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About INTERCONTINENTAL HOTELS GROUP PLC

InterContinental Hotels Group (IHG) is truly that. The company is the world's largest hotel company by room count, boasting around 800,000 rooms across 5,300 hotels in around 100 countries. The UK-based company takes an asset-light approach to hoteliering, franchising its 13 brands to, or managing hotels on behalf of, third parties. Its mainstay chain, Holiday Inn, offers mid-market accommodation at around 1,170 locations in the US, Europe, and Asia, along with some 2,600 limited-service locations operated under the Holiday Inn Express brand. IHG also serves the upscale market with its Crowne Plaza and InterContinental chains, while its Staybridge Suites and Candlewood Suites brands offer extended stay services mostly in the US. IHG dates back to 1777.

Operations

InterContinental Hotel Group (IHG) operates some 5,400 hotels across 13 brands: InterContinental Hotels & Resorts, Kimpton, Hotel Indigo, Even, Hualuxe, Crowne Plaza, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, Holiday Inn Resort, Avid, Staybridge, and Candlewood. The four Holiday Inn brands account for around 70% of the total hotel count. The next largest are Crowne Plaza (415 hotels), Candlewood (380), and Staybridge (260).

Its brands span budget options (avid, Holiday Inn Express) to premium options (InterContinental, Kimpton). 

In mature markets such as Europe and North America, IHG primarily operates on a franchise basis, while in developing markets such as Asia the balance shifts to a managed model.

Geographic Reach

UK-based InterContinental Hotel Group's (IHG) biggest market is the Americas, which is home to more than 60% of its room-count and generates more than 55% of its revenue. Europe and the Asia/Middle East/Africa segment are comparable in size, bringing around 15% of revenue each and accounting for 10-15% of rooms. Greater China generates more than 5% of revenue but holds nearly 15% of IHG's rooms. 

Financial Performance

InterContinental Hotel Group (IHG) has struggled to meaningfully grow its revenue over the past few years. In fiscal 2017 sales increased 4% to $1.8 billion as the net addition of 174 hotels grew room count by 4%, while IHG also extracted 3% higher revenue per available room. 

Net income increased 42% to $593 million on the back of higher revenue, a 1.6 percentage point increase in margin, and an improvement in exceptional item expenses. 

Cash from operations declined 16% to $634 million.

Strategy

InterContinental Hotels Group (IHG)'s growth strategy is based on growing scale, revitalizing its core brands, shifting to a franchise model in China, and growing in the luxury space. 

IHG believes greater scale will drive profitable growth. It significantly increased its hotel pipeline to 1,655 in 2017 (primarily Holiday Inn and Holiday Inn Express), accounting for some 13% of pipeline across the entire industry and is three times the share of its current hotel count. The company's younger brands' pipeline exceeds their current hotel count in many cases, including Hualuxe (21), Even (12), and its new hotel brand, avid (44). Its other brands have a significant percentage of their current hotel count in the pipeline, excluding Holiday Inn Club Vacations, which has none.

The company sees opportunities in the luxury hotel market, particularly in Asia. In 2018 it acquired Regent, a luxury hotel operator, while in 2017 it opened Kimpton Bali, its first Kimpton hotel in Asia; Even Auckland, the first of several Even hotels in Australasia; Hotel Indigo Bali; and InterContinental Hanoi. 

IHG is also intent on improving its brands. It has invested $200 million in Crowne Plaza in the US to improve guest experience, brand awareness, and commercial performance. Of its US estate, 78% of hotels took up the renewal initiative and have seen on average a 2.3% uplift in revenue per available room vs non-participating Crowne Plaza hotels. The investment reshaped communal spaces to better reflect the leisure-business balance and have increased food and drink revenue. 

The company is also upgrading its Holiday Inn and Holiday Inn Express portfolio with redesigned guest bedrooms and public spaces. By the end of 2017 the plan had reached some 87% of Generation 1 and 2 properties (its older buildings). The redesigned lobbies have increased satisfaction 7 percent and driven food and drink profits 20%. 

In China, IHG's goal is to tip the balance towards franchises from direct management. The Franchise Plus model, introduced for Holiday Inn Express in 2017, is intended to shift the needle via a hybrid approach by providing the benefits of the franchise proposition with elements of a managed model. It accelerated Holiday Inn Express growth in China, signing 54 hotels to Franchise Plus in 2017. It will also introduce Crowne Plaza, Holiday Inn, and Holiday Inn Resort in the country. 

Mergers and Acquisitions

InterContinental Hotels Group expands its hotel count and brands via acquisitions. In 2018-19 it made two acquisitions in the luxury hotel space: In 2018 it acquired a 51% stake in Regent Hotels & Resorts, adding six hotels in the fast-growing luxury space to IHG's portfolio; and in 2019 it agreed to acquire the brands and operating companies of Six Senses Hotels Resorts Spas for $300 million. Additionally, it acquired 12 hotels in the UK from Foncière des Régions. 

INTERCONTINENTAL HOTELS GROUP PLC

Broadwater Park North North Orbital Road
UXBRIDGE, MIDDX UB9 5HR
Phone: 44 01895 512000

Stats

Employer Type: Publicly Owned
Stock Symbol: IHG
Stock Exchange: , NYSE
Chairman: Patrick Cescau
Chief Executive, Asia, Middle East, and Africa: Jan Smits
CEO and Director: Richard Solomons

Major Office Locations

UXBRIDGE, MIDDX

Other Locations

Anchorage, AK
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