Holiday Inn 2010 Annual Report Download - page 20

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Business review continued
18 IHG Annual Report and Financial Statements 2010
EMEA results
12 months ended 31 December
2010 2009 %
$m $m change
Revenue
Franchised 81 83 (2.4)
Managed 130 119 9.2
Owned and leased 203 195 4.1
Total 414 397 4.3
Operating profit before exceptional items
Franchised 59 60 (1.7)
Managed 62 65 (4.6)
Owned and leased 40 33 21.2
161 158 1.9
Regional overheads (36) (31) (16.1)
Total 125 127 (1.6)
EMEA comparable RevPAR movement on previous year
12 months ended
31 December 2010
Franchised
All brands 7.6%
Managed
All brands 3.3%
Owned and leased
InterContinental 11.4%
All ownership types
UK 3.8%
Continental Europe 10.1%
Middle East (1.0)%
Revenue increased by $17m to $414m (4.3%) and operating profit
before exceptional items decreased by $2m to $125m (1.6%).
At constant currency, revenue increased by $30m (7.6%) and
operating profit before exceptional items increased by $3m (2.4%).
Excluding $3m of liquidated damages received in 2009, revenue at
constant currency increased by 8.4% and operating profit by 4.8%.
Franchised revenue and operating profit decreased by $2m to
$81m (2.4%) and $1m to $59m (1.7%) respectively. At constant
currency, revenue increased by 1.2% and operating profit increased
by 1.7% respectively. Excluding the impact of $3m in liquidated
damages received in 2009, revenue and operating profit at constant
currency increased by 5.0% and 7.0% respectively. The underlying
increase was driven by RevPAR growth of 7.6% across the
franchised estate. Revenues associated with new signings,
relicensing and terminations decreased compared to 2009 as
real estate activity remained slow.
EMEA managed revenue increased by $11m to $130m (9.2%)
and operating profit decreased by $3m to $62m (4.6%).
At constant currency, revenue increased by 10.9% while operating
profit declined by 3.1%. Positive RevPAR growth in key European
cities and markets, including growth of 14.8% in IHG’s managed
properties in Germany, was offset by unfavourable trading across
much of the Middle East where RevPAR declined overall by 0.7%.
At the year end, a provision of $3m was made for future estimated
cash outflows relating to guarantee obligations for one hotel.
In the owned and leased estate, revenue increased by $8m to
$203m (4.1%) and operating profit increased by $7m to $40m
(21.2%), or at constant currency by 8.2% and 27.3% respectively.
RevPAR growth of 11.9% benefited from average daily rate growth
of 6.5% across the year. The InterContinental London Park Lane
and InterContinental Paris Le Grand delivered strong year-on-year
RevPAR growth of 15.0% and 11.5% respectively. Margins improved
in both these hotels as the focus remained on cost control.
Regional overheads increased by $5m to $36m (16.1%), mainly
attributable to performance-based incentive costs.
Europe, Middle East and Africa
EMEA strategic role 2011 priorities
To manage margins in a diverse and complex region; and seek
ways to achieve scale in key geographic areas.
• Execute our strategic plans of becoming a brand-led
business by delivering Great Hotels Guests Love and
increasing revenue share;
• drive growth strategies of our portfolio of brands in agreed
scale markets and key gateway cities;
• build upon the success of the Holiday Inn relaunch to
continue to grow the Holiday Inn brand family;
• deliver our People Tools to include the franchised estate; and
• support London 2012 Olympics.