InterContinental Hotels Group PLC (IHG) 2006 Q3 法說會逐字稿

Welcome to the InterContinental Hotels Group Q3 results conference call.

At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (OPERATOR INSTRUCTIONS) I must advise you that this conference is being recorded today, Tuesday, the 14th of November, 2006.

This announcement contains certain forward-looking statements as defined under the U.S. law section 21-E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements often use words such as targets, expect, intend, believe or other words of similar meaning. By their nature, forward-looking statements are inherently predictive, speculative, and involve risk and uncertainty. There are a number of factors that can cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Factors that could affect the business and the financial results are described in risk factors in the InterContinental Hotels Group PLC annual report on Form 20-F filed with the United States Securities and Exchange Commission.

I would now like to turn the conference over to your speaker today, Andy Cosslett. Please go ahead, sir.

Thanks, Marcus. Good morning, everyone. This is Andy Cosslett, Chief Executive of InterContinental Hotels Group, and I'm in London newly reopened Intercontinental Park Lane London, which looks absolutely fabulous. Thanks for coming online today. I'm sure you've all had a chance by now to look at our results, so let me just highlight a few key points and then I will take some questions.

The Group had an excellent third quarter. We've good trading right around the world. We achieved encouraging growth in both our net room additions and our rooms pipeline. We think we are very well-positioned to add in the region of 10,000 rooms by the end of this year and beyond that to hitting our 50 to 60,000 net organic rooms target by the end of 2008.

In the period, there are a number of highlights. The main ones would be probably these. Our global RevPAR increased by 8.6% on a constant basis and continuing operating profit was up 13% to GBP53 million, while EPS increased 100% to 11.4 pence.

Regionally, EMEA was strongest with RevPAR up 11.6%, which was driven by a 30% growth in our Middle Eastern business. The Americas and Asia-Pacific also both continued to deliver good growth, up 7.5 and 10.5%, respectively.

All of our seven brands performed well, even in the markets where competition is fiercest. In the USA specifically, InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, and Candlewood brands all outperformed their segments so far this year. We saw a strong performance in both our managed and franchised businesses with a constant-currency operating profit up 18% and 7%, respectively. We saw improved performance for our continuing owned and leased hotels, which as we've discussed before is receiving a lot of focus now in IHG.

The InterContinental London, as I said, has reopened now; November 6 it opened, after a major refurbishment. However, the hotel does not get all of its rooms back until March of next year. Now, we have previously indicated that the refurbishment would impact earnings this year, 2006, by approximately GBP15 million compared with 2004 profits. Now, as results of fewer rooms being available to the hotel, we actually now expect the profitability of this hotel to be GBP3 million lower this year. Strong performances from our other owned hotels will help mitigate this.

In the quarter, the InterContinental Paris saw RevPAR increase 27.3% as it continues to rebuild demand after its extensive renovation. The InterContinental Barclay New York is continuing to drive strong rate growth and the new InterContinental Buckhead in Atlanta is outperforming its competitors, including the Ritz-Carlton. The InterContinental Hong Kong saw strong trading in the quarter, despite some of its rooms being under refurbishment.

In the quarter, we opened 8044 rooms but removed 5271, leaving 2773 net additions. We signed 25,000 rooms into our pipeline, and our pipeline now stands at 143,600 rooms. We continue to expand the pipeline in key markets such as China, where we've signed 12 hotels worth almost 5000 rooms in the quarter, making 28 hotels and 13,000-plus rooms signed in China since the start of this year.

Three weeks ago, we signed a landmark deal in Japan with All Nippon Airways. This catapults IHG into being the leading international hotel operator in Japan, the world's second largest hotel market, and of course a key part of our axis in the Asian region.

As forecast, overheads in the quarter did rise. This is mainly a result of continuing investment that we're making in the business to drive our future growth. These costs covered a suite of global research projects, as I say, which are indicating and gaining a deeper insight into grand perceptions in the lodging sector generally, building the development of our franchised capability around the world. These projects will run through to the end of 2006.

Over GBP2.7 billion has now been returned to shareholders with a further GBP50 million still to be completed. We will update on the size and timing of our next return to shareholders no later than the preliminary results in February 2007.

So, overall, I would say this has been a very good quarter for the business, good progress being made towards all of our stated goals, and we continue to have a very positive outlook for the remainder of this year and indeed beyond that.

Thanks very much. I think I will just now throw it open to any questions you might have.

Thank you. We will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS) You have no questions at this time, sir. Please continue.

Okay. Well, that's hopefully a sign that you think it's a good, clean set of results and we're in the right direction. Thanks so much for coming online this afternoon, my time. Good morning, your time, and I look forward to seeing you before too long. Thanks, everyone.

That does conclude our conference for today. For those of you wishing to review this conference, the replay facility can be accessed by dialing the UK on country code 44-1452-55-0000. The standard UK dial-in number is 0845-245-5205. The reservation number is 9543957, followed by #. Thank you for participating. You may all disconnect.