Holiday Inn 2009 Annual Report Download - page 6

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“In a difficult year we’ve taken
decisive actions to improve
the efficiency of our business,
significantly reducing costs
while opening a record number
of hotels and driving forward
with the $1 billion Holiday Inn
relaunch.”
Andrew Cosslett
Chief Executive
2009 proved to be one of the most challenging years on record, with double-digit
declines in revenue per available room (RevPAR) leading to lower profits.
In a difficult market we outperformed the competition and delivered well on the
key priorities we set at the beginning of the financial crisis.
Focus on efficiency
We exceeded our cost savings target for the year, reducing central and regional costs
by $95 million of which $50 million is sustainable. We also delivered $25 million of
sustainable cost savings in our franchised and managed businesses. In addition, we
have taken similar actions to increase the efficiency of the system fund spending.
Support hotel performance
As the financial crisis took hold, we were able to harness the power of our global
system to support performance in our hotels. Rooms revenue booked through our
reservations channels or by Priority Club Rewards members direct to hotel, rose
four percentage points on last year to 68 per cent. We also introduced a number
of initiatives to help owners keep operating costs down.
Build quality distribution
During the year, we added a record 439 hotels to our system, over 80 per cent of
which were ‘new-build’, and we signed 345 hotels into our development pipeline.
This is a noteworthy achievement given the scarcity of financing and is a testament
to the strength of our brands and the power of our system.
Our drive for quality continued with the removal of almost 30,000 rooms in the year.
We made excellent progress with the Holiday Inn relaunch with over 50 per cent
of the hotels now operating under the new standards. The consumer marketing
campaign started over the summer and the relaunched hotels continue to show
encouraging results.
The relationship we enjoy with our owners has been key to managing through this
downturn and we continue to work side by side on our shared purpose of creating
Great Hotels Guests Love.
The actions we have taken in 2009 build on IHG’s transformation to an asset-light,
fee-based, aligned business with the brand strength and scale to drive market share
and operational efficiencies whatever the market conditions. Our resilience through
this downturn demonstrates the robustness of this strategy. We will continue to focus
hard on execution in 2010 to drive competitive advantage and deliver sustained value
to our shareholders.
Andrew Cosslett
Chief Executive
4IHGAnnual Report and Financial Statements 2009
Chief Executive’s review
Our strategy is to be one
of the very best companies
in the world, delivering
Great Hotels Guests Love