Holiday Inn 2007 Annual Report Download - page 9

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BUSINESS REVIEW
Business review 7
Strategy
IHG’s ambition
IHG seeks to deliver enduring top quartile shareholder returns, when measured against a broad global hotel peer group.
IHG’s strategy
The Group’s underlying strategy is that by putting the guest first, IHG will grow a portfolio of differentiated hospitality brands in core
strategic countries and global key cities to maximise our scale advantage. With a clear target for room growth and a number of brands
with market premiums offering excellent returns for owners, the Group is well placed to execute the following strategic priorities:
Strategic priorities Key performance indicators Current status and 2008 priorities
(KPIs) v 2006* 2007 developments
BUSINESS REVIEW
Brand performance
To operate a portfolio of brands
attractive to both owners and
guests that have clear market
positions and differentiation in
the eyes of the guest.
Excellent hotel returns
To generate higher owner
returns through revenue
delivery and improved
operating efficiency.
• Global revenue per available
room (RevPAR) growth 6.9%; and
• RevPAR growth premiums
to respective key market
segments** (% pt increase)
+ 4.4 InterContinental US
+ 1.0 Holiday Inn US
+ 0.7 Holiday Inn Express US
+ 3.5 InterContinental EMEA
+ 0.3 Holiday Inn and
Holiday Inn Express UK.
• Total gross revenue (TGR)
growth 17.1%;
• Continuing operating profit
margin growth 1.4% pts;
• Priority Club Rewards (PCR)
membership growth 17.6%;
and
• Return on capital employed
(ROCE) increased by 4% pts
to 7% for IHG’s flagship
InterContinental hotels
(New York, London Park
Lane, Paris Le Grand and
Hong Kong).
• Relaunch of Holiday Inn
brand family;
• International launch of
Staybridge Suites; and
• InterContinental positioning
continued to gain ground, with
advertising driving a material
change in consumer ‘intent
to stay’, up 10% in the year.
• Increased revenue delivery through
IHG global reservation channels by
19.3% to $6.8bn of global system
room revenue in 2007, including
$2.6bn from the internet;
• Industry leading PCR loyalty
programme with 37 million
members, contributing $5.2bn
of global system room revenue,
an increase of 16.3%; and
• Strong web presence:
holidayinn.com is the industry’s
most visited site, with around
75 million site visits per annum; new
InterContinental website launch.
• Roll-out of the Holiday Inn
brand family relaunch; and
• Define and roll-out Hotel
Indigo internationally and
continue to build scale in
the US.
• Integrate reservation channels
to provide a seamless and
differentiated experience
for guests;
• Drive more value from the
IHG loyalty programme
initiatives; and
• Implement technology
upgrades across guest insight,
owner insight and revenue
delivery systems.
Market scale and knowledge
To accelerate profitable growth
in the largest markets where
the Group currently has scale.
• Progress against 2008
growth targets, set in
June 2005:
– 47,419 net room growth;
– 81 hotels in China; and
– 13 net InterContinental
hotel additions.
• Significant progress against
2008 growth targets;
• TGR growth in US 8.5%, UK
22.4%, China 31.0%, Japan
269.9%; and
• 90% of pipeline focused on
core strategic countries.
• Achieve 2008 growth targets:
– 50,000-60,000 net room growth;
– 125 hotels in China;
– 15-25 net InterContinental
hotel additions; and
• Execute agreed strategies
for core strategic countries.
Aligned organisation
To create a more efficient
organisation with strong core
capabilities.
• 2007 employee engagement
of 65%, as defined on page 10
of this Report.
• Defined ‘core purpose’
for the organisation –
Great Hotels Guests Love;
• Continued to strengthen IHG’s
senior management team with
new regional and functional
appointments; and
• Created Winning Ways and
Room to be yourself initiatives,
as explained on page 9 of this
Report, resulting in increased
employee engagement.
• Align organisation
behind core purpose of
Great Hotels Guests Love;
and
• Increase investment in
key countries to compete
for talent.
* KPIs v 2006 unless stated otherwise. ** Source: STR, Deloitte