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In preparation for IHG's Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from IHG’s Q1 earnings call and subsequent conferences/releases.

Youtube from Q1 Conference Call

  • “RevPAR trends continued into April with global RevPAR growth of 6.1% excluding Japan, Egypt and Bahrain, 4.9% growth on a reported basis. U.S. RevPAR grew 7.2% and China RevPAR grew 14.6%.”
    • “On EMEA, we were up 1.9% excluding Bahrain and Egypt. And actually if you exclude Lebanon where there are other issues, we were up 3.1% in EMEA. And then in Asia-Pacific, the 5.3% is 12.8% excluding Japan, and that includes 14.6% in China”
  • “Looking further forward, our reported RevPAR figures were clearly be impacted to some extent by Japan and the Middle East, particularly in 2Q. April RevPAR in Japan was down 26%. Moving through the year, we’ll also face progressively tougher comparatives, particularly for our Shanghai hotels due to the world expo last year.”
  • “Overall, booking pace looks good with increases in both demand and rate. Future travel intentions data collected from guests in our hotels is positive, and specifically as we head into the key summer leisure season, leisure travel intentions are also up. We’ve not seen any impact from the rise in the oil price although clearly this remains a risk if the price spikes further.”
  • “We’ve estimated the full year impact of the events in the Middle East and Japan at between $15million and $20 million, and at this stage we expect much of this would be offset by positives elsewhere. The situation in each market is however clearly fluid and our visibility is limited with extremely short-term booking activity. Our estimates are based on no return to normality until at least the fourth quarter of this year.”
  • [Japan] “The cancellation activity has ceased and booking pace is starting to show a gradual pickup.”
  • “In the Middle East, the key impacted markets are Egypt and Bahrain, and although we’re starting to see some recovery in the outskirts of Cairo and the Red Sea resorts, we do not expect any return to normality until there is stability in government.”
  • [Regional/central costs] “For the full year, we still expect these cost to be between $250 million and $260 million at constant currency.”
  • “Looking now at the pipeline. Financing for new hotel construction remains constrained in some of our biggest markets, and we don’t anticipate much change in the short-term.”
  • “We have the industry leading pipeline, with 18% of the active global pipeline according to Smith Travel and our nearest competitor has just 13% and that pipeline is high quality. Around 70,000 rooms, close to 40%, are under construction. In Greater China, some 70% of the projects are under construction, and across EMEA, this figure is around 60%. It drops to around 20% in the Americas, where the figure is typically lower due to the shorter time from signing to opening for midscale hotels.”
  • “We remain confident with our 3 to 5% net system growth guidance from next year into the medium term as the level of removals revert to more historic norms.”
  • “Net debt at the end of March stands at $846 million. This is around $100 million up on year-end, due to seasonal working capital movements which we expect to reverse for the full year.”
  • “We’ve got around 20 hotels in Shanghai, out of 150 open and obviously more opening this year. So, we’ll have some impact but we’re, not only we’re seeing RevPAR growth but we also adding hotels in China, so the momentum is pretty strong there.”
  • “As far as the Barclay is concerned, I think historically we’ve always talked about the six to nine months for a disposal of a major asset. We aren’t a forced seller with that asset, so the important thing for us is to find the right buyer who is going to support that hotel, support the brand and invest in it, I think we said before, we’re going to require at least $100 million refurbishment program of that hotel. And if you play it right you can also get other hotels or built a good new relationship. So there is a lot of good interest in that hotel.”
  • “We’re actually seeing rate growth in the corporate negotiated area. At inflation or slightly above inflation. But what we’ve done is push quite hard for market share growth, which is obviously one thing you have to look at and with our move to dynamic pricing and real focus on bigger accounts, we’re seeing some quite significant share gains.”
  • “Booking windows are short…the momentum looks okay for leisure. We’ll certainly start feeling that much more in June, July as we get to that.”
  • “But as you say, that is new supply (in New York) and with our share of that particularly with the InterContinental in Times Square that’s been performing really well. Honestly for a brand owner with good product in the market, new supply is obviously a good thing for us if we get our share of it. And we’ve certainly been seeing that in New York.”
  • [FY2011 Capex] “$100 million to $200 million and it’s a broad range. But because most of this is working with third-party owners we are not dictating the timing, then it’s hard to be very specific about the amount. And then on top of that we’ll have about a $150 million of maintenance capital this year, which is slightly ahead of depreciation. I think I’ve always said that depreciation should broadly equal maintenance and over the last couple of years for obvious reasons we were significantly below depreciation, so a little bit of catch up this year. Quite a lot in the technology area which is obviously important for us.”