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4 IHG Annual Review and Summary Financial Statement 2011
One of my immediate priorities on being
appointed Chief Executive was to ensure
that IHG was optimally structured to derive
maximum benefit from our scale and
expertise in each geographic region. As a
result we have reorganised the business into
four regions: The Americas; Europe; Asia,
Middle East and Africa; and Greater China.
DRIVING HIGH-QUALITY GROWTH
The next phase of IHG’s journey will be
characterised by high-quality growth,
measured by gains in both market share
and margins. Where appropriate, and as
opportunities arise, we will invest our
free cash flow in the business to
accelerate this growth and raise the
awareness of our brands.
We will continue to drive market share
in two ways. We will use our powerful
revenue systems and innovations to drive
growing revenues into IHG branded hotels.
We will also add new and rebranded hotels to
our system. In 2011 we delivered 6.2 per cent
global RevPAR growth, beating the industry
in key markets, such as the US and Greater
China. We grew our system size by two per
cent in the year and our industry-leading
13 per cent of the active new-build global
pipeline demonstrates our ability to continue
to increase our share of room supply.
We will achieve progressive and sustainable
margin growth and higher returns for
owners by capitalising on benefits of scale
and efficiency. Our fee-based margin was
up nearly five percentage points in 2011,
and we expect to continue to drive up our
margins over time whilst continuing to
reinvest in the business.
There are three clear priorities we have
set to achieve our growth strategy and
deliver Great Hotels Guests Love:
1. PREFERRED BRANDS
In a competitive world, preferred brands
are a prerequisite to deliver market
share growth. Our brands are already
some of the best recognised in the
industry, but in order to drive meaningful
increases in share, we have to make
them work harder.
The Holiday Inn relaunch continues to
drive results for both IHG and our owners.
In 2011, the brand once again grew its
industry segment premium and for the
first time ever was awarded ‘Highest in
Guest Satisfaction among Mid-Scale
Full Service Hotel Chains’ in the coveted
J.D. Power and Associates¤ (see page 57)
2011 North American Hotel Guest
Satisfaction Index StudySM. We will keep
improving the experience for guests and
building brand awareness. In 2012
Holiday Inn is the official hotel provider to
the London 2012 Olympic and Paralympic
Games, which will also coincide with the
brand’s 60th birthday, so we have plenty
of opportunity to talk about the brand to
existing and future guests.
We are now applying the same approach
we used with Holiday Inn to deliver the
Crowne Plaza repositioning programme.
Crowne Plaza has been a great success
story for IHG and is already the world’s
fourth largest full-service upscale hotel
brand, generating $3.9 billion in total gross
revenues per annum. It does suffer from
some inconsistencies, however, especially
in North America, and a three-phase,
multi-year programme will address this,
raising all Crowne Plaza hotels to the same
standard around the world.
We also see the opportunity to leverage
the value of the IHG family of brands
through select partnerships. The first
CHIEF EXECUTIVE’S REVIEW
Our focus is on driving high-quality growth. We will achieve this by further strengthening our
existing brands, launching new brands and ensuring our hotels are known for industry-leading
guest experiences delivered by talented people and best-in-class delivery systems. The global
economy remained uncertain throughout 2011, but the strength of IHG’s preferred brands,
underpinned by our global systems and scale, drove good growth in revenue and operating profits.
“The next phase of IHG’s journey
will be characterised by
high-quality growth, measured
by gains in both market share
and margins. Where appropriate,
and as opportunities arise, we
will invest our free cash flow in
the business to accelerate this
growth and raise the awareness
of our brands.”
Richard Solomons
Chief Executive