Holiday Inn 2007 Annual Report Download - page 5

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OVERVIEW
Highlights and Message from the Chairman and Chief Executive 3
OVERVIEW
Message from the
Chairman and Chief Executive
Strong trading
Our financial performance was strong.
Continuing operating profit before
exceptional items was up 19 per cent,
from £200 million to £237 million, and
up 30 per cent at constant exchange
rates. Adjusted continuing earnings
per share rose 23 per cent from 38.0p
to 46.9p. Global RevPAR rose by
7 per cent, mainly driven by guests’
willingness to pay more for an
enhanced customer experience.
Accelerating growth
The number of hotels which operate
under IHG’s brands grew at a record
pace. We opened 366 hotels in 2007, one
a day on average. We continued to focus
on improving the quality of our hotel
estate and removed over 150 hotels
during the year. Taking into account
these removals, the number of hotel
rooms in our system increased by over
5 per cent, representing more than a
50 per cent increase in rooms growth
over 2006. Our future growth lies in the
forward order book of contracts that
we have signed for new hotels – our
pipeline. This pipeline also grew at a
record pace in 2007, and now stands
at 1,674 hotels, comprising 225,872
rooms, a 43 per cent increase on 2006.
We signed 873 hotels in the year,
comprising 125,533 rooms, a 22 per
cent increase on 2006. This is by far
the highest level of signings in the hotel
industry. We have now added a total
of 47,419 rooms to our system against
our three-year target of adding 50,000
to 60,000 net rooms by the end of 2008.
We remain confident we will exceed the
top end of this target.
Improving brand performance
Over the last two years we have
conducted extensive hotel research
studies across the globe and we are
now applying the insights from this work
to refresh and renew our hotel brands.
The performance of the InterContinental
brand continues to gather pace; we
signed 33 new InterContinental hotels
around the world in 2007 and ended the
year with a record pipeline of 62 hotels.
In October 2007 we announced the
global relaunch of our Holiday Inn brand
family. The relaunch is designed to raise
the standards of quality, style and
comfort in the hotels, and will deliver
a consistent, best-in-class service to
our guests. Owners and franchisees will
invest up to £500 million in Holiday Inn
hotels around the world over the next
three years, and IHG will separately
make a £30 million contribution.
This activity should generate a strong
return on investment through expected
increases in RevPAR following
completion of the relaunch.
Board and Executive Committee
As previously announced,
Richard Hartman retired from the Board
in September 2007. We thank him for
his service and wish him well for the
future. In December 2007 Ying Yeh was
appointed as a Non-Executive Director.
Her in-depth knowledge of the Asia
Pacific region will be of great value
to IHG. Two of our Non-Executive
Directors, Sir David Prosser and
Robert C Larson, are planning to retire
from the Board at the end of May and
December 2008, respectively. Both
have given outstanding service to IHG.
We also made changes to our Executive
Committee. Kirk Kinsell, previously
Chief Development Officer for the
Americas region, took up the position
of President of our Europe, Middle
East and Africa region. Peter Gowers,
formerly Chief Marketing Officer,
became President of our Asia Pacific
region, and we welcomed back
Tom Seddon (who had previously worked
for IHG) as Chief Marketing Officer.
Shareholder returns
During the year we returned £790 million
to shareholders by way of a £709 million
special dividend and £81 million of
share buybacks. This takes our total
funds returned to shareholders since
March 2004 to £3.5 billion.
Dividend increase
The Board is recommending a
12 per cent increase to the final dividend
for 2007, taking it to 14.9p per share.
This will give a full year dividend of 20.6p,
12 per cent higher than in 2006. Subject
to shareholder approval, the final
dividend will be paid on 6 June 2008.
Outlook
The outstanding contribution from
our people has driven excellent
results in 2007. We have the biggest
development pipeline in the industry
and this will deliver another high level
of hotel openings in 2008. Although
the current economic environment
is less predictable than in 2007, our
broadly-based portfolio of brands and
our resilient fee-based business model
position us well for future growth.
David Webster
Chairman
Andrew Cosslett
Chief Executive