Holiday Inn 2003 Annual Report Download - page 4

HOTELS
STRATEGY
The overall strategy for Hotels is clear. The Group will use the
strength of its brands, the breadth of its hotels distribution, the
diversity of its business models and the benefits of its scale to
drive growth and returns for shareholders. Key to the
implementation of this strategy are the following priorities:
• the continued development of high quality, strongly
differentiated and preferred brands;
• extending the network of hotels around the world that are
attractive to international guests in the upscale and upper
upscale brands, and in the domestic markets for the
midscale brands;
• using our scale to drive revenues and operating margins;
• enhancing returns from the asset base by redeploying capital
over time; and
• investing and training our staff to ensure that our brands and
service levels are maintained and enhanced.
Action has already been taken in several areas to improve
returns to shareholders. The organisation has been redesigned
to align behind the strategic priorities and to facilitate decision
making. Changes have been made to ensure the right people
are in the right jobs to drive the strategy, and the cost base has
been reduced by eliminating unnecessary work, and
streamlining ongoing processes. In addition a thorough asset
by asset review has been undertaken to determine the
appropriate level of hotel ownership.
HIGHLIGHTS FOR THE 12 MONTHS ENDED
31 DECEMBER 2003
IHG’s businesses experienced varying trading conditions in
the 12 months ended 31 December 2003. While the UK’s
exceptionally long summer saw the overall market for soft
drinks rise 8%, continuing global insecurity, SARS, depressed
economies and latterly exchange rate movements presented
one of the hotel industry’s most challenging years.
IHG turnover for the 12 months ended 31 December 2003
was £2,161m (12 months ended 31 December 2002 £2,149m).
During the period, Soft Drinks turnover rose £63m (10.3%) to
£674m, while Hotels turnover fell £51m (3.3%) to £1,487m.
Pro forma IHG operating profit before non-operating
exceptional items for the 12 months ended 31 December 2003
was £283m (12 months ended 31 December 2002 £307m).
Soft Drinks operating profit increased £15m (22.1%) to £83m
while Hotels, net of pro forma adjustments, fell £39m (16.3%)
to £200m.
Pro forma adjustments totalled £3m for the 12 months ended
31 December 2003 (£13m for the 12 months ended
31 December 2002). These adjustments relate principally
to charges to MAB and pension credits.
OPERATING AND FINANCIAL REVIEW
2InterContinental Hotels Group 2003
Unaudited Unaudited Audited Unaudited Audited
12 months ended 12 months ended 15 months ended 3 months ended 12 months ended
31 Dec 2003* 31 Dec 2002* 31 Dec 2003 31 Dec 2002 30 Sept 2002
GROUP RESULTS £m £m £m £m £m
Tu r n ov er :
Hotels 1,487 1,538 1,870 383 1,532
Soft Drinks 674 611 820 146 602
IHG 2,161 2,149 2,690 529 2,134
MAB –– 793 342 1,481
Group 2,161 2,149 3,483 871 3,615
Operating profit before non-operating
exceptional items:
Hotels 203 252 251 48 266
Pro forma adjustments (3) (13) – – –
Soft Drinks 83 68 95 12 63
Exceptional items – Hotels –– (51) – (77)
IHG 283 307 295 60 252
MAB –– 137 52 289
Group 283 307 432 112 541
EBITDA 481 500 786 186 889
* The results for the 12 months are pro forma figures.