelopmentoflocaltalent.

Hotel Indigo

Wecontinuetodriveexcellentprogresswithourbrandedboutiqueoffer,HotelIndigo.TheneighbourhoodstoryconceptattheheartofthebrandfitswellintoEuropeancities,whichcanalsoprovideamplepropertiesforconversion.SinceintroducingthebrandtoEuropein2008,we’veopened10hotels,eightintheUKandtwoinGermany,andtherearenow13inthepipeline.TheseincludetherecentsigningofHotelIndigoBarcelona-PlazaCatalunyaandourfirstHotelIndigopropertyinIsrael,whichwillopeninTelAvivin2013.

Olympic sponsorship

HolidayInnwastheofficialhotelprovidertotheLondon2012OlympicandParalympicGames,andhelpedhostathletesattheOlympicVillage,somethingfromwhichallofIHGdrewenormouspride.

PartofthelegacyoftheGamesarethetwonewIHGhotelsneartotheOlympicsite–HolidayInnLondon-StratfordCityandStaybridgeSuitesLondon-StratfordCity,London’sfirstStaybridgeSuitesproperty.Thesecreated120permanentjobs,andarealsosupportinganewIHGAcademyinthelocalboroughofNewhamthatwilltrainaround50participantsayear.

“IHG is winning in Europe. My definition of winning is to be the preferred choice for guests, the preferred choice for investors, and the preferred choice for our employees.”

Angela Brav Chief Executive, Europe

Europe

Our strategy in Europe is to achieve high-quality growth by focussing on key cities across Europe, and building national scale in priority markets. In these markets, we want to be in a leadership position.

OlympicandParalympicmarathonstarsPaulaRadcliffeandShellyWoodshostatrainingsessionforHolidayInnguestsaspartoftheLondon2012sponsorshipprogramme

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The Americas and Europe 39

Performance highlights

Revenueperavailableroom(RevPAR)up4.9%

Revenueup0.9%to$218m

Operatingprofit*up4.8%to$88m

*Beforeexceptionalitems.

Number of rooms by business model

Franchised10,860

Managed51,290

Owned&leased587

Room and hotel numbers

Totalroomsopen62,737

Roomsinpipeline30,357

Totalhotelsopen232

Hotelsinpipeline132

WeendedtheyearstronglywithRevPARgrowthof4.9percentandanactivepipelineof132hotelswith36newsigningsin2012.WealsoexceededourtargetfortheIHGAcademyprogramme,with59IHGAcademyprogrammesacrosstheregionreadytoprovideskillsdevelopmentandimproveemploymentprospects.

Seizing opportunities AMEAisIHG’smostgeographicallydiverseregion.Weoperate232hotelsinover37countries,coveringamixofmatureandemergingmarkets,resortsandurbanlocations.Theregionisalsohometosomeofthemostimportanttourismmarketsofthefuture.Indiaisonesuchmarket,with850milliondomestictripsmadeannually,andrapidlyincreasinginboundandoutboundnumbers.In2012,weopenedthefirstHolidayInnExpressinIndia,tomeettheuntappeddemandforatrustedglobalbrandthatcaterstothemid-marketsegment.WealsolaunchedHolidayInnExpressinSoutheastAsiatopositiveownerandindustryfeedback.Wenowhave35HolidayInnExpresshotelsunderdevelopment,whichrepresentsaquarteroftheregion’scurrentpipeline.

Winning in resorts Thisyearweopenedseveralbrand-definingresorts,includingInterContinentalDanangSunPeninsulaResortinVietnam,InterContinentalSamuiBaanTalingNgamResortinThailandandtheCrownePlazaJordanDeadSeaResort&SpainJordan.

Someofthesenewresortshavealreadyreceivedgreatindustryandguestrecognition–astrongindicationofthe‘haloeffect’aresortcanbringtoabrand.Giventhereisnoclearleaderinthissought-afterbutfragmentedsegment,wehaveanincredibleopportunity,particularlyforInterContinentalHotels&ResortsandHolidayInn.In2012,weestablishedadedicatedteaminBangkoktodevelopIHG’sresortsstrategy.Ourgoalistobecometheregion’spreferredresortsoperator.GlobalmanagementoftheInterContinentalHotels&ResortsbrandhasalsomovedtoBangkok.WithmorethanathirdoftheInterContinentalHotels&ResortspipelineinAMEA,itgivesourownersconfidencetoseethebrandleadershipbasedintheregion.

Winning in food and beverageAround$1.5billion,35percent,ofAMEA’sgrossrevenuein2012wasfromourfoodandbeverageoperations,representingthelargestamountofanyregionwithinIHG.Withmorethan700restaurantsandbarsinAMEA,foodandbeverageisasizeablebusinessthatcandefineanddrivepreferenceforourBrandsevenfurther.FoodandbeverageisanotherstrandofIHG’sglobalstrategybeingdevelopedinAMEAalongwithglobalresorts.ThiswillestablishtheneedsforeachIHGbrandgloballyanddevelopspecificcareerpathsforourPeople.

“AMEA has some of the world’s most compelling travel destinations, robust business hubs and an incredible energy that comes from our geographical and cultural diversity. We have a great opportunity for AMEA to lead IHG in resorts and food and beverage excellence.”

Jan Smits Chief Executive Officer, Asia, Middle East and Africa

Asia, Middle East and Africa (AMEA)

We are growing our Brands and our People in an exciting region. Strong economies, growing incomes and the rapid rise of the middle class are some of the long-term factors underpinning the success of AMEA.

InterContinentalSamuiBaanTalingNgamResort,Thailand

40 IHG Annual Review and Summary Financial Statement 2012

Performance highlights

Revenueperavailableroom(RevPAR)up5.4%

Revenueup12.2%to$230m

Operatingprofit*up20.9%to$81m

*Beforeexceptionalitems.

Number of rooms by business model

Franchised2,184

Managed58,914

Owned&leased503

Room and hotel numbers

Totalroomsopen61,601

Roomsinpipeline50,916

Totalhotelsopen187

Hotelsinpipeline160

Strong RevPAR growth

Overallin2012RevPARincreasedby5.4percentincludingrategrowthof3.1percent.Whilesomeexplainableslowdownwasseenthisyear,we’restilloutperformingthemarketintheregionwithmorethan180hotelsacross60cities.

Launch of HuALuxE™ Hotels & Resorts

InMarch2012,welaunchedHUALUXEHotels&Resorts–thefirstinternationalupscalehotelbranddesignedspecificallyforChineseguests.

NootherinternationalhotelgrouphasanofferlikeHUALUXEHotels&Resorts,andevensuccessfullocalbrandsarenotabletoprovidethescaleorsupportofIHG.Wesigned15contractsforthebrandin2012.

Thisuniquebrandcouldbeinmorethan100Chinesecitiesoverthenext15-20years.

Continued growth

CrownePlazaisoneofthefastestgrowingIHGbrandsinGreaterChina.Itisalsotheregion’slargestupscaleinternationalhotelbrand.WeopenedeightnewCrownePlazahotelsthisyear,andnowhave60,with52hotelsinthepipeline,whichismorethanhalfofthebrand'sentireglobalpipeline.

WealsoopenedoursecondandthirdHotelIndigoproperties–inthecoastalcityofXiamenandinTianjin,thecommercialhubofNorthChina.

Bytheendof2012,wehadmorethan110,000roomsopenorinthepipeline–anincreaseof7.2percentoverthepreviousyear.

Investing in People

Wecurrentlyhavemorethan50,000employeesacrossourestate,almostallofthemChinese,andwillbecreatingaround30,000newjobsoverthenextfewyears.ThiswillrequiresignificantinvestmentindevelopingourPeople,asthesinglebiggestoperationalchallengeinChinaisobtainingthebesttalent.

Butwith25IHGAcademyprogrammesinGreaterChina,ourcollaborationwithlocaleducationprovidersand/orcommunityorganisationswillgiveparticipantstheopportunitytodevelopskillsandimprovetheiremploymentprospects,creatingapipelineofpotentialrecruitsandfuturetalentforIHGandtheindustry.

“It has been a great year for IHG in China. We are the largest international hotel operator in Greater China with more rooms under development than any competitor. Our RevPAR continues to outperform the market due to the strength of our systems and preference for our Brands.”

Keith Barr Chief Executive, Greater China

Greater China

Greater China has been a standalone business within IHG for the past three years. In that time we have successfully focused on strengthening our Brands, driving strong operating results and implementing a robust People strategy.

CrownePlazaHongKongKowloonEast

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Asia, Middle East and Africa and Greater China 41