Holiday Inn 2012 Annual Report Download - page 30

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28 IHG Annual Report and Financial Statements 2012
Central
Central results 12 months ended 31 December
2012
$m
2011
$m
%
change
Revenue 114 112 1.8
Gross central costs (270) (259) (4.2)
Net central costs (156) (147) (6.1)
System Fund
System Fund results 12 months ended 31 December
2012
$m
2011
$m
%
change
Assessment fees and
contributions received
from hotels
1,106
1,025
7.9
Proceeds from sale of
Priority Club Rewards points
144
128
12.5
1,250 1,153 8.4
Net central costs increased by $9m (6.1%) from $147m in 2011 to
$156m in 2012. At constant currency, net central costs increased
by $11m (7.5%). The movement was driven by investment in
infrastructure and capabilities to support the growth of the business.
Central revenue mainly comprised technology fee income.
In the year to 31 December 2012, System Fund (the Fund) income
increased by 8.4% to $1,250m primarily as a result of growth in hotel
room revenues. The increase in proceeds from the sale of Priority
Club Rewards points mainly reflects the strong performance of
co-brand credit card schemes.
In addition to management or franchise fees, hotels within the IHG
System pay assessments and contributions which are collected by
IHG for specific use within the Fund. The Fund also receives proceeds
from the sale of Priority Club Rewards points. The Fund is managed
for the benefit of hotels in the System with the objective of driving
revenues for the hotels.
The Fund is used to pay for marketing, the Priority Club Rewards
loyalty programme and the global reservation system. The operation
of the Fund does not result in a profit or loss for the Group and
consequently the revenues and expenses of the Fund are not
included in the Group Income Statement.
Business Review: Performance continued