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In preparation for IHG’s Q1 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from IHG’s Q4 earnings call.


  • “Although our visibility remains limited ... our demand trends do look very good and our momentum is strong.”
  • “In terms of system size, we expect growth to remain modest this year as the last tranche of exits related to the Holiday Inn re-launch directly are managed out of the system. In future years, the level of removals should revert to historic norms. And that should allow us to produce annual net system size growth of between 3% and 5% over the medium term.”
  • “For 2011, we expect the effective tax rate to be in the high 20%s. And going forward, the rate will move toward the low to mid 30%s.”
  • “Based on our expectations of the net system size movement in the Americas franchise business due to these exits, we expect a decrease in royalty fees in the region of $15 million in 2011.”
  • “Looking at 2011, our continued focus on costs and efficiencies mean that, based on the current trading outlook and at constant currency, our expectation for regional and central costs is between $250 million and $260 million as planned incentive payments return to a more normal level.”
  • “In 2011, we are starting a number of technology enhancements, which means that we do expect maintenance capital expenditures to go back above depreciation and to be in the region of $150 million.”
  • “We now have... an 18% share of the global industry pipeline. That compares to a 3% share of the total open hotel system and an 8% share of the total open branded system. And within that pipeline we have the top three brands, Holiday Inn, Holiday Inn Express and Crowne Plaza.”
  • “On Barclay, we’ve obviously been working on preparing for the sale for a little while. So we’re clearly looking to sell, just to be clear, keeping flag and management on the hotel. We’re also going to be selling it with a requirement to refurbish the property as well. So we actually have a refurbishment plan. We’re talking in the order of $100 million refurbishment plan to really bring the hotel back to where it needs to be and to compete effectively or complement effectively the new InterContinental we’ve got in Times Square….So we’ll probably be looking second half of the year.”
  • “I think we’re seeing finally some thawing in the lending markets in Northern Europe where they’ve been very difficult for a period.”
  • “And if you look at the January numbers, we’re up again. And North America trends are looking very good in that area.”
  • “So at the moment we’re thinking maybe inflation up to mid-single digits is where we’re going to finish, although we’re only three-quarters of the way through that process.”
  • [1% REVPAR sensitivity on EBITDA] “Yes. 1%, $13 million still holds. That’s a full-year number. Obviously it slightly depends where the RevPAR growth comes through, but we think that holds for 2011. So we haven’t changed that.”
  • “HPT. We continue to have discussions with them. The guarantee will burn out this quarter one and we’re into deposit. So good-natured discussions, but ultimately we’re earning no income from that portfolio and we need to earn some income from it. So we’ll see where we get to, but we’re continuing to talk to them.”
  • "We’re seeing no slowdown in deal pace in China at the moment.”
  • “I think what we’re seeing...is that the Holiday Inn Express, and the Holiday Inn core brand are now starting to hit their stride, the markets stabilizing around price points... One of the interesting features, though, is how well Holiday Inn is doing. It’s getting very competitive now. For a time, the differential between Holiday Inn Express and Holiday Inn was actually in the opposite direction that you might have expected, and Holiday Inn Express was quite often outperforming Holiday Inn. We’re beginning to see that now move in a different direction as the Holiday Inn with food and beverage product starts to – the quality of that estate now starts to come through.”
  • “I think the long-term intention is to move the Holiday Inn brand premium up. We’re already about 10 points better than the segment’s average on average. And we would like to start to close some of the gap on the upscale brands that are above it, and we see no reason now with the quality of the estate, and the brand imagery that we’ve got out there that over time, and as people get used to the new product, we can’t actually start to close the gap on some of its more upscale competitors.”
  • “We have 25 hotels in Shanghai at the moment; that will be going up to 40, 42... Even though we are well-dispersed through the secondary and tertiary markets, we still have leading positions in the major cities in China. There is quite a large discrepancy between the highest RevPARs based on Holiday Inn or a Crowne Plaza, and the lowest, it’s probably about 50% at the low end for the regions. We anticipate that will change over time and will start to close down, bu it’ll be quite some time yet before that happens.”
  • “We have a broader distribution across America than perhaps some of our competitors, given the heartland states of our midscale estate. But at the moment, we are still seeing the big driver of our business in the States coming out of the big centers. But I’d have to investigate it a bit further to see if we’re actually getting anything in that’s happening in the Midwest, particularly that’s changing the results. But as you say, we are definitely seeing the engine pick up speed, and our January numbers were stronger again than Q4, which was stronger again than the overall for the year. So, we’re definitely picking up pace.”