InterContinental Hotels Group PLC (NYSE:IHG) Q3 2023 Earnings Call Transcript
InterContinental Hotels Group PLC (NYSE:IHG) Q3 2023 Earnings Call Transcript February 20, 2024
InterContinental Hotels Group PLC isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Stuart Ford: Hello and welcome to IHG’s 2023 full year results presentation. I’m Stuart Ford, Head of Investor Relations at IHG Hotels & Resorts, and shortly you will be hearing from Elie Maalouf, our Chief Executive Officer, and Michael Glover, our Chief Financial Officer. Before we proceed, I am obliged to remind all viewers that the company may make certain forward-looking statements as defined under U.S. law. Please refer to the accompanying full year results announcement and the company’s SEC filings for factors that could lead actual results to differ materially from those expressed in, or implied by, any such forward-looking statements. The results release, together with the usual supplementary data pack, as well as the presentation slides accompanying this webcast, can all be downloaded from the ‘results and presentations’ section under the investors tab on IHGplc.com. Now over to Elie.
Elie Maalouf: Hello and welcome to IHG’s 2023 full-year results presentation. I’m Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. I was honoured to take on this role in July 2023, and to now be presenting my first set of annual results. Our results presentation follows a slightly different format this year, as we are holding a separate live webcast and Q&A session to talk about IHG’s update on strategic priorities. All material background for that update is contained in the full year results announcement that we have released. This webcast that you are currently watching is specifically to cover the performance in 2023. In a moment, Michael Glover will talk you through our financial results, but before that, let me share some key highlights.
We saw excellent progress in 2023, with key metrics for our trading performance, hotel openings and signings, profit and earnings all significantly ahead of last year. RevPAR improved significantly, up 16% versus 2022, and up 11% versus 2019. Despite tougher comparable as we progressed through the year, Q4 RevPAR still finished up 8% year-on-year, and up 13% versus 2019. Looking at system size, our gross growth was 5.3%, and net growth was 3.8%. We added 275 hotels to our system, delivering 16% more room openings than 2022 after adjusting for Iberostar. Signings were up 26% on last year, driven by one of IHG’s best ever quarterly signings performances in Q4. We continue to successfully capture conversion opportunities, which represented over 35% of both openings and signings.
Our Essentials and Suites brands had another strong year, and Luxury & Lifestyle is a rising proportion of our future growth. IHG’s overall pipeline increased 6% year-on-year to almost 300,000 rooms, representing secured growth equivalent to more than 30% of today’s system. Our fee margin continued to expand, growing by 3.4 percentage points in the year and helping to drive operating profit to just over $1 billion, up 23% on 2022. Earnings per share grew 33% year-on-year, and is 24% ahead of where earnings were back in 2019. 2023 saw another record year of cash generation, with free cash flow totalling $819 million. We are pleased to propose a final dividend of $0.104, contributing to total dividend growth of 10% for the year to $152.3. After completing buyback programmes in each of 2022 and 2023, and while continuing to invest in our business, we have announced a further $800 million buyback programme for 2024, demonstrating our commitment to routinely return surplus capital to shareholders.
Let me now handover to Michael who will take you through the details of our financial results for the year.
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