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100	100	“We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of its key markets around the world. The high level of demand IHG has seen for leisure travel continues to drive increased rates and occupancy. The company also continue to see a return of business and group travel, further supporting RevPAR improvements in many of its key urban markets. As occupancy levels rise and due to the strength of its brands, its hotels are seeing increased pricing power; in March, its hotels in the US achieved leisure rates up by more than 10% on 2019 levels and rate across the whole of the US business was 4% ahead. Trading in Greater China continues to be impacted by restrictions put in place to control rising Covid cases.
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102	102	The company's strategic focus on strengthening and expanding its brand portfolio continues to drive growth. The company signed 17 thousand rooms into its development pipeline in the first quarter, 15% more than in 2021. The company's pipeline of 278 thousand rooms increased 2.4%. Of the 120 hotels signed, there was a particularly strong performance in the Americas with a near-doubling of signings from 39 to 73. Luxury & Lifestyle brands now account for around 20% of all signings, and following the completion of its quality review in 2021 there were 52 signings across the Holiday Inn brand family and 14 for Crowne Plaza, together up 22% on last year. The company's net system size is expanding, and IHG is pleased with the progress towards its ambition of delivering an industry-leading level of net rooms growth.”
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105	105	In April, IHG entered into a new $1.35bn syndicated bank revolving credit facility (RCF). The previous $1.275bn syndicated facility and $75m bilateral facility have been cancelled. The covenant amendments to the previous facility announced in December 2020, which included a relaxation of covenants for the June 2022 and December 2022 and the $400m minimum liquidity covenant, are no longer in effect.
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107	107	The new five-year RCF matures in April 2027. Two one-year extension options are at the lenders’ discretion. There are two financial covenants: interest cover and leverage ratio. Covenants are tested at half year and full year on a trailing 12-month basis. Interest cover requires a ratio of Covenant EBITDA to Covenant interest payable above 3.5:1. The leverage ratio requires Covenant net debt to Covenant EBITDA below 4.0:1. These covenants now include the impact of IFRS 16, Leases, which was previously excluded due to ‘frozen GAAP’ treatment in the previous agreement.
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	112	+[[image:IHG3.png]]
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	114	+
110	110	== 2021 Full Year Results ==
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112	112	During the year ended 31 December 2021, total revenue increased by $513m (21.4%) to $2,907m including a $48m reduction in cost reimbursement revenue. Revenue from reportable segments increased by $398m (40.1%) to $1,390m, driven by improved trading conditions. Underlying revenue increased by $387m to $1,373m, with underlying fee revenue increasing by $314m. Owned, leased and managed lease revenue increased by $68m.{{footnote}}https://www.ihgplc.com/en/-/media/FBC3B4884AB449A4975A4302F38F1F7D.ashx{{/footnote}}
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115	115	Comparing to 2020, Group comparable RevPAR declined 34% in the first quarter, then grew 151% in the second quarter, 66% in the third quarter, 71% in the fourth quarter and 46% in the full year. When compared to the pre-pandemic levels of 2019, Group comparable RevPAR declined 51% in the first quarter, 36% in the second quarter, 21% in the third quarter, 17% in the fourth quarter and 30% in the full year.
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	122	+
117	117	Operating profit improved by $647m from a loss of $153m to a profit of $494m, including a $241m net reduction in operating exceptional items, a $91m improvement in the System Fund result, from a $102m deficit to an $11m deficit, and a $36m decrease in the charge for expected credit losses on corporate trade receivables. Operating profit from reportable segments increased by $315m (143.8%) to $534m, driven by improved demand and the delivery of sustainable fee business cost savings. Underlying operating profit increased $308m to $531m.
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119	119	Fee margin increased by 15.5ppts to 49.6%, benefitting from the improvement in trading and focused cost management.
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121	121	In the year to 31 December 2021, System Fund revenues increased $163m (21%) to $928m, primarily driven by the recovery in travel demand yielding higher assessment revenues. The System Fund income statement deficit reduced by $91m to $11m, primarily due to the rebound in travel demand and associated assessment income, partially offset by the reversal of temporary savings realised in 2020.
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123	123	Net financial expenses decreased by $1m to $139m. Adjusted interest, as reconciled on page 223, and which excludes exceptional finance expenses, and adds back interest relating to the System Fund, increased by $12m to an expense of $142m. The increase in adjusted interest was primarily driven by increased average bond debt.
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125	125	Financial expenses include $91m (2020: $69m excluding exceptional financial expenses) of total interest costs on public bonds, which are fixed rate debt. Interest expense on lease liabilities was $29m (2020: $37m).
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127	127	The Group’s basic earnings per ordinary share is 145.4¢ (2020: basic loss per ordinary share: 142.9¢). Adjusted earnings per ordinary share increased by 115.7¢ to 147.0¢.
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129	129	The Board is proposing a final dividend of 85.9¢ in respect of 2021, an amount equivalent to the withdrawn final payment in respect of 2019. No interim dividend was paid in respect of 2021.
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	144	+[[image:IHG4.png]]
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133		-Business Overview
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	147	+= Business Overview =
	148	+
135	135	The company predominantly franchise its brands and manage hotels on behalf of third-party hotel owners and have a weighting to more resilient domestic non-urban markets.
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138		-
139	139	The growth of its business relies on two fundamental growth drivers: revenue per available room (RevPAR) and increasing the number of rooms across its estate. RevPAR indicates the value guests ascribe to a given hotel, brand or market and grows when they stay more often or pay higher rates. Room supply reflects how attractive the hotel industry is as an investment from an owner’s perspective.
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141	141	To drive growth, IHG has a portfolio of 17 brands across more than 100 countries in the Suites, Essentials, Premium and Luxury & Lifestyle categories. Supported by a leading loyalty programme and powerful technology, its brands meet clear guest needs and generate strong returns for its owners, which in turn attracts further hotel investment and grows its estate.
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143	143	IHG is an asset-light business and its focus is on growing fee revenues and fee margins, which the company can do with limited capital requirements. This enables it to grow and invest in its business while generating high returns on invested capital and strong cash flow.
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145	145	The company generally franchise or manage hotels, with the decision largely driven by market maturity, owner preference and, in certain cases, the particular brand. Hotels in the Essentials category tend to be franchised, while Luxury & Lifestyle hotels are predominantly managed.
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147	147	The company's broad geographic spread and weighting towards essential business and domestic leisure travel has driven resilience relative to the wider industry during the pandemic. IHG is weighted towards non-urban markets which are less reliant on international inbound travel and less exposed to large group meetings and events. A combination of these factors, along with its enterprise capability, has allowed IHG to outperform the wider industry in RevPAR growth.
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150	150	The company's asset-light business model requires a limited increase in IHG’s own operating expenditure to support its revenue growth, which delivers operating profit and fee margin growth.
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152	152	For franchised hotels, the flow through of revenue to operating profit is higher than it is at managed hotels, given its well-invested scale platform where limited resources are required to support the addition of an incremental hotel. This is most evident in its Americas region, where fee margins are the highest, reflecting its scale and around 90% of its hotels operating under its franchised model.
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155		-Brands
	173	+[[image:IHG5.png]]
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157		-Six Senses Hotels Resorts Spas
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159		-Regent Hotels & Resorts
	176	+== Brands ==
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161		-InterContinental Hotels & Resorts
	178	+* Six Senses Hotels Resorts Spas
	179	+* Regent Hotels & Resorts
	180	+* InterContinental Hotels & Resorts
	181	+* Vignette™ Collection
	182	+* Kimpton Hotels & Restaurants
	183	+* Hotel Indigo
	184	+* EVEN Hotels
	185	+* HUALUXE Hotels and Resorts
	186	+* Crowne Plaza Hotels & Resorts
	187	+* voco hotels
	188	+* Holiday Inn Hotels & Resorts
	189	+* Holiday Inn Express
	190	+* Holiday Inn Club Vacations
	191	+* avid hotels
	192	+* Staybridge Suites
	193	+* Atwell Suites
	194	+* Candlewood Suites
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163		-Vignette™ Collection
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165		-Kimpton Hotels & Restaurants
	197	+(% class="info" %)|(% rowspan="2" %)**Brands**|(% colspan="2" style="text-align:center" %)**Current**|(% colspan="2" style="text-align:center" %)**Pipeline**
	198	+(% class="info" %)|**Hotels**|**Rooms**|**Hotels**|**Rooms**
	199	+|Six Senses Hotels Resorts Spas|21|1412|33|2424
	200	+|Regent Hotels & Resorts|7|2190|8|1938
	201	+|InterContinental Hotels & Resorts|207|69917|79|19730
	202	+|Vignette™ Collection|2|539|6|884
	203	+|Kimpton Hotels & Restaurants|75|13297|38|7723
	204	+|Hotel Indigo|133|16717|119|19127
	205	+|EVEN Hotels|21|2994|29|4907
	206	+|HUALUXE Hotels and Resorts|17|4893|22|5762
	207	+|Crowne Plaza Hotels & Resorts|406|111491|107|27856
	208	+|voco hotels|35|8523|36|9701
	209	+|Holiday Inn Hotels & Resorts|1192|215841|251|49206
	210	+|Holiday Inn Express|3034|319407|658|83808
	211	+|Holiday Inn Club Vacations|28|8822|0|0
	212	+|avid hotels|52|4676|161|13956
	213	+|Staybridge Suites|318|34559|158|17284
	214	+|Atwell Suites|1|90|22|2181
	215	+|Candlewood Suites|361|32024|107|8794
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167		-Hotel Indigo
168	168
169		-EVEN Hotels
	218	+= Industry Overview =
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171		-HUALUXE Hotels and Resorts
172		-
173		-Crowne Plaza Hotels & Resorts
174		-
175		-voco hotels
176		-
177		-Holiday Inn Hotels & Resorts
178		-
179		-Holiday Inn Express
180		-
181		-Holiday Inn Club Vacations
182		-
183		-avid hotels
184		-
185		-Staybridge Suites
186		-
187		-Atwell Suites
188		-
189		-Candlewood Suites
190		-
191		-
192		-<brand img>
193		-
194		-
195		-Industry Overview
196		-
197	197	The $360 billion hotel industry has compelling structural growth drivers, underpinned by factors including consumers’ inherent desire to travel, population growth, and an expanding middle class in emerging markets with increasing disposable incomes. While the pandemic suppressed demand during 2020 and 2021, demand has returned rapidly in domestic markets as government restrictions have lifted and vaccination rates increased. This demand has predominantly been in markets not exposed to cross-border trips and across essential business travel, though discretionary corporate travel and group events have begun to return.
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200	200	Cost remains a significant barrier to building a scale position in the industry, whether that’s due to the investment required to build and maintain hotels, establish a strong loyalty programme or to market brands in a competitive marketplace. As such, the industry remains fragmented, with 54% of rooms affiliated with a global or regional chain.
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202	202	Branded hotel penetration has steadily increased as a long-term trend and is expected to continue to grow as consumers look to trusted brands to meet their evolving expectations, particularly when it comes to state-of-the-art technology and the skills, scale and resources to provide more sustainable stays. Owners affiliated with a brand tend to generate higher returns
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204	204	For the industry as a whole, it is not yet clear what impact there will be on demand from structural changes brought about by the pandemic, such as technology replacing elements of business travel. However, this may be offset by a greater use of hotels to facilitate a global shift to increasingly flexible working arrangements. In addition, there is scope for ‘bleisure’ demand, where flexible working creates potential for leisure demand to be combined with business stays.
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206	206	It is likely that fluctuating Covid-19 restrictions will continue to create a volatile demand environment in the short term. However, the company anticipate the attractive industry fundamentals to be fully restored in the longer term. For example, STR forecast that US industry RevPAR will return to 2019 levels by the end of 2023.
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209		-References
	235	+= References =
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211	211	{{putFootnotes/}}