Financial summaryº

2011

2010

% Change YoY

Actual

CER²

CER² & excluding LDs³

Revenue

$396m

$362m

9%

9%

6%

Operating profit

$112m

$83m

35%

35%

23%

Total adjusted EPS

24.0¢

17.4¢

38%

Total basic EPS¹

24.0¢

18.8¢

28%

Net debt

$846m

$1,077m

Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC, said:

“We delivered a strong set of results in the first quarter.  Global revenue per available room (RevPAR) grew 6.9%, with 18.8% growth in Greater China and 8.4% in the US, the highest growth in the US since the second quarter 2006.  Underlying revenue growth of 6% was converted to 23% operating profit growth, reflecting good use of our scale and the efficiency of our business model.

“Our strategy to free up capital to drive growth for our brands is on track.  Post quarter end we sold two hotels in the US, with proceeds substantially above book value.  We have recently committed to enter into a joint venture with Duet Hotels to take Holiday Inn Express into India, developing 19 new hotels by 2016.

“During the quarter, we welcomed The Venetian and The Palazzo Las Vegas into our system as our first InterContinental Alliance Resorts, boosting room supply by almost 7,000 and we continue to look for further opportunities of this kind.

 “We remain confident about the outlook for the rest of the year. Demand for our brands continues to strengthen with both guests and hotel owners.  This is driving our performance and reinforcing our industry leading pipeline.  We are well positioned to take advantage of the gathering rate momentum we now see around the world.

“My time with IHG comes to a close on 30 June and I would like to thank all the people I’ve worked with over the past six years.  I now hand over the reins to Richard Solomons, confident that he and the excellent team we have in place will lead IHG to a bright future.”

Driving Market Share

•

First quarter global RevPAR growth of 6.9%, including rate growth of 1.9%.

-

Americas 7.7%; (includes US 8.4%); EMEA 3.0%; Asia Pacific 9.9%.

•

Total system size of 652,456 rooms (4,422 hotels), up 0.1% year on year.

-

15,153 rooms (53 hotels) added, including 6,986 rooms (2 hotels) from the first InterContinental Alliance Resorts; and 9,858 rooms (68 hotels) removed.

-

Signings of 8,399 rooms (63 hotels) were ahead of Q1 2010 and almost half were conversions. Total pipeline of 191,182 rooms (1,236 hotels) of which 26% are in Greater China.

-

2011 net system growth will be modest as previously disclosed due to the final Holiday Inn relaunch exits.

•

Holiday Inn relaunch delivering strong results.

-

Relaunch driving continued RevPAR outperformance, with the wider benefits clear as global core brand hotel signings are up 27% year on year.

Growing Margins

•

Continued cost control.

-

Regional and central costs of $61m increased $2m on 2010 at constant currency ($4m as reported).

-

At constant currency, and reflecting the current trading outlook, full year 2011 regional and central costs still expected to be in the region of $250m to $260m compared to $258m in 2010.

Current trading update

•

April global RevPAR up 4.9%, up 6.1% excluding Bahrain, Egypt and Japan.

-

Americas 6.4%; (includes US 7.2%); EMEA 0.5%; Asia Pacific 5.3%.

•

c.$8m operating profit benefit in the rest of year from one individually significant liquidated damages receipt and cessation of depreciation on a hotel now held for sale. 

•

Estimated operating profit impact in full year 2011 from events in Middle East, Japan and New Zealand of $15m to $20m. 

º All figures are before exceptional items unless otherwise noted.  See appendix 3 for analysis of financial headlines. ¹ After exceptional items.

² CER =constant exchange rates

³excluding $10m of significant liquidated damages receipts in 2011.

Regional Highlights

Americas – good growth in franchise profits

RevPAR increased 7.7%, including rate growth of 1.6%.  US RevPAR was up 8.4%, including rate growth of 2.0%. 

Revenue increased 9% to $194m and operating profit increased 35% to $97m.  After adjusting for the owned hotel disposals in 2010 and excluding the impact of a $10m liquidated damages receipt in the managed business in 2011, revenue was up 9% and operating profit up 23% primarily driven by an 11% increase in franchise royalties.  A $3m decline in regional costs was due to timing of costs related to our self-insured healthcare benefit plan.

We signed 6,059 rooms (50 hotels) in the first quarter.  This was almost 1,300 rooms more than the same period in 2010, driven by Holiday Inn signings, demonstrating the continuing benefits of the relaunch. 11,812 rooms (42 hotels) were opened into the system, including 6,986 rooms at the Las Vegas Sands Venetian and Palazzo InterContinental Alliance Resorts, and the 513 room Holiday Inn Toronto, the brand’s biggest hotel in Canada.

EMEA – continued strength in signings

RevPAR increased 3.0%, including rate growth of 1.6%.  RevPAR grew 4.2% excluding Egypt (10 hotels) and Bahrain (2 hotels) where the political unrest resulted in significant declines. In other Middle East markets RevPAR continued to grow, including 7.5% in Saudi Arabia and 2.4% in the United Arab Emirates.

Revenue increased 6% (4% at CER) to $95m and operating profit increased 10% (5% at CER) to $23m.  This was driven by good RevPAR growth at both the owned and leased and franchised hotels.  Managed operating profit declined $2m as the impact of unrest in the Middle East offset good growth in fees across Europe.

We signed 1,425 rooms (8 hotels) in the quarter, including Hotel Indigo Hamburg.  Crowne Plaza hotels accounted for half of the region’s signings as well as three of its five hotel openings in the quarter.  These were in the key locations of Dubai (the third for the brand in the city), Geneva and also in Istanbul where we now have two Crowne Plaza hotels open and expect to add a further three by year end. This reinforces the strength of the brand across the EMEA region.

Asia Pacific – growth in rooms and RevPAR drives profits

RevPAR increased 9.9%, including rate growth of 4.8%.  Excluding Japan (33 hotels) where the earthquake and resultant events negatively impacted March growth, RevPAR grew 13.6%.  Greater China continues to be our strongest market with RevPAR up 18.8%, including rate growth of 9.9%. 

Revenue increased 16% (13% at CER) to $80m and operating profit increased 39% to $25m.  This was predominantly driven by RevPAR growth and the contribution from a 6% year on year increase in rooms.

We signed 915 rooms (5 hotels) in the quarter, three of which were in Thailand including an InterContinental resort on the West coast of Koh Samui and a Hotel Indigo on Phuket Naithon beach.  In April we signed a further 7 deals, including three in India and three in Indonesia.  Key openings included the InterContinental Kuala Lumpur and Crowne Plaza West Hanoi, the first hotels opened under those brands in Malaysia and Vietnam respectively.

Capital recycling strategy driving growth

During 2011 we have started the initial marketing for sale of the InterContinental New York Barclay. Post quarter end we completed the disposal of Staybridge Suites Denver Cherry Creek and Holiday Inn Atlanta-Gwinnett Place to Summit Hotel Properties Inc for $17m, retaining the hotels under a long term license agreement and a management agreement respectively.

In line with our strategy to recycle capital to drive growth in our brands, we entered into a joint venture partnership with Duet India Hotels Group to develop 19 new Holiday Inn Express hotels across India (c.3,300 rooms) by 2016. We will invest through a 24% equity stake, making a multi-year investment of $30 million into the partnership.

Interest, tax and net debt

The interest charge for the period was $16m (Q1 2010: $15m).  Based on the position at the end of the quarter, the tax charge has been calculated using an estimated annual tax rate of 28% (Q1 2010: 27%).

Net debt was $846m at the end of the quarter (including the $207m finance lease on the InterContinental Boston).  This is down from $1.1bn at 31 March 2010 but up $103m on the year end position due to seasonal working capital movements including incentive payments.  This is expected to reverse for the full year 2011.

Appendix 1: RevPAR Movement Summary

April 2011

Q1 2011

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

Group

4.9%

1.1%

2.3%pts

6.9%

1.9%

2.8%pts

Americas

6.4%

1.9%

2.7%pts

7.7%

1.6%

3.3%pts

EMEA

0.5%

(2.0)%

1.6%pts

3.0%

1.6%

0.8%pts

Asia Pacific

5.3%

3.4%

1.2%pts

9.9%

4.8%

2.9%pts

Appendix 2: Q1 2011 System & Pipeline Summary (rooms)

System

Pipeline

Openings

Removals

Net

Total

YoY%

Signings

Total

Group

15,153

(9,858)

5,295

652,456

-

8,399

191,182

Americas

11,812

(6,920)

4,892

444,267

(1)%

6,059

92,425

EMEA

1,253

(1,067)

186

121,038

-

1,425

31,380

Asia Pacific

2,088

(1,871)

217

87,151

6%

915

67,377

Appendix 3: First quarter financial headlines

Three months to 31 March 2011

Operating Profit $m

Total

Americas

EMEA

Asia Pacific

Central

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Franchised

108

95

91

81

15

12

2

2

-

-

Managed

49

34

18

7

11

13

20

14

-

-

Owned & leased

16

11

(1)

(2)

6

5

11

8

-

-

Regional costs

(28)

(29)

(11)

(14)

(9)

(9)

(8)

(6)

-

-

Operating profit pre central costs

145

111

97

72

23

21

25

18

-

-

Central costs

(33)

(28)

-

-

-

-

-

-

(33)

(28)

Group Operating profit

112

83

97

72

23

21

25

18

(33)

(28)

Appendix 4: Constant exchange rate (CER) operating profit movement before exceptional items

Total***

Americas

EMEA

Asia Pacific

Actual currency*

CER**

Actual currency*

CER**

Actual currency*

CER**

Actual currency*

CER**

Growth/ (decline)

35%

35%

35%

35%

10%

5%

39%

39%

Exchange rates:

GBP:USD

EUR:USD

* US dollar actual currency

2011

0.62

0.73

** Translated at constant 2010 exchange rates

2010

0.64

0.72

*** After central overheads

For further information, please contact:

Investor Relations (Heather Wood; Catherine Dolton):

+44 (0)1895 512176

Media Affairs (Leslie McGibbon, Kari Kerr):

+44 (0)1895 512425

+44 (0) 7770 736 849

UK conference call and Q&A:

A conference call with Richard Solomons (Chief Financial Officer and Head of Commercial Development) will commence at 8.00am (London time) on Tuesday 10^th May.  There will be an opportunity to ask questions. 

International dial-in:

+44 (0)20 7108 6370

UK Toll Free

0808 238 6029

Passcode:

HOTEL

A recording of the conference call will also be available for 7 days.  To access this please dial the relevant number below and use the access number 2941#.

International dial-in:

+44 (0)20 7108 6281

UK Toll Free

0800 376 9029

US conference call and Q&A:

There will also be a conference call, primarily for US investors and analysts, at 10.00am (Eastern Standard Time) on 10^th May with Richard Solomons (Chief Financial Officer and Head of Commercial Development).  There will be an opportunity to ask questions.

International dial-in:

+44 (0)20 7108 6370

Standard US dial-in:

+1 517 345 9004

US Toll Free:

866 692 5726

Conference ID:

HOTEL

A recording of the conference call will also be available for 7 days.  To access this please dial the relevant number below and use the access number 3094#.

International dial-in:

+1 203 369 4724

US Toll Free:

866 851 2563

Website:

The full release and supplementary data will be available on our website from 7.00 am (London time) on 10 May. The web address is www.ihg.com/Q111. To watch a video of Richard Solomons reviewing our results visit our YouTube channel at www.youtube.com/ihgplc.

InterContinental Hotels Group (IHG) [LON:IHG, NYSE:IHG (ADRs)] is a global company operating seven well-known hotel brands including InterContinental® Hotels & Resorts, Hotel Indigo®, Crowne Plaza® Hotels & Resorts, Holiday Inn® Hotels and Resorts, Holiday Inn Express®, Staybridge Suites® and Candlewood Suites® .  IHG also manages Priority Club® Rewards, the world’s first and largest hotel loyalty programme with 58 million members worldwide.

IHG is the world’s largest hotel group by number of rooms and IHG franchises, leases, manages or owns, through various subsidiaries, a portfolio of over 4,400 hotels and more than 652,000 guest rooms in 100 countries and territories around the world.

IHG has more than 1,200 hotels in its development pipeline and expects to recruit around 160,000 people worldwide over the next few years.

InterContinental Hotels Group PLC is the Group’s holding company and is incorporated in Great Britain and registered in England and Wales.

IHG offers information and online reservations for all its hotel brands at http://www.ihg.com and information for the Priority Club Rewards programme at www.priorityclub.com. For our latest news visit www.ihg.com/media, Twitter www.twitter.com/ihgplc or YouTube http://www.youtube.com/ihgplc

Cautionary note regarding forward-looking statements:

This announcement contains certain forward-looking statements as defined under US law (Section 21E of the Securities Exchange Act of 1934).  These forward-looking statements can be identified by the fact that they do not relate to historical or current facts.  Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’ or other words of similar meaning.  By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty.  There are a number of factors that could cause actual results and developments to differ materially from those expressed in or implied by, such forward-looking statements.  Factors that could affect the business and the financial results are described in ‘Risk Factors’ in the InterContinental Hotels Group PLC Annual report on Form 20-F filed with the United States Securities and Exchange Commission.

3 months ended 31 March 2011

3 months ended 31 March 2010

Before

exceptional

items

Exceptional

items

(note 7)

Total

Before

exceptional

items

Exceptional

items

(note 7)

Total

$m

$m

$m

$m

$m

$m

Continuing operations

Revenue (note 3)

396

-

396

362

-

362

Cost of sales

(181)

-

(181)

(178)

-

(178)

Administrative expenses

(81)

(22)

(103)

(74)

(1)

(75)

Other operating income and expenses

4

9

13

1

-

1

_____

____

____

_____

____

____

138

(13)

125

111

(1)

110

Depreciation and amortisation

(26)

-

(26)

(28)

-

(28)

Impairment

-

11

11

-

(1)

(1)

_____

____

____

_____

____

____

Operating profit (note 3)

112

(2)

110

83

(2)

81

Financial income

-

-

-

1

-

1

Financial expenses

(16)

-

(16)

(16)

-

(16)

_____

____

____

_____

____

____

Profit before tax (note 3)

96

(2)

94

68

(2)

66

Tax (note 8)

(27)

2

(25)

(18)

4

(14)

_____

____

____

_____

____

____

Profit for the period from continuing operations

69

-

69

50

2

52

Profit for the period from discontinued operations

-

-

-

-

2

2

_____

____

____

_____

____

____

Profit for the period attributable to the equity holders of the parent

69

-

69

50

4

54

====

====

====

====

====

====

Earnings per ordinary share

(note 9)

Continuing operations:

Basic

24.0¢

18.1¢

Diluted

23.5¢

17.6¢

Adjusted

24.0¢

17.4¢

Adjusted diluted

23.5¢

16.9¢

Total operations:

Basic

24.0¢

18.8¢

Diluted

23.5¢

18.3¢

Adjusted

24.0¢

17.4¢

Adjusted diluted

23.5¢

16.9¢

====

====

====

====

2011

3 months ended

31 March

$m

2010

3 months ended

31 March

$m

Profit for the period

69

54

Other comprehensive income

Available-for-sale financial assets:

Gains on valuation

-

6

Losses reclassified to income on impairment

-

1

Cash flow hedges:

Losses arising during the period

-

(2)

Reclassified to financial expenses

2

2

Defined benefit pension plans:

Actuarial gains, net of related tax charge of $2m (2010 $1m)

12

7

Change in asset restriction on plans in surplus and liability in respect of funding commitments, including related tax charge of $2m (2010 $nil)

(4)

(3)

Exchange differences on retranslation of foreign operations

12

(21)

Tax related to pension contributions

2

1

____

____

Other comprehensive income/(loss) for the period

24

(9)

____

____

Total comprehensive income for the period attributable to equity holders of the parent

93

45

====

====

3 months ended 31 March 2011

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

Total equity

$m

$m

$m

$m

$m

At beginning of the period

155

(2,659)

2,788

7

291

Total comprehensive income for the period

-

14

79

-

93

Issue of ordinary shares

4

-

-

-

4

Movement in shares in employee share trusts

-

23

(76)

-

(53)

Equity-settled share-based cost

-

-

7

-

7

Tax related to share schemes

-

-

5

-

5

Exchange and other adjustments

6

(6)

-

-

-

____

____

____

____

____

At end of the period

165

(2,628)

2,803

7

347

====

====

====

====

====

3 months ended 31 March 2010

Equity share capital

Other reserves*

Retained earnings

Non-controlling interest

Total equity

$m

$m

$m

$m

$m

At beginning of the period

142

(2,649)

2,656

7

156

Total comprehensive income for the period

-

(14)

59

-

45

Issue of ordinary shares

9

-

-

-

9

Movement in shares in employee share trusts

-

(2)

(26)

-

(28)

Equity-settled share-based cost

-

-

2

-

2

Tax related to share schemes

-

-

4

-

4

Exchange and other adjustments

(9)

9

-

-

-

____

____

____

____

____

At end of the period

142

(2,656)

2,695

7

188

====

====

====

====

====

*

Other reserves comprise the capital redemption reserve, shares held by employee share trusts, other reserves, unrealised gains and losses reserve and currency translation reserve.

2011

31 March

2010

31 March

2010

31 December

$m

$m

$m

ASSETS

Property, plant and equipment

1,456

1,767

1,690

Goodwill

93

83

92

Intangible assets

271

260

266

Investment in associates

46

44

43

Retirement benefit assets

6

18

5

Other financial assets

140

136

135

Deferred tax assets

133

90

79

_____

_____

_____

Total non-current assets

2,145

2,398

2,310

_____

_____

_____

Inventories

4

4

4

Trade and other receivables

416

373

371

Current tax receivable

5

37

13

Cash and cash equivalents

59

41

78

Other financial assets

-

3

-

_____

_____

_____

Total current assets

484

458

466

Non-current assets classified as held for sale

269

-

-

______

______

______

Total assets (note 3)

2,898

2,856

2,776

=====

=====

=====

LIABILITIES

Loans and other borrowings

(17)

(104)

(18)

Derivative financial instruments

(3)

(10)

(6)

Trade and other payables

(651)

(658)

(722)

Provisions

(23)

(45)

(8)

Current tax payable

(141)

(165)

(167)

_____

_____

_____

Total current liabilities

(835)

(982)

(921)

_____

_____

_____

Loans and other borrowings

(875)

(977)

(776)

Derivative financial instruments

(27)

(39)

(38)

Retirement benefit obligations

(184)

(139)

(200)

Trade and other payables

(475)

(418)

(464)

Provisions

(3)

-

(2)

Deferred tax payable

(91)

(113)

(84)

_____

_____

_____

Total non-current liabilities

(1,655)

(1,686)

(1,564)

Liabilities classified as held for sale

(61)

-

-

_____

_____

_____

Total liabilities

(2,551)

(2,668)

(2,485)

=====

=====

=====

Net assets

347

188

291

=====

=====

=====

EQUITY

Equity share capital

165

142

155

Capital redemption reserve

10

10

10

Shares held by employee share trusts

(13)

(6)

(35)

Other reserves

(2,899)

(2,890)

(2,894)

Unrealised gains and losses reserve

51

35

49

Currency translation reserve

223

195

211

Retained earnings

2,803

2,695

2,788

______

______

______

IHG shareholders’ equity

340

181

284

Non-controlling interest

7

7

7

______

______

______

Total equity

347

188

291

=====

=====

=====

2011

3 months ended

31 March

2010

3 months ended

31 March

$m

$m

Profit for the period

69

54

Adjustments for:

Net financial expenses

16

15

Income tax charge

25

14

Depreciation and amortisation

26

28

Exceptional operating items

2

2

Gain on disposal of assets, net of tax

-

(2)

Equity-settled share-based cost, net of payments

6

(2)

_____

_____

Operating cash flow before movements in working capital

144

109

Net change in loyalty programme liability and System Fund surplus

45

30

Other changes in net working capital

(135)

(49)

Utilisation of provisions

(7)

(20)

Retirement benefit contributions, net of cost

(8)

(1)

Cash flows relating to exceptional operating items

(3)

(5)

_____

_____

Cash flow from operations

36

64

Interest paid

(8)

(8)

Interest received

-

-

Tax paid on operating activities

(31)

(28)

_____

_____

Net cash from operating activities

                          (3)

28

_____

_____

Cash flow from investing activities

Purchases of property, plant and equipment

(8)

(5)

Purchase of intangible assets

(9)

(3)

Purchases of other financial assets

(12)

-

Purchases of associates

(2)

-

Disposal of assets, net of costs and cash disposed of

(1)

4

Proceeds from other financial assets

4

1

Tax received on disposals

-

2

_____

_____

Net cash from investing activities

(28)

(1)

_____

_____

Cash flow from financing activities

Proceeds from the issue of share capital

4

8

Purchase of own shares by employee share trusts

(57)

(23)

Increase/(decrease) in borrowings

70

(12)

_____

_____

Net cash from financing activities

17

(27)

_____

_____

Net movement in cash and cash equivalents in the period

(14)

-

Cash and cash equivalents at beginning of the period

78

40

Exchange rate effects

(5)

1

_____

_____

Cash and cash equivalents at end of the period

59

41

=====

=====

1.

Basis of preparation

These condensed interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority and IAS 34 ‘Interim Financial Reporting’. They have been prepared on a consistent basis using the accounting policies set out in the InterContinental Hotels Group PLC (the Group or IHG) Annual Report and Financial Statements for the year ended 31 December 2010.

These condensed interim financial statements are unaudited and do not constitute statutory accounts of the Group within the meaning of Section 435 of the Companies Act 2006. The auditors have carried out a review of the financial information in accordance with the guidance contained in ISRE 2410 (UK and Ireland) ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board.

The financial information for the year ended 31 December 2010 has been extracted from the Group’s published financial statements for that year which contain an unqualified audit report and which have been filed with the Registrar of Companies.

2.

Exchange rates

The results of operations have been translated into US dollars at the average rates of exchange for the period.  In the case of sterling, the translation rate for the three months ended 31 March is $1= £0.62 (2010 $1=£0.64).  In the case of the euro, the translation rate for the three months ended 31 March is $1 = €0.73 (2010 $1 = €0.72).

Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the period.  In the case of sterling, the translation rate is $1=£0.62 (2010 31 December $1 = £0.64, 31 March $1 = £0.66).  In the case of the euro, the translation rate is $1 = €0.70 (2010 31 December $1 = €0.75, 31 March $1 = €0.74).

3.

Segmental information

Revenue

2011

2010

3 months ended

31 March

3 months ended

31 March

$m

$m

Americas  (note 4)

194

178

EMEA  (note 5)

95

90

Asia Pacific (note 6)

80

69

Central

27

25

____

____

Total revenue

396

362

====

====

All results relate to continuing operations.

Profit

2011

3 months ended

31 March

$m

2010

3 months ended

31 March

$m

Americas (note 4)

97

72

EMEA  (note 5)

23

21

Asia Pacific (note 6)

25

18

Central

(33)

(28)

____

____

Reportable segments’ operating profit

112

83

Exceptional operating items (note 7)

(2)

(2)

____

____

Operating profit

110

81

Financial income

-

1

Financial expenses

(16)

(16)

____

____

Profit before tax

94

66

====

====

All results relate to continuing operations.

Assets

2011

31 March

$m

2010

31 March

$m

2010

31 December

$m

Americas

930

997

891

EMEA

921

873

856

Asia Pacific

652

631

665

Central

198

187

194

____

____

____

Segment assets

2,701

2,688

2,606

Unallocated assets:

Deferred tax assets

133

90

79

Current tax receivable

5

37

13

Cash and cash equivalents

59

41

78

____

____

____

Total assets

2,898

2,856

2,776

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====

====