InterContinental Hotels Group on February 18 revealed the fourth quarter and full-year financial report of 2019 ended December 31, 2019.
• Net system size growth of 5.6% (5.0% excluding Sands partnership in Macau SAR), the strongest in over a decade, with 65k room additions. Ongoing focus on the long-term health of established brands drove 18k removals, leaving 884k rooms across the global estate.
• FY Comparable RevPAR: Global = (0.3)%; Americas = (0.1)% (US = (0.2)%); EMEAA = 0.3%; Greater China = (4.5)%. The performance was impacted by macro and geopolitical factors, increased supply growth ahead of demand in some markets, and ongoing unrest in Hong Kong SAR.
• Operating profit from reportable segments up 4%; operating profit up 8% after System Fund result and exceptional items, which in 2019 include impairment charges to the UK leased portfolio and Kimpton management agreements.
• Full-year signings of 98k rooms (down 1% YoY), includes record performance in Greater China and EMEAA. The total pipeline now stands at 283k rooms.
Comparable RevPAR decreased by 4.5% (Q4: down 10.5%), impacted by ongoing unrest in Hong Kong SAR. In Mainland China, RevPAR was down 1%, with market outperformance throughout the year. Tier 1 and 2 cities were flat (Q4: up 1%), with higher levels of corporate demand in Guangzhou partially offset by declines in Shanghai, which saw higher levels of supply growth, and tougher trading conditions in Shenzhen. Tier 3 and 4 cities were down 3% (Q4: down 1%), with softening levels of demand across major industrial cities.
Reported revenue1 of $135m decreased by 6% (decreased 1% at CER) and reported an operating profit of $73m increased by 4% (CER 7%).
IHG opened a record 24k rooms (88 hotels), including the 400th hotel in Greater China and the 100th Holiday Inn hotel. This drove 17.5% net rooms growth, taking the total number of open rooms to over 135k (470 hotels). Signings totaled 36k rooms (158 hotels), the highest ever for the region, and included 5k rooms from our InterContinental Alliance Resorts partnership with Sands.
Keith Barr, Chief Executive Officer of IHG said in a recent financial report conference call that China today is less than 10% of the group's operating profit. It now has about 160 hotels closed or closed to arrival. "Based upon the current level of disruption year-on-year, we're seeing about a $5 million fee impact for the month of February in the Mainland China business. Our fee revenue for the full year is around $100 million for Mainland China," he said.
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