IHG Reports Strong Financial Performance & Growth in 2023

IHG Performance 2023
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IHG PERFORMANCE 2023: BRAND POSTS STRONG FINANCIAL GROWTH IN 2023, PROMISING CONTINUED EXPANSION AND VALUE CREATION.

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IHG Hotels & Resorts experienced robust performance in 2023, with global Revenue per Available Room (RevPAR) soaring by 16.1% year-over-year (YoY) and 10.9% compared to 2019. The Americas saw a 7.0% YoY RevPAR increase, EMEAA a remarkable 23.7% (Q4 +7.0%), and Greater China an impressive 71.7% (Q4 +72.0%). Average daily rates climbed 5% vs 2022 and 13% vs 2019, with occupancy up 6 percentage points vs 2022, just 1 percentage point lower vs 2019.

IHG Performance 2023: Financial Growth & Global Expansion

Gross system growth reached 5.3%, with a net system size growth of 3.8%. IHG opened 47.9k rooms, showing a remarkable 16% YoY increase. The global estate now boasts 946k rooms across 6,363 hotels. The company signed agreements for 79.2k rooms, marking a 26% YoY rise. The global pipeline stands at an impressive 297k rooms across 2,016 hotels, reflecting a 5.5% YoY growth.

Profitability and Margin Growth

Fee margin saw an increase of 3.4% points, reaching 59.3%, driven by the trading recovery in EMEAA and Greater China. Operating profit from reportable segments reached $1,019m, a significant 23% increase. The reported operating profit of $1,066m included $19m from the System Fund and reimbursables, along with a $28m exceptional profit.

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Cash Flow and Shareholder Returns

Net cash from operating activities hit $893m, showcasing a strong performance. Adjusted free cash flow reached $819m, representing 129% conversion of adjusted earnings. The net debt increased by $421m, reflecting the robust adjusted free cash flow, $1.0bn of shareholder returns, and a $105m net foreign exchange adverse impact.

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Share Buyback and Future Growth Plans

IHG successfully completed the 2023 $750m share buyback program and paid $245m in ordinary dividends. A new $800m buyback program has been launched, expected to return over $1bn to shareholders in 2024. The company envisions high single-digit percentage growth in fee revenue, focusing on RevPAR and system size growth, with a fee margin expansion of 100-150bps annually over the medium to long term.

Elie Maalouf, IHG’s CEO, expressed gratitude for the excellent performance in 2023 and outlined plans for future growth. With a strong portfolio and efficient operating model, the company aims for sustained value creation. Thet are anticipating 12-15% adjusted EPS compound annual growth. IHG is poised for an important next chapter of growth, creating sustainable value for shareholders and contributing positively to employees, hotel owners, and communities.

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