IHG Hotels & Resorts release its full year results for 2023

Trading and revenue

• Strong trading: global RevPAR2 up +16.1 per cent YoY (Q4 +7.6 per cent); global RevPAR up +10.9 per cent vs 2019 (Q4 +12.7 per cent)

• Americas FY RevPAR up +7.0 per cent YoY (Q4 +1.5 per cent), EMEAA +23.7 per cent (Q4 +7.0 per cent) and Greater China +71.7 per cent (Q4 +72.0 per cent), reflecting the differing levels of travel restrictions that were still in place in 2022

• Average daily rate up +5 per cent vs 2022, +13 per cent vs 2019; occupancy up +6 per cent pts vs 2022, just (1) per cent pt lower vs 2019

• Total gross revenue of $31.6b, +23 per cent vs 2022, +13 per cent vs 2019

System size and pipeline

• Gross system growth +5.3 per cent; net system size growth of +3.8 per cent

• Opened 47.9k rooms (275 hotels), +16 per cent YoY (ex. Iberostar); global estate 946k rooms (6,363 hotels)

• Signed 79.2k rooms (556 hotels), +26 per cent YoY (ex. Iberostar); global pipeline 297k rooms (2,016 hotels), +5.5 per cent YoY

• Q4 opened 19.2k rooms (117 hotels) and signed 28.3k rooms (194 hotels), one of the highest quarters on record

Margin and profit

• Fee margin of 59.3 per cent, up +3.4 per cent pts driven by trading recovery in EMEAA and Greater China

• Operating profit from reportable segments of $1,019m, up +23 per cent; this included $13m adverse currency impact

• Reported operating profit of $1,066m, including a profit of $19m from System Fund and reimbursables (2022: loss of $105m) and a $28m exceptional profit (2022: $95m net exceptional charges)

Cash flow and net debt

• Net cash from operating activities of $893m (2022: $646m), with adjusted free cash flow of $819m (2022: $565m), the latter representing 129 per cent conversion of adjusted earnings (2022: 111 per cent)

• Net debt increase of $421m reflects the strong adjusted free cash flow, $1.0b of shareholder returns and a $105m net foreign exchange adverse impact

• Adjusted EBITDA of $1,086m, +21% vs 2022; net debt:adjusted EBITDA ratio of 2.1x

Shareholder returns

• Completion of 2023’s $750m share buyback programme, and payment of $245m in ordinary dividends

• Final dividend of 104.0¢ proposed, +10 per cent vs 2022, resulting in a total dividend for the year of 152.3¢

• New $800m buyback programme launched, which together with ordinary dividends is expected to return over $1b to shareholders in 2024

Clear framework to drive future value creation over the medium to long term

• High single digit percentage growth in fee revenue, though combination of RevPAR and system size growth, together with 100-150bps fee margin expansion, annually on average over the medium to long term

• 100 per cent conversion of adjusted earnings into adjusted free cash flow, supporting investment in the business to optimize growth, sustainably growing the ordinary dividend and returning surplus capital

• 12-15 per cent adjusted EPS compound annual growth rate, including the assumption of ongoing share buybacks

“I was honoured to take over as IHG’s group CEO in July and would like to thank our teams for delivering an excellent set of results. Travel demand was strong across all markets, with RevPAR up 16 per cent on last year and 11 per cent ahead of the 2019 pre-pandemic peak. Combined with the power of our enterprise and efficient operating model, profit from reportable segments grew 23 per cent and exceeded one billion dollars for the first time, and adjusted EPS grew 33 per cent. Today we are announcing a further $800m share buyback programme, which together with ordinary dividends is expected to return over $1b to shareholders in 2024.

Alongside strong trading and financial performances, we continued to grow our portfolio and the global footprint of our brands. We opened 275 hotels in 2023 and signed more than double that amount – 556 hotels – into our pipeline. Adjusting for the effect of the Iberostar hotels joining IHG’s system, openings for the fourth quarter grew by 27 per cent year-on-year and signings were up by 50 per cent, representing one of our biggest ever quarters for development activity,” says Elie Maalouf, chief executive officer, IHG Hotels & Resorts.