SECURITIES
AND EXCHANGE COMMISSION
Washington
DC 20549
FORM 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 AND 15d-16
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For 07
May 2020
InterContinental Hotels Group PLC
(Registrant's
name)
Broadwater
Park, Denham, Buckinghamshire, UB9 5HJ, United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F
Form 40-F
Indicate
by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes
No
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): Not
applicable
EXHIBIT
INDEX
99.1
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First
Quarter Trading Update dated 07 May 2020
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Exhibit
No: 99.1
7 May 2020
InterContinental Hotels Group PLC
2020
First Quarter Trading Update
●
Group Q1
comparable RevPAR1 down
24.9%; March down 55%; April expected to be down around
80%
●
~15% (~1,000
hotels) of the estate closed as at the end of April; ~10% (~440
hotels) in the Americas,
~50% (~560 hotels) in EMEAA and ~2% (10 hotels) in Greater
China
●
Occupancy levels in
comparable open hotels in the low-to-mid 20%
range
●
4.6% YoY net system
size growth to 882k rooms
●
6k rooms opened,
including 1k in March
● Signed 14k rooms (104 hotels)
in the quarter, including 4k in March, taking the pipeline to 288k
rooms
● Delivering on our cost
reduction and cash conservation actions across the System Fund and
Fee Business; on track to reduce Fee Business costs by up to $150m
and capex by ~$100m; further cost measures to be implemented
to manage the business through the evolving
trading environment
● ~$2bn of liquidity available;
extension secured on $1.275bn syndicated RCF until September 2023
in addition to covenant waivers already in place; £600m
(~$740m) of CCFF funding issued
Keith Barr, Chief Executive Officer, InterContinental Hotels Group
PLC, said:
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"Covid-19 represents the most significant challenge both IHG and
our industry have ever faced. We are responding on every front and
taking decisive action to the benefit of all our stakeholders. Our
top priority remains to support our guests, colleagues and hotel
owners through this crisis, whilst protecting for the long term and
positioning the business for recovery. I would like to sincerely
thank everyone at IHG and our owners for the way they have
responded to this challenge. This includes protecting the health
and safety of guests and colleagues; flexing booking and
cancellation options for guests and protecting their loyalty
membership status; and repurposing hotels to provide essential
activities including accommodation to frontline workers, military
personnel and vulnerable members of society. We have been working
closely with our owners to help keep hotels open, including
advising on adjusting operations, providing fee relief and payment
flexibility, and collaborating to secure broader government support
for the industry.
Following a solid performance in the first two months of 2020,
occupancy levels dropped to historic lows in March and April, as
social distancing measures and travel restrictions came into effect
around the world. Global RevPAR in the first quarter declined by
25%, including a 55% decline in March, and we anticipate April to
be down by around 80%. In the US, our biggest market, our franchise
portfolio of 3,750 mainstream hotels has seen lower levels of
RevPAR decline than the industry, and as at the end of April we had
~90% of our estate open. Our business is also weighted towards
non-urban markets that are less reliant on international inbound
travel and large group meetings and events, which provides a level
of resilience during this difficult period.
Building on our conservative balance sheet approach, we are
delivering on our plans to reduce costs, preserve cash and
strengthen our liquidity. We remain focused on managing the
business appropriately through this unique period while also
positioning IHG to emerge strongly when our markets recover. We
anticipate continued disruption to travel in the months ahead, and
forward visibility on the timing and shape of improvements in
demand remains very limited. We are though still seeing hotel
openings including the Regent Shanghai Pudong later this month, and
great signings such as the InterContinental in Rome. Progress also
continues around the world to build upon the launches of our avid,
voco and Atwell Suites brands.
IHG's response to Covid-19 is centred on remaining true to our
purpose and values, and we are taking all necessary actions to
manage through the uncertainties and challenges facing our
industry. Our strategy is unchanged, and we will look to continue
building on the resilience of our business model relative to the
industry."
First Quarter performance
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Americas
RevPAR was down 19.3% in Q1, driven by occupancy declines of
10%pts. In the US, RevPAR was down 19.6% for the quarter and 49% in
March, impacted by the sharp decline in travel due to the outbreak
of Covid-19. March performance was ahead of both the industry and
our weighted segments, with relative outperformance across our
Mainstream and Extended Stay brands. Our distribution is weighted
towards non-urban markets, which account for ~85% of our estate and
which saw a less severe RevPAR decline than urban markets in March.
We also have a lower degree of reliance on large groups and events
and on international inbound travel, with domestic travel making up
~95% of our demand.
Elsewhere in the region, Canada was down 20% in Q1, Latin America
and the Caribbean were down 14% and Mexico was down 18% (with
declines in March of 51%, 49% and 45%, respectively).
At the end of April, we had ~90% of our estate open (~440 closed
hotels) across the Americas, with our Luxury and Upscale portfolio
seeing the greatest impact. We anticipate that RevPAR for April
will be down around 80%, with occupancy levels for comparable open
hotels in the mid-20% range.
We opened 2.5k rooms (26 hotels) and removed 3.5k rooms (27 hotels)
in the quarter, with our net system size growing 2.4% YoY. We have
seen construction activity continue through April, albeit at lower
levels, with 10 hotels breaking ground during the month. We signed
6.1k rooms (61 hotels) in the quarter, including 12 avid hotels and
5 Atwell Suites.
Europe, Middle East, Asia & Africa
RevPAR was down 25.7% in Q1, including a 63% decline in March. Q1
RevPAR was down 22% in the UK (March down 55%), with London down
25% (March down 61%). Continental Europe RevPAR was down 28% for
the quarter (March down 72%). Elsewhere, the Middle East was down
21% for the quarter (March down 60%), while Australia and Japan
were down 22% and 35% respectively.
At the end of April there were ~560 hotels (~50% of our estate)
closed across EMEAA, reflecting the timing of mandated lockdowns by
governments in the region. Occupancy levels for comparable open
hotels are running in the low-20% range on average, and RevPAR for
April is expected to be down around 90%.
We opened 1.5k rooms (10 hotels), driving net rooms growth of 3.5%
YoY. Removals of 3.6k rooms included 2.1k relating to a previously
flagged portfolio of hotels in Germany. We signed 2.5k rooms (12
hotels) in the quarter, including 2 further hotels for Six Senses
and our first Kimpton property in Malaysia, and subsequent signings
include an InterContinental in Rome.
Greater China
First
quarter RevPAR in Greater China was down 65.3%, reflecting the
outbreak of Covid-19 in January. RevPAR was down 89% in February,
improving modestly to an 81% decline in March and to an expected
~75% decline in April. In Mainland China, our Q1 RevPAR declined
63%. RevPAR in Tier 1 and 2 cities declined 64%, and Tier 3 and 4
cities fell 59%.
There were 10 of our hotels closed across Greater China at the end
of April, compared to 178 closed at the peak of the outbreak.
Recent weeks have continued to see a moderate improvement in
occupancy levels which are running in the mid-20% range, up from a
trough of ~5% in mid-February.
We opened 2.0k rooms (8 hotels) in the quarter, with net rooms
growth of 16.2% YoY. We have also seen construction work resume on
~95% of hotels that are due to open this year.
Signings totalled 5.6k rooms (31 hotels), including 22 franchise
signings across our Holiday Inn Express, Holiday Inn and Crowne
Plaza brands. Last month, we also announced the signing of the
Regent Shanghai Pudong, which will become the first Regent hotel to
open since our acquisition of the brand. In addition, the
InterContinental Hong Kong has now closed ahead of an extensive
refurbishment which will see it re-open as the Regent Hong Kong in
2022.
Update on cost actions, cash preservation and
liquidity
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As
recently set out, we have implemented a number of measures to
reduce costs and preserve cash across the business.
Cost actions and cash preservation
● We are delivering on our plans to reduce salary
and incentives, challenge discretionary spend and scale down
marketing spend across the Fee Business, our Owned, Leased and
Managed Lease hotels, and the System Fund.
● Our previously announced measures are expected to
result in a reduction of up to $150m in our Fee Business
costs; further cost
reduction measures are to be implemented to manage the business
through the evolving trading environment.
● Additionally, we anticipate gross capital
expenditure of ~$150m for 2020, a saving of ~$100m versus
2019.
● Our previously stated sensitivity of a ~$13m
change in EBIT for every 1% change in RevPAR (before taking account
of any cost actions) still holds, although we expect this to
increase by ~$1m through 2020 given hotel closures in our Owned,
Leased and Managed Leased estate. The response to Covid-19 is also
likely to impact our technology fee income, where we have offered a
temporary discount to owners, along with other revenues such as
training fees which are impacted by hotel closures and social
distancing measures.
Liquidity
● We have amended our existing $1.35bn syndicated
and bilateral revolving credit facilities (RCF) to include a waiver
of existing covenants until 31 December 2021 (see note 1 for more
details).
● We have also extended the maturity of the $1.275bn
syndicated RCF for 18 months to September 2023 (see note 2 for more
details).
● In addition, we have issued £600m (~$740m) of
commercial paper under the UK Government's Covid Corporate
Financing Facility (CCFF).
● Our total available liquidity is therefore ~$2bn,
comprising ~$1.2bn of cash on deposit and undrawn facilities on our
RCF of $850m, giving us sufficient headroom to continue to operate
for at least 18 months in a theoretical 'zero occupancy'
environment.
● Our headroom assessment assumes current estimated
cash outflows in a zero occupancy environment for the Fee Business,
our Owned, Leased and Managed Leased hotels and the System Fund, as
well as outflows for financing and tax.
Commitment to operate a responsible business
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In dealing with the Covid-19 crisis, IHG is focused on remaining
true to our purpose and values. Actions across our wider
stakeholder group as part of our response have
included:
● Ensuring the safety and security of our colleagues
as they deliver True Hospitality each day, as well as
cross-industry collaboration to help impacted colleagues find
alternative employment whilst hotels are temporarily closed through
our IHG Hotel Colleague Job Center website.
● IHG is supporting its long-standing True
Hospitality for Good charitable partners, including the British Red
Cross through its Disaster Relief Alliance membership, CARE
International to provide Personal Protective Equipment (PPE) in
developing markets, and the China Red Cross.
● IHG Rewards Club loyalty members are able to
donate loyalty points, converted into cash, to our True Hospitality
for Good community partners, such as the International Federation
of Red Cross and Red Crescent Societies (IFRC). In just a few
weeks, IFRC has received millions of points from IHG's loyalty
members.
● Working with governments and organisations around
the world, including #FirstRespondersFirst in the US, to provide
accommodation to frontline workers, military personnel and
vulnerable members of society. Across our business around 290
hotels are currently repurposed for these and other essential
activities.
● Extension of our True Hospitality for Good
programme to help support foodbanks and food provision charities in
more than 70 countries.
● Waiving of cancellation fees for guests on stays
through to the end of June and reduction of the criteria for Elite
membership across our loyalty programme, IHG Rewards
Club.
● Helping our owners to keep their hotels open and
to adjust their operations, providing them with support measures
such as fee relief and increased payment flexibility, and advising
them on access to government support
programmes.
The strengthening of the US dollar against major currencies
decreased Group RevPAR to a 25.6% decline in the quarter, when
reported at actual exchange rates. A breakdown of constant vs.
actual currency RevPAR is set out in Appendix 2.
1 RevPAR
growth is on a comparable hotels basis and at constant exchange
rates (CER) unless otherwise stated
Note 1: The RCF has customary covenants in respect
of interest cover and leverage ratio, tested at half year and full
year on a trailing twelve-month basis. The next three tests of
these covenants are now waived, with the next test occurring on 31
December 2021. The interest cover covenant requires a ratio of
EBITDA to net interest payable above 3.5:1 and the leverage ratio
requires Net Debt:EBITDA of below 3.5:1 on a "frozen GAAP" basis
pre-IFRS 16. For 2019, the IFRS 16 adjustment reduced EBITDA
and net debt by approximately $70m and $440m respectively. The
interest cover and leverage ratio covenants have been replaced by a
minimum liquidity covenant (defined as unrestricted cash and
undrawn facilities with a remaining term of 6 months) which will be
tested at 30 June 2020, 31 December 2020 and 30 June
2021.
Note 2: The term of the
$1.275bn syndicated RCF has been extended to September 2023. The
interest margin payable on borrowings under the facility is linked
to IHG's Net Debt:EBITDA ratio. The margin can now vary between
LIBOR + 0.90% and LIBOR + 2.75%.
Appendix 1: First quarter RevPAR movement summary
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Q1 2020
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Monthly RevPAR
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RevPAR
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Rate
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Occ.
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Jan
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Feb
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Mar
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Group
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(24.9)%
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(3.0)%
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(14.4)%pts
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(1.5)%
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(10.8)%
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(55.1)%
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Americas
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(19.3)%
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(3.8)%
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(10.4)%pts
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0.2%
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(0.9)%
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(49.0)%
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EMEAA
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(25.7)%
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(6.0)%
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(14.2)%pts
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2.1%
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(11.3)%
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(62.7)%
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G.
China
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(65.3)%
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(13.2)%
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(32.4)%pts
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(24.6)%
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(89.3)%
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(81.4)%
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Appendix 2: RevPAR at constant exchange rates (CER) vs. actual
exchange rates (AER)
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Q1 2020
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CER
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AER
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Difference
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Group
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(24.9)%
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(25.6)%
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(0.7)%pts
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Americas
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(19.3)%
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(19.8)%
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(0.5)%pts
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EMEAA
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(25.7)%
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(26.9)%
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(1.2)%pts
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G.
China
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(65.3)%
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(66.1)%
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(0.8)%pts
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Appendix 3: Q1 system & pipeline summary (rooms)
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System
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Pipeline
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Openings
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Removals
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Net
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Total
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YoY%
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Signings
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Total
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Group
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6,045
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(8,046)
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(2,001)
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881,562
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4.6%
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14,202
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288,321
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Americas
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2,522
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(3,519)
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(997)
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523,650
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2.4%
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6,108
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118,490
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EMEAA
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1,521
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(3,599)
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(2,078)
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221,292
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3.5%
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2,476
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82,098
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G.
China
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2,002
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(928)
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1,074
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136,620
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16.2%
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5,618
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87,733
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Appendix 4: Definitions
AER: Actual exchange rates used for each respective
period.
CER: Constant exchange rates.
RevPAR: Revenue per available room.
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For further information, please contact:
Investor
Relations (Stuart Ford; Matthew Kay; Rakesh Patel)
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+44
(0)1895 512 176
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+44
(0)7527 419 431
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Media
Relations (Yasmin Diamond; Mark Debenham)
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+44
(0)1895 512 097
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+44
(0)7527 424 046
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Conference
call for Analysts and Shareholders:
A conference call with Keith Barr, Chief Executive Officer and Paul
Edgecliffe-Johnson, Chief Financial Officer and Group Head of
Strategy will commence at 9:00am London time on
7th May
and can be accessed at https://www.ihgplc.com/investors/results-and-presentations.
There will be an opportunity to ask questions:
UK:
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+44 (0)
203 936 2999
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US:
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+1 646
664 1960
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All
other locations:
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+44 (0)
203 936 2999
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Participant
Access Code:
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703
051
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A recording of the conference call will be available for 7 days
from 11.30am London time; details are below:
UK:
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+44 (0)
203 936 3001
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US:
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+1 845
709 8569
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All
other locations:
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+44
(0)203 936 3001
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Participant
Access Code:
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795
493
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Website:
The full release and supplementary data will be available on our
website from 7:00am (London time) on 7th May.
The web address is https://www.ihgplc.com/investors/results-and-presentations.
Notes to Editors:
IHG® (InterContinental
Hotels Group) [LON:IHG, NYSE:IHG (ADRs)]
is a global organisation with a broad portfolio of hotel brands,
including Six
Senses Hotels Resorts Spas, Regent
Hotels & Resorts, InterContinental® Hotels
& Resorts, Kimpton® Hotels
& Restaurants, Hotel
Indigo®, EVEN® Hotels, HUALUXE® Hotels
and Resorts, Crowne
Plaza® Hotels
& Resorts, voco™, Holiday
Inn® Hotels
& Resorts , Holiday
Inn Express®, Holiday
Inn Club Vacations®, avid™
hotels, Staybridge
Suites®, Atwell
Suites™,
and Candlewood
Suites®.
IHG franchises, leases, manages or owns approximately 5,900 hotels
and nearly 882,000 guest rooms in more than 100 countries, with
almost 2,000 hotels in its development pipeline. IHG also
manages IHG® Rewards
Club, our
global loyalty programme, which has more than 100 million enrolled
members.
InterContinental Hotels Group PLC is the Group's holding
company and is incorporated in Great Britain and registered in
England and Wales. More than 400,000 people work across IHG's
hotels and corporate offices globally.
Visit www.ihg.com for
hotel information and reservations and www.ihgrewardsclub.com for
more on IHG Rewards Club. For our latest news,
visit: https://www.ihgplc.com/en/news-and-media and
follow us on social media at: https://twitter.com/ihgcorporate, www.facebook.com/ihgcorporate and www.linkedin.com/company/intercontinental-hotels-group.
Cautionary note regarding forward-looking statements:
This announcement contains certain forward-looking statements as
defined under United States law (Section 21E of the Securities
Exchange Act of 1934) and otherwise. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking
statements often use words such as 'anticipate', 'target',
'expect', 'estimate', 'intend', 'plan', 'goal', 'believe' or other
words of similar meaning. These statements are based on
assumptions and assessments made by InterContinental Hotels Group
PLC's management in light of their experience and their perception
of historical trends, current conditions, expected future
developments and other factors they believe to be
appropriate. By their nature, forward-looking statements are
inherently predictive, speculative and involve risk and
uncertainty. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed in or implied by, such forward-looking statements.
The main factors that could affect the business and the financial
results are described in the 'Risk Factors' section in the current
InterContinental Hotels Group PLC's Annual report and Form 20-F
filed with the United States Securities and Exchange
Commission.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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InterContinental Hotels Group PLC
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(Registrant)
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By:
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/s/ F. Cuttell
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Name:
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F.
CUTTELL
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Title:
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ASSISTANT
COMPANY SECRETARY
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Date:
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07 May 2020
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