Holiday Inn 2012 Annual Report Download - page 8

6 IHG Annual Report and Financial Statements 2012
How we win
Our well established, asset-light strategy
has enabled us to deliver good revenue
and profit growth again this year, despite
the continued challenges in the wider
global economy. At the core of this
strategy lies the third party owners of IHG
branded hotels. At IHG we have a unique
competitive advantage, which is the strong
and deep relationship that we have with
our owners, primarily through the IHG
Owners Association. This collaboration
enables us to work closely with our
owners, tap into their combined expertise
and take action more quickly and
effectively than our competitors.
As we move into our 10th year as a
stand-alone listed company, we can be
proud of our record of delivery as we
continue to gain market share, leveraging
our scale to grow margins, profits and
cashflow. This has enabled us to continue
to reinvest in our business whilst
simultaneously returning significant sums
of surplus cash to shareholders and
generating superior shareholder returns.
In August 2012 we announced a $1 billion
return of funds to shareholders continuing
our long track record of returns, with total
funds returned to shareholders since
the 2003 demerger, including ordinary
dividends, of around $9 billion, almost
twice the market capitalisation of the
Group when we listed.
We will continue to drive the business
forward through our preferred Brands,
talented People and best-in-class
Delivery systems, all underpinned by our
commitment to Responsible Business.
In 2012 we continued to outperform the
industry with strong RevPAR growth, with
particular outperformance in our two
largest markets, the US and Greater
China. Importantly, in spite of the limited
availability of capital in many markets, we
increased the number of rooms operating
in our System by 2.7 per cent. This,
combined with healthy RevPAR growth
is what has enabled us to grow our fee
revenue so strongly.
Preferred Brands
Our preferred Brands are at the heart of
our business and are key to our continued
success in driving strong results. Our
brands are already some of the most
recognised in the industry but we continue
to innovate and develop them to meet
changing guest needs and to stay ahead
in a competitive market place.
We are delighted to have launched two
new brands in 2012; HUALUXE Hotels &
Resorts in China and EVEN Hotels in the
US. HUALUXE has had a particularly
strong start with 15 signings in the year.
Each of these brands has been created
through a deep understanding of the
trends in the lodging marketplace
combined with genuine insight into guest
occasions and needs. They have been
designed to meet a need which we feel
is underserved in the market today and
which can deliver significant revenue
and profit opportunities over the longer
term, in our two largest markets. IHG’s
significant expertise in both these
markets and the scale of our operations
enabled us to launch these two new
brands simultaneously, unprecedented
in the industry.
New brands are exciting and have the
potential to create value in the future and
IHG has a track record of successful
brand launches. But it is our powerful
portfolio of established brands that create
value for our owners and shareholders
today – and we never lose sight of that fact
as we continually evolve and refine them.
Our largest brand, the Holiday Inn brand
family, continues to deliver significant
value for both IHG and our owners. This
year Holiday Inn was the official hotel
provider to the London 2012 Olympic and
Paralympic Games and celebrated its 60th
anniversary. In 2012 Holiday Inn continued
its post relaunch track record by growing
its premium to the sector each year since
2007, and was ranked ‘Highest Guest
Satisfaction Among Mid-Scale Full Service
Hotel Chains, Two Years in a Row’ by
J.D. Power and Associates¤ (see page 141).
Crowne Plaza is our second largest brand
after the Holiday Inn brand family. It is already
the world’s fourth largest full-service hotel
brand in the upper segments, generating
almost 20 per cent of our total gross
revenue per annum. Crowne Plaza has
been highly successful and has a solid
foundation for future growth, however
we see significant opportunity to take its
performance in The Americas up to the
levels achieved by the brand globally.
We are currently undertaking a three-phase,
multi-year repositioning programme,
which will look to provide a more consistent,
targeted experience around the world.
Talented People
Great hotel brands need to deliver a
consistent, branded experience to guests,
and talented and passionate People are
essential for this. At IHG we are focussed
on ensuring our People deliver consistent
Chief Executive’s Review
2012 was another year of high-quality growth for IHG, with the
launch of two new brands and a strong pace of hotel openings
and signings. Driven by a material increase in worldwide
demand for hotel rooms, we generated an impressive
6.8 per cent growth in fee revenue, one of our key metrics of
success. This translated into double digit profit growth, driven
by our preferred Brands and brought to life in our hotels by
talented and passionate People.