Annual Report and Form 20-F
2022
True Hospitality
for Good
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Welcome
Our purpose
is to provide
True Hospitality
for Good.
It brings our brands to life, shapes our
culture and represents a commitment to
make a difference to our people, guests
and communities, and protect the world
around us.
With strong stakeholder engagement,
together we work towards common goals
that help ensure we create shared value
for all.
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Our presence
IHG® Hotels & Resorts is a global hospitality company,
with 18 hotel brands, one of the industry’s largest
loyalty programmes, over 6,000 open hotels in more
than 100 countries, and a further 1,800 hotels in our
development pipeline.
See pages 16 to 21
Our ambition
To deliver industry-leading growth in our scale,
enterprise platform and performance, doing so
sustainably for all stakeholders, including our hotel
owners, guests and society as a whole.
See page 18
Our strategy
To use our scale and expertise to create the
exceptional guest experiences and owner returns
needed to grow our brands in the industry’s most
valuable markets and segments. Delivered through
a culture that retains and attracts the best people
and embraces opportunities to positively impact
the world around us.
See pages 18 to 37
Our business model
By franchising our brands and managing hotels
on behalf of third parties, we can focus on increasing
fee revenues and fee margins, with limited capital
requirements. We grow our business by ensuring
our brands meet consumer demand and generate
strong returns for hotel owners.
See pages 10 to 13
What’s inside
2022 in review
Chair’s statement
Chief Executive Officer’s review
Industry overview
Strategic Report
2
4
6
8
10 Our business model
14 Trends shaping our industry
16 Our brands
18 Our strategy
38 Our stakeholders
40 Our culture
44 Our risk management
52 Viability statement
54 Task Force on Climate-related Financial Disclosures (TCFD)
62 Key performance indicators (KPIs)
66 Chief Financial Officer’s review
67 Performance
67 Group
75 Americas
78 Europe, Middle East, Asia & Africa (EMEAA)
81 Greater China
84 Central
85 Key performance measures and non-GAAP measures
Governance
90 Chair’s overview
92 Our Board of Directors
96 Our Executive Committee
98 Governance structure
99 Board activities
100 Key matters discussed in 2022 and Section 172 statement
102 Our shareholders and investors
103 Director appointments and induction
104 Board development and effectiveness evaluation
105 Audit Committee Report
110 Responsible Business Committee Report
112 Nomination Committee Report
114 Directors’ Remuneration Report
137 Statement of compliance
Group Financial Statements
140 Statement of Directors’ Responsibilities
141
Independent Auditor’s UK Report
147 Independent Auditor’s US Report
150 Group Financial Statements
157 Accounting policies
169
Notes to the Group Financial Statements
Parent Company Financial Statements
218 Parent Company Financial Statements
220 Notes to the Parent Company Financial Statements
Additional Information
226 Other financial information
235 Directors’ Report
240 Group information
252 Shareholder information
259 Exhibits
260 Forward-looking statements
261 Form 20-F cross-reference guide
264 Glossary
266 Useful information
The Strategic Report on pages 2 to 88 was approved
by the Board on 20 February 2023.
Nicolette Henfrey Company Secretary
IHG | Annual Report and Form 20-F 2022
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Strategic Report
2022 in review
Recovery from the Covid-19 pandemic
gathered pace in 2022, with demand returning
strongly as restrictions lifted in most markets.
Significant investments were made across our
enterprise, including in our brands, loyalty offer,
digital platforms and sustainability, as we continue
to focus on enhancing the guest experience,
growing our estate and driving owner returns.
Financial performance
Global RevPAR
+36.6%
2021: +46.0%
Total gross revenue
in IHG’s Systemb
$25.8bn
2021: $19.4bn
Operating profitd
$628m
2021: $494m
Adjusted EPSc
282.3�
2021: 147.0�
Adjusted net system
size growtha
4.3%
2021: -0.6%
Total revenue
Signings (rooms)
80,338
2021: 68,870
Revenue from
reportable segmentsc
$3,892m
2021: $2,907m
$1,843m
2021: $1,390m
Operating profit from
reportable segmentsc
$828m
2021: $534m
Dividend
138.4�
2021: 85.9�
Basic EPS
207.2�
2021: 145.4�
Share buyback completede
$500m
a Net system size growth of 3.6% unadjusted for removals related to ceasing operations in Russia in 2022; 2021 growth
shown unadjusted.
b Definitions for key performance measures can be found in the Use of key performance measures and non-GAAP
measures section, which can be found on pages 85 to 88.
c Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial
Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used
internally by management as key measures to assess performance. Non-GAAP measures are either not defined under
IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 85 to 88,
and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.
d 2022 operating profit shown after $105m System Fund reported loss and $95m net exceptional charges. See page 175
for details.
e Completed in January 2023.
Regional growth (number of rooms)
Americas
Openings
EMEAA
Openings
20,568
2021: 15,739
16,211
2021: 10,162
Greater China
Openings
12,664
2021: 18,057
Signings
Signings
Signings
32,464
2021: 17,647
25,847
2021: 20,376
22,027
2021: 30,847
See page 75
See page 78
See page 81
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SHAREHOLDERS
AND INVESTORS
HOTEL
OWNERS
OUR
GUESTS
Our focus on building a stronger business
for guests and owners, coupled with
increasing demand, led to strong trading
and shareholder returns delivered via
our cash-generative business model.
Owners choose to work with IHG based
on trust in our brands, our ability to drive
returns and the strength of our entire
enterprise – underpinned by a focus on the
cost to build, open and operate our hotels.
• Americas RevPAR +3.3% vs 2019;
EMEAA -7.5%; Greater China -38.1%
• Surpassed 6,000 open hotels; +4.3%
adjusted net system size growth (+2.9%
excluding Iberostar Beachfront Resorts)
• Signings +17% YOY; conversions increased
• Long-term commercial agreement with
Iberostar Hotels & Resorts boosting
system size growth
• Fee margin 56.2%, 6.6%pts ahead of 2021
• Net cash from operating activities of
$646m (2021: $636m), adjusted free cash
flow of $565m (2021: $571m)
• Total dividend of 138.4¢ proposed
alongside $500m 2022 share buyback.
Share buyback launched for 2023 to
return $750m
• Launched Guest How You Guest, our biggest
marketing campaign in over a decade,
improving brand favourability measures
• Enterprise contribution of 77% of total room
revenue, boosted by loyalty programme
and mobile app enhancements
• Enhanced design, procurement and
technology solutions developed
• Holiday Inn, Crowne Plaza refreshes driving
up occupancy, rate and guest satisfaction
• Collaboration with governments to support
owners and industry demand
• Introduced new payment solution in US and
Canada to lower costs and improve options
• Developed new Digital Concierge to enable
greater guest self-service
• Launched Demand Sensing Forecast model
• Deanna Oppenheimer appointed Chair;
to help maximise owners’ revenue
Michael Glover appointed CFO
See information about our shareholders and
investors on page 38 and 102 and our KPIs
on pages 62 to 65.
See information about our hotel owners on
pages 20 to 25 and 39, and our net rooms
supply, signings, gross revenue and enterprise
contribution KPIs on pages 62 and 63.
We’re focused on driving demand
and delivering great guest experiences
through modern design, service, our
loyalty offer and seamless technology.
• Transformed IHG One Rewards loyalty
programme to offer members greater
benefits, choice and value
• Enrolled 12.2 million new members,
with increases in loyalty contribution
since launch
• New mobile app delivering richer
customer experience and supporting
increased direct bookings, loyalty
engagement and incremental spend
• Iberostar Beachfront Resorts became
IHG’s 18th brand, boosting resort and
all-inclusive offer
• Enhanced customer booking journey
with new brand websites, simplified
room rates and stay enhancements
• Holiday Inn named Leading Budget Hotel
Brand and voco named Leading Premium
Hotel Brand at World Travel Awards
See information about our guests on pages
22 to 27 and page 38 and our Guest Love KPI
on page 64.
OUR
PEOPLE
OUR COMMUNITIES
AND SUPPLIERS
PLANET
We champion an engaging, diverse
and high-performance culture and
focus on providing the tools, technology
and working environment we need to
succeed as individuals and as a business.
We want to improve millions of lives within
our communities over the next decade
through supporting disaster relief, tackling
food poverty and providing skills training
to help drive social and economic change.
• Employee engagement 86% (+1% on 2021).
A Kincentric Global Best Employer
• New learning and HR platforms launched
• Colleagues dedicated more than 57,000
hours to making a positive difference to
over 100,000 people
We have set targets to reduce carbon,
waste and water usage so we can operate
and grow with our owners in ways that
minimise our impact on the planet.
• A 3.4% absolute reduction in carbon
emissions compared with our 2019
baseline level from our franchised,
managed, owned and leased hotels
• Continued progress to increase ethnic
minority representation in US and UK
corporate leadership roles
• Female corporate leadership
representation (VP and above)
at 34% globally
• Supported charities providing aid following
natural disasters and war in Ukraine
• Secured bulk amenity supplier for over
4,000 hotels to reduce plastic usage
• Worked with Tent Partnership for Refugees
charity to train and hire refugees in the US
• Introduced global brand standards
to reduce energy and water usage
• Expanded IHG Skills Academy to give more
• Refreshed scenario analysis and
people free access to skills and training
evaluated data collection processes
in line with TCFD guidance
• Grew Employee Resource Groups to help
• Partnered with US Historically Black
foster diverse and inclusive culture
• Launched Room to Grow Week to
Colleges and Universities to enhance our
early careers pipeline
• Expanded renewable energy
procurement in Europe and Americas
support corporate career development
• Worked with leading organisations to help
• Launched HERO tool training to help
• 90 graduates of IHG’s development
programme designed to boost number
of women in senior positions in
managed hotels
• Fresh workspaces to support hybrid
working, including new Global HQ
See information about our people on pages
28 to 33 and 39; our employee engagement
KPI on page 65.
prevent human trafficking
hotels cut energy, carbon and water use
• Introduced new supplier diversity
• Launched global food waste training
programme, helping gain exposure to
additional diverse business entities
See information about our communities and
suppliers on pages 33, 34, 38 and 39 and our
IHG® Academy KPI on page 65.
• Developed a toolkit in EMEAA to help
reduce plastic usage in hotels
• Helped secure tax credits in the US for
hotel energy efficiency measures
See pages 35 to 37, 54 to 61, and 237 to 239
for our planet, TCFD and greenhouse gas
emissions disclosures and our carbon
footprint KPI on page 65.
2022 in review
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Strategic Report
Chair’s statement
Deanna Oppenheimer Non-Executive Chair
Final dividend
Total dividend
94.5¢
Final dividend proposed for 2022
(2021: 85.9�)
138.4¢
Total dividend proposed for 2022
(2021: 85.9� (as no interim dividend
was paid in 2021))
Return of funds
$500m
Through share buyback programme
(completed in January 2023)
$750m
Surplus capital to be returned over
the course of 2023 through new
share buyback programme
It’s a great privilege to be Chair of IHG,
a company with a rich history, a world-
class portfolio of trusted brands and
a track record of driving attractive returns
for both hotel owners and shareholders.
Since joining in June, I have spent time
gaining a deeper understanding of the
business – meeting with colleagues,
shareholders, guests and owners – and
I have been impressed by the purpose
and passion that runs through our hotels
and wider organisation, as well as the
desire to keep enhancing how we
operate and grow.
A clear focus on developing a portfolio
of distinct brands that deliver great guest
experiences and strong owner returns, allied
to an asset-light, fee-based, predominantly
franchised business model, has proven
successful over many years. This strategy
enables us to build global scale, attract
millions of guests and build long-standing
relationships with thousands of owners.
It makes the business more resilient during
challenging times too, with a regional
approach allowing us to adapt quickly by
market – something that has been important
in recovery from the Covid-19 pandemic.
Critically, it is a model that is highly cash
generative, and IHG has demonstrated an
ability to reinvest in key areas of its enterprise,
such as its brand portfolio, loyalty and
technology to enhance performance,
increase competitiveness and drive growth,
alongside delivering returns to shareholders.
This approach again supported a strong
financial performance in 2022, and while
group RevPAR and operating profit are still
slightly below pre-pandemic levels, they
continue on an upward trajectory, with the
opening and signing of more outstanding
hotels globally underlining demand for our
brands and strong growth prospects.
Seizing opportunities
In recent years, IHG has transformed its
business by investing in all aspects of its
enterprise, driven by a strategy that reflects
what is needed to succeed in today’s
world while creating long-term value for
stakeholders. Four strategic priorities ensure
a focus on growing our brands and meeting
expectations around service and design,
prioritising what matters most to guests
and owners in a competitive marketplace,
creating space for innovation as we invest
in greater digitalisation, and operating in
ways that nurture our people, communities
and planet.
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Hospitality is a unique industry, built upon
a foundation of care with people at its
heart, and IHG’s purpose of providing True
Hospitality for Good ensures that we not
only look after those with whom we interact,
but also make a positive difference to our
communities and the world around us.
Embedded within the organisation, our
purpose, culture and strategy, is a clear
understanding of the environmental, social
and governance agenda. Our actions in this
regard – captured through our 2030 Journey
to Tomorrow responsible business plan –
are key to meeting stakeholder expectations
and our long-term growth. This commitment
to operating inclusively with integrity and
transparency is very much aligned to my
own values and is something we must
ensure runs deep throughout the business.
Through IHG’s Colleague HeartBeat survey
and other feedback forums, as well as
the work of our designated Voice of the
Employee Non-Executive Director, we can
see that teams understand the strategic
direction of the business and are engaged
by the investments being made to build
a stronger IHG. Feedback is carefully
considered and steps are taken to address
areas for improvement.
Clear priorities set for 2022 provided a
focal point during a significant year for the
business. The launch of IHG® One Rewards
transformed loyalty for our guests and
owners, powered by our new mobile app;
our commercial agreement with Iberostar
Hotels & Resorts added an 18th brand to
our portfolio; and we made further progress
against Journey to Tomorrow, including
steps to reduce carbon emissions in our
hotels and increasing the diversity of our
corporate leadership. We know our owners
also rely on IHG to help them run an efficient
business, and in light of continued supply
chain issues, labour shortages and cost
pressures, we further strengthened
operational and commercial support.
This included close collaboration with the
IHG Owners Association, as well as coming
together at meetings where we can
collectively listen and learn in the spirit
of continued success and growth.
The role of the Board
Amid an ever-changing global landscape,
strong governance is fundamental to the
success of any business, as is the flexibility
to adapt thinking and plans while still
progressing toward longer-term targets and
ambitions. The role of the Board has been
to support and constructively challenge
the Executive Committee around how we
prioritise, manage risk, grow and generate
future value.
The effectiveness of this approach could
be seen in how we navigated significant
challenges in the year. The war in Ukraine
saw us cease operations in Russia, consistent
with evolving UK, US and EU sanctions
regimes. Our approach to cybersecurity
risk management also continued to be a
principal feature on the Board’s agenda, and
significant time was dedicated to assessing
the response to the criminal unauthorised
access to our technology systems in
September. This response has included
further review of our security measures.
The Board has continued to evolve, with
Patrick Cescau retiring in August, having
served as Chair since 2013. We wish him
a happy retirement and thank him for his
invaluable contribution, and extend the
same gratitude to both Jill McDonald and
Ian Dyson, who also retired from the Board
after nine years. During the year, we
welcomed Byron Grote as Non-Executive
Director, and following a review of Board
Committee responsibilities, Byron takes up
the position of Chair of the Audit Committee,
with Graham Allan becoming Chair of the
Responsible Business Committee and
Arthur De Haast joining the Audit Committee.
Furthermore, Paul Edgecliffe-Johnson
announced he will be stepping down from
the Board and his role as Chief Financial
Officer (CFO) and Group Head of Strategy
in March 2023, after 19 years of service.
Replacing Paul as CFO and on the Board
on 20 March 2023 is Michael Glover,
who has demonstrated his breadth of
financial knowledge, global expertise and
commitment to our purpose and values
in his 18 years at IHG. Strong succession
planning has been a hallmark of the business
for many years and will remain a priority for
the Board to ensure we have a breadth of
skills, experience and backgrounds to
navigate an evolving landscape.
Shareholder returns
Following a strong financial performance
this year, I am pleased to announce the
Board is recommending a final dividend of
94.5 cents per ordinary share, an increase of
10% on the final dividend for 2021. An interim
dividend of 43.9 cents was paid in October
2022, taking the total dividend for the year
to 138.4 cents, representing an increase of
61% on 2021 (as no interim dividend was paid
in the prior year). An additional $500m was
also returned to shareholders through a
share buyback programme (completed in
January 2023), taking total returns to more
than $14bn since 2003. The Board expects
IHG’s business model to continue its strong
long-term track record of generating
substantial capacity to enable our investment
plans that drive growth, to fund a sustainably
growing ordinary dividend and to return
surplus capital to our shareholders, with
a new $750m share buyback programme
having been announced for 2023.
Looking ahead, we must remain alive to
potential macroeconomic challenges, but
our industry’s future is a bright one, driven
by factors such as a growing global economy,
an expanding middle class and increasing
demand for branded hotels – all of which will
contribute to an expected one in three new
jobs over the next decade coming from
leisure and tourism. With strong leadership,
talented people and a clear strategy, we will
continue to focus on leveraging a well-
invested and expanding enterprise to drive
performance and growth.
It has been a pleasure getting to know so
many colleagues and seeing the dedication,
talent and commitment of our hotel and
corporate teams. I would like to thank
everyone for a warm welcome, as well as
our hotel owners and investors for their
continued confidence in IHG.
Deanna Oppenheimer
Non-Executive Chair
Chair’s statement
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Strategic Report
Chief Executive Officer’s
review
In what was my 30th year at IHG – and
my fifth as CEO – I will remember 2022 as
one of significant achievements delivered
by our extraordinary colleagues around
the world. Supported by the strength of
our brands and enterprise platform, we
saw RevPAR move closer to pre-pandemic
levels, passed the milestone of 6,000 open
hotels, and continued the transformation
of our business to further enhance our
offer for guests, owners and colleagues.
People continue to prioritise travel, with
consumer surveys indicating travel to be
among the most resilient of discretionary
spending areas, even with inflationary
pressure. Leisure has led the way, with
business travel and group activity improving
steadily. Across our major markets, demand
returned quickly with the lifting of Covid-19
restrictions, and we saw strong average daily
rate growth as the year progressed. By Q4,
RevPAR versus 2019 in the Americas was
+9%, EMEAA was +8.8% and, reflecting
stringent control measures that impacted
people’s ability to travel, Greater China
was -42.1%. That said, whenever restrictions
have eased in Greater China, demand has
returned strongly, and we see positive signs
for 2023 as the region reopens.
The strength and scale of our brands and
wider enterprise platform continues to allow
us to capture demand for our hotels and
drive revenue, which, coupled with disciplined
cost management, supports profit growth.
Operating profit of $628m improved from
$494m in 2021. Operating profit from
reportable segments rose 55% to $828m.
Fee margin was also ahead of 2021 and 2019,
and we have been able to grow the dividend
for shareholders and carry out a $500m
share buyback programme.
Continued strong owner appetite for our
brands saw 269 properties open in 2022,
contributing to adjusted net system size
growth of 4.3%. This was achieved despite
global supply chain and construction
pressures, and restrictions constraining
development activity in Greater China.
The signing of 467 hotels took our global
pipeline to 1,859, which is 31% of today’s
system size.
We can be proud of this performance,
which was achieved while responding to the
ongoing impact of the pandemic, especially
in Greater China, and other challenges.
In response to the war in Ukraine, we ceased
all operations in Russia, alongside supporting
our humanitarian charity partners and hotels
in providing shelter to those affected.
Keith Barr Chief Executive Officer
Key highlights in 2022
269
Hotels opened
(291 in 2021)
51%
Of total openings were for
our Holiday Inn® Brand Family
>10%
Proportion of pipeline
contributed by the six brands
added since 2017 (excluding
Iberostar Beachfront Resorts)
12.2m
Loyalty members added
year-on-year since launch
of IHG One Rewards
467
Hotels signed
(437 in 2021)
20%
Of our pipeline now
represented by Luxury
& Lifestyle brands
18
Iberostar Beachfront Resorts
becomes IHG’s 18th brand
58%
The proportion of digital
bookings made with a mobile
device following the launch
of the new IHG app
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Furthermore, IHG’s technology systems were
subject to unauthorised criminal access in
September – a constant threat that we and
many companies must remain alive to in
today’s world. In response, we activated
recovery plans, and our teams and external
specialists worked to support owners, hotels
and guests.
Strategic progress
While our industry must adapt to an evolving
macroeconomic environment, its long-term
growth fundamentals remain unchanged,
including people’s desire to travel, a growing
population and rising wealth in emerging
markets. Oxford Economics expects global
hotel room nights consumed to be back
above 2019 levels by 2024 and to grow at
a CAGR of +6% from 2022 through to 2032.
Our strategy enables us to capitalise on
this demand, with this year’s achievements
illustrating our ability to strengthen returns
and enhance our culture, operations and
reputation with key stakeholders.
Our established brands remain a powerful
growth engine, illustrated by our Holiday Inn
Brand Family generating half of hotel
openings in 2022. Cost-effective designs,
service or food and beverage concepts were
launched for Holiday Inn®, InterContinental®
Hotels & Resorts, Hotel Indigo® and EVEN®
Hotels, while our ongoing progress following
our 2021 quality review will see two-thirds
of the Americas Holiday Inn estate and
three-quarters of the Crowne Plaza® Hotels
& Resorts estate updated by 2025. We also
celebrated Kimpton® Hotels & Restaurants’
first opening in Australia, 18 openings for
Hotel Indigo, and won World Travel Awards
for Holiday Inn, InterContinental and
voco™ hotels.
Momentum continued to build behind our
newer brands, too, with the six we have
added since 2017 (excluding Iberostar
Beachfront Resorts) already contributing
more than 10% of our total pipeline. In the
Americas, we opened our first Atwell Suites™
properties and our first avid® hotels property
in Canada. Our voco brand recently achieved
the milestone of 100 opened and signed
hotels, and VignetteTM Collection secured
its first 17 properties by the end of 2022.
Highlights for our luxury brands included
the reopening of the flagship Regent® Hotels
Hong Kong and eight amazing resorts signed
for Six Senses® Hotels Resorts & Spas.
Our strategy in recent years to build on our
position in Luxury & Lifestyle has seen IHG
transform its offer in a segment with high
fee income and excellent growth prospects.
Luxury & Lifestyle brands now represent
13% of our system size and 20% of our total
pipeline, which is approaching twice the size
it was five years ago.
Further evolving our portfolio, in 2022
we announced a long-term commercial
agreement with Iberostar Hotels & Resorts
to strengthen our presence in resort and
all-inclusive destinations. Adding up to 70
properties to IHG’s system under the Iberostar
Beachfront Resorts brand, the agreement is
testament to how the transformation of IHG
in recent years has enhanced our reputation
as a valued partner. This brand sits in a newly
created Exclusive Partners category, where we
continue to explore further new opportunities
to drive additional system growth.
Transforming loyalty
Key to the success of our brands is the
investment in the enterprise platform that
supports them, with this year’s transformation
of our loyalty programme at the forefront of
our customer centric approach. Providing
industry-leading value, richer benefits and
greater choice for members to enhance their
stays, our new IHG One Rewards programme
added 12.2m loyalty members in 2022, and
increased loyalty contribution and guest
satisfaction. It also won multiple awards,
including Best Hotel Loyalty Enhancement
for 2022 from The Points Guy and Best Hotel
Rewards Program from Global Traveler.
Supporting it in driving demand was our
biggest global marketing campaign in more
than a decade, Guest How You Guest, which
used our refreshed IHG Hotels & Resorts
masterbrand to showcase our portfolio
across TV, social media, cities and airports,
and helped increase awareness and brand
favourability measures.
Also powering IHG One Rewards was our new
next-generation mobile app, which is at the
heart of a transformed booking journey across
our digital channels. Revenue driven by our
mobile app for the Americas and EMEAA
regions is at 30% higher levels than 2019 and
mobile devices now account for 58% of all
digital bookings. The app illustrates how
our digital-first approach is creating richer
experiences for guests, while producing cost
efficiencies, maximising revenue opportunities,
and delivering data and insights for owners.
Another example is increased use of artificial
intelligence in our reservation and customer
care centres, which is helping handle calls
more efficiently, improving guest satisfaction
and freeing up busy on-property teams.
Whatever we are working on as a business, we
are focused on reducing the cost to build, open
and operate our hotels, collaborating with
our owners and the IHG Owners Association.
In 2022, this included new or enhanced
procurement programmes, streamlined
housekeeping models and evolved brand
standards to help mitigate inflation.
Supporting the industry on a broader scale,
important progress was also made alongside
governments and trade bodies in addressing
labour shortages, rising costs and
travel restrictions.
Growing responsibly
As we strengthen the business, it’s important
we do so responsibly and sustainably for our
people, communities and planet. In 2022, we
developed innovative ways to reduce waste,
plastic, energy and water usage in our hotels,
including introducing new brand standards
and a bespoke tool to reduce energy and
costs. We were also there for our communities,
responding to natural disasters and delivering
thousands of volunteer acts of service through
our Giving for Good month. Bringing our plans
to life are our people, and we made progress
on our commitment to increase the diversity
of our corporate leadership and rolled out a
new learning and development platform and
training to support people in growing their
careers. Maintaining an inclusive, engaging
culture is fundamental to our success, so I was
proud to see IHG once again recognised as
a Kincentric Global Best Employer.
The critical investments we’ve made are
holistically driving our growth as a business,
not simply our net system size, but everything
we need to successfully operate and grow
our brands around the world, including how
we grow responsibly and retain and attract
talent. We are a stronger, more resilient
business today than we’ve ever been, and
I’m confident our strategy will guide us
towards an even brighter future for owners,
guests and colleagues.
I would like to thank the Board for its support
on multiple fronts, with special recognition
of Patrick Cescau for his leadership for the
past decade as Chair, and Deanna for a
smooth transition into the role. On behalf
of the Executive Committee, I would also
like to thank our colleagues for showing the
world just what True Hospitality for Good
means to us all at IHG, as well as our owners
for their partnership and commitment to
providing wonderful guest experiences
as we look to drive success together.
Keith Barr
Chief Executive Officer
Chief Executive Officer’s review
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Industry overview
We operate in an industry with high growth potential,
underpinned by strong long-term fundamentals.
Cost remains a significant barrier to building
a scale position in the global hotel industry,
whether that’s due to investment to build
and maintain the properties, to establish
strong loyalty programmes and technology
platforms, or to develop and market leading
brands. Hotel owners affiliated with a major
global brand and enterprise system also tend
to generate higher returns.
The hotel industry is cyclical: long-term
fluctuations in RevPAR tend to reflect the
interplay between industry demand, supply
and the macroeconomic environment.
At a local level, political, economic and
other factors such as terrorism, oil market
conditions, hurricanes and the ongoing
pandemic response can also impact
demand and supply.
Shorter-term economic challenges may
therefore become more of a factor in 2023,
and health-related travel restrictions could
recur, which would lead to the volatility in
demand seen in recent years. However, the
attractive industry fundamentals that led
to the sector outpacing global economic
growth in 18 out of 23 years between 2000
and 2022 are anticipated to be fully restored
in the longer term. For example, STR data
shows that US industry RevPAR has already
returned to 2019 levels during 2022 on a
nominal basis, and STR’s forecasts are for
both occupancy and real ADR to exceed
2019 levels by 2025.
As a global business, with a footprint in
over 100 countries, operating in the midst
of change and uncertainty is something
IHG is very used to and continues to be one
of our greatest strengths. Our strategy of
developing a strong brand portfolio and
an industry-leading loyalty programme,
together with our fee-based income streams
and prevalent midscale positioning, means
we remain resilient through varying
economic cycles.
The hotel industry has
attractive tailwinds…
US disposable personal income
grew on average by
1.5%
per annum between 2000 and 2022
Source: Federal Reserve Economic Data (FRED)
Globally, middle income
consumers spent
$44tn
in 2020, with this expected
to increase to
$62tn
by 2030
Source: The Brookings Institution
Global hotel room net new
supply grew
2%
per annum between 2012 and 2022
Source: STR
The global hotel industry
continued to demonstrate a high
degree of resilience through the
macroeconomic uncertainties of 2022.
As we move into 2023, the capacity for
long-term structural growth is clear.
The $550 billion hotel industry has compelling
structural growth drivers, underpinned by
factors including the inherent need and desire
to travel for business and leisure purposes,
population growth, and an expanding middle
class in emerging markets with increasing
disposable income. Spend on travel
continues to be among the most resilient
of discretionary areas for consumers, while
demand for business travel remains robust,
with hotels adapting to support flexible
working trends in the post-Covid-19
environment. Though there are uncertainties
within the wider economic outlook, a number
of tailwinds may also persist through 2023,
including the continued progress in returning
to pre-Covid-19 levels of demand for group
travel, as well as the ongoing reopening and
recovery of several major international
markets, such as Greater China and Japan.
In what is a relatively fragmented sector,
with 55% of rooms affiliated with a global or
regional chain, competitor pressures in the
branded space remain intense as all major
players pursue growth strategies through
a combination of organic growth, partnering
arrangements and acquisitions. Branded
hotel penetration has steadily increased
as a long-term trend, with this expected to
continue to grow as consumers look to trusted
brands to meet their evolving expectations,
particularly when it comes to state-of-the-art
technology and the skills, scale and resources
required to provide guests with enjoyable,
effective and sustainable stays.
While there have been short-term challenges
impacting the completion and opening of
new-build hotels, driven by supply chain and
contractor constraints, financing availability,
and lingering Covid-19 restrictions in certain
markets, there remains a long-term need
for new hotel supply to satisfy the demand
drivers listed above. Global hotel room net
new supply increased at a CAGR of 2.0% over
the 10 years from 2012 to 2022, with forecasts
indicating a similar rate into the future.
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with significant barriers
to entry…
and a track record of growth
The top five hotel groupsa have
increased their market share
Share of top five branded hotel groups
as % of global rooms supply
2022
2021
2020
2019
2018
2017
24.4%
24.3%
23.9%
23.9%
23.4%
22.5%
a Includes IHG, Marriott International, Inc.,
Hilton Worldwide Holdings Inc.,
Wyndham Hotels & Resorts Inc., Accor S.A.
Source: STR
With share expected to further expand
Branded share of global industry
supply and share of global industry
active pipeline
Industry RevPAR has shown resilience and recovery post-Covid-19
US Industry RevPAR growth, indexed to 2019
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
0
2
0
2
n
a
J
0
2
0
2
b
e
F
0
2
0
2
r
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0
2
0
2
r
p
A
0
2
0
2
y
a
M
0
2
0
2
n
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0
2
0
2
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J
0
2
0
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0
2
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0
2
0
2
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0
2
0
2
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N
0
2
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D
1
2
0
2
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J
1
2
0
2
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F
1
2
0
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1
2
0
2
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A
1
2
0
2
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1
2
0
2
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1
2
0
2
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J
1
2
0
2
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1
2
0
2
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e
S
1
2
0
2
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c
O
1
2
0
2
v
o
N
1
2
0
2
c
e
D
2
2
0
2
n
a
J
2
2
0
2
b
e
F
2
2
0
2
r
a
M
2
2
0
2
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p
A
2
2
0
2
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a
M
2
2
0
2
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2
2
0
2
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2
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2
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0
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2
2
0
2
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o
N
2
2
0
2
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e
D
Source: STR
80%
Global industry RevPAR ($)
RevPAR movements are illustrative
of lodging demand
Global rooms supply (m rooms)
Supply growth reflects the attractiveness
of the hotel industry
1.5x
55%
2022
2021
2020
2019
2018
2017
50.7
33.7
73.9
79.7
79.4
76.8
2022
2021
2020
2019
2018
2017
Source: STR
Source: STR
20.6
20.1
19.7
19.5
19.0
18.5
Branded hotel business models
There are two principal business models:
• A fee-based, asset-light model:
• An owner-operated, asset-heavy model:
– Franchised: owned and operated by
parties distinct from the brand, who
pay fees to the hotel company for use
of its brand.
– Managed: operated by a party distinct
from the hotel owner. The owner pays
management fees and, if the hotel
uses a third-party brand name, fees
to that third-party, too.
– Owned: operated and branded by
the owner who benefits from all
the income.
– Leased: similar to owned, except
the owner-operator does not have
outright ownership of the hotel but
leases it from the ultimate owner.
Asset-heavy models generate returns on the real estate and centralise control
over operations. Asset-light models typically enable faster growth and generate
higher returns. This model tends to present lower risk to fluctuations in the economy.
Branded share
of global
room supply
Branded share
of global
active pipeline
Source: STR
Consumers value loyalty membership,
which requires a large-scale enterprise
to deliver
74%
Of consumers are more likely to recommend
brands with good loyalty programmes
Source: Bond, in partnership with Visa
78%
Of loyalty members have a redemption goal
for the programme
Source: Bond, in partnership with Visa
Industry overview
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Our business model
We predominantly franchise our brands
and manage hotels on behalf of third-party
hotel owners. While we will continue to
have a weighting towards Essentials, our
pipeline shows an increasing proportion
of growth in the Premium and Luxury &
Lifestyle segments, as well as a more even
geographical spread.
Total system size
Total development pipeline
911,627
rooms
281,468
rooms
Composition of rooms
Composition of rooms
<1%
28%
72%
18%
<1%
25%
57%
1%
9%
13%
15%
42%
58%
Franchised*
Managed
Owned, leased
and managed lease
34%
36%
Americas
EMEAA
Greater China
30%
2%
11%
20%
18%
Luxury & Lifestyle
Premium
Essentials
Suites
Exclusive Partners
62%
49%
* Includes Iberostar Beachfront Resorts, which joined IHG’s system
and pipeline as part of a long-term commercial agreement.
10
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The growth of our business relies on
two fundamental growth drivers:
revenue per available room (RevPAR)
and increasing the number of rooms in our
system. RevPAR indicates the value guests
ascribe to a given hotel, brand or market,
and grows when they stay more often or
pay higher rates. Room supply reflects
how attractive the hotel industry is as an
investment from an owner’s perspective.
To drive growth, we have a portfolio of
18 brands across more than 100 countries
in the Luxury & Lifestyle, Premium, Essentials,
Suites and Exclusive Partners categories.
Supported by a leading loyalty programme
and powerful technology, our brands meet
clear guest needs and generate strong returns
for our owners, which in turn attracts further
hotel investment and grows our system size.
IHG is an asset-light business and our focus
is on growing fee revenues and fee margins,
which we can do with limited capital
requirements. This enables us to grow and
invest in our business while generating high
returns on invested capital and strong
cash flow.
We generally franchise or manage hotels,
with the decision largely driven by market
maturity, owner preference and, in certain
cases, the particular brand. Hotels in the
Essentials category tend to be franchised,
while Luxury & Lifestyle hotels are
predominantly managed.
Our broad geographic spread and weighting
towards essential business and domestic
leisure travel has driven comparative
resilience during times of economic
downturn. Though this continues to be a
core component of our business, we have
made excellent progress in expanding our
presence in the Luxury & Lifestyle segment,
which generally generates higher fees per
room. This category is currently 13% of IHG’s
system size, though comprises 20% of the
future growth pipeline.
Our asset-light business model
means we do not employ colleagues
in franchise hotels, nor do we control
their day-to-day operations, policies or
procedures. That being said, IHG and
our franchise hotels are committed
to delivering a consistent brand
experience, conducting business
responsibly and sustainably so that
we deliver our purpose of providing
True Hospitality for Good.
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How we generate revenue
Franchised hotels
We receive a fixed percentage of rooms
revenue when a guest stays at one of our
hotels. This is our fee revenue.
Guests
Hotel
Managed hotels
From our managed hotels, we generate
revenue through a fixed percentage of the
total hotel revenue and a proportion of
hotel profit.
Exclusive partners
We receive marketing, distribution,
technology and other fees for providing
access to our enterprise platform.
IHG fee revenue
System Fund
Hotel owner
Franchised
RevPAR
X
Rooms
X
Royalty rate
Managed
Fixed % of total
hotel revenue as a
management fee and
typically a share of
hotel gross operating
profit after deduction
of management fees
Exclusive partners
Fee streams
similar to our
asset-light model
Owned, leased and managed lease hotels
For hotels which we own or lease, we record the entire revenue and profit of the hotel in our financial statements.
Our owned, leased and managed lease hotels have reduced from over 180 hotels 20 years ago to 16 hotels at 31 December 2022.
System Fund
IHG manages a System Fund for the
benefit of hotels within the IHG system
and their third-party owners, who pay
contributions into it. This includes a
marketing and reservation assessment
and a loyalty assessment.
The System Fund also benefits from
proceeds from the sale of IHG One Rewards
points under third-party co-branding
arrangements.
Given the significant scale of the
System Fund, IHG can make substantial
investments in marketing brands,
creating a leading loyalty programme
and powerful technology, including
revenue management systems, thereby
strengthening the IHG enterprise.
Fees to IHG in relation to the licensing of our brands and,
if applicable, hotel management services.
Assessments and contributions that are collected by IHG for
specific use within the System Fund.
Third-party hotel owners pay:
IHG revenue from reportable segmentsa
System Fund revenues
2022: $1,843 million
2022: $1,217 million
Revenue attributable to IHG comprises:
• Fee business revenue from reportable segments:
– Franchise fees
– Management fees
– Commercial agreement fees
– Central revenue (principally technology fee income)
• All revenue from owned, leased and managed lease hotels.
See page 84 for more information.
a Excludes System Fund and hotel cost reimbursements.
The System Fund is not managed to a profit or loss for IHG over
the longer term, but for the benefit of hotels in the IHG system,
and comprises:
• Assessments and contributions paid by hotels
• Revenue recognised on consumption of IHG One Rewards
loyalty points
See page 68 for more information.
Our business model
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Our business model continued
How we drive operating profit
Our asset-light business model requires
a limited increase in IHG’s own operating
expenditure to support our revenue
growth, which delivers operating profit
and fee margin growth.
The benefit of operational efficiencies,
along with brands and markets becoming
more mature, has supported fee margin
expansion on average by over 130bps
a year between 2009-2019.
For franchised hotels, the flow through of
revenue to operating profit is higher than it
is at managed hotels, given our well-invested
scale platform where limited resources are
required to support the addition of an
incremental hotel. This is most evident in
our Americas region, where fee margins are
the highest, reflecting our scale and over
90% of our hotels operating under our
franchised model.
Across our managed hotels, the flow
through of revenue to profit can be lower,
given higher operating expenditure
on operations teams supporting the
hotel network.
Fee margina by region
Americas
EMEAA
Greater China
Total IHG
FY 2022
FY 2021
FY 2020
FY 2019
FY 2022
52.7%
FY 2022
26.4%
84.3%
82.2%
FY 2021
21.5%
70.7%
-17.9%
FY 2020
FY 2021
FY 2020
47.3%
45.5%
FY 2022
FY 2021
FY 2020
56.2%
49.6%
34.1%
77.7%
FY 2019
58.6%
FY 2019
54.1%
FY 2019
54.1%
a Fee margin excludes owned, leased and managed lease hotels, significant liquidated damages and the results of the Group’s captive insurance company and is stated at AER.
Our owned, leased and managed lease hotels tend to have significantly lower margins than our fee business. This is because we not
only record the entire revenue of the hotel, but also the entire cost base, which includes staff and maintenance of the hotel.
Capital allocation and dividend policy
1
Invest in the business
to drive growth
We look to strategically
drive growth, while
maintaining strict control
on investments and our
day-to-day capital
expenditures.
2
Target sustainable growth
in the ordinary dividend
IHG has a dividend policy
where we would look to
grow the ordinary dividend
each year, while balancing
all our stakeholder interests
and ensuring our
long-term success.
3
Return surplus funds
to shareholders
The Group has a
strong track record of
returning surplus cash to
shareholders. Since 2003,
including the ordinary
dividend, the Group has
returned $14.3bn.
Consistent uses of cash
Our priorities for the uses of cash are
consistent with previous years and
comprise three pillars:
Shareholder returns (2003-22) ($bn)
Source of returns
6.5
14.3
7.8
Asset
disposals
Operational
cash flows
Total
a Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures
(described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under
IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on page 85 to 88 and reconciliations to IFRS figures, where they have been
adjusted, are on pages 226 to 232.
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Capital expenditure
Spend incurred by IHG can be summarised as follows:
Type
What is it?
Recent examples
Maintenance capital expenditure
and key money
Recyclable investments to drive
the growth of our brands and our
expansion in priority markets
System Fund capital investments for
strategic investment to drive growth
at hotel level
Maintenance capital expenditure is devoted
to the maintenance of our systems and
corporate offices, along with our owned,
leased and managed lease hotels.
Key money is expenditure used to access
strategic opportunities, particularly in
high-quality and sought-after locations,
when returns are financially and/or
strategically attractive.
Recyclable investments are capital used
to acquire real estate or investment
through joint ventures or equity capital.
This expenditure is strategic to help build
brand presence.
We would look to divest these investments
at an appropriate time and reinvest the
proceeds across the business.
The development of tools and systems that
hotels use to drive performance. This is
charged back to the System Fund over the
life of the asset.
Examples of maintenance spend include
investment in corporate technology and
software, as well as office refurbishment
and maintenance. Across our owned,
leased, and managed lease hotels we
invest in refurbishment of public spaces
and guestrooms.
Examples of key money include
investments to secure representation
for our brands in prime locations.
Examples of recyclable investments in
prior years include our EVEN® Hotels
brand, where we used our capital to
develop three hotel properties in the US
to showcase the concept. These hotels
were subsequently sold and now operate
under a franchise agreement.
We continue to invest in a range
of upgraded technology solutions,
including the ongoing development of
IHG’s mobile app and IHG One Rewards
Loyalty evolution.
Dividend policy and shareholder returns
The Board consistently reviews the
Group’s approach to capital allocation
and seeks to maintain an efficient balance
sheet and investment-grade credit rating.
IHG has an excellent track record of
returning funds to shareholders through
ordinary and special dividends, and share
buybacks. The ordinary dividend paid to
shareholders increased at an 11% CAGR
between 2004 and 2019.
Our asset-light business model is highly
cash generative through the cycle and
enables us to invest in our brands and
strengthen our enterprise. When reviewing
dividend recommendations, the Board
looks to ensure that any recommendation
does not harm the sustainable success of
the Company and that there are sufficient
distributable reserves to pay any
recommended dividend. The Board
assesses the Group’s ability to pay a
dividend bearing in mind its responsibilities
to its stakeholders and its objective of
maintaining an investment-grade credit rating.
One of the measures we use to monitor this
is net debt:adjusted EBITDA and we aim for
a ratio of 2.5-3.0x.
In February 2022, IHG announced that
ordinary dividend payments would resume
with an 85.9¢ proposed final dividend
in respect of 2021. This reflected 2021’s
improved trading as the business continued
to recover from the pandemic, strong cash
flow, and significant reduction in net debt.
The proposal was subsequently approved
at the AGM and paid to shareholders on
17 May 2022.
In August 2022, IHG announced the
resumption of the interim dividend, with
a proposed payment of 43.9¢ per share,
representing growth of 10% on the 39.9¢
interim dividend paid in 2019. This was
paid to shareholders on 6 October 2022.
In addition to the interim dividend,
a $500m share buyback programme
was also announced. This commenced
on 9 August 2022 and completed on
31 January 2023.
The Board is proposing a final dividend
of 94.5¢ in respect of 2022, which is
consistent with the 10% growth of the
reintroduced interim dividend on the prior
interim payment in 2019. The proposed
total dividend for the year is therefore
138.4¢. Further, the Board have announced
a share buyback programme to return
an additional $750m of surplus capital
in 2023.
Our business model
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Trends shaping
our industry
There is no question that
the pandemic has had an
unprecedented impact across
travel and tourism, however, the
last few years have reminded
us of the power and resilience
of our industry. In 2022, we
saw the resurgence in travel
continue – with guests looking
to reconnect with their friends,
families and colleagues both
domestically and internationally.
Many markets returned to 2019 performance
levels in terms of rates and occupancy,
as strong leisure demand and the ongoing
return of business and group travel continued around
the world, helped by the easing of travel restrictions
through the year.
With travel bouncing back, we’ve seen some trends
become established, such as a shift to more sustainable
operations and the continued integration of digital
functionality into all aspects of the guest journey.
As hotel brands and owners adapt to these shifts
alongside positioning themselves to capture growing
guest demand, they must also carefully navigate a global
background of economic pressures and higher inflation,
and the knock-on impact of the pandemic on critical
areas such as labour and supply chains.
1
2
3
Travel’s continued
recovery
Sustainability gaining
increasing importance
Evolving guest
expectations
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2022 was a reminder that people love to travel for both leisure and business, and as demand
returned, RevPAR was ahead of pre-pandemic levels in many markets. As we look ahead, we expect
to see further momentum around travel’s recovery, with sustained demand for leisure travel and
further pick-up in international travel, as well as business and group demand. Inflationary pressures
in most economies globally will likely mean that consumers will continue to pay closer attention to
their spending. However, a recent survey by STR indicated that more than 80% of consumers plan
to travel the same or more in 2023 than last year, underlining the resilience of travel spend.
As travel continues to chart its path to full recovery, the industry must navigate additional challenges
such as labour shortages and geopolitical concerns. For hotel owners, this will mean remaining agile
and alert to address concerns around staffing, higher construction costs, energy costs, interest rates
and potential supply chain disruptions.
Looking longer term, projections from the World Travel & Tourism Council (WTTC) point to a strong
decade of growth, with the travel and tourism sector on track to create an additional 126 million jobs
by 2032 and outpace the growth of the overall economy during this time.
Our responses include:
• Capturing strong demand for our
brands, with Global RevPAR close
to 2019 levels, including ADR
8% ahead
• Continuing to invest behind
our global marketing campaign
Guest How You Guest
• Enhancing our global procurement
offer, working closely with the
IHG Owners Association and our
teams to anticipate owners’ needs
and find more ways to leverage
central purchasing and provide
cost-effective solutions
See pages 2 to 7, and 39, for
more information.
Guests are increasingly expressing a desire to travel more sustainably. A recent study by the WTTC
found that nearly 60% of travellers have chosen sustainable options within the past few years, while
other research shows that guests’ buying decisions are shifting as a result: 71% of Americans stated
that they would pay more to lower the carbon footprint of their vacation, and 33% would be prepared
to pay up to $250 more, according to a survey from The Vacationer. In addition, business customers
are increasingly requesting information about sustainable accommodation and meeting options to
help make progress against their own targets. A recent Global Business Travel Association survey
showed that 88% of the global business travel sector views addressing climate change as the top
priority area for action.
As environmental concerns continue to grow, guests are likely to be more selective in choosing
companies that prioritise environmentally sustainable practices, a fact outlined in Skift’s 2022
Traveller survey, with 30% of travellers stating that they would go as far as making sustainable decisions
at the cost of their own convenience. With stakeholders increasingly expecting businesses to operate
and grow responsibly, the onus is on travel companies to respond to shifting stakeholder values and
expectations and drive positive change through their products and experiences. This ambition will
be challenging to implement given the proliferation of the asset-light model across the industry,
and will require branded players to work with hotel owners of assets to drive positive change.
Our responses include:
• A 3.4% absolute reduction in carbon
emissions compared with 2019
baseline level from our franchised,
managed, owned and leased hotels
• Launching new tools, training and
brand standards to support hotels
and owners with improving
energy efficiency
• Helped secure tax credits in the US
for hotel energy efficiency measures
See pages 35 to 37, and 57, for
more information.
See our Responsible Business
Report (RBR) www.ihgplc.com/
responsible-business/reporting
The experience of the pandemic has altered the way that we live, work and travel. Flexibility is at the
centre of new working behaviours, and there is increasing evidence that the remote working trend
has led to new travel accommodation demand called ‘bleisure’, where business and leisure trips are
combined into longer stays. A 2022 study commissioned by IHG indicated that 60% of US travellers
plan to add leisure days to future business trips. At the same time, the rising ‘digital nomad’ trend
– people who embrace a location-independent, technology enabled lifestyle – could drive an
increasing number of people to travel all year round, with around 16 million workers in the US
describing themselves as digital nomads.
The pandemic has accelerated the role of technology in our lives, including our use of mobile
devices, and this is set to continue with developments in technologies such as 5G and the internet
of things (IoT). A recent study by Oracle Hospitality and Skift shows that 71% of guests want to use
their mobile device to manage their hotel experience, demonstrating the importance of technology
and digitalisation across all aspects of the guest journey.
Alongside new tech demands, in the near term, we expect to see a growing demand for luxury
experiences. Recent research by Kantar Insight and Altiant reveals that ‘experiential luxury’, including
luxury hotels, is one of the top categories for increased luxury spending in 2023, driven by pent-up
demand and high savings.
Our responses include:
• Incorporating functional
workspaces into guestrooms
across new design prototypes,
such as H5 for Holiday Inn, which
also features a refreshed lobby
to help encourage collaboration
• Launching next-generation IHG
mobile app to give our guests
more personal choice and unlock
benefits of our transformed IHG
One Rewards loyalty programme
• Transforming our brand portfolio to
become one of the world’s leading
players in Luxury & Lifestyle
See pages 6 and 7, and 20 to 27,
for more information.
Trends shaping our industry
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Strategic Report
A portfolio of brands
for all occasions
Our strategic focus on having
a diverse and attractive selection
of distinct brands that meet the
needs of a range of guests and
owners has helped us transform
our portfolio and grow our
estate, which now stands at
more than 6,000 hotels globally.
Alongside enhancing our established brands,
we’ve added seven new ones in the past five
years to rapidly expand our offer in every
segment – further strengthening our industry-leading
presence in midscale, growing our Suites collection,
enhancing our resort and all-inclusive offer, and
building an attractive Luxury & Lifestyle portfolio.
The brands we have added since 2017 already represent
more than 10% of our pipeline, and our Luxury & Lifestyle
portfolio now stands at 13% of our system size and 20%
of our pipeline, reflecting our progress in diversifying and
increasing our exposure to high fee income segments.
To drive growth across our portfolio, we’ve made key
investments in our enterprise, including a transformed
IHG One Rewards loyalty programme and a powerful
IHG Hotels & Resorts masterbrand that together are
growing awareness of our brands.
To help guests intuitively choose the right one for them,
we have Luxury & Lifestyle, Premium, Essentials and
Suites collections, and this year added a new Exclusive
Partners category, following the addition of the resort
and all-inclusive brand Iberostar Beachfront Resorts
through a new long-term commercial agreement.
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MASTERBRAND AND LOYALTY
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LUXURY & LIFESTYLE
19 open
38 pipeline
9 open
10 pipeline
207 open
90 pipeline
3 open
7 pipeline
76 open
41 pipeline
143 open
119 pipeline
PREMIUM
45 open
39 pipeline
21 open
21 pipeline
403 open
111 pipeline
22 open
31 pipeline
3,091 open
617 pipeline
ESSENTIALS
1,198 open
229 pipeline
SUITES
59 open
145 pipeline
2 open
30 pipeline
314 open
162 pipeline
28 open
1 pipeline
368 open
124 pipeline
EXCLUSIVE PARTNERS
33 open
15 pipeline
IHG system size includes 123 other and unbranded hotels, of which eight will be re-branded to voco and two will be re-branded to Vignette Collection.
IHG pipeline includes 29 other and unbranded hotels, of which six will be branded as voco and five will be branded as Vignette Collection.
A portfolio of brands for all occasions
IHG | Annual Report and Form 20-F 2022
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Strategic Report
Our strategy
The strategic investments we
have made in recent years have
been critical in driving business
performance, strengthening our enterprise
and enhancing the appeal of our brands to
owners and guests as we focus on growing
in high-value markets and segments.
How we measure growth and success has
evolved in many ways – not only net rooms
growth, which remains vital, but also the
growth of our brand portfolio, loyalty
programme, guest satisfaction and market
share, as well as how we grow responsibly
and in ways that develop and attract
great talent.
Reflecting this, in 2022 we evolved our
ambition to be about the growth of our
enterprise in its broadest sense, driven by
strategic investment in the four priority areas
set out in our strategy. Over the long term,
with disciplined execution, this approach
supports sustained growth in cash flows
and profits, which can be reinvested in our
business and returned to shareholders.
Our strategic priorities and the behaviours
that drive them have been designed to put
the expanded brand portfolio we have built
in recent years at the heart of our business,
and our owners and guests at the heart
of our thinking. They recognise the crucial
role of a sophisticated, well-invested digital
approach, and ensure we meet our growing
responsibility to care for and invest in our
people, and to make a positive difference
to our communities and planet.
Our plans and their execution reflect all
we have learnt in recent years navigating
an industry recovery from the Covid-19
pandemic and keeping pace with evolving
trends and social and economic factors.
They are also inspired and informed by
our purpose of providing True Hospitality
for Good, which is underpinned by our
commitment to a culture of operating
and growing in a responsible, ethical and
inclusive manner. This sets the tone for
how we do business, enabling us to focus
on creating value for all stakeholders as
we build an even stronger IHG.
See how the Board considered strategic and
operational matters on page 100 and 101.
See pages 40 to 43 for more about
Our Culture.
OUR PURPOSE
True Hospitality
for Good
OUR AMBITION
PRIORITIES
BEHAVIOURS
Build loved and
trusted brands
Move fast
To deliver industry-leading growth in our scale,
enterprise platform and performance, doing so
sustainably for all stakeholders, including our
hotel owners, guests and society as a whole.
Customer
centric in
all we do
Solutions
focused
OUR STRATEGY
To use our scale and expertise to create
the exceptional guest experiences and
owner returns needed to grow our brands
in the industry’s most valuable markets and
segments. Delivered through a culture that
retains and attracts the best people and
embraces opportunities to positively impact
the world around us.
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IHG | Annual Report and Form 20-F 2022
Create digital
advantage
Think return
Care for
our people,
communities
and planet
Build one team
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Strategic overview
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Build loved
and trusted
brands
Customer
centric in
all we do
Create
digital
advantage
We have transformed our portfolio of
trusted brands in recent years to offer
guests more choice and drive greater
returns for owners. That work continued
apace in 2022, as we added the resort
and all-inclusive brand Iberostar
Beachfront Resorts to our portfolio,
further enhanced our established
brands and continued to scale up our
newer ones, with our IHG Hotels &
Resorts masterbrand sharpening the
perception of our brands.
See pages 20 to 21.
Recognising the power of listening
closely to our guests and owners,
we are focused on providing tailored
services and solutions that meet
evolving expectations.
This year we’ve invested significantly
in key elements of the stay experience,
transformed our loyalty offer with IHG
One Rewards and continued to deliver
solutions that drive demand for our
owners and more efficient ways of
operating their hotels.
See pages 22 to 25.
Our digital-first approach is helping
our customers stay connected and
in control, and in 2022 we found more
sophisticated, targeted ways to transform
the guest experience and ensure our
hotels operate ever more efficiently to
manage demand and drive performance.
Highlights included the launch of our
new IHG mobile app and a transformed
booking journey across our channels.
See pages 26 to 27.
269
Hotels opened in 2022
27%
Rise in loyalty enrolment year-on-year
since launch of IHG One Rewards
58%
Of all digital bookings now driven by mobile
Care for our people, communities and planet
People
Our people are at the heart of our
success, bringing our plans to life,
creating deeper connections with
guests and showing the world what
True Hospitality for Good means to
us all at IHG.
This year, we took further steps to
empower them to do their best work
by enhancing our diverse and inclusive
culture, supporting their wellbeing,
creating further opportunities for
personal development and investing
in our core technology and ways
of working.
See pages 29 to 33.
Communities
We are proud to be at the heart of
thousands of communities, and in 2022
we built on what we have been doing in
recent years to deliver lasting, positive
change by providing support to those
who need it most through skills training,
being there in times of natural disaster
and helping those facing food poverty.
See pages 33 to 34.
Planet
Knowing we must take decisive,
practical action to reduce our
environmental impact for the benefit
of our planet and the long-term success
of our business, we continued working
closely with our hotel owners and
specialist partners to find innovative
ways to reduce carbon emissions,
waste and water usage across our
global estate.
See pages 35 to 37.
1,300
Members of our employee resource groups,
which help foster diversity and inclusion
>100,000
People around the globe positively
impacted through Giving for Good month
850
Tonnes of plastic expected to be saved
in the Americas region annually through
our bathroom bulk amenity contracts
Strategic Overview
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Our strategy continued
PRIORITY:
Build loved and
trusted brands
2022 at a glance
Surpassed
6,000
Open hotels globally
~33%
Of openings were conversions
(excluding Iberostar
Beachfront Resorts)
13%
Of system size made up of
Luxury & Lifestyle brands,
along with 20% of pipeline
Iberostar Beachfront
Resorts becomes
IHG’s
18th
brand
Brand refreshes
for Holiday Inn,
InterContinental,
Hotel Indigo and
EVEN Hotels
1,859
Pipeline hotels, equivalent
to 31% of today’s system size
>40%
Of global pipeline
under construction
17
Properties secured
for Vignette Collection
since launch in 2021
Holiday Inn voted
World’s Leading
Budget Hotel Brand
We build love and trust for
our brands by investing in an
attractive portfolio that aims
to consistently meet guest expectations
for outstanding quality and experiences,
and represents a leading choice for
owners through a commitment to industry
outperformance, effective hotel lifecycle
management and strong returns.
Central to our growth strategy is developing
a well-rounded collection of brands to meet
the needs of a range of guests and owners.
Adding seven brands in the past five years,
we have transformed our portfolio, expanding
our midscale offer, strengthening our Luxury
& Lifestyle capabilities, providing a greater
choice of resort locations and all-inclusive
stays, and enhancing our ability to seal
conversion deals. Alongside this, we have
invested significantly in the quality, design,
service and technology of our established
brands, allowing us to keep pace with evolving
consumer trends, build further trust with
guests and increase owner returns.
We now have 18 brands grouped into five
distinct collections to showcase the breadth
of our offer, which leverage the power
of our IHG Hotels & Resorts masterbrand
and transformed IHG One Rewards loyalty
programme to collectively enhance their
performance, perception and growth.
What we achieved in 2022
We opened 269 hotels during 2022 to surpass
6,000 globally, including our 600th in Greater
China, while adding 467 hotels to our global
pipeline. Our Essentials brands remain a
powerful growth engine, with our Holiday Inn
Brand Family generating half of hotel openings
globally, illustrating its enduring appeal.
Important work this year included investment
in our existing estate, with Holiday Inn,
InterContinental, Hotel Indigo and EVEN
Hotels all undergoing design, service or food
and beverage refreshes to appeal to a new
generation of guests. In its 70th anniversary
year, Holiday Inn demonstrated why it
remains so trusted by being voted Leading
Budget Hotel Brand at the 2022 World Travel
Awards. Ongoing progress following our
2021 quality review will see two-thirds of
the Americas Holiday Inn estate and three-
quarters of the Crowne Plaza estate updated
by 2025. Recently renovated hotels are
showing strong performance metrics across
occupancy, room rate, revenue market share
and guest satisfaction scores, enhancing
the reputation, consistency and growth
prospects of these two powerful brands.
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Strong progress has continued with our
newer brands, too, with the six we’ve added
since 2017 (excluding Iberostar Beachfront
Resorts) already contributing more than
10% of our pipeline. We saw avid hotels
reach 59 open properties, including its
first in Canada, and opened our first two
Atwell Suites hotels, alongside growing
its pipeline to 30.
Work continues in accelerating our growth
and performance in Luxury & Lifestyle.
Underlining our progress, we celebrated
more than 110 openings and signings in
2022, including a Six Senses hotel in the
Bahamas and a Vignette Collection hotel in
Thailand. Several halo hotels showcasing key
brand elements were also secured, including
the opening of the flagship Regent Hong
Kong and the signing of iconic Regent
properties in Shanghai and Cannes, and
Kimpton’s first resort hotel in Europe. Hotel
Indigo achieved 18 openings in the year to
reach 143 properties across more than 20
countries, while Kimpton’s global expansion
continued, including the brand’s first hotel
in Australia and a second in Greater China.
Our Luxury & Lifestyle pipeline now stands
at 20% of our total global pipeline, which is
approaching twice the size it was five years
earlier, and we are investing in the capabilities,
people and tailored strategies required to
drive performance and growth.
Our strategic focus on accelerating
conversion deals around the world has also
continued to gain traction. Conversions
represented around a quarter of signings
and a third of openings in the year (excluding
Iberostar Beachfront Resorts), thanks to a
broader suite of brands to choose from than
ever before and growing owner demand for
access to our revenue-generating systems,
marketing and loyalty programme.
voco Orchard, Singapore
Hotel Indigo Vienna – Naschmarkt
Our Luxury & Lifestyle conversion brand
Vignette Collection has secured 17 properties
since launch in 2021, and our upscale
conversion brand voco recently achieved
the milestone of 100 open and pipeline hotels
and is achieving top satisfaction scores versus
competing brands. The brand was also voted
the World’s Leading Premium Hotel Brand
at the 2022 World Travel Awards.
Supporting our growth ambitions, in
November 2022, IHG signed a long-term
commercial agreement with Iberostar Hotels
& Resorts for resort and all-inclusive hotels
in the Caribbean, Americas, Southern
Europe and North Africa. This agreement
adds up to 70 hotels to our estate, with the
first 33 properties going live on ihg.com by
the end of December 2022, and is expected
to boost our global system size by up to 3%.
With the Iberostar Beachfront Resorts brand
becoming the 18th in our portfolio, the
agreement significantly increases our
footprint in resort and all-inclusive hotels
– a high-growth market segment where
there is clear demand from guests and IHG
One Rewards members. It joins IHG’s system
under a new Exclusive Partners category in
our brand portfolio, where we will explore
further new opportunities to drive additional
system growth and high-quality fee streams.
What’s to come
Having strategically rounded out our
portfolio to broaden its appeal to guests,
alongside continued investment in our
established brands, we have built a pipeline
of more than 1,800 hotels, representing 31%
of today’s system size. This, together with
the investments in our entire enterprise,
lays the foundations for continued net
system size growth in the years ahead.
Supporting this, we will continue to focus
on the quality and consistency of our estate.
This includes evolving key aspects of the
design, service and operations of our
Essentials brands to help assert their
competitive advantage, including launching
a new flagship breakfast for Holiday Inn in
the Americas. A brand refresh for Holiday
Inn Express® in Greater China will also help
support its continued expansion in the
region, where the brand has grown from
42 to 278 hotels in the past nine years.
Alongside the scaling up of our home-grown
Essentials and Suites brands, including avid
hotels and Atwell Suites, we will continue
to drive growth in Luxury & Lifestyle, with
openings in 2023 including the reopening
of Carlton Cannes as a Regent following
a two-year redevelopment. This will be
a flagship property within a new generation
of Regent hotels and resorts that will help
drive growth across Europe.
With the new Iberostar Beachfront Resorts
brand enhancing our all-inclusive capabilities,
we will drive our competitive advantage by
continuing to embed it in our systems and
showcasing the breadth of our portfolio
across our channels.
Our strategy | Build loved and trusted brands
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Our strategy continued
PRIORITY:
Customer centric
in all we do
2022 at a glance
Transformed loyalty programme
with IHG One Rewards, adding
12.2m new members
Heightened focus on
owner cost to build,
open and operate
our hotels
Launched Guest
How You Guest,
our biggest
marketing
campaign in
over a decade
Enhanced food
and beverage
offer for guests
~4,100
Hotels now participate in
Americas F&B purchasing
programme to reduce costs
Supported
owners through
collaboration with
governments and
trade bodies
Increased
guest choice by
adding Exclusive
Partner Iberostar
Beachfront Resorts
Our success depends on going
the extra mile for our customers
– keeping guests and owners at the
heart of everything we do to meet evolving
expectations and providing the right
support at the right time. This mindset
helps us to create unrivalled service, greater
choice and personalised experiences for
our guests, and compelling investment
opportunities, fast and effective solutions
and stronger returns for our owners.
From transforming our loyalty offer to
major marketing investments, richer guest
experiences, revenue-enhancing solutions
and an agile procurement offer, we are
focused on delivering the things that matter
most to ensure IHG and our brands stand
out as a preferred choice in the market.
What we achieved in 2022
As our guests embark on a new era of travel,
we launched a transformed loyalty offer in
2022 with IHG One Rewards providing more
ways to earn and redeem points alongside
richer, more tailored experiences. Our loyalty
programme is critical to our business and
future growth, with members responsible
for more than half of all room nights globally
and typically spending 20% more in our
hotels than non-members.
Since launching IHG One Rewards, more
than 12 million new members have been
welcomed to the programme, with
enhanced rewards including free breakfast
for Diamond Elite members and the ability
for guests to choose the rewards that matter
to them most through the introduction of
Milestone Rewards. The programme has
gained notable industry recognition, including
Best Hotel Rewards Program at the Global
Traveler 2022 Awards. Helping deepen guest
relationships and drive more business to
our hotels, we have teamed up with major
sporting events and music festivals to enable
IHG One Rewards members to redeem points
in exchange for unique experiences. We have
also further strengthened our partnership
with Mr & Mrs Smith by increasing the number
of properties available and expanding the
benefits to our IHG One Rewards members.
We continue to focus on enhancing all
critical aspects of the guest experience.
Recognising the role food and beverage
plays in guest satisfaction, we have delivered
new high-quality, cost-effective solutions
across many of our brands, and we continue
to modernise guestroom and public space
designs, such as H5 for Holiday Inn, an
efficient new prototype, which has been
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developed for the same build cost as our
previous H4 design. We have also made key
digital enhancements to enrich the guest
experience, including the launch of our
next-generation mobile app, which is playing
a central role in a transformed customer
booking journey across our channels
(see pages 26 and 27 to find out more).
For corporate guests, we are supporting
organisations in how they are bringing their
teams together to connect in today’s world,
incorporating seamless booking, hybrid
solutions and customisable perks. In 2022,
IHG was recognised at the Stella Awards for
the second consecutive year with a gold
medal for Best Hotel Chain for providing
an exceptional meetings experience.
For our hotel owners, we remain focused on
providing the operational and commercial
support they need to strengthen performance
and capture demand. Our investment in IHG
One Rewards is playing an important role,
with loyalty contribution increasing following
launch and returning to 2019 levels by
the end of 2022. Enrolments were up 27%
year-on-year and Reward Night bookings
were 16% ahead of 2019. Launched in
phases to minimise impact on hotel teams,
with training for thousands of colleagues
to bring it to life, the new programme’s
many benefits are being delivered by our
new mobile app, which is driving loyalty
engagement and direct bookings.
Underpinned by our loyalty programme, our
IHG Hotels & Resort masterbrand marketing
approach is helping to showcase the breadth
of our offer to consumers in fresh and
engaging ways. Our global Guest How You
Guest campaign is our biggest in more than
a decade, telling the world how we have
a brand for every traveller in every market
and using data to target key demographics.
In addition, a new Demand Sensing
Forecast model launched in 2022 helps our
owners and hotel teams maximise revenue
opportunities by using data and analytics
such as web searches and airline bookings
to forecast local transient demand. The model
is now available for all hotels globally.
Underpinning all our work with owners is a
heightened focus on the cost to build, open
and operate our hotels, and we are focused
on enhancing every aspect of the hotel
lifecycle. This includes more efficient design
prototypes for new-builds and renovations,
and procurement solutions to speed up new
Underpinning
all our work
with owners is a
heightened focus
on the cost to
build, open and
operate our hotels.
openings. Recognising that some markets
face specific challenges in getting building
projects off the ground, we are providing
tailored solutions to boost development.
In Greater China, we have connected owners
to specialist financiers for them to provide
a Supply Chain Financing Programme that
offers deferred payment plans for hotel
building materials. In Japan, Australasia
and the Pacific, our first Hotel Procurement
Service pilots for construction and
refurbishment are helping owners achieve
Holiday Inn Ho Tram Beach, Vietnam
Our strategy | Customer centric in all we do
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Strategic Report
Our strategy continued
Customer centric in all we do continued
savings of 11% to 35% on goods and services
during hotel build and opening phases
of their projects.
We are also helping control energy costs
through negotiating fixed rates, while around
4,100 hotels in the Americas region now
participate in our F&B purchasing programme,
with nearly 20% growth in the number of
hotels joining in the US alone. This programme
supports menu optimisation, helping owners
mitigate inflationary pressures and achieve
absolute savings.
We also continue to take steps to streamline
operations while maintaining great guest
experiences, including removing or relaxing
some brand standards, and introducing a
new housekeeping model to free up teams.
To ensure we are doing all we can to
strengthen owner returns in an environment
of high inflation, we also launched a Think
Owner Return global e-learning series for
corporate colleagues during the year.
Recruiting and retaining talent to meet rising
demand remains a challenge across the
industry, so we are taking steps to reduce
pressure on busy hotel teams and enhance
customer service. We have hired more
than 2,700 people in our Reservations and
Customer Care (RCC) teams to help handle
sales and service interactions, answering
them in an average time of 25 seconds.
We are also implementing workforce
management tools and processes in each
of our regions, leveraging technology to
help owners optimise staffing levels.
Focused on supporting our owners in as many
ways as possible, we continue to collaborate
with governments, peers and trade bodies
on a range of industry issues, from easing
labour shortages to maximising use of
available tax incentives. A new development
website delivered in the year is also
providing prospective owners and investors
with everything they need to work together
as efficiently as possible from the first
conversation on potential projects with IHG.
What’s to come
To help ensure our IHG One Rewards loyalty
programme continues to attract and retain
more members through richer experiences
and drive more direct bookings and repeat
business for owners, we are focused on
embedding a culture of loyalty in every
hotel through further training and support.
In addition, we will continue to optimise
benefits and develop further programme
enhancements, alongside a broader focus
on delivering rich, relevant guest experiences
and driving the commercial performance
and growth of our brands.
Our focus on reducing the cost to build,
open and operate our hotels remains, and
we will continue to work closely with owners
across all aspects of the hotel lifecycle.
This includes delivering new low-cost hotel
designs, speeding up renovations across our
Americas estate, streamlining brand standards
and providing more procurement solutions
that allow owners to benefit from our scale.
Holiday Inn Ho Tram Beach, Vietnam
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Why hotel owners choose to work with IHG
Hotel owners choose to work with IHG because of the trust they
have in our brands and our track record in delivering strong returns.
Strength of brands
A portfolio of brands across
industry segments, designed
to drive owner returns
Global sales organisation
We have developed
a global sales enterprise
to drive higher-quality,
lower-cost revenue
to our hotels
Strong loyalty
programme and
enterprise contribution
77% of revenues
delivered to hotels
by IHG’s enterprise
Sustainability
tools and expertise
We have developed
tools, training and
programmes to
support hotels and
provide better data
and insights to enable
them to reduce their
energy, waste and
water consumption
Digital advantage
We have invested
in our cloud-based
IHG ConcertoTM
platform, including
our Guest Reservation
System, to better
connect with guests
and owners
Procurement
We use our scale to
reduce costs for owners,
with procurement
programmes for hotel
goods, services
and construction
Investment in hotel lifecycle
management and operations
We have invested in
technology, systems and
processes to support
performance, increase
efficiencies and drive returns
for our owners
Our strategy | Customer centric in all we do
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Strategic Report
Our strategy continued
PRIORITY:
Create digital
advantage
2022 at a glance
Launched
next-generation
mobile app
58%
Of all digital bookings are now
made on our new mobile app
Commenced rollout
of next-generation
payments system
Redesigned brand
websites as part
of transformed
booking journey
Introduction of 24/7
customer care text
messaging service
20%
Of customer contacts shifted
to digital channels, reducing
pressure on hotel teams
We continue to invest
significantly in our technology
platforms, identifying and
embedding solutions that create more
seamless experiences for guests, unlock
revenue opportunities for IHG and our
owners, and support collaboration and the
streamlining of processes within our teams.
In enhancing our digital capabilities, we
are gaining access to deeper insights and
increasing our ability to connect with guests
across our platforms to raise awareness
of our brands, while simplifying operations
and strengthening performance for owners.
From forecasting demand to creating more
personalised stays, our use of data and
analytics is providing key insights for our
teams across the business, enabling them
to seize opportunities to enhance the guest
and owner experience. With many of our
apps and platforms now cloud-based, the
infrastructure is already in place to test, pilot
and launch new hotel products and services
at pace and scale, saving time and money.
What we achieved in 2022
This year we made important progress on
multiple fronts, working closely with owners
as demand increased in many markets.
Launched in 2022, our next-generation
mobile app is providing a richer customer
experience, with streamlined booking that
allows guests to check-in faster and powering
IHG One Rewards to give members seamless
access to their loyalty benefits, including
the ability to choose and redeem Milestone
Rewards. Other new features include filtering
by room attributes and enriched maps
functionality, while in the fourth quarter
alone a further 60-plus enhancements were
made to the booking process, supporting
further increases in direct booking, loyalty
engagement and incremental spend
during stays.
With mobile our fastest-growing revenue
channel, the app has driven revenue at 30%
higher levels than 2019 in the Americas and
EMEAA, and in recent months the further
shift towards using mobile devices has seen
it now account for 58% of all digital bookings.
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Our new mobile app is part of a wider
transformation of the booking experience,
which includes simpler-to-navigate brand
websites featuring new photo galleries,
improved technology to boost traffic and
easier-to-manage content platforms.
We have simplified room rates, focusing on
consistency across channels to encourage
direct bookings that drive lower-cost revenue
to our owners, while redesigned web pages
that combine rooms and rates choices
have contributed to increases in booking
conversion of up to one percentage point
and revenue uplift of up to 3%. This new
web experience has also driven around
a 30% increase in web enrolments to our
IHG One Rewards programme.
Linked to this work is the piloting of attribute
pricing, where guests can seamlessly
select add-ons and tailor their stays while,
in parallel, owners generate maximum
value from their hotel’s unique attributes.
Having already completed the detailed room
inventory assessments, these pilots will be
scaling across more of the estate in 2023.
Further supporting owners in the
merchandising of extras, we launched the
IHG Mobile Mall platform in Greater China,
which provides guests easy access to
package deals in full-service hotels.
Our technology continues to elevate
customer service, with further progress
being made through artificial intelligence
(AI). This enabled our Reservations and
Customer Care (RCC) teams to shift 20%
of our customer contacts through digital
channels by the end of 2022, compared
with just 4% at the start of the year.
This is part of an approach to use a blend
of agents and AI to quickly meet our guests’
needs and engage with them on their
preferred channels. During the year, we
launched asynchronous messaging as a
24/7 service, where customers can elect
to contact us through SMS and popular
messaging applications and respond in
their own time. We handled more than
250,000 interactions in 2022, with the
service receiving the highest satisfaction
scores of all our channels.
We have also developed a new Digital
Concierge for web and mobile, which enables
greater guest self-service and reduces the
burden on hotels by diverting call traffic.
This handled millions of conversations
during the year, further assisting customers
across our platforms.
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Our powerful
new mobile app
is part of a wider
transformation
of the booking
experience.
Our digital capabilities are enabling us to
meet guest and owner expectations at a
faster pace than ever before. To speed up
hotel check-in and reduce fees for owners,
we have launched our next-generation
payments system in the US and Canada,
which includes a broader range of secure
payment options, including tap to pay.
What’s to come
We will continue our progress in creating
a more frictionless customer journey with
further enhancements. This includes new
mobile app features, easier digital enrolment
in IHG One Rewards, an expanded Digital
Concierge service, a more seamless
connection to hotel wifi, and scaling up
pilots to leverage our Guest Reservation
System capability with selectable room
attributes and stay enhancements. With the
addition of Iberostar Beachfront Resorts, we
will also be creating brand-new all-inclusive
digital capabilities, and we expect to roll out
our next-generation payments solution to
the majority of our US and Canada hotels.
To further strengthen operations, we will
expand our cloud-based technology to
unlock new capabilities to enhance our
operational systems, streamline access to
applications and support us in utilising data
throughout the customer journey. Work will
also begin on a more flexible, user-friendly
revenue management platform that will
provide owners with clear insights on how
best to optimise revenue to their properties.
Holiday Inn Queenstown Remarkables Park, New Zealand
Our strategy | Create digital advantage
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Our strategy continued
PRIORITY:
Care for our
people, communities
and planet
2022 at a glance
86%
Overall employee
engagement increased
to 86% (+1% on 2021),
placing IHG as a Global Best
Employer by Kincentric
3.4%
Reduction in our
carbon emissions
in 2022, compared
with our 2019
baseline level
>57,000
Hours were collectively
dedicated by colleagues
in 2022 during IHG’s
Giving for Good month
10
The number of relief
efforts we responded
to around the globe
alongside our
charity partners
Caring for our people, communities
and planet has always been at the
heart of how we work, but the nature
of an ever-evolving social and environmental
landscape means we continually explore
how we can make a positive difference
as we operate and grow.
The Board’s Responsible Business Committee
reviews IHG’s responsible business objectives
and strategy and advises the Board on our
approach to diversity, equity & inclusion
(DE&I), our impact on local communities,
responsible procurement in our supply chain,
programmes on human rights and modern
slavery, our environmental impact, and our
engagement with employees.
To guide our actions and drive progress,
in 2021 we launched our 2030 Journey
to Tomorrow plan, a series of ambitious
commitments to create positive change
for our people, communities and planet,
aligned to our purpose of True Hospitality
for Good and to the UN Sustainable
Development Goals.
We know the actions we take around the
environment, our people and society are
closely followed by our investors and other
stakeholders and are therefore critical to our
reputation and growth, and we have focused
our efforts on the areas where we feel we
can make the greatest impact. Reflecting the
changing world around us, each commitment
is designed to ensure IHG grows responsibly
and in ways that ensure travel has a beautiful
future for everyone.
See key matters discussed by the Board on
page 100-101 and the Responsible Business
Committee Report on pages 110 and 111.
See our Responsible Business Report at
www.ihgplc.com/responsible-business/
reporting
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Our 10-year responsible business plan
Our goal is to help shape the future of responsible travel together with those who stay, work and
partner with us. We will support our people and make a positive difference to local communities,
while preserving our planet’s beauty and diversity… not just today but long into the future.
Improve the lives
of 30 million
people in our
communities
around the world
Champion a
diverse culture
where everyone
can thrive
Reduce our energy
use and carbon
emissions in line
with climate science
Pioneer the
transformation
to a minimal waste
hospitality industry
Conserve water
and help secure
water access in
those areas at
greatest risk
EMPOWER OUR PEOPLE TO HELP SHAPE THE FUTURE OF RESPONSIBLE TRAVEL
People
Champion a diverse culture
where everyone can thrive
Our 2030 commitments
• Drive gender balance and a doubling
of under-represented groups across
our leadership
• Cultivate an inclusive culture for our
colleagues, owners and suppliers
• Support all colleagues to prioritise their
wellbeing and the wellbeing of others
• Drive respect for and advance
human rights
Our people are fundamental to IHG achieving
its purpose and strategic goals. IHG’s business
model means that we do not employ all
colleagues. We directly employ individuals
in our corporate offices, reservation centres,
and managed, owned, leased and managed
lease hotels. However, not all individuals
in managed, owned, leased and managed
lease hotels are directly employed, and we
do not employ any individuals in franchised
hotels (nor do we control their day-to-day
operations, policies or procedures).
What we achieved in 2022
People engagement
We have several forums available for
employees to share their thoughts,
including employee resource groups (ERGs),
a designated Non-Executive Director for
workforce engagement and our employee
engagement survey, known as Colleague
HeartBeat, which allows people to express
their views on key aspects of working at IHG.
In our 2022 survey, our overall employee
engagement stood at 86%, a 1% improvement
on last year, which once again saw IHG
accredited as a Kincentric Global Best
Employer. The survey highlighted areas that
we can strengthen further, including enabling
infrastructure and technology, a continued
focus on rapid and high-quality decision
making, plus ensuring that inclusion remains
a key focus for the business. Actions taken
during 2022 on talent and staffing saw a
significant improvement in scores in these
particular areas. These areas will remain
a priority for 2023.
Developing and retaining talent
To achieve our ambitions, we know we need
to develop and retain a diverse and talented
workforce, which involves creating an open
and inclusive culture that promotes career
development and equal opportunity, and this
year we developed more tools and resources
we need as individuals and as a business
to be successful. Our growth as individuals
and as a company is encapsulated in our
employee brand. Celebrating the inclusive
culture we create at IHG, it incorporates our
promise to support employees on every step
of their career journey by giving them Room
to Belong, Room to Grow and Room to Make
a Difference. To support this, in 2022 we
launched Room to Grow Week, a series of
events and resources to champion personal
and professional development.
We also ensure our people managers are
well-equipped to support our performance
and development processes through
offering simplified resources and delivering
masterclasses to bring our processes and
practices to life. As part of our continued
focus on developing talent, managers have
continued to hold quarterly check-ins with
employees to support them in achieving
their professional goals, helping them
connect their own role and purpose with
the overall vision for IHG.
Our strategy | Care for our people, communities and planet
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Strategic Report
Our strategy continued
Care for our people, communities and planet continued
Attracting talent
To address the challenges the industry is
facing in attracting talent, we have invested
in our careers website, refreshed our
employer brand and marketing materials,
and increased social and paid media activity
to improve visibility of vacancies. This has
resulted in more than 80,000 visits per
month to the careers website, and a
significant rise in applications across job
platforms. We have continued to embed
inclusive hiring practices throughout the
recruitment process to attract people from
a wide range of backgrounds. We have
strengthened our recruitment materials,
such as translating our interview guides
into more languages, and integrated our
franchise job portal into WeChat in Greater
China to reach new talent.
To support the growth of Luxury & Lifestyle
brands, we have set up a team dedicated
to attracting and developing GMs within
the segment and launched a recruitment
campaign showcasing the great career
opportunities on offer across our brands.
Recognising the importance of attracting
and developing talent whatever their
backgrounds, circumstances or abilities,
we are working with organisations across
our regions to diversify our early careers
pipeline, from Historically Black Colleges
and Universities in the US and the Leonard
Cheshire Disability charity in the UK to
special education schools in Asia. To find
out more, see our Communities section
on pages 33 and 34.
Wellbeing
In March 2022, we launched myWellbeing –
a framework to support employees across a
range of important areas, including their health,
lifestyle and workplace. The myWellbeing
suite of resources, which includes an
employee wellbeing handbook, wellbeing
guidelines for people managers and financial
education materials, has been designed to
provide a holistic wellbeing offering, which
employees can access quickly and easily.
During the year, we established regular
touchpoints to encourage employees to take
care of their mental health. We marked World
Mental Health Day with global webinars and
a video series, while Focus Fridays encourage
employees to avoid scheduling standing
meetings to allow undisturbed time to focus
on the week ahead.
With the world shifting to hybrid working,
we took further steps to create more flexible
workspaces that support employees in
adopting a balance of remote and office
working and the delivery of IHG’s priorities.
In December 2022, we moved into our new
Global Headquarters in Windsor in the UK
– a modern, creative and sociable working
environment equipped with the latest
technology to bring employees together
at the right time and help them get the
most out of their days in the office. We also
refurbished our Americas headquarters in
Atlanta in the US to create a more inviting
environment for employees to connect
and collaborate.
IHG’s reward strategy aims to attract, retain,
motivate and engage top talent. It is supported
by a robust governance approach that ensures
our reward and recognition practices are
fair and consistent across our employee and
colleague population, regardless of gender
and other aspects of diversity, and there
is alignment between the wider direct
workforce and executive remuneration.
For our hotels, Journey to GM (our new
General Manager talent acceleration
programme) aims to provide a pipeline of
talent that both matches our growth ambitions
and fulfils the aspirations of our employees
wishing to build long and successful careers
at IHG. In its first year, we saw 10 Journey
to GM participants move into their first
General Manager role across our EMEAA
and Americas regions. We also continued
to develop our hotel talent management
system to provide us with greater insights
into the talent we have and the critical gaps
we need to fill.
Investing in our HR technology
and learning and development
In 2022, we invested in our core HR and
learning technology platforms and our
learning offer. These areas are critical to
creating the engaging, high-performance
culture we champion at IHG, each providing
the tools and resources we need to be
successful. Delivering a more streamlined,
intuitive user experience for employees
and colleagues, our HR system features
self-service capabilities to enable line
managers to initiate a range of core HR
transactions themselves. The new platform
also provides an end-to-end onboarding
experience and consolidates HR support
into one easy-to-navigate portal.
Our new learning platform will provide
our corporate offices, company-managed
and franchise hotels with access to flexible
training in a way that enables people to
address specific needs and personalise
their learning experience to strengthen
opportunities for career development
and growth.
See more about our workplace environment
on page 41 and wider workforce considerations
on pages 114, 117, 123 and 124.
IHG celebrated LGBTQ+ Pride Month in Atlanta, US.
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Diversity, equity & inclusion (DE&I)
A cornerstone of our culture is our passion
and commitment to DE&I. It’s not just crucial
to who we are, but also to how we work
together and grow our business, and to the
sense of belonging colleagues feel at IHG
and the freedom to be themselves.
Our commitment starts at the top, but
we know we can’t have a one-size-fits-all
approach when it comes to DE&I as the
focus of each of our markets is unique.
Our six regional DE&I councils – connected
to our Global DE&I Board – are chaired by an
increasingly diverse leadership to prioritise
local agendas and focus on what makes
the biggest difference to the people
around them.
Every member of IHG’s Executive Committee
(EC) has a DE&I-focused goal. Together with
their leadership teams, they review talent
with a specific focus on diversity. For instance,
in the UK, we have formed a steering group
comprising EC, Human Resources (HR)
and Employee Resource Group (ERG)
representatives to educate leaders on ethnic
diversity and creating a more inclusive
workplace, alongside action plans to
drive change.
Our commitment is emphasised throughout
our global hiring guidelines and initiatives
and is backed up by our Global Diversity,
Equity, Inclusion & Equal Opportunities
Policy, with our work in this area revolving
around a DE&I framework spanning three
core areas: creating an inclusive and
inspiring culture for all our people, driving
gender balance globally and addressing
under-representation in our leadership.
Creating an inclusive and inspiring
culture for all our people
At IHG, inclusion means creating a culture
that truly values having colleagues from
a wide variety of backgrounds and provides
them with a positive and welcoming
environment in which they can thrive.
Having already rolled out conscious
inclusion training for GMs and corporate
colleagues in key markets in 2021, this year
we built on this foundation by extending the
programme to frontline hotel colleagues.
Our ERGs are central to the conversations
we have around DE&I within the business and
are continuing to grow, supporting diverse
employees and their allies and driving change.
We now have 1,300 members and allies in
24 chapters worldwide, which represent a
broad demographic of employees including
race and ethnicity (Somos US, Path US,
BERG US, EMbrace Europe, IMEA), gender
(Lean In – global), LGBTQ+ (Out and Open,
US and UK), disabilities (DAWN US and UK),
generational diversity (BBX US, HYPE Greater
China, US, SEAK and UK), Veterans (Serve
US) and virtual workers (Fave US).
Our ERGs also play a leading role in bringing
leaders and employees together to deepen
their understanding of the value of inclusion
at regular touchpoints throughout the year
by organising activities around globally
recognised DE&I celebrations, including
International Women’s Day, International Day
of Persons with Disabilities and Pride Month.
Employee listening sessions and insights
from our inclusion index are also among the
ways we are keeping track of our progress
and identifying areas where we need to
keep improving. The index showed that
nine out of 10 employees feel IHG has an
inclusive culture.
We were proud to be recognised as a
Best Place to Work for LGBTQ+ and Equality
in the Human Rights Campaign’s Corporate
Equality Index in the US for the eighth year
in a row, as well as in Mexico for the first time.
Reflecting the inclusive culture we work hard
to create within the business, we saw our
internal efforts in the LGBTQ+ space extend
into the communities in which we operate
when we sponsored Pride in London’s 50th
anniversary, became members of Pride
Connection in Mexico and Latin America,
and continued to be a valued sponsor
of Atlanta Pride in the US.
Our DE&I Policy
IHG is committed to promoting a culture
of inclusion where everyone feels safe,
respected and valued. Our policy applies
to anyone who is directly employed by
IHG and colleagues who work in managed
hotels. Below is a summary of
our commitments:
• Provide all employees with the
opportunity to join our Employee
Resource Groups.
• Provide employees with disabilities the
appropriate support where reasonable
and practicable to do so and in
accordance with local requirements.
• Ensure our recruitment, development
• Actively support diversity and inclusion
to ensure that all our employees are valued
and treated with dignity and respect.
and reward practices, and our approach
to working arrangements, are designed to
attract, develop and retain diverse talent.
• Strive continually to provide people with
a working environment that is free from
racism, harassment and discrimination.
• Foster an environment where our
employees can work together to maintain
an inclusive working approach where
everyone’s unique contribution is valued.
• Ensure that all decisions affecting an
• Work to educate our employees about
the benefits that diversity and inclusion
brings to our business and support
interventions that improve diversity
and inclusion in our places of work.
IHG’s Global DE&I Board, chaired by our
CEO, and regional DE&I councils feature
representatives from across our Company
who offer a breadth of experience from
different cultures, industries and
organisations. They work with stakeholders
to ensure we continue to honour our DE&I
commitments and strive for best practice.
It is our policy to comply with international,
national and local regulatory requirements
and, where required, any affirmative action
as stipulated by local laws. We set measurable
objectives for achieving diversity and
inclusion for IHG, and we review our progress
against them each year.
See our DE&I Policy at
• Ensure all employees are aware of this
www.ihgplc.com/responsible-business
policy and complete any relevant training
in relation to diversity and inclusion.
employee’s employment are made fairly
and are based on an individual’s ability
and performance.
• Ensure our customers experience an
inclusive welcome and stay provided
by our employees.
Our strategy | Care for our people, communities and planet
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Strategic Report
Our strategy continued
Care for our people, communities and planet continued
Driving gender balance globally
We have made significant progress towards
achieving gender balance at IHG over the
past decade and regularly feature in the
Top 20 of the FTSE female leaders list.
Globally, 34% of our leaders working at Vice
President level and above are female, and
we are one of the few large global businesses
to have a gender-balanced all-employee
population, of which 58% is female.
As part of our commitment to achieving
gender balance in our corporate and hotel
leadership teams by 2030, we are focusing
on how we attract more women into
functions that have been historically less
gender balanced, such as Commercial &
Technology, Operations and Development.
We are also identifying and removing
potential barriers to increase the number
of female GMs across our estate, including
through our global network of Lean In circles,
which empower our female colleagues to
realise their ambitions by supporting one
another through small peer groups that
meet regularly.
We want all women at IHG to be able to
consider opportunities that encourage
career growth, and which help them fulfil
their potential. To that end our Flexible
Working Policy encourages corporate
employees to organise their time in the
best way for them and IHG. We are proudly
sharing the success stories of those it is
helping to prosper at work, while hotel
colleagues are also benefiting through
initiatives like myFlex in Australia, where they
can work across any hotels in the country’s
managed estate. Underlining our
commitment to help all parents and carers
in our teams find the right work/life balance,
we have market-specific family policies and
continue to evaluate them to ensure they
support our people to be at their best.
Addressing under-representation
in our leadership
We are committed to having leaders who
represent the truly diverse global nature of
our business and drive our commitment to
DE&I in all our markets.
Today, 21% of our global leaders are ethnically
diverse, representing 20 nationalities.
We want to increase the ethnic diversity
of leaders across our markets and have set
clear targets in the US and UK – where we
have our largest populations of corporate
colleagues. Our aim is to increase ethnic
minority leadership representation in the
US where we are at 20% in 2022 to 26%
by 2025, and in the UK where we are at 6%
with the aim of getting to 20% by 2027.
To help us achieve this, we are developing
action plans and initiatives supported by a
range of stakeholders, including our Americas
and Europe regional DE&I councils, and
several ERGs.
In the Americas, we evolved our Ascend
programme to nurture not only Black
leadership talent but also multiracial leaders,
so a wider pool of talent can acquire the
skills they need to take on more senior
positions. Our successful Rise programme,
which is focused on increasing the number
of women in GM and other senior positions
in our managed hotels, saw another
90 employees graduate.
In the UK, we ran cross-organisational
programmes for manager-level employees
with The Network of Networks (TNON),
a DE&I partnership that has delivered our
Ethnic Minority Manager programme, while
non-manager level employees enrolled on
the Women in Hospitality, Travel and Leisure
(WiHTL) Ethnic Future Leader Programme.
With 30 of IHG’s leaders acting as sponsors
across both programmes, we were proud
to see all 10 employees on the TNON
programme graduate and engage in their
career-planning conversations, while
participants on the WiHTL programme are
expected to graduate in March 2023, with
one of them invited to join the WiHTL board.
As at 31 December 2022
Male
Female
Total
Directors
Executive Committee
Executive Committee
direct reports
Senior managers
(including
subsidiary directors)
All employees
(whose costs were
borne by the Group
or the System Fund)
7
7
6
3
34
25
13
10
59
69
29
98
5,405
7,494 12,899
Supplier diversity
In 2022, we continued to focus on driving
inclusion in our US supply chain in support
of the People and Community pillars of
Journey to Tomorrow. We introduced
Engaging Partnerships through Inclusion
and Collaboration (EPIC), our Supplier
Diversity Programme, at the 2022 Americas
Investors & Leadership Conference. We also
recognised our diverse suppliers and our
‘EPIC Allies’ – suppliers with a verifiable
Supplier Diversity Programme who are
working with us to identify diverse suppliers
in their respective supply chains. In 2022,
IHG gained exposure to more diverse business
entities and saw our qualified diverse spending
double in the US since 2021. In 2023, we
intend to expand this programme to the UK.
Intercontinental Lusaka, Zambia
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Human rights and modern slavery
An integral part of our global commitment
to responsible business is respecting human
rights in accordance with internationally
recognised standards. We understand the
importance of human rights in relation to
our colleagues, guests and communities
and we encourage those with whom we do
business – including our suppliers, owners
and franchisees – to prevent, mitigate and
address adverse impacts on human rights,
including modern slavery.
We seek to advance human rights through
our business activities and by working
together with others to identify challenges
and effective solutions.
Key focus areas in 2022 included: the launch
of minimum core requirements related to
responsible labour practices for IHG-owned,
leased and managed hotels, focusing on
responsible recruitment and onboarding,
staff accommodation, worker voice, and the
use of recruitment agencies and third-party
labour suppliers, with the aim to support
the implementation of IHG’s Human Rights
Policy at hotel level. Furthermore, we
conducted a labour market assessment in
the UK, continued to address findings of our
previous risk assessment work, progressed
our supply chain risk assessment work and
our approach to human rights supplier
due diligence.
IHG is a member of the United Nations
Global Compact (UNGC) and is
committed to alignment of IHG’s
operations, culture, and strategies with
the UNGC’s 10 universally accepted
principles in relation to human rights,
environment and anti-corruption.
See our Modern Slavery Statement at
www.ihgplc.com/modernslavery
Junior achievement IHG First Look events, London, UK
of paid volunteer leave annually to work
with charities close to their hearts.
As our activity increases, it is important that
we measure our contribution and ensure we
continue to focus on areas where we can
make the biggest difference. We do this as
members of Business for Societal Impact
(B4SI), which sets the global standard for
managing corporate community investment.
What we achieved in 2022
Skills training and innovation
Since 2004, IHG Academy has been
inspiring rewarding careers in travel and
tourism. In 2022, more than 7,400 people
gained valuable employment and life skills
through work experience, internships and
apprenticeships alongside some of the
world’s best hoteliers. After expanding the
programme last year to include IHG Skills
Academy, a best-in-class virtual learning
platform that provides free online education,
this year we have built on this offer by
translating some of our core learning modules
into eight additional languages to make the
IHG Skills Academy a truly global resource.
Communities
Improve the lives of 30 million
people in our communities
around the world
Our 2030 commitments
• Drive economic and social change
through skills training and innovation
• Support our communities when natural
disasters strike
• Collaborate to aid those facing
food poverty
We aim to ensure we make a real and
sustainable difference in our communities
through meaningful partnerships and
leveraging our skills and resources to
help others.
We have pledged to improve the lives of
30 million people through skills training,
being there in times of natural disaster and
fighting food poverty. We do this not only
through direct funding and working in
partnership with expert organisations, but
also through our employees and colleagues
who share their time, skills and passion
to address the social needs within their
communities. We support the efforts of
corporate employees by providing two days
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Our strategy continued
Care for our people, communities and planet continued
>380,000
Acts of volunteer service have been provided
by colleagues since 2018 through Giving for
Good month
Sustainability classes at local schools, Six Senses Ninh Van Bay, Vietnam
We’re also supporting social and economic
change through partnerships with charities
and Non-Governmental Organisations (NGOs),
such as US non-profit Jobs for America’s
Graduates (JAG), which helps students
historically impacted by discrimination,
poverty and other barriers to graduate
and secure work.
Supporting our communities
when disasters strike
We have a proud record of being there for
our communities in times of need, and with
our support needed more than ever before,
we work closely with a range of humanitarian
aid partners around the world to assist in
their critical relief and recovery efforts.
Extending our support to thousands of
people being displaced in countries such as
Afghanistan and Ukraine, we’ve also teamed
up with the Tent Partnership for Refugees
to train and hire refugees in the US over the
next three years, which includes providing
access to our IHG Skills Academy.
Giving for Good month
As some markets remained restricted
by the pandemic during 2022, we didn’t
reintroduce hotel targets around Giving for
Good activities this year. However, through
corporate colleagues and those hotels able
to participate, we still managed to collectively
dedicate more than 57,000 hours to making
a positive difference to the lives of over
100,000 people globally.
We’re proud to be at the heart of thousands
of communities, and since 2018, corporate
employees and hotel colleagues around the
world have provided more than 380,000
acts of volunteer service.
In 2022, we supported 10 relief efforts,
working with our long-term partners such
the International Federation of Red Cross
and Red Crescent Societies (IFRC).
Alongside our annual donations to support
its work on multiple fronts, we assisted the
American Red Cross in its recovery efforts
following the destruction caused in the US
and eastern Canada by Hurricane Fiona and
Hurricane Ian.
We also proudly celebrated 10 years of
working with CARE International, during
which time we have provided support
across all our key focus areas – responding
to disasters, supplying aid to those facing
food poverty and providing educational
support. Our grants support the NGO to
work with local organisations across more
than 100 countries to provide a lifeline
to vulnerable people in times of need.
We also activated the IHG Colleague Disaster
Relief Assistance Fund to help colleagues
impacted by natural disasters across the
globe, including those affected by severe
tropical storm Paeng in the Philippines.
Collaborating to aid those
facing food poverty
Our support of the Global FoodBanking
Network contributes to its food bank and
food provision charities in 47 countries.
In addition to the support we give through
our direct food bank partnerships, we are
helping to support society’s most vulnerable
in the fight to achieve global food security.
This includes working closely with key
organisations, such as No Kid Hungry in
the US and OzHarvest in Australia – a food
rescue NGO that diverts leftover food from
our hotels to those in need within our local
communities. This year we extended our
partnership to support the newly launched
VietHarvest in Vietnam and JapanHarvest
in Japan.
We also expanded the number of hotels
using the food recovery app Goodr, which
uses technology to make it quick and simple
to pick up excess and expiring food from
hotels and restaurants and donate it to local
non-profit organisations.
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consistent with climate science and the
Paris Agreement to limit global temperature
rise to 1.5°C above pre-industrial levels.
The challenges faced by our hotels in
recovering from the pandemic and restoring
growth have required careful navigation
that recognises the pressures on our owners
and teams. Despite this, we achieved a 3.4%
reduction in our GHG emissions, compared
with our 2019 baseline level.
What we achieved in 2022
To support our Journey to Tomorrow
commitments, we undertook a review of
our brand standards and have begun to
incorporate a range of Energy Conservation
Measures (ECMs). Existing hotels are now
mandated to implement LED lighting and
high-efficiency, low-flow aerated shower
heads by the end of 2025. We have initially
focused on ECMs that provide the most
impact for the lowest cost, with paybacks
of less than five years for owners.
Being part of IHG means hotel owners
receive a range of support to empower them
with the knowledge and resources they need
to meet their energy reduction targets and
go further where they can.
We are taking steps to help ensure the
availability of incentives for sustainability
measures that require greater investment
with longer pay-back periods. This year, this
included engaging directly with government
officials in the US to help secure tax credits
for commercial buildings that make their
properties more energy efficient as part
of the Inflation Reduction Act.
Every IHG hotel is given access to our
IHG Green Engage™ system, our online
environmental management platform, which
helps hotel teams make greener choices,
charts their progress, and measures, reports
and manages their energy, water and waste.
Another part of this strategy is to provide
hotels with an automated data collection
service which, at no additional cost to hotels,
collects data from utility companies or
hotels directly, which it then feeds directly
into Green Engage.
In 2022, we rolled out the Hotel Energy
Reduction Opportunities (HERO) toolkit to
guide hotels on the most effective energy
conservation measures for their specific
building. The tool provides indicative capital
costs, energy reductions and payback
periods for each measure based on the
hotel’s facilities, climate and energy use.
We now supply all of our UK offices and
managed hotel estate with a renewable
electricity tariff, as well as our managed
hotels in Germany and our Atlanta office
and Design Center in the US.
We also continue to explore the delivery
of a broader renewable energy programme
that can be accessed by a wider range of
our hotels. Our focus has initially been in
the US, and this year we worked with a US
community solar organisation to deliver our
first Community Solar initiative in Maryland,
which gives hotels access to renewable
energy while delivering a fixed discount on
electricity charges and Renewable Energy
Credits so they can reduce the reported
GHG emissions from their operations.
Holiday Inn & Suites Atlanta Perimeter – Dunwoody opened in 2021, complete with on-site photovoltaic solar
panels to generate electricity and solar thermal panels for hot water, producing 15% of the hotel’s energy use.
Planet
With hotels in more than 100 countries and
ambitious growth plans for our brands, it is
important to us that we operate sustainably
and help preserve our planet for all
generations to travel and explore.
So that we continue to create more
sustainable guest stays and support
our hotels in reducing carbon emissions,
managing waste, and conserving and
preserving natural resources, we are working
with our hotel owners, suppliers, industry
peers and governments.
See our TCFD, Responsible Business
Committee Report and GHG emissions
disclosures on pages 54 to 61, 110 and 111
and 237 to 239.
See our Responsible Business Report at
www.ihgplc.com/responsible-business/
reporting
Energy and carbon
Reduce our energy use and
carbon emissions in line with
climate science
Our 2030 commitments
• Implement a 2030 science-based
target that delivers 46% absolute
reduction in carbon dioxide emissions
from our franchised, managed, owned,
leased and managed lease hotels
• Target 100% new-build hotels to
operate at very low/zero carbon
emissions by 2030
• Maximise/optimise the role of
renewable energy
We recognise the importance of partnering
with hotel owners and supporting them to not
only generate profits but also decarbonise
and futureproof their assets to protect the
long-term value of their business. Working
with our colleagues, owners and partners, we
have a clear strategy for how we will deliver
on our carbon reduction commitments while
continuing to grow our estate, which covers
three main areas: decarbonising our existing
hotels; sourcing renewable energy; and
developing new-build hotels that operate
at very low or zero carbon.
We have set specific, measurable goals that
drive sustainable operations, minimise carbon
emissions and create business efficiencies.
Our target has been validated by the Science
Based Targets initiative (SBTi) as being
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Our strategy continued
Care for our people, communities and planet continued
Requiring no capital expenditure, Community
Solar also enables hoteliers to make clean
energy claims on requests for proposals to
bid for corporate bookings and we’re now
looking to extend the initiative to other US
states, subject to demand and availability.
We are also focused on how IHG hotels
of the future will support our carbon goals
and accelerate the decarbonisation of our
industry. In 2022, we worked with technical
specialists to develop a future-proof
definition of what a zero carbon building
will look like in the years to come. We have
begun to integrate the conclusions of our
analysis into our design, development and
construction processes and standards
to help owners future-proof their assets.
We are also analysing the operational carbon
measures and cost impact requirements for
our Holiday Inn Express brand in the US to
meet our zero-carbon definition.
Waste
Pioneer the transformation
to a minimal waste
hospitality industry
Our 2030 commitments
• Eliminate single-use items, or move
to reusable or recyclable alternatives
across the guest stay
• Minimise food going to waste through
a ‘prevent, donate, divert’ plan
• Collaborate to achieve circular solutions
for major hotel commodity items
The world produces over 2 billion tonnes of
waste annually – a figure expected to increase
to 3.4 billion tonnes by 2050. Less than 20%
of waste is recycled each year, with enormous
quantities sent to landfill.
Our long-term aim is to achieve circularity,
where resources can be recycled or reused
on a large scale. This might include the
incorporation of recycled content in the
manufacturing of new products, or making
sure items are put to good use elsewhere
once they leave our hotels. We already have
a system for evaluating the environmental
credentials of our suppliers and make
recommendations to our hotels where we
can (see page 43 for the progress we’re
making on responsible procurement).
What we achieved in 2022
In 2019, IHG became the first hotel company
to commit to replacing bathroom miniatures
with full-size amenities across all brands –
and we took this further in 2021 with a
commitment to eliminate single-use items
or move to reusable or recyclable alternatives
across the guest stay by 2030.
Our progress continued in 2022 through the
signing of a deal to secure bathroom bulk
amenities contracts across more than 4,000
hotels. This is expected to reduce our annual
plastic usage by an estimated 850 tonnes in
the Americas region alone, while providing
our hotels with cost savings. To support
hotels further, we’ve commissioned experts
from Travel Without Plastic to develop
a bespoke Single Use Items Toolkit in
EMEAA that will provide our hotels with a
best-practice approach to reducing, reusing,
replacing and recycling common products.
Building on this momentum, we reviewed
and updated the sustainability credentials
of our guest supplies, including items such
as toothbrushes and razors.
When it comes to food waste, we are
minimising the amount we send to landfill
through a ‘prevent, divert, donate’ plan.
To enable our brands and hotels to set goals,
avoid waste and track their progress, we
are collaborating with WWF, Greenview
and our industry peers on the Hotel Waste
Measurement Methodology to provide a
common industry approach to collecting
data and measuring and reporting waste.
To support hotels across our estate in
adopting best practice for reducing food
waste across their teams, we launched
our global food waste training e-learning
module in 13 languages for colleagues and
made it part of the General Manager
training programme.
Water
Conserve water and help
secure water access in those
areas at greatest risk
Our 2030 commitments
• Implement tools to reduce the water
footprint of our hotels
• Mitigate water risk through stakeholder
collaboration to deliver water
stewardship at basin level
• Collaborate to ensure adequate water,
sanitation and hygiene (WASH)
conditions for our operating
communities
Faced with the reality that the world’s water
resources are no longer sufficient to meet
everyone’s needs along with the increasing
frequency of extreme weather and droughts,
it’s important that we understand which of our
hotels are in high or very high areas of water
stress, so that we can adapt our business
strategy accordingly to better support these
hotels and target water savings.
Holiday Inn Nairobi Two Rivers Mall
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What’s to come
People
As we build on our inclusive and
high-performance culture, we are
becoming a stronger business and will
continue to develop the tools, resources
and capabilities to support our people.
Our Global Learning strategy will continue
to evolve, with this year’s introduction of
a new learning platform and programmes
serving as the building blocks for the
launch of our new IHG University in 2023.
Tailored to distinct audiences, this new
educational framework will champion
learning, career development, talent
acceleration and best practice across
the business.
We will continue to invest in talent
management to strengthen our approach
to recruitment, alongside building on our
successful campaign in 2022 to strengthen
our General Manager pipeline in support
of our growth aspirations in the Luxury
& Lifestyle segment.
Having made clear DE&I commitments
we will work towards reaching these goals
at all levels within the business, while also
continuing to provide further education
for our teams.
Communities
We will continue to work strategically
with expert charities to help those in most
need around the world, as well as support
our hotels in developing local partnerships
in line with our policy and strategy for
community investment. We will extend the
reach and scope of these relationships to
provide support across a broader range
of areas, while strengthening our ability
to capture data and measure our impact.
We will scale the global rollout of our IHG
Skills Academy to ensure it’s available in
more local languages and markets and
seek new opportunities for collaboration
within our communities.
Planet
Work will begin on an enhanced IHG
Green Engage system to help hotels
better manage their energy, water and
waste, while renewable energy contracts
will be rolled out in more markets as part
of our wider focus on providing owners
with the most effective energy and
cost-efficient solutions for their hotels.
We will leverage our scale and influence
within the industry to help secure more
government incentives for introducing
sustainability measures across our estate
that require greater investment with
longer pay-back periods. We will further
develop our strategy to ensure our
new-build hotels operate at very low
or zero carbon in the future.
What we achieved in 2022
The steps we’ve taken in 2022 include
using the World Resources Institute (WRI)
Aqueduct Water Risk Atlas to map risk across
all hotel locations. This has enabled us to
create a baseline dataset on water risk, which
will inform our future strategy and allows
us to report in line with the Sustainability
Accounting Standards Board (SASB)
framework. This will provide us with the
number of hotels located in areas of water
scarcity, as well as taking into consideration
key indicators – including risk of flooding,
drought and water depletion – to provide us
with an overall water risk score. Our ongoing
assessment is being integrated into our
overall risk management strategy, forms
part of our work on TCFD and features in our
analysis of both acute and chronic physical
risks (see pages 54 to 61 for the full disclosure).
Despite hotel occupancy increasing as
travel resumed in most markets following
the pandemic, we reduced our absolute
water footprint by 6.9% in 2022 compared
with our 2019 baseline year. Recognising the
challenge in achieving ongoing reductions in
usage in future years, we have set our hotels
a water reduction target, along with being
required to report on their water usage
through the Green Engage system.
In our four years as members of the Alliance
for Water Stewardship (AWS), we have met
our target to develop water stewardship
action plans for six hotels, and as part of our
Journey to Tomorrow strategy review, we
appointed a leading sustainability consultancy
to support us in the next stage of developing
our water strategy. This includes targets to
reduce our WASH impact and conserve
water in areas at greatest risk.
We are currently conducting an assessment
of current programmes and data, external
drivers and peer analysis as we work on
developing a Group-wide strategy for
reducing our water usage across all of
our hotels.
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Our stakeholders
IHG recognises the importance of engaging with its stakeholders
at all levels of the business, from the Board, through the Executive
Committee, Senior Leadership and corporate functions, to
front-line operations. A variety of methods are used based on
experience and developing best practice, including face-to-face
meetings, feedback and performance reviews, employee forums
and training. We adjust our engagement methods as required to
ensure they remain effective for both our stakeholders and IHG.
The effectiveness of our engagement methods is measured
through a range of metrics, including our KPIs (such as signings and
pipeline), performance, ability to attract and retain talent, employee
engagement survey results, adherence to the policies covered by
our Code of Conduct and AGM results. The views and interests of
other stakeholders, such as regulators and industry bodies, are also
taken into consideration. They help provide a framework against
which we measure ourselves, protect our reputation and develop
our commercial and social awareness.
Stakeholders
What impacted them in 2022
Engagement
Outcomes
Guests
Our ability to offer a wide
selection of brands, with
quality stay experiences,
plenty of choices, great
value and loyalty rewards,
are key to attracting and
building trust with IHG’s
guests, while continuing
to drive commercial
performance and revenue.
• Increased desire to travel and for
• Teamed up with major events to
access to a broader range of
locations and experiences
• Rising cost of living and effect
of inflation
• Increased interest in ESG profile
of companies
• Increased desire to book and
stay seamlessly
allow IHG One Rewards members
to redeem points in exchange for
unique experiences
• Global ‘Guest How You Guest’
campaign to target key
demographics in every market
• Launched next generation mobile
app for bookings
• Guest satisfaction surveys
• Expanded choice of locations for
our Luxury & Lifestyle brands
• Invested in refurbishments to
create modern public spaces and
guestrooms
• Roll-out of transformed IHG One
Rewards providing more ways
to earn and redeem points
• Expanded our portfolio to 18 brands
with addition of Iberostar Beachfront
Resorts which offers resort and
all-inclusive destinations
• Enhanced digital customer service
support, including automation to
speed up response time and
direction to the right team
• Continued enhancement of meetings
offered for corporate clients
• Holiday Inn voted Leading Budget
Hotel Brand at the 2022 World
Travel Awards
See our Guest Love KPI on page 64 and how the Board had regard for guests as part of their consideration of strategic and operational matters
on pages 100 to 101.
Shareholders
and investors
Our ability to maintain
strong relationships
with shareholders and
institutional investors is
fundamental to our ability
to access capital markets
and ensure IHG’s
long-term success.
• The impact of geopolitical unrest
• Regular roadshow investor
• Continued investor confidence
and continued impact of the
pandemic on the hospitality
sector in certain regions and IHG,
which influence IHG’s trading
performance, financial results
and capital allocation strategy
• Executive remuneration policies
including the potential use of
discretion; alignment with
workforce pay and talent retention
• Concerns about climate change
and wider sustainability issues
• Chair succession and
Board composition
meetings and participation at
investor conferences by Executive
Directors, Senior Leadership and
the Investor Relations team
• Extensive consultations between
the Chair of the Remuneration
Committee and institutional
investors and proxy vote advisers
• Meetings with the Chair, IHG’s
Chief Sustainability Officer and
Investor Relations team to discuss
governance, sustainability and
workforce practices
• Various shareholder meetings with
the Chair Designate as part of her
induction plan
in IHG’s performance, long-term
viability and leadership as
demonstrated through feedback
received and across AGM results
• Enhanced understanding of
shareholder and investor focus
areas, including in relation
to remuneration policy and
ESG matters
• Continued investor confidence
in the composition of IHG’s Board
See also a description of our dividend policy on page 13, our KPIs
on pages 62 to 65, key matters discussed by the Board on pages 100
and 101 and engagement with shareholders relating to Executive
Director remuneration on pages 118 and 125 to 126.
Visit www.ihgplc.com/investors for further information.
Suppliers
Responsible supplier
relationships are vital for
IHG in driving efficiency
and effectiveness
throughout our
supply chains.
• Ongoing uncertainty and disruption
• Identified alternative solutions
in supply chains
• Increased focus on sustainability
and integrity within supply chains
• Increased desire of consumers for
sustainable goods and services
with suppliers where supply was
impacted across our corporate and
hotel estate
• Engaged with high performing
suppliers in sustainability and the
circular economy that provide key
goods and services to our hotels
and corporate functions
• Partnered with EcoVadis and
engaged with 92 suppliers globally
to participate in the EcoVadis ESG
risk assessment
• Remained agile by adjusting our
approach to goods and services
sourced from impacted regions
• Increased collaboration
opportunities with sustainable
suppliers and for sustainable
goods in alignment with our
Journey to Tomorrow ambitions
• Assessed suppliers’ performance
and identified ESG risks in our
supply chain
Further information about how the Board considered supply
chain and procurement is on pages 100 and 101, and our business
relationships, including our statement of business relationships
with suppliers, customers and others, is on page 237.
Visit www.ihgplc.com/responsible-business for further information
about our responsible procurement approach.
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Stakeholders
What impacted them in 2022
Engagement
Outcomes
Hotel owners
IHG’s success relies on
hotel owners investing
in our brands. To remain
attractive, we focus on
the breadth of our brand
portfolio and effectiveness
of our IHG One Rewards
loyalty programme and
wider enterprise.
• Increased operating costs
• Direct meeting with CEO and
• Transformed IHG One Rewards
including energy, and food and
beverage costs
• Labour shortages, supply chain
challenges and financial and
operational constraints caused
by global macroeconomic factors
• Ability to capture and drive demand
to their hotels given a renewed era
of travel
• Evolving brand standards
Regional CEOs
loyalty programme
• IHG Owners Association
collaboration
• Portfolio and individual hotel
reviews covering operational,
strategic and industry
trend updates
• Webinars, regular newsletters
and bulletins
• Hotel lifecycle and finance
team support
• Collaboration with governments
and industry to support recovery
• Expanded brand portfolio with
the resort and all-inclusive brand
Iberostar Beachfront Resorts
• Streamlined operations, including
removed and relaxed brand
standards, and introduced a new
housekeeping model
• Tailored marketing and promotions,
supported by new data-driven
resources and services that help
hotels quickly identify and act on
revenue opportunities
• Further procurement programmes
to drive savings for owners
• Increased training, guidance and
recruitment support for hotel teams
• Next-generation formats for
Holiday Inn, Holiday Inn Express,
Candlewood Suites and
Staybridge Suites
See our net rooms supply, signings, gross revenue and enterprise
contribution KPIs on pages 62 and 63 and how the Board had regard
for hotel owners as part of its consideration of strategic and
operational matters on pages 100 to 101.
Visit www.owners.org for further information about the IHG
Owners Association.
Communities
The communities we are
a part of both support
and benefit from our
responsible business
approach and the
commitments we have
made to achieve a better
and more sustainable
future for everyone through
our Journey to Tomorrow
programme.
• Natural disasters, such as a severe
tropical storm in the Philippines
and hurricanes in the US
• Continued economic impacts
of the pandemic and geopolitical
unrest, including cost of living
challenges and food poverty
• Continued close collaboration with
international and local charities and
NGOs, such as CARE International
and American Red Cross
• Support for relief efforts around the
globe and for our colleagues and
their families through our Colleague
Disaster Relief Assistance Fund
• Industry collaboration on human
rights and labour conditions in
specific markets
• Support of the Global FoodBanking
Network that operates across
47 countries
• 7,400+ people trained and
mentored through our IHG
Academy programme in 2022
• Modern slavery and human
• Giving for Good month:
rights issues
• Access to business skills
a programme of activities and
employee volunteering days
development and local employment
• Collaboration with local education
• IHG Skills Academy available
• Climate change and other wider
environmental challenges
providers and community
organisations, as part of our focus
on offering skills building and
training opportunities
across more than 90 countries
• More than 57,000 hours of
colleague volunteering dedicated
to communities during Giving for
Good month
• Teamed up with Tent Partnership
for Refugees in the US to provide
refugees with skills and jobs
See our IHG Academy KPI on page 65, and Responsible Business
Committee Report on pages 110 and 111.
Visit www.ihgplc.com/responsible-business for further information
on our community commitments.
People
Delivery of our purpose
to provide True Hospitality
for Good and the strategic
priorities that drive future
success relies on our
people and our ability to
maintain and evolve an
engaged, diverse and
inclusive culture where
careers can grow.
• Appeal of working in the hospitality
industry during and following
the pandemic
• Employees wishing to build long
and successful careers at IHG
• Launched our Room to Grow week,
a series of events and resources
to champion personal and
professional development
• Continued prioritisation of DE&I
commitments, including conscious
inclusion training and refreshed
DE&I policy
• Employee engagement survey
• IHG accredited as a Kincentric
• IHG’s approach to DE&I
• Invested in core HR and learning
• Demand to provide an intuitive
user experience for colleagues
and employees on our HR systems
technology platforms
• Voice of the Employee feedback
sessions with the Board
• ERGs representing ethnic
minorities, gender, LGBTQ+,
disabilities and other employees
• Quarterly performance,
development and wellbeing
check-ins
Global Best Employer
• Increased focus on recruitment
and talent development at hotel
and corporate levels
• Established regular contact with
staff to promote mental health care,
supported by global webinars and
video series
• Moved into our new Global
Headquarters in Windsor, UK
See our employee engagement KPI on page 65, how the Board had
regard for people in board and remuneration decisions on pages
101, 114, 117, 123, 124 and 126, Voice of the Employee disclosure on
page 111, and statement on employee engagement on page 236.
Visit www.ihgplc.com/responsible-business for further information
about our people commitments.
Our stakeholders
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Our culture
Our culture sets the tone for how we
do business and drives forward our
purpose of providing True Hospitality
for Good.
Our values
Led by the Board and Executive Committee our values underpin
our behaviours and business ethics, and guide how we deliver
our strategy, make decisions and live our purpose.
Do the right thing
Show we care
Aim higher
Celebrate difference
Work better together
The long-term success of
IHG is shaped by a number of
interdependent factors, including
our purpose, the effectiveness of our
strategy, and the resilience of our business
model. Underlying all of these is our strong
workplace culture, which is aligned with
our reputation as a well-governed, trusted
and ethical company.
IHG’s approach to business, including our
structure and governance, risk appetite,
controls and systems, workplace environment,
behaviours, values, and policies (including
our Code of Conduct), drives our culture.
Accordingly, understanding these aspects
of our business is critical to understanding
how we deliver on our strategic priorities,
risk management, and KPIs.
Our structure and governance
IHG’s Board has overall responsibility for
ensuring that our culture and ways of working
are aligned with our purpose and drive our
strategy. Throughout the year, the Board
and its Committees review metrics, reports
and scorecards, and receive updates and
presentations, on the delivery of our strategic
priorities, all within the context of our culture
and governance. They challenge and support
Senior Leaders, particularly where there is
a need to adapt policies and initiatives, to
ensure the continued alignment of strategy
and culture.
The Board delegates day-to-day
responsibility for setting and embedding
Company culture to the CEO who, together
with the Executive Committee (EC), sets the
tone from the top in relation to attitudes and
behaviours to create an open and honest
workplace environment, empowering
employees to give feedback and freely ask
questions about matters that concern them,
such as during the CEO’s quarterly, global
all-employee calls. The EC is responsible for
executing the Group’s strategy, and keeping
the Board informed of the operation of the
business and workplace culture.
IHG’s hotel development and operations
are organised on a regional basis
(Americas, EMEAA and Greater China)
and are supported by global functions
in the key areas of Marketing, Commercial
& Technology, Finance, Human Resources,
Corporate Affairs, and Business Reputation
and Responsibility.
Management of the regional and global teams
is organised into leadership teams, who are
responsible for executing IHG’s strategic
priorities in a manner that aligns with the
Group’s culture and values. Decisions on
hotel developments and capital expenditure
go through the appropriate deal approval
and expenditure committees.
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The Group operates a Global Delegation
of Authority Policy, which sets out financial
commitment and expenditure approval
controls. Commitments over specified
thresholds or for certain types of proposals
require approval from the Group’s Capital
Committee, which reports into the
Executive Committee.
The Group’s corporate legal structure is
comprised of around 383 subsidiaries
worldwide. These entities provide the legal
framework required to support the Group
in making individual contracts
and commitments.
Information on the Board’s monitoring and
assessment of our culture is included on
page 101.
Risk appetite, controls and systems
Our risk appetite and tolerance is continually
reviewed by the Board in relation to the
Group’s pursuit of strategic and business
objectives. While our strategy does not
consciously expose any of our assets to
significantly heightened risk, the choices we
make aim to balance priorities and resources
to either actively exploit current advantages
or address current disadvantages versus a
range of competitors, and meet stakeholder
expectations. The Board considers the
portfolio of uncertainties that we face, and
whether our allocation of resources and the
pace of initiatives used to build enterprise
capability create any imbalance or exposure
to other risk areas. It considers the impact
of macro-external factors, including the war
in Ukraine, inflationary pressures, as well as
ongoing industry recovery from the pandemic.
Our risk appetite is cascaded through
our values and behaviours, our Code of
Conduct, Delegation of Authority and other
global policies, and how we set out goals
and targets, and is further reinforced by
frequent leadership communications to
guide behaviours and set priorities.
We are committed to a framework of
monitoring and assurance processes
in relation to our initiatives and policies,
reviewing whether they have operated
within acceptable risk tolerances where
priorities have shifted or additional actions
were required. Board and Committee
agenda topics allow the Board to identify
and discuss the nature and extent of
principal (and emerging) risks, and how risk
management arrangements have adapted
where required.
See our Governance pages 99, 106 and 107.
Workplace environment
With the world shifting to hybrid working,
we took steps to create more flexible
workspaces that support employees in
adopting a balance of remote and office
working and the delivery of IHG’s priorities.
In December 2022, we moved into our new
global headquarters in Windsor in the UK
– a modern, creative and sociable working
environment equipped with the latest
technology to bring employees together
at the right time and help them get the
most out of their days in the office. We also
refurbished our Americas headquarters in
Atlanta in the US to create a more inviting
environment for employees to connect
and collaborate.
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Throughout 2022 we provided cyber-
security training to support hybrid working
and improve resiliency against cyber threats.
Topics included phishing, accessing
systems securely while working remotely,
and the secure transfer and storage of data.
In recognition of ever evolving cyber threats,
we also continued to enhance controls and
monitoring over IHG systems to remain
vigilant regarding the security of
Company information.
See our people disclosures on pages 26 to 33,
and key matters discussed by the Board
on page 101.
Our behaviours
Our behaviours – Move fast, Solutions
focused, Think return and Build one team
– empower and inspire our employees to
work in a way that supports our purpose
and strategic priorities. Underlying these
behaviours are our Code of Conduct and
related policies, all of which influence how
we interact with our stakeholders. By role
modelling our behaviours, IHG’s leaders
create an environment that encourages
rapid decision-making that supports our
growth aspirations, within a framework of
due diligence and assurance processes that
ensures we continue to operate responsibly.
During the year, a series of Next Talk
events were led by Executive Committee
members across the organisation, to deepen
understanding of the link between our
behaviours and strategy. More than 2,500
employees joined each session, with positive
feedback from them.
Code of Conduct and related policies
IHG’s Code of Conduct (Code) is the
framework for how we do business at IHG,
and underpins our strategy and commitment
to providing True Hospitality for Good.
Our key principles and policies are included
in the Code, which enables employees and
colleagues working in IHG corporate offices,
reservation centres, managed, owned, leased,
and managed lease hotels to make the right
decisions, in compliance with the law and
IHG’s ethical standards.
Included in the Code is an overview of
our values, reporting concerns framework
and Group policies, including those relating
to human rights, respect in the workplace,
diversity, equity, inclusion and equal
opportunities, accurate reporting, information
security, anti-bribery and corruption, and
the environment. It also provides guidance
on where to go if colleagues have a concern
and need further help.
The Board, Executive Committee and all
colleagues working in IHG corporate offices,
reservation centres, managed, owned,
leased, and managed lease hotels must
comply with the Code. We expect those we
do business with, including our franchisees,
to uphold similar principles and standards.
Our culture
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Our culture continued
The Code is reviewed and approved by the
Board on an annual basis, and is supported
by annual e-learning requirements. In 2022,
we developed and launched a new Code
e-learning module to support updates
to the Code. In the coming year, we will
continue to enhance our engagement and
measurement approaches, and provide
additional guidance to highlight key themes.
In addition to our Code e-learnings, we
monitor and assess other aspects of our
culture through a variety of methods,
including direct engagement, employee
engagement surveys, tracking of e-learning
completion and our confidential
reporting hotline.
Embedded in the Code are several key
policies and principles set forth in detail
below. Other areas of the Code, such as our
DE&I Policy, and human rights and modern
slavery commitments, are outlined on pages
31 and 33. Initiatives to respond to legal,
regulatory and ethical compliance risks
are on page 49.
IHG’s Code of Conduct is available in
14 languages on the Company’s intranet and
www.ihgplc.com/en/investors/corporate-
governance/code-of-conduct
Speaking up
A core component of our people culture
is respect in the workplace, whether it be
relating to a colleague, guest or anyone
else. IHG has zero-tolerance to any form of
discrimination, harassment or bullying, in
line with our Respect in the Workplace Policy.
While we uphold our responsibility to behave
ethically and protect IHG’s reputation, it is
possible that in limited instances, a colleague
may act in a way that conflicts with the
principles set out in the Code. Guidance
is given to report concerns directly to line
managers, supervisors or local Human
Resources representatives. For instances
where it is more appropriate, a confidential
reporting hotline and online reporting
facility is available and globally advertised.
Concerns can also be reported to the
Head of Risk and Assurance or the General
Counsel and Company Secretary. The Board
routinely review summaries of reported
concerns and ensure processes are in
place for investigations and follow-up.
Safety and security
IHG is committed to providing a safe, secure
and healthy environment for all colleagues,
guests and visitors. All operations must
comply with all applicable health, safety
and security laws. Beyond compliance
with the law, IHG works to identify further
improvements to the way safety and security
risks are managed, and has mandatory
Brand Safety Standards in place for all hotels
globally to drive consistency in this area.
Initiatives to respond to safety and security
risks are on page 51.
Bribery and corruption
IHG is committed to operating with integrity.
Bribery and any form of financial crime,
including improper payments, money
laundering, violations or circumvention
of economic and trade sanctions and tax
evasion or the facilitation of tax evasion,
are not permitted under any circumstances.
This also applies to any agents, consultants
and other service providers who do work
on our behalf.
Our Anti-Bribery Policy sets out our zero-
tolerance approach and is applicable to all
Directors, Executive Committee members,
employees and colleagues in managed,
owned, leased, and managed lease hotels.
It is accompanied by anti-bribery content in
our mandatory Code of Conduct e-learning
module. Our Gifts and Entertainment Policy
and guidance further support our approach
in this area.
To continue to enhance our anti-bribery
programme and in line with best practice,
a Group-wide bribery and corruption risk
assessment was commenced in 2021 with
the assistance of specialist external counsel.
The objective was to ensure that IHG’s key
bribery risks continue to be identified and
addressed. The assessment concluded in
2022, with work ongoing to address the
findings and evolve IHG’s programme under
the leadership of the Ethics and Compliance
team. This work included approval by the
Board of updates to the Group’s Anti-Bribery
and Gifts and Entertainment Policies.
Initiatives to respond to legal, regulatory
and ethical compliance risks are more
broadly discussed on page 49.
IHG is a member of Transparency
International UK’s Business Integrity
Forum and participates in its annual
Corporate Anti-Corruption Benchmark.
Each year, the results from this
benchmark help to measure the
effectiveness of our anti-bribery and
corruption programme and identify
areas for continuous improvement.
Handling information responsibly
We are committed to ensuring that guests,
loyalty programme members, colleagues,
shareholders, owners and other stakeholders
trust the way we manage data. As part of our
privacy and information security programmes,
we have standards, policies and procedures
in place to manage how personal data
can be used and protected. Our e-learning
training for employees on handling
information responsibly is a mandatory
annual requirement, and covers topics
such as password and email security, using
personal data in accordance with our policies
and privacy commitments, how to work
with vendors and transferring data securely.
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In addition to the cyber security awareness
training mentioned on the previous page,
we held tabletop exercises to practise our
ability to detect and respond to potential
security events, such as ransomware and
supply chain attacks. We continue to develop
our privacy and security programmes to
address evolving requirements and take
account of developing best practice.
The Board regards cyber security as a critical
business discipline and it regularly receives
updates on the Group’s cyber security
processes and controls.
See initiatives to respond to cyber security
and information governance risks on page 47.
Section 172 statement
Details of how the Directors have had
regard to the matters set forth in
Section 172(1)(a) to (f) of the Companies
Act 2006 is provided in the Section 172
statement on pages 100 to 101.
Further details can be found throughout
the Strategic and Governance Reports,
including in our key stakeholder
engagement disclosures on pages 38
and 39.
Non-financial information statement
Non-financial information, including
a description of policies, due diligence
processes, outcomes and risks and
opportunities can be found as set
out below. Internal verification and
disclosure controls apply to all the
information covered in these areas.
• Impact of the Company’s activities
on the environment on pages 35 to 37,
54 to 61, and 237 and 239
• Social matters on pages 33 and 34
• Anti-corruption and anti-bribery
matters on page 42
• Employee matters on pages 26 to 33,
101, 114, 117, 123, 124 and 126
• Respect for human rights on page 33
• A description of the Group’s business
model on pages 10 to 13
• The Group’s principal risks on pages
44 to 51
• The Group’s KPIs on pages 62 to 65
See our relevant policies at
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Responsible procurement
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Growing our business innovatively
and sustainably, while working
to the highest standards of
business conduct, plays a crucial role
in our new supplier selection process
and in how we continue to work with
our existing suppliers. We are committed
to working with suppliers who not only
meet our minimum ethical standards but
also share the values of our responsible
business plan – Journey to Tomorrow.
What we do already
Our supply chains are split between
corporate and hotel spend. Hotel
procurement predominantly occurs at
the local hotel level because our hotels
are primarily owned by independent
third-party franchisees responsible for
managing their own supply chains. In some
key markets, the IHG Procurement team
has created procurement programmes
for certain goods and services related
to building, opening, renovating, and
operating a hotel, which hotels can
leverage. Our corporate supply chain
covers expenditures such as technology,
office buildings and facilities management,
and professional services.
To help manage and monitor our corporate
supply chain, an enterprise procurement
system is in place to oversee third-party
corporate expenditures. Several global
technology and outsourcing providers
have been identified as strategic supplier
relationships due to the critical nature
of their services. IHG engages with these
suppliers to harness innovation, provide
customer service, manage risk, and
promote value realisation. We annually
review this list of strategic suppliers and
their delivery of our business objectives.
To ensure that suppliers operate with
the same integrity and respect as we do,
IHG requires new corporate suppliers to
confirm their acceptance of the Supplier
Code of Conduct (Supplier Code) at the
onboarding stage (or demonstrate that
they have equivalent policies in place).
It is a contractual requirement for centrally
negotiated programmes in which our
hotels can purchase. Recommended
guidance is also provided to managed and
franchised hotels when purchasing locally.
At the end of 2022, 100% of new suppliers
had signed the Supplier Code.
Corporate and hotel supply activities
are driven by our Procurement
function and guided by our
responsible business agenda,
with oversight from the Board’s
Responsible Business Committee.
Supporting Small Businesses
IHG complies with statutory reporting
duties on payment practices and
performance and is committed to
supporting smaller suppliers – striving
to pay suppliers with fewer than
50 employees within 30 days, where
centrally accounted for across our UK
corporate, managed, owned, leased
and managed lease hotels.
What we achieved in 2022
We focused on implementing responsible
procurement through digital solutions
and advancing our supply chain risk
assurance programme. We also continued
sourcing sustainable solutions, increased
collaboration with diverse suppliers and
improved employee awareness of
responsible procurement.
Recognising that the impact of supply
chain risk is not only an issue for
Procurement but also prevalent on
management agendas across IHG, we
reviewed and refreshed the objectives of
our Supply Chain Risk Council. The Council
focuses on ensuring cross-functional
collaboration, reviewing IHG’s profile
of supply chain risks and corresponding
methodology, and identifying emerging
threats. This year, macroeconomic events
have exacerbated disruption to global
supply chains, which have required
adjustment to our approach to goods
and services sourced from the impacted
geographies. We evaluated affected
supply across corporate and hotel spend
areas and identified alternative solutions
where possible. Furthermore, we provided
forward-looking perspectives on commodity
price inflation in food and energy to our
franchisees to enable better local
purchasing decisions.
This year we have implemented several
digital solutions to support responsible
procurement, which have been integrated
into our spend intelligence tool, and
training has been delivered to the Global
Procurement team. The solutions provide
better visibility of IHG’s focus areas
including labour practices, sustainability,
and financial risks. These are helping
to identify new opportunities, including
diverse suppliers, and assisting the
mitigation of supply chain disruptions.
For example, we have partnered with
EcoVadis, a global leader in business
sustainability ratings, to assess supplier
risk and sustainability performance.
To date, we have requested 92 suppliers
globally to participate in the EcoVadis
ESG risk assessment. Insights from the
scorecards will be used to understand
supplier performance, drive improved
scores, and identify ESG risks in our
supply chain.
This year, we engaged with high-
performing suppliers in sustainability
and the circular economy who provide
carpeting, showers, furniture, bedding,
mattresses, flooring, and air travel to our
hotels and corporate functions. This helped
Procurement gain valuable insights into
the sustainability journey of our suppliers,
discuss opportunities for collaboration,
and to build stronger relationships with
our top-performing suppliers.
Textiles are a substantial supply chain
commodity, given that they are widely
present in our hotels. This year we have
worked on a project in collaboration with
our Ethics and Compliance team and a
third-party consultancy to conduct a risk
assessment of two key textile suppliers
in our US hotel procurement programmes.
The risk assessment findings will inform the
evolution of our supply chain due diligence
approach. We also continued working with
CARE International UK following a workplace
gender analysis in 2021, and this year CARE
hosted an interactive workshop with internal
stakeholders to review the findings and
recommended actions. In 2023 we will
continue to perform detailed supply chain
risk mapping.
What’s to come
We will continue our goal to increase the
consideration of sustainable, diverse and
resilient suppliers. We will also explore
how sustainability assessments can be
incorporated into our due diligence
processes for new suppliers and pilot
additional risk intelligence tools.
We will roll out our updated Procurement
Policy, which will include additional
guidance on our commitment to
sustainability and diversity in our supply
chain. A review of the Supplier Code
commenced in 2022, informed by a
benchmarking exercise, and an updated
Supplier Code will be implemented
in 2023.
We will also continue to support the
implementation of sustainable solutions
to advance the progress of our Journey
to Tomorrow commitments and build
hotel supply chain solutions for energy
conservation measures to support IHG’s
decarbonisation agenda. Additionally, we
will develop an approach to segment our
suppliers based on emissions profiles to
identify focus areas.
Our culture
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Our risk management
The Board’s role in risk management during
2022 – constantly evolving our resilience
in a volatile environment
The Board is ultimately accountable for
establishing a framework of prudent and
effective controls, which enable risk to be
assessed and managed, and is supported by
the Audit Committee, Executive Committee
and delegated committees. Our governance
framework and Committee agendas enable
Board members to request and receive
information on risk from the Executive
Committee and Senior Leaders, together
with other internal and external sources.
New Board members are fully briefed on
current risk management discussions as
part of their induction.
The delivery of IHG’s individual strategic
objectives and overall ambition requires
us to continuously balance opportunities
for strategic advantage or efficiency with the
need to remain resilient and agile in the short
and longer term. The Board considers and
defines its risk appetite and tolerance as an
active part of determining and monitoring
our strategic priorities. We describe the
Board’s approach to risk appetite on page 41,
and this has also been a regular topic for
consideration by management during 2022.
This recognises the trade-offs inevitably
required to achieve our growth ambitions
between responding to individual
uncertainties and the need to balance
interests of multiple stakeholders, for
example, how teams allocate resources
and management attention. We have faced
significant individual and accumulated
uncertainties during the year from external
events and IHG initiatives which management
has reacted to and built into management
processes. In order to enhance our risk
management processes, we routinely
look to apply learnings to future resilience
and planning.
The description of the 2022 focus areas
and activities for the Board and its
delegated committees (see pages 90 to 138)
demonstrates active ongoing consideration
of emerging and evolving uncertainties
across a wide range of topics and timeframes.
The Audit Committee reviews the principal
risks and the appropriateness of our risk
management system to address these, and
also considers risk and control implications
of strategic topics reviewed by other
committees, for example, third-party risk
management and future assurance
requirements for ESG data. Across the year,
this discussion of risk, supported by the
Risk and Assurance team, allows for review
of the overall level of risk within the business,
our resilience to individual and aggregated
uncertainties, and implications for strategic
decision-making.
More detail on formal risk appetite and
tolerance is provided elsewhere in this report.
For example, our appetite for financial risk is
described in note 23 to the Group Financial
Statements (see pages 199 to 203), and our
approach to taxation on page 69.
How we think about risk in relation to the
achievement of our strategic objectives
Like many companies, we face an
unprecedented context in 2023 which
includes multiple realities from outside IHG,
and other inherent execution risks relating to
our own internal initiatives (for example, the
delivery of complex technology innovation
such as the evolution of our mobile app – see
page 26). During 2022 and coming out of the
pandemic, we have reviewed the focus and
balance of our principal risk profile, shifting
from describing specific downside events or
failures of control to articulating the broader
uncertainties we face in delivering our
objectives. These often present both
opportunity and threat at the same time
and require considered decision-making
to achieve the best overall outcome for our
various stakeholders. By evolving in this way,
we aim to further reinforce ownership and
enhance discussion of attitudes to risk
and uncertainty within key decisions.
Certain downside events shown in prior
years, including safety and security and
financial control incidents, have therefore
been integrated into a rearticulated
uncertainty relating to our operational
resilience. The previous risks relating to
macro external factors and investment
effectiveness have been interwoven into
several of the newly defined uncertainties.
We have also considered specific factors
such as digital security or climate change
as part of how we articulate other
uncertainties, for example the evolving
preferences of our owners and guests.
We continue to consider the trend
(inherent impact and/or likelihood) and
potential speed of impact of individual risks,
comparing the level of uncertainty we face
as we move into the next three-year plan
relative to what we experienced in 2022.
This means factors can move around the
grid if they become relatively more dynamic
or rapid and allows us to identify where
management teams may need to intervene
or course-correct to respond in 2023 and
manage individual and the overall portfolio
of risks to an appropriate net level.
For ease of reference, a consolidated trend
and speed of impact for each uncertainty
is mapped in the grid, with further detail
on the following pages.
How we consider emerging risks
We recognise that our business model means
we often face long lead times to effect change
working with the owners of our hotels and
therefore remain vigilant to emerging risks
which could impact the achievement of
our stated strategic priorities and also our
longer-term growth, competitiveness,
viability and sustainability.
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Realities for 2023-25 …
We are monitoring a range of external
and internal factors:
• Macroeconomic pressures – recession
inflation, rising interest rates, energy,
and other cost of living pressures
• Geopolitical tension and conflict,
heightening cyber threats and supply
chain disruption
• Complex IHG initiatives or investments
• Growth into new territories and new
brand and business models
• Evolving third-party relationships
• Uncertain central bank policies and
increasing development or financing
costs for owners
• Aggressive strategies from existing
and new competitors
• Pace of digitalisation
• Talent demands or expectations
for compensation
• Scarcity of labour or pressure on
labour relations in certain markets
• Colleague burnout
• Operational efficiency and
effectiveness opportunities
• Managing in a permanently hybrid
environment, including wellbeing
• Onerous and increasing legal, ethical
or regulatory and compliance
developments
• Increasing ESG regulation or stakeholder
expectations relating to climate
• Ongoing Covid-19 disruption
We think about emerging risks as:
• new risks, or existing risks in a new context,
when the nature and value of the impact
is not yet fully known or understood; and
• factors with an increasing impact and
probability over a longer time horizon.
There are emerging elements in many of
our principal risks. These factors include
shifts in consumer demand and travel
patterns, international and domestic real
estate ownership, digital transformation
across all areas of the guest journey,
workplace expectations of current and future
IHG colleagues and several trends linked to
our ongoing assessment of longer-term risks
within our TCFD analysis. These factors will
be considered as we develop and model
future resilience, using the TCFD scenarios
we are developing as a starting point.
Specific emerging trends are considered
through deep dives with a smaller audience
including the CFO and Head of Strategy and
the General Counsel, supported by the Risk
and Assurance and Group Strategy teams.
See also pages 14 to 15 for more detailed
discussion of trends impacting our industry.
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Principal risk – assessment of relative trend and speed of impact
Relative speed of impact on IHG strategic priorities in 2023-25
More gradual
Rapid
• Legal and regulatory complexity
• Owner preferences for or ability
Principal risks descriptions
or litigation trends
to invest in our brands
Inherent risk trend
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• Data and information usage,
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• The impact of climate
change on hospitality
(physical and transition risks)
storage and transfer
• Our ability to deliver technological
or digital performance or
innovation (at scale, speed, etc.)
• Global and local supply chain
efficiency and resiliency
• Guest preferences or loyalty
for branded hotel experiences
• Talent and capability attraction
or retention
• Operational resilience to incidents
or disruption or control breakdown
(including safety and security,
geopolitical, health-related
and fraud)
Dynamic/Rapid
Dynamic/More gradual
Stable/Rapid
Stable/More gradual
Risk impact – link to our
strategic priorities
Build loved and trusted brands
Customer centric in all we do
Create digital advantage
Care for our people,
communities and planet
How we identify, discuss and escalate risks,
including emerging factors, within IHG
The Board oversees our culture through
which employees are encouraged to learn
and work at pace, focus on solutions and
take the right risks. Management teams
across IHG are highly aware of the
challenges our current industry context
creates and that our ambition and strategic
priorities inevitably expose us to uncertainty
in the short, medium and longer term.
Our confidence in achieving our priorities
is reviewed regularly:
• at Executive Committee meetings as part
of decision-making, financial planning and
strategy review, including consideration
of emerging factors through open
roundtable discussion;
• by first-line management teams with
day-to-day responsibility for identifying
and managing risk within key decisions,
programmes and transactions and
escalating where appropriate; and
• by second-line management functions
which provide specialist expertise,
support, monitoring and challenge to
decision-makers on risk-related matters.
The Risk and Assurance team works with
Group Strategy and other first- and second-
line teams to maintain and evolve their risk
profiles using the same format as the overall
principal risk grid. These discussions consider
how risk trends, shifts in risk appetite or
tolerance and/or changes to risk
management maturity may impact future
decision-making and whether any other
leadership interventions may be required.
These also enable teams to identify
interdependencies across IHG, for example
the consideration of talent risks within
other risk profiles. Consolidated insights
are reviewed by the Executive Committee
and the Audit Committee every six months,
and we also consider risk continuously
as part of key decisions.
How we manage our principal risks and
uncertainties across the organisation and
remain resilient to unanticipated events
Our risk management and internal control
system evolves and adapts constantly, as
an integral part of how we run the business
and make ourselves overall more agile
and responsive to unanticipated events.
It engages multiple specialisms to
operationalise our attitudes to risk at every
level of IHG, enabling us to move at speed,
balance the many uncertainties at play
simultaneously within decisions and achieve
an appropriate level of resilience. We adopt
a tailored approach to the management of
individual risks and do not aim to mitigate
each one to the same level.
During 2022, we have observed themes of
risk management focus which each relate to,
and provide mitigation for, many of the risks
shown on the following pages. These should
be read in conjunction with detail elsewhere
in the Strategic Report which helps
position IHG overall to respond to future
opportunities and risks in delivering
our ambitions, including strengthening
our organisation through key strategic
investments (pages 19 to 37), engaging
proactively with stakeholders (pages 38
and 39) and by reinforcing our strong
workplace culture (pages 40 to 43).
Culture and leadership
We have strong ‘tone from the top’ on the
importance of effective risk management,
evidenced through 2022 by actions including:
• Policy management has been enabled by
dedicated roles in key teams and a global
policy approved by the Board and
managed by Ethics & Compliance to align
policy development, communication and
compliance monitoring with good practice.
• We have strengthened risk leadership and
oversight arrangements by working with
risk forums to align their purpose, scope
and membership to avoid confusion with
other first- and second-line accountabilities
and to provide advice and challenge on
key indicators used to track risks.
• Several teams have also maintained
strong communication on key risk topics,
including cybersecurity phishing training,
the importance of maintaining strong
financial controls, inclusion and wellbeing,
and our updated Code of Conduct training.
Our risk management
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Our risk management continued
Processes and controls
Many teams reviewed their risk assessments
in 2022, including the Group-level cyber
risk assessment to identify if IHG’s highest
valued assets are operating within security
risk tolerances, a labour rights risk
assessment focused on the UK market,
a Group-level anti-bribery and corruption
assessment with external support, a privacy
programme maturity assessment and an
assessment of the impacts of BEIS on our
financial governance arrangements.
Compliance process and control
improvements have been implemented
in various areas (for example, information
security policy exception management,
supply chain due diligence processes and
privacy management, alternative compliance
arrangements for specific safety risks) while
technology investments to support risk
management have been made for supplier
diversity and sustainability tools, a privacy
management tool and a new risk &
compliance measurement tool to replace
ageing technology.
Monitoring and reporting
Leadership teams have also evolved
monitoring and reporting arrangements,
better defining geopolitical intelligence
requirements and, in some places, developing
dashboards for future reporting or discussion
of key risk and control indicators, although
there is room for further maturity in this area
(building on recent experience of refined
cyber risk indicators).
With the support of Risk and Assurance,
teams have identified opportunities to
integrate risk management strategies.
For example, collaboration between
Supply Chain and Ethics and Compliance
teams on third-party due diligence, between
Information Security and Privacy teams on
personal data training for HR colleagues,
and across Threat Intelligence, Safety and
Security and Resilience teams to develop
scenario testing for hypothetical major
security incidents. Our insurance renewal
cycle has also directly engaged multiple
teams to present on risk mitigation strategies
in underwriting market presentations
during 2022.
We have also evolved our crisis management
framework to anticipate and coordinate
incidents during the year, including the war
in Ukraine and major events such as the FIFA
world cup. The framework was also applied
to an unauthorised systems disruption
(see below). Teams continue to test crisis
preparedness and scenario planning,
including tabletop exercises and
development of playbooks.
How senior management and the Board
obtain assurance in our risk management
and resilience
The Governance section outlines focus
areas and activities which enable the Board
and its delegated committees to receive
management updates on risks within key
decisions. In addition, pages 47 to 51 explain
how senior management and the Board are
able to source ongoing assurance on our
risk management and internal control system
during the year and how actions may impact
future risk levels.
The Risk and Assurance team reports
regularly on developments in oversight
of risk management. The third-line Internal
Audit team has worked during 2022 with
the Audit Committee to consider existing
sources of assurance, for example, from
direct reporting or attestations provided by
first- and second-line management teams
on risk and control matters. The Internal
Audit plan identifies where independent
assurance may be valuable, taking into
account the maturity of management’s own
reporting, and acceptable risk tolerances.
Internal Audit also monitor the confidential
disclosure channel to identify any emerging
trends requiring management and/or
Board intervention.
The Audit Committee considers future
assurance needs within the Internal Audit
planning process and has also debated
potential assurance considerations for
non-financial data disclosures, with
incoming regulations in many territories.
We plan to develop an assurance roadmap
for carbon data during 2023, including
where this can be obtained internally on
controls and when external independent
input may be necessary in the coming years.
This will also inform wider conversations
about the Audit and Assurance Policy likely
to be required by the UK Government.
This section should be read together with the
rest of the Strategic Report, Governance on
pages 90 to 138, the going concern statement
on page 239, and Risk Factors on pages 240
to 245.
How we adapted to manage cyber risk
during the criminal, unauthorised access
to our technology systems
No company is immune to cyber risk, and
we remain vigilant to attacks, continuously
learning and adapting our security
response to evolving risks.
As we explained in our 6 and 29 September
2022 Stock Exchange Announcements,
parts of our technology systems were
subject to unauthorised activity, causing
disruption to our booking channels and
other applications. In line with our crisis
management framework, teams across
IHG came together to evaluate and
address the incident. No evidence of
unauthorised access to systems storing
guest data was identified.
On identifying the disruption, Commercial
and Technology, with direction from legal
counsel, led the incident response with
support from Information Security, Global
Communications and Risk and Assurance
teams. This team met frequently, considering
technology, security and communications
developments, and was also bolstered with
representatives with responsibility for guest
products and booking platforms and global
marketing, to enable close consideration of
impacts on operational services and channels
and management of brand impacts and
other reputational risks. External specialists
were also engaged to investigate the incident.
The Executive Committee provided
Group-level incident coordination,
considering prioritisation of resources
to address the range of stakeholder
needs and our approach to stabilisation,
recovery and communications and
potential risks to other corporate and hotel
initiatives. As the incident management
proceeded, it was possible to de-escalate
our crisis posture progressively by
reducing the frequency of extraordinary
meetings, while maintaining focus on
owner and partner queries and providing
assurance over medium- and longer-term
remediation activities.
The Board was also engaged throughout
the incident response.
See page 212 for further details regarding
the financial impact of the incident.
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In pursuing our ambition,
we face inherent
uncertainties relating to …
Owner preferences
for or ability to invest
in our brands
Executive Risk Sponsor:
Global Chief Customer
Officer and Regional CEOs
Link to strategy:
Trend:
Data and information
usage, storage, security
and transfer
Executive Risk Sponsor:
Chief Commercial and
Technology Officer, Chief
Customer Officer and EVP
General Counsel and
Company Secretary
Link to strategy:
Trend:
Why these uncertainties are important to the achievement
of our strategic objectives over the next two to three years
How senior management and Board obtained assurance
in our risk management and resilience in 2022
Our growth ambitions require us to take risks to drive
returns for our existing and potential owners. Our owners’
choice to work with IHG is dependent on our ability to
build a portfolio of loved and trusted brands with a track
record in delivering returns, while also continuing to
invest behind digital advantage, customer centricity
and caring for our people, communities and planet.
Driving owner returns in an uncertain macroeconomic
and inflationary environment will expose us to risk.
For example, we need to pursue opportunities in relation
to hotel building and renovation and hotel opening
projects and also in executing initiatives such as loyalty
transformation across our open hotels and supply chains.
There is also growing scrutiny of IHG’s responsibilities as
a franchisor or manager of our brands (including other
aspects of our strategic agenda such as decarbonisation).
These opportunities need to be balanced with risks
associated with increasingly complex deal structures with
owners, uncertainties as we expand into new markets and
a need to risk our own capital to pursue inorganic growth
or to incentivise deals in key locations for key brands.
If we fail to manage this risk effectively, we will lose
competitiveness and may not realise the opportunities
to grow our brand footprint.
By its nature, our business involves managing large
volumes of data of guests and loyalty members globally.
In addition, our strategic objectives of achieving digital
advantage and customer centricity will transform how
we use our commercial and marketing data to improve
and personalise the customer experience, grow loyalty
and empower our owners to make better decisions.
This transformation involves us pursuing opportunities
with cloud-based applications, storage and partnering
with third-party specialists and exploiting technology
advancements and innovation requiring the use of
personal data and artificial intelligence. The opportunities
presented by this ambition are consciously balanced
with the inherent exposures our digital footprint presents
to data, information security and privacy-related threats,
including threat actors (including criminals, third parties
and inherent colleague risk) and the need to use data
appropriately and responsibly, including in response to
changing regulations. This posture is possible because
of investments in recent years in cybersecurity and
information governance and the maturing of our risk
management system, including our response to the
recent systems disruption.
If we fail to manage this risk effectively, we face operational,
financial and reputational impacts to the range of
high-value assets we are responsible for (including critical
systems and employee, guest and other sensitive data).
In addition, if the data we use is not accurate, this may
impair decision-making and/or lead to lack of trust or
satisfaction by our guests, loyalty members or owners.
The Board considers reporting and insight from
management on:
• individual and brand category performance;
• loyalty and digital and responsible business
strategies and investments;
• initiatives to strengthen owner returns;
• impacts of macro events (including the war
in Ukraine) and impacts on specific markets;
• performance and prospects for key areas of
capital investment, including controls over growth
decision-making and post project reviews of
investment effectiveness;
• external insight where valuable (for example,
on investor perceptions); and
• competitor activities.
The Executive Committee also reviews these areas
frequently and has obtained reports on initiatives,
including to strengthen owner returns and to
enhance owner communications via a new portal.
The Internal Audit plan provides independent
assurance on initiatives supporting owner returns
and financial processes relating to fee collection.
The Board considers reporting and insight from
management, including:
• presentations on strategy for the delivery of our
customer journey through technology and the
refreshed loyalty programme;
• direct presentations from the Chief Information
Security Officer, including on incident handling,
which draw on external input on risk assessments
and advice on specific topics;
• updates on the cyber insurance renewal strategy;
• second-line reporting on our privacy programme
and policies for handling information securely; and
• specific updates on metric integrity, including
review of ESG data principles and assurance
arrangements, supported by third-party experts.
The Executive Committee monitors the execution
of our data and analytics strategy and was directly
accountable for overall coordination of the
response to the systems disruption that occurred
in September 2022. An Executive Security Risk
and Compliance steering committee also tracks
key projects and risk and control indicators.
The Internal Audit plan includes independent focus
on governance of both cybersecurity and data and
information, including providing assurance on
foundational controls at both corporate and hotel
levels, within commercial and marketing plans and
in relation to third-party data transfers.
Key
Inherent risk trend
Strategic priorities
Dynamic/Rapid
Stable/Rapid
Build loved and trusted brands
Create digital advantage
Dynamic/More gradual
Stable/More gradual
Customer centric in all we do
Care for our people, communities and planet
Our risk management
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Our risk management continued
In pursuing our ambition,
we face inherent
uncertainties relating to …
Our ability to deliver
technological or digital
performance or
innovation (at scale,
at speed, etc.)
Executive Risk Sponsor:
Chief Commercial and
Technology Officer
and Global Chief
Customer Officer
Link to strategy:
Trend:
Global and local supply
chain efficiency
and resiliency
Executive Risk Sponsor:
Chief Financial Officer,
Chief Commercial and
Technology Officer and
EVP General Counsel
and Company Secretary
Link to strategy:
Trend:
Why these uncertainties are important to the achievement
of our strategic objectives over the next two to three years
How senior management and Board obtained assurance
in our risk management and resilience in 2022
Managing our investment effectiveness and efficiency will
be critical for our short- and long-term strategic priorities
to deliver digital advantage and customer centricity and
to build loved and trusted brands. Delivering our priorities
will require us to pursue opportunities to innovate in
booking technology and to maintain and enhance the
functionality and resilience of our channel management
and technology platforms (including those of third
parties, on which we rely directly or indirectly), and to
respond to changing guest and owner needs, which may
evolve in an environment of macroeconomic uncertainty
(including inflationary and labour pressures).
This means we consciously expose ourselves to
uncertainty in this area, as the pace of innovation
and competition in digital behaviours in the hospitality
industry and wider society continues to accelerate.
We need to respond rapidly to shifts and opportunities
in the marketplace and to drive incremental revenue by
focusing on the basics of pricing, inventory and booking
flow optimisation.
If we fail to manage this risk effectively, we may not
capitalise on opportunities to maintain or increase
guest and owner preferences for IHG and its brands,
and we may also reduce the resilience of ageing channel
management and technology platforms (including those
of third parties, on which we rely directly or indirectly).
Our ambitions, including to build loved and trusted
brands which are consistently delivered around the world,
expose us to risks associated with our global and hotel
supply chains. We are increasing our interdependencies
with third-parties to deliver both our commercial and
technology strategy to create digital advantage and to
source cost-efficient products from available markets
to support our owners. See pages 22 to 24 for an outline
of the procurement support we provide to our owners
as part of our focus on customer centricity, for example
enabling them to access and control costs for key hotel
materials, and page 237 for details of our business
relationships with suppliers, for example with Amadeus.
We are also exposed to wider macroeconomic
uncertainties impacting supply chains, including
geopolitical tensions, commodity price shifts and
labour disputes, which may increase costs and impact
availability for our owners. Our priority to care for people,
communities and planet requires us to effectively manage
third-party sustainability and ethical performance.
We also need to remain vigilant to threats to information
security across our supply chain. See pages 38 to 39 for
details of management engagement with stakeholders
during 2022, including with suppliers and supply chain
considerations for other stakeholders, and the outcomes
achieved. See also page 43 for our approach to
responsible procurement.
If we fail to manage this risk effectively, this may impact
the design, opening and operation of hotels, the ongoing
effectiveness of our commercial channels and impact
margins for our owners, as well as fees to IHG.
The Board considers reporting and insight from
management, including on:
• strategic choices for technology support across
our customer journey and loyalty programmes;
• technology options to support gathering of
ESG data;
• budget allocation, including post project reviews
by finance teams of major capital investments; and
• information security strategy and risk profile.
The Executive Committee’s agenda actively steers
and monitors the pace of innovation and technology
delivery including focus on mobile, loyalty and
booking transformation and hotel technology.
The 2022 Internal Audit plan included focus on
programme governance and the effectiveness
of controls over expenditure and benefit delivery
for critical commercial, technology and marketing
initiatives. This has provided independent assurance
in relation to overall programme management,
tracking and financial governance controls, and
delivery of initiatives at high pace across the
hotel estate and within the loyalty transformation
programme. The team also works closely to support
and advise several programme teams in real time,
including HR system changes.
The Board considers reporting and insight from
management, including:
• consideration of third-party relationships within
our digital and commercial strategies;
• review of supply chain risks associated with
macroeconomic factors including within
management reporting on our response to
the war in Ukraine and general market updates;
• second-line presentations on our Responsible
Procurement strategy to the Responsible
Business and Audit Committees, including wider
third-party risk management and internal control
arrangements; and
• clarifications of risk management arrangements
with presentations on new business models
and relationships.
The Executive Committee reviews our operational
risk posture in relation to key digital initiatives,
including the transformation of hotel technology
arrangements and our loyalty programme.
The CEO and CFO meet with the Chief Procurement
Officer to review supply chain strategy and risks,
supported by a Supply Chain Risk Council, which
draws on external insight where appropriate.
The Internal Audit plan provides independent
review of third-party and contract risk management
and control arrangements, for example relating to
vendors or strategic suppliers engaged to deliver
our loyalty programme, and to vendor sourcing
and fee collection.
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Why these uncertainties are important to the achievement
of our strategic objectives over the next two to three years
How senior management and Board obtained assurance
in our risk management and resilience in 2022
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In pursuing our ambition,
we face inherent
uncertainties relating to …
Legal and regulatory
complexity or
litigation trends
Executive Risk Sponsor:
EVP General Counsel
and Company Secretary
Link to strategy:
Trend:
The global business regulatory and contractual
environment and societal expectations continue to
evolve, with legislative changes anticipated in many
locations we operate in. Our strategic ambition to grow
and our efforts to achieve digital advantage and customer
centricity will also often create inherent legal and regulatory
exposures. Many countries in which we operate, or are
targeting for growth, are introducing legislation or
legislative proposals, for example relating to ESG, privacy
and labour rights. Focus on sanctions as a foreign policy
tool also continues to increase.
We recognise that failing to manage this risk effectively
and non-compliance and/or inadequate compliance could
expose us to significant monetary and non-monetary
penalties. This can, in some instances, lead to follow-on
litigation. We consider such exposures carefully as part
of our decision-making.
If we fail to manage this risk appropriately, we could be
at an increased risk of regulatory breaches and fines and
adverse litigation which could impact confidence in the
IHG brand and our ability to perform in key markets.
Ethical and social
expectations
Executive Risk Sponsor:
EVP General Counsel
and Company Secretary,
EVP Global Corporate
Affairs and Chief Human
Resources Officer
Link to strategy:
As IHG operates in more than 100 countries and
continues to explore new opportunities for growth,
we are exposed to many dynamic reputation risks.
We are committed to monitoring and ensuring the
continued effectiveness of our human rights approach,
our social responsibility and environmental performance,
and also recognise that expectations are increasing for
us to manage and drive responsible business through
our supply chains and across our wider business including
with our franchisees.
Trend:
Our stated priority to care for our people, communities
and planet demonstrates our appetite to balance our
growth ambitions with the wider risks and opportunities
associated with building loved and trusted brands with
appropriate consideration of our wider stakeholder
responsibilities, including to our colleagues in a challenging
operating environment in many markets. We manage
these risks carefully to ensure that we operate responsibly
and with integrity, and to guide decision-making across
IHG’s corporate and hotel operations.
If we fail to manage this risk effectively, it has the potential
to impact our performance and growth in key markets as
well as causing reputational damage with respect to key
stakeholder and investor expectations.
The Board considers reporting and insight from
management, including on:
• corporate governance and regulatory
developments from General Counsel and the
external Auditor;
• relevant corporate affairs topics, including
briefings from external advisors;
• material litigation and serious incidents and
threats at the Audit Committee;
• second-line updates on specific regulatory
matters, including tax and anti-bribery and
corruption and fraud risk management controls,
supported by external insight and benchmarking
where appropriate;
• regional trends within Regional CEO updates; and
• the appropriateness of available insurance
coverage, including casualty, property, cyber
and directors’ and officers’ liability risks.
The Executive Committee also actively monitors
the management of key regulatory and/or litigation
risks, including close consideration as part of
incident handling (for example, in relation to
ceasing all operations in Russia).
The Internal Audit plan considers regulatory
management and provides independent assurance
on the proportionality of controls, for example
due diligence protocols for vendors, owners
and partners.
The Board considers reporting and insight from
management, including:
• requests for Board approval of the Code of
Conduct, the Global Diversity, Equity, Inclusion
and Equal Opportunities Policy, and the IHG
Policy Governance Policy (see page 101);
• second-line reports on ethics and compliance
strategy, including external benchmarking where
appropriate (e.g. Transparency International UK’s
Corporate Anti-Corruption Benchmark);
• reports from Internal Audit on confidential
reporting arrangements and updates from our
Voice of the Employee programme from HR;
• education and awareness raising from the
external Auditor on ESG and climate-related
reporting and from advisers on government
affairs; and
• second-line reports on our communities, human
rights and responsible procurement programmes
and key disclosures including the Modern
Slavery Statement.
The Executive Committee monitors the progress
of and delivery towards our people, communities
and planet ambition, including its relationship
to our growth strategy.
The Internal Audit plan includes independent focus
on ethics and compliance, including consideration
of management and external assessments of
maturity, controls relating to marketing and
commercial campaigns, and due diligence controls.
Our risk management
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Strategic Report
Our risk management continued
In pursuing our ambition,
we face inherent
uncertainties relating to …
Guest preferences
for branded hotel
experiences and loyalty
Executive Risk Sponsor:
Global Chief
Customer Officer
Link to strategy:
Trend:
Our ability to attract
and retain talent
and capability
Executive Risk Sponsor:
Chief Human
Resources Officer
Link to strategy:
Trend:
Why these uncertainties are important to the achievement
of our strategic objectives over the next two to three years
How senior management and Board obtained assurance
in our risk management and resilience in 2022
Our strategic objectives to build loved and trusted brands
and to deliver customer centricity require us to ensure the
services, technology and experiences we provide meet
evolving expectations, increase consumer preference
and loyalty, and drive bookings.
In a highly competitive industry with increasing demands
for personalisation, we will need to take a balanced
approach – pursuing the opportunities we may be able
to capitalise on, including investing effectively behind
our new brands and Luxury & Lifestyle ambitions or
delivering digital advantage, while also carefully delivering
fundamental guest expectations underpinning their
trust in our brands, for example for cleanliness and safety,
or in relation to our response to climate change. We are
conscious in an inflationary environment of the potential
for increasing customer sensitivity to price.
There are also inherent uncertainties as a result of our
business model. As our franchise hotels operate as
independent businesses, we are limited in our ability
to control delivery on the ground in these properties.
If we do not manage this uncertainty well, it could impact
our competitive positioning, our growth ambitions and
our reputation with guests and owners.
As our industry continues to recover, it is clear that we
face fast-moving and seemingly permanent challenges
in relation to the availability, recruitment and retention
of colleagues to support our hotels, reservation offices
and key corporate functions and executive leadership.
See pages 29 to 33 for further detail on the importance
of our people to our purpose and ambitions.
Our growth ambitions are also dependent on hotel talent,
including General Managers in Luxury & Lifestyle, and
our priority to care for our people, communities and
planet means that we need to balance short- and
longer-term growth risks and opportunities with our
broader responsibilities and commitments to stakeholders.
We face uncertainties relating to our ability to retain and
attract talent of sufficient quality, quantity and diversity,
to deliver learning at pace and to transition to hybrid ways
of working while maintaining productivity, collaboration
and appropriate labour relations. We will need to adapt
and innovate our operational procedures and remuneration
structures to be agile to the changing interests of our
business, colleagues and owners.
IHG has the ability to manage talent and retention risks
directly in relation to IHG employees but relies on owners
and third-party suppliers to manage these risks within
their businesses. Our Procurement, Legal and Risk teams
also consider indirect workforce risks.
If we are unable to manage this uncertainty, this could
impact our ability to operate and grow hotels, and
the effectiveness and efficiency of our key corporate
functions and executive leadership, and it could also
heighten risks of secondary exposures to compliance
or litigation.
The Board considers reporting and insight from
management, including on:
• individual and brand category, loyalty and
responsible business strategies and investments;
• regional operational and strategic plans;
• new brand projects;
• digital strategy execution; and
• analysis of competitor activities.
External insight is obtained where valuable
(for example, on loyalty and responsible
business strategies).
The Executive Committee also reviews these
areas frequently, including analysis of specific
trends (for example, business travel and
commercial platforms) and has obtained reports
on the evolution of regional quality mechanisms
to support guest experience and the governance
of how we update standards. Additional oversight
and coordination is provided by a global Guest
Experience Council and programme oversight
of specific initiatives including Luxury & Lifestyle.
The Internal Audit plan also provides independent
assurance on the execution of key initiatives
(including loyalty, Luxury & Lifestyle and
responsible business) and hotel performance
and quality measurement.
The Board considers reporting and insight from
management, including on:
• overall remuneration and incentive strategy
and policy, including directors and executive
management and wider structures for all
colleagues, supported by external advisors;
• talent and succession planning;
• diversity, equity and inclusion updates; and
• colleague HeartBeat and direct employee feedback
via the Voice of the Employee programme.
The Executive Committee directly reviews talent
(both as a group and through individual talent
reviews with the CEO) and receives regular
updates on colleague engagement and HR
priorities, including learning strategy. The HR team
also has a dedicated Talent & Leadership steering
committee. Regular all-employee calls are held
with the Chief Executive Officer, and there are
ongoing leadership communications and virtual
team meetings at regional and functional levels.
The 2022 Internal Audit plan has provided
independent assurance on challenges associated
with performance monitoring and measurement
in a hybrid environment and the wider global talent
management framework for critical corporate
talent and GMs.
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In pursuing our ambition,
we face inherent
uncertainties relating to …
Operational resilience
to incidents or disruption
or control breakdown
(including safety and
security, geopolitical,
health-related, and fraud)
Executive Risk Sponsor:
EVP General Counsel
and Company Secretary,
Chief Financial Officer,
Chief Commercial and
Technology Officer
and Regional CEOs
Link to strategy:
Trend:
The impact of climate
change on hospitality
(physical and transition
risks for IHG)
Executive Risk Sponsor:
Chief Financial Officer
and EVP Global
Corporate Affairs
Link to strategy:
Trend:
Why these uncertainties are important to the achievement
of our strategic objectives over the next two to three years
How senior management and Board obtained assurance
in our risk management and resilience in 2022
The nature of our global business and our growth
ambitions will continue to expose us to significant
inherent operational risks, including factors relating
to ongoing safety and security in our hotel operations
and the overall resilience of key processes, applications
and relationships which we depend upon. We aim to
both avoid harm to and enhance the reputation of IHG
and our loved and trusted brands and to support our
people and communities wherever possible.
We recognise that we need to prepare carefully for
uncertainties wherever we can, for example in relation
to fire, life safety and security, health-related concerns
not limited to the Covid-19 pandemic, natural disasters
impacting our hotels and corporate locations, and also
our ability to respond to the potential for disruption
to technology and information security from external
threats and operational breakdown.
The complexity of our global and regional business
model also requires continued attention to our financial
management and control systems to balance ongoing
robustness, including mitigation of inherent risks of fraud
in challenging economic conditions, while we actively
pursue opportunities for efficiency. Broader financial risk
management considerations are covered in note 23 to
the Group Financial Statements (see pages 199 to 203),
and within our approach to taxation on page 69.
If we fail to manage this risk effectively, this could impact
IHG’s reputation, lead to financial loss and claims against
IHG and undermine our stakeholders’ confidence in
our brands.
As a global business, IHG faces uncertainties from
physical and transition risks relating to climate change.
Our business model means that we share these threats
and opportunities with our owners, including our
dependency on their capacity to invest in the short-
and long-term. We will continue to set ambitious targets
and to assess the aggregate impact of climate change,
and also to capitalise on opportunities that the low-carbon
transition will bring for the hospitality industry by
responding to evolving guest and colleague preferences.
The details of our TCFD risk assessment and transition
plans are included on pages 54 to 61, and we will continue
to assess the aggregate impact of climate change on our
wider stakeholders including our third-party hotel owners.
The potential impact of climate change-related
uncertainties is evaluated as an integral part of other
principal risks; however, if we fail to manage physical
and transition risks effectively overall, this has the
potential to impact performance and growth in key
markets. Our management of these risks is also subject
to scrutiny from a wide range of stakeholders, including
regulators and investor groups, corporate clients, guests
and colleagues.
The Board considers reporting and insight from
management, including:
• second-line reporting to the Audit Committee
on operational safety and security arrangements
and reported serious incidents and threats;
• ongoing review by Risk and Assurance of incident
handling (including ad hoc updates as required
and within broader review of our risk management
system), describing how management teams are
coordinating efforts;
• reports to each Audit Committee from the
second-line financial governance team, including
control implications for managed hotels and
major technology and process changes;
• an annual review by Risk and Assurance of fraud
risk management activities; and
• independent audit by PwC of SOC1 control
reports provided for the benefit of hotel owners.
The Executive Committee is closely involved with
resilience planning as part of ongoing risk profiling
and considering the appropriateness of
management action plans to deal with disruption.
Internal Audit provided independent review of
organisational resilience capabilities, including
arrangements for key technology, third-party
vendors, talent and processes, and also reviewed
the governance of viability scenarios.
The Board considers reporting and insight from
management, including:
• reporting from corporate responsibility on
TCFD disclosures and the embedding of climate
considerations into strategy, governance, risk
management and performance management,
supported by external subject matter expertise;
• updates from various second-line teams on
approaches to ESG data disclosure and future
strategies for assurance (including to comply
with changing regulatory requirements); and
• education and awareness raising from the
external auditor on ESG and climate-related
reporting and from advisers on
government affairs.
The CEO, CFO, General Counsel and EVP Global
Corporate Affairs are kept informed of progress
against our TCFD commitments, and how our
transition plan helps us to align the Group’s climate
strategy and carbon ambitions with the wider
business growth strategy. Oversight of the Journey
to Tomorrow programme is provided by an Executive
Responsible Business Governance Committee.
The Head of Internal Audit supports the TCFD and
decarbonisation steering committees, including
advising on data assurance. These groups are also
advised by external experts.
Our risk management
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Viability statement
Trading in 2022 continued to recover with ongoing
relaxation of travel restrictions in most markets supporting
an increasing return of travel demand, resulting in
Global RevPAR recovering to approximately 97% of 2019 levels.
The resilience of the Group’s fee-based model and wide geographic
spread resulted in Group adjusted free cash flow of $565m during
2022 and net debt reduced by $30m after $715m of ordinary
dividends and the share buyback. The Group’s business model
is discussed in more detail on pages 10 to 13.
Looking forward, the Directors have determined that the three-year
period to 31 December 2025 is an appropriate period to be covered
by the viability statement. The Group’s annual financial planning
process builds a three-year plan. This detailed plan takes into
consideration the principal risks, the Group’s strategy and current
and emerging market conditions. The plan then forms the basis for
strategic actions taken across the business and is used as the basis for
longer-range planning. The plan is reviewed annually by the Directors.
Once approved, the plan is then cascaded to the business and used
to set performance metrics and objectives. Performance against
those metrics and objectives is regularly reviewed by the Directors.
There are a wide range of possible planning scenarios over
the three-year period considered in this review due to macro
uncertainties in each of our regions. In the US and Europe, rising
interest rates and high inflation heighten concerns over the strength
of consumer spending and broader economic growth and the
resulting impact on travel demand. In Greater China, the very recent
relaxation of Covid-19-related travel restrictions means it is very
difficult to predict the pace of recovery of domestic demand and also
international travel of Chinese consumers. In assessing the viability
of the Group, the Directors have reviewed a number of scenarios,
weighting downside risks that would threaten the business model,
future performance, solvency and liquidity of the Group more
heavily than opportunities.
Viability scenarios and assumptions
In performing the viability analysis, the Directors have considered
a ‘Base Case’ which assumes global RevPAR in 2023 around
pre-pandemic levels and continues to grow on the assumption of
continued economic growth in each of our regions. The assumptions
applied in the viability assessment are consistent with those used
for Group planning purposes, the going concern assessment, for
impairment testing and for reviewing recoverability of deferred tax
assets (see further detail on page 157).
The Directors have also reviewed a ‘Downside Case’ based on
a recession scenario which assumes no RevPAR growth in 2023,
with the recovery profile delayed by one year.
The Directors have also reviewed a ‘Severe Downside Case’
which is based on a severe but plausible scenario equivalent to
the market conditions experienced through the 2008/2009 global
financial crisis. This assumes that the performance during 2023
starts to worsen and then RevPAR decreases significantly by 17%
in 2024 and increases by 5% in 2025.
Principal risks
The relative strength and resilience of the IHG business model
to severe shocks has been proven by performance through the
Covid-19 pandemic, with positive cash flows being generated
through one of the most challenging periods of trading in the history
of the industry. In assessing the viability of the Group, the Directors
have considered the impact of the principal risks as outlined on
pages 45 to 51. The discussion on those pages includes a description
of why these risks are important to the achievement of our
objectives and how the Group manages these risks.
We have considered which principal risks could have the most
significant and direct impact to the viability of the Group during
the three-year period of assessment and they are shown below,
alongside the scenario that is used to model those risks.
Scenarios modelled
Related to principal risks
Changes in RevPAR
Downside Case and Severe Downside Case
These scenarios model a prolonged decrease in RevPAR,
which may be driven by external or internal factors.
Operational resilience to incidents/shocks
Guest preferences/loyalty for branded hotel experiences
Talent and capability attraction/retention
Our ability to deliver technological/digital performance
Owner preferences for/ability to invest in our brands
One-off events
This scenario models the impact of a specific material incident,
which could relate to cybersecurity or an alternative material
impact on the cash flow statement.
Data and information usage, storage and transfer
Legal and regulatory complexity/litigation trends
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Funding
The Group’s revolving credit facilities were refinanced in 2022
with a new $1,350m facility maturing in 2027 (‘the bank facility’).
See note 21, page 197 in the Group Financial Statements for further
details. There is a €500m bond maturing in 2024 and £300m bond
maturity in 2025 – it has been assumed that these are refinanced
on maturity.
We have considered the potential impact of the downside scenarios
on our net system size growth. We do not believe a change in system
size growth would have a material impact on the Group during the
period under review.
We have also considered the principal risks that may impact the
viability of the Group over a longer-term period, for example, the
impact of climate change on hospitality. The physical and transition
climate risks to which IHG is most exposed are discussed in the
TCFD statement on pages 54 to 61. Physical risks are not considered
material to the long-term viability of the Group, and transition risks
present both opportunities and risks. While some transition risks
have been assessed as being potentially material to the Group
over the next 1-5 years under a 1.5°C scenario, this scenario is not
considered a likely outcome leading to the probability of a material
impact on the Group’s viability assessment through 31 December
2025 as low.
Viability assessment
At 31 December 2022 the Group had cash and cash equivalents
of $921m plus an undrawn bank facility of $1,350m.
Under the Base Case, Downside Case and Severe Downside Case
the Group is forecast to generate positive adjusted free cash flow
over the 2023-2025 period. The principal risks which could be
applicable have been considered and are able to be absorbed
within the covenant requirements. If there were additional trading
downsides to the assumptions used then additional actions
could be taken in order to mitigate this risk such as reductions
in discretionary spend.
Under the Severe Downside scenario, there is limited headroom
to the covenants at 31 December 2024 and 30 June 2025 to
absorb multiple additional risks, for example, additional RevPAR
impacts and a widespread cybersecurity incident. However, the
Directors reviewed a number of actions to reduce discretionary
spend, creating substantial additional headroom to the covenants.
After these actions are taken the bank facility would also
remain undrawn.
The Directors reviewed a reverse stress test scenario to determine
what decrease in RevPAR would create a breach of the covenants,
and the cash reserves that would be available to the Group at that
time. The Directors concluded that the outcome of this reverse
stress test showed that it was very unlikely the bank facility would
need to be drawn.
This means that in the event the covenant test was failed, the bank
facility could be cancelled by the lenders but would not trigger
a repayment demand on the bonds which threatened the viability
of the Group.
None of the scenarios modelled indicates a covenant amendment
would be required, but, in the event that it was, the Directors
believe it is reasonable to expect that such an amendment
could be obtained based on their prior experience in relation to
negotiating the waivers and amendments during 2020. The Group
also has alternative options to manage this risk including raising
additional funding in the capital markets. We continue to plan to
maintain an investment grade credit rating which provides good
access to the debt capital markets.
Conclusion
The Directors have assessed the viability of the Group over
a three-year period to 31 December 2025 taking account of the
Group’s current position, the Group’s strategy and the principal
risks documented in the Strategic Report. Based on this assessment,
the Directors have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due
over the period to 31 December 2025.
See also our business model on pages 10 to 13, the going concern
assessment on page 157 and the impact of the principal risks on
pages 45 to 51.
Viability statement
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Delivering on the
recommendations of TCFD
Compliance with Listing Rule 9.8.6(8)
We confirm that our disclosures are in line with the UK Listing Rules and are consistent with the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and recommended disclosures. We recognise that our disclosures are limited in part by current
data availability, and are working to improve our data and underlying assumptions. A summary table is provided below which
references the location of our disclosures.
TCFD section
Overview
Page
Governance
Transition Plan
How our Board and management govern climate-related risks
and opportunities
See page 54 for further information
A preview of our plan to achieve our SBT which aims to reduce
greenhouse gas (GHG) emissions across our estate by 46%
by 2030
See pages 54 to 57 for further information
Risk Management
Overview of our climate-related risks and opportunities and how
we are managing them, including our next steps
See pages 58 to 60 for further information
Strategy
Overview of the scenario analysis we completed to test our
business against a 1.5°C temperature pathway
See pages 58 to 60 for further information
Metrics & Targets
Our progress against the TCFD’s seven cross-industry metrics
and targets
See pages 61 for further information
Next Steps
Actions we will take over the next 12 months to continue to evolve
our business in line with our climate commitments
See pages 59 and 60 for further information
Governance
Board’s governance of climate-related risks and opportunities
Our approach to responsible business is driven by a culture of
strong governance, supported by robust policies and our dedication
to drive positive change within our industry. IHG’s commitment
to climate action is set at the Board-level which is collectively
responsible for overseeing the Group’s strategy and ensuring the
development of robust risk management and internal control systems
to manage climate impact and other principal risks and opportunities.
The Responsible Business Committee advises the Board on our
responsible business strategy and objectives, including in relation
to the impact on environment and climate change. The Responsible
Business Committee meets three times a year to review and advise
the Board on our responsible business approach within our wider
Group strategy, including oversight of our transition plan and the
potential impacts of climate change on our business. It also
considers data validation, assurance and controls around
non-financial ESG data.
Our Audit Committee is responsible for the review and oversight
of our internal control and risk management systems, including
our approach to and assessment of emerging and principal risks
which consider climate change, as well as the procedures in place
to identify, manage and mitigate them. The Audit Committee is also
responsible for reviewing, prior to endorsement by the Board, the
integrity of IHG’s financial reporting and the potential impact on
our financial statements of our principal risks, which include
climate change. During 2022, the Audit Committee has also
considered future strategies for data validation, assurance and
supporting controls over our reported data.
The Remuneration Committee determines Executive Board and
Executive Committee remuneration and reviews wider workforce
remuneration, to ensure they are aligned with the interests of
shareholders, the UK corporate governance environment, and
our environmental and climate-related goals. The 2023-2025
cycle for Long Term Incentive Plan (LTIP) measures will include
a new ESG measure, part of which will be targets related to
decarbonisation actions.
Management’s governance of climate-related risks
and opportunities
The management of climate-related risks and opportunities is the
responsibility of our Executive Committee and at the operational
level this responsibility is held by the Steering Groups (defined in the
reporting structure chart on the next page). These Steering Groups
comprise senior management across our core operations and
have varying responsibilities relating to our climate change strategy,
including identifying and analysing climate risks, integrating climate
scenario analysis into our wider business strategy and leading global
decarbonisation programmes.
We understand climate change is a multi-faceted challenge that
will require collaboration across different parts of the Group.
Another core element is ensuring we continue to update our Board
and leadership team on the latest ESG considerations and plan
relevant and bespoke ESG training in the future.
The graphic on the next page demonstrates the reporting structure
we use to manage climate-related risks and opportunities from the
Board to operational level, including a brief description of each
relevant group.
Transition plan
Introducing our plan to reduce our emissions and transition
to a low-carbon economy
Last year, we completed climate-related scenario analysis to
understand the level of exposure our business faces to a range of
potentially material transition risks and opportunities. This assessment
was updated this year, and across the three transition risks assessed,
we identified that one of the most immediate and potentially
material risks to our business is our ability to successfully deliver
against our SBT, given the challenges associated with our third-party
business model. As such, we have begun to develop our transition
plan with support from external experts to help us meet our SBT.
We acknowledge the release of the Transition Plan Taskforce’s (TPT’s)
Disclosure Framework guidance in November 2022. While we are
not currently in a position to report in line with all elements of the
TPT guidance points, we have joined the TPT Sandbox to provide
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Climate change reporting structure
IHG Board
Audit Committee
Responsible for the review and
oversight of our internal control
and risk management systems.
s
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Remuneration Committee
Determines which environmental
metric(s) to be included in Executive
Board and Executive Committee
remuneration and reviews wider
workforce remuneration
Responsible Business Committee
Reviews IHG’s responsible business
strategy and has oversight of our
transition plan, including climate-
related commitments and alignment
with the wider business strategy
Executive Committee
TCFD
Delivers on
the TCFD
recommendations
and drives
adoption of TCFD
action plans
across the
business
s
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g
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S
Strategy
& Targets
Sets
decarbonisation
metrics and
targets and
supports IHG’s
Board to drive
reductions in
GHG emissions
to meet our SBT
Existing Hotels
Identifies and
implements
energy and
GHG reduction
measures for the
existing estate
Interim
New-Build
Identifies and
tests measures
to reduce GHG
emissions from
operations in
new-build hotels
opening ahead
of 2030
Renewable
Energy
Responsible
for driving the
renewable energy
strategy across
the global estate
and helping
transition to
clean energy
Very Low or
Zero Carbon
New-Build
Explores and
tests measures
for new-build
hotels to reduce
GHG emissions
from operations
to very low or zero
carbon by 2030
See page 98 for further details of IHG’s governance structure.
ongoing feedback during the consultation period. We will work
to achieve alignment to the TPT framework, with the aim to report
our transition plan in accordance with its guidance in due course.
We will also take steps to align to new recommendations and
disclosure requirements under the International Sustainability
Standards Board (ISSB), TCFD and UK Green Finance Strategy.
How our transition plan fits into our business strategy
Our work on decarbonisation supports our overarching corporate
aim of ‘Care for our people, communities and planet’ – one of IHG’s
four strategic priorities. In 2021, we upgraded our 2°C aligned SBT
to be consistent with the most ambitious aims of the Paris climate
accord, limiting global warming to 1.5°C. This target, approved by
the Science Based Target initiative (SBTi), commits IHG to reduce
absolute GHG emissions from our Scope 1 and 2, and Scope 3
emissions from our fuel and energy-related activities (FERA) and
franchise estate by 46% by 2030 from a 2019 base year.
Our transition plan helps us to align the Group’s climate strategy
with the wider business strategy to ensure we deliver on our carbon
ambitions while continuing to grow the system competitively.
Our SBT: To reduce absolute scope
1, 2, and Scope 3 GHG emissions
from fuel and energy-related
activities and franchises 46%
by 2030 from a 2019 base year.
How we are tracking our emissions reduction progress
Every one of IHG’s hotels has an annual and 2025 energy reduction
target which enables us to track progress against our 2030 SBT.
Hotels were previously given carbon reduction targets, but in 2022,
we pivoted to energy reduction because this can be easily monitored
and benchmarked. In addition, hotels have more control over their
energy usage relative to their carbon footprint (which also relies
on the energy mix of the grid).
We are investing in our online environmental management platform,
Green Engage, to provide better reporting and insights for hotels
and also implementing new processes to enable centralised
collection of verifiable data, supported by third-party experts.
Delivering on the recommendations of TCFD
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Delivering on the
recommendations of TCFD continued
Improving the accuracy and completeness of data from our
predominantly franchised and managed hotels is a key focus area.
This will enable us to better support them in their decarbonisation
efforts. It will also provide IHG with better-quality data to underpin
our work in developing metrics and targets to help us monitor
and track progress against our climate commitments. We are also
exploring how we can capture emissions from other material
Scope 3 categories more accurately, by improving our data
collection techniques to inform potential future ambitions.
To monitor delivery against our 1.5°C aligned SBT pathway, we will
continue to measure and monitor GHG emissions from across our
portfolio, as discussed in more detail in the Metrics & Targets section
on page 61.
How we plan to meet our 2030 SBT
We are aware that transitioning to a low-carbon economy
requires global coordination and the support of our hotel owners.
The franchised nature of our business model means that we do not
have direct control over a large proportion of the emissions produced
by the vast majority of our hotels. However, we can mandate certain
interventions to hotel owners via our brand standards, as well as
supporting them to implement their own decarbonisation initiatives
through resources and tools and working with governments to
advocate policies that make it easier for them to do so. In many
markets in which we operate, there is less urgency and limited market
or regulatory pressure on the owners themselves to decarbonise, such
as deregulated markets in the US, and in China, where the country’s
net-zero target extends to 2060. Developing a business case for
building electrification is more challenging with owners in Western
markets such as the UK and US where the relative cost of electricity
to gas is high. Although we have not included carbon offsets in our
plan, we do expect decarbonisation of electricity supply in the
Our transition plan
We have identified three key decarbonisation levers and steps to implement them across our global estate, as detailed below:
See further information on initiatives across all three levers on pages 32 to 34 of IHG’s Responsible Business Report.
1. Energy efficiency of our existing estate
2. Construction of very low and zero carbon
operating new-builds
We are collaborating with our hotel owners, through the IHG
Owners Association and our established Global Environmental
Sustainability Committee, to deliver our target for all new-build
hotels to operate at very low or zero carbon by 2030. Key focus
areas to date include the following:
1.
We commissioned a study to evaluate how governments,
NGOs, building certification programmes and the
hospitality industry define a zero carbon building.
2. We commenced work on modelling ‘typical’ hotels
in different climate zones, to identify the impact and
effectiveness by region of 30 different ECMs on those
hotels. Our analysis included cost and return on
investment (ROI) on energy-saving initiatives.
3. Prioritising the adoption of lower cost measures with
payback of under five years across brands and climate
zones. We have developed new-build standards that
reduce energy usage, as well as a guide to our Holiday Inn
Express owners that advise them on how to future-proof
their assets to align with very low carbon new-builds.
Automated data collection systems – Our Green Engage
system allows hotels to share their utility data to enable
monitoring and targeting of energy reduction targets, as
well as providing low-cost solutions for improving efficiency.
In 2022, we launched the Hotel Energy Reduction Opportunities
(HERO) tool to recommend bespoke energy conservation
measures for hotels, providing approximate cost, savings
and payback to help with financial decision-making. In 2023,
we will be introducing regional targets for verifiable
data collection.
Energy solutions identified – We have collaborated with
external experts to identify ECMs for hotel owners to implement,
such as LED lighting and high-efficiency, low-flow aerated
taps and shower heads; these have short pay-back periods of
less than five years and have been integrated into our brand
standards. Extensive modelling of higher-impact ECMs that
require larger investment, such as upgrading to energy
efficient heating, ventilation and air conditioning (HVAC)
systems, has also been carried out. The 2023-2025 cycle for
Long Term Incentive Plan (LTIP) measures will include a new
ESG measure, part of which will be targets related to
decarbonisation actions.
Training – A core training module on decarbonisation and
the global context of climate change was launched in 2022
for all colleagues, and we have begun to provide bespoke
instructor-led sessions for business functions where support
is vital to achieving our carbon commitments and reducing
our identified climate-related risks. In addition, training
modules and resources are available to owners and hotel
colleagues focusing on energy efficiency improvements.
We recognise that engaging our owners to implement our
recommendations is crucial to us achieving our SBT.
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markets in which we operate to contribute to emissions reductions
across our portfolio. In addition, there is a significant role for
governments to play around creating incentives to support our
owners to decarbonise their hotels; we urge governments to do
this to support a faster energy transition.
For further details of our stakeholder engagement,
see pages 44 and 45 of our Responsible Business Report at
www.Ihgplc.com/responsible-business/reporting
Our 2023-2025 Long Term Incentive
Plan will include a new ESG measure,
part of which will be targets related
to decarbonisation actions.
How we govern our transition plan
In addition to overseeing the Group’s corporate responsibility strategy,
the Responsible Business Committee is accountable for approving
and overseeing the execution of the transition plan. The Steering
Groups are given full responsibility for the operationalisation of the
plan by the Executive Committee, including the Strategy & Targets,
Renewables, Very Low/Zero Carbon New Build, and Existing Hotels
and Interim New Build workstreams. These Steering Groups meet
regularly to implement the transition plan at an operational level,
design and deliver decarbonisation projects, and develop metrics
and targets to measure our progress against our climate goals.
Scenario analysis is used to test grid decarbonisation and energy
efficiency measures for delivery of our 2030 SBT and we recognise
the associated reputational risk if the target is not delivered.
For further details, see our risk management section on pages 44-51.
3. Renewable energy
We are working to explore on-site renewable energy generation
options and will continue to map renewable energy opportunities
globally. This includes in markets where we have a large
presence and where renewable energy markets are mature.
We can then take these learnings to adopt in markets where we
have a smaller presence and/or renewables are still emerging.
We will help hotel owners to procure renewable electricity
through power purchase agreements, community solar
offerings and green tariffs. To achieve this, we are bringing
together the scale of owner groups to access zero-carbon
energy projects. By coordinating small business owners and
pooling hotels to purchase renewable energy at scale, as well
as creating access to large-scale renewable energy markets,
we can help owners achieve lower pricing which they would
not otherwise be able to do as individual hotel owners.
Alongside this, we are working with our US hotel owners to
help them understand the US federal support available, whether
that be tax credits or other financial incentives, and how to
apply for these. So far, we have successfully developed a
Community Solar offering for our hotels located in Maryland,
in addition to helping to secure tax credits for owners making
their properties more efficient through our work with the
US government.
Challenges
We are addressing three key challenges in delivering on our
transition plan:
Key challenge
Response and reference
1. Obtaining high-
quality, robust hotel
and GHG emissions
data to provide the
right information to
support emissions
reduction and to
track progress
against targets.
2. Supporting our
owners to reduce
emissions, given
we are an asset-light
business and have
limited control of
the day-to-day
operations of our
franchisee hotels.
3. Reducing our overall
emissions while
simultaneously
achieving growth
in system size.
We are undertaking work to
better understand the status of
each hotel to determine which
decarbonisation interventions
have already been or could be
implemented moving forward,
as well as improving our data
collection methods.
We are working to find
innovative ways to engage
with our owners on climate
change, by finding incentives
for investments, developing
tools and resources and
attempting to reduce the
complexities of work required
by hotels to take action.
To mitigate this, we have
accounted for projected
growth across our portfolio
in our decarbonisation
estimates, and we are working
to scale our ambition to
deliver decarbonisation
levers accordingly.
Delivering on the recommendations of TCFD
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Delivering on the
recommendations of TCFD continued
Climate-related risk management and strategy
Risk management integration
We consider the impact of climate change as a major uncertainty
affecting our industry, reflecting this both as a discrete principal
risk and also indicating that it may affect other core areas of our
business, including guest and owner preference for our brands.
The Board and the Executive Committee review our principal risks
as part of their planning and decision-making during the year.
We also monitor and evolve our risk management and internal
control processes (with reference to TCFD requirements), and the
Audit Committee provides ongoing oversight of the effectiveness
of these arrangements.
At an operational level, the Risk and Assurance team conduct
ongoing discussions with IHG leaders responsible for ‘first line’
regional and functional teams and ‘second line’ risk and control
oversight. This has enabled us to consider climate-related factors
in the achievement of operational team strategies and objectives,
and steps which are being taken to mitigate potential exposures.
As an example, this includes regional playbooks for physical
extreme weather risks.
See pages 44-51 for further detail of our approach to risk management.
Climate-related risk management and strategy
The tables on pages 59 and 60 provide a summary of the key
climate-related risks we have assessed using scenario analysis and
their potential impacts on our business. The materiality of those risks
have been considered using a 1.5°C scenario.
The materiality of our risks is assessed based on the revenue impact
in the year of analysis. A high, potentially material impact in 2030
is defined as >5% of total 2030 expected revenues or cost, or
reputational impact; a medium impact is 1-5% of total Group revenue
or cost, or potential responsible business leadership risk; and finally
a low, potentially minor impact is <1% of total Group revenue or cost
or negligible reputational risk. The potential size of impact of our
climate-related opportunities has been assessed on a qualitative
basis and has not undergone the same level of analysis as the
identified risks. We will work to improve our data capture to help
us to better understand the potential associated opportunities.
The timeframes used to assess our climate-related risks and
opportunities include a short term horizon (1-5 years) which is
more closely aligned with our financial, going concern and viability
statement assessments. In addition, the medium-term (10-15 years)
and long-term timeframes (30 years) look beyond traditional
assessments to provide a strategic view of our risks in line with
our own SBT and international climate scenarios and targets.
Our progress against our climate targets and Journey to Tomorrow
strategy will strengthen our ability to mitigate the impacts of these
risks, as well as seize the climate-related opportunities available
to us (outlined in the table adjacent). Due to significant challenges
and uncertainty in the data associated with our identified risks and
opportunities, we are not yet able to fully quantify the impacts within
our financial planning processes. However, external forecasts for
RevPAR do not show any slow-down in the medium-term as a result
of climate change. We continue to refine our work and improve data
capture to enable quantification at some point in future and are
focused on monitoring how our climate-related risks and opportunities
evolve and ensuring they are integrated into our business strategy.
Scenario analysis assumptions
Last year, we performed scenario analysis under 2°C and 4°C
temperature rise scenarios to assess our exposure to physical and
transition risks up to 2050. This year, we have added to our scenario
analysis by assessing our three transition risks under a 1.5°C
temperature scenario to align with our SBT.
The refreshed analysis has altered the timeframes of our transition
risks. The first risk outlined in the table on page 60, which focuses
on our inability to meet stakeholders expectations in the energy
transition, has become potentially material in the short-term
(1-5 years) under 1.5°C, compared to in the medium-term (5-10 years)
under a 2°C temperature scenario, whereas the second risk of
reduced aviation travel demand has moved from being potentially
material in the medium- to long-term (10-30 years) to potentially
material in the long-term (15-30 years). Changes to the underlying
assumptions has meant that despite moving from a 2°C to 1.5°C
temperature scenario, reduced demand for aviation is expected
to have a lower impact in the short- to medium-term (1-15 years).
The third and final transition risk relating to an increase in demand
for green hotels has become potentially material in the short-term
under a 4°C temperature scenario, due to a change in underlying
assumptions to reflect greater anticipated action on decarbonisation
and sustainable behaviours from corporate customers. As the
physical risks related to climate change would become less likely
under a lower temperature scenario, we have not re-run the analysis
for physical risks.
• Physical risks – To assess potential impacts, we have aligned
the temperature rise scenarios used in our scenario analysis
with the Intergovernmental Panel on Climate Change’s (IPCC)
Representative Concentration Pathways (RCPs).
• Transition risks – To assess potential impacts, we have based our
analysis on the International Institute for Applied Systems Analysis’
(IIASA) Shared socioeconomic Pathways (SSPs) to capture how
societal, economic and technological trends could evolve
over time.
Scenario analysis
Temperature
rise
1.5°c
2°c
4°c
Stronger policy action
• Higher use of renewables in the
energy mix
• Widespread emissions capture
technology
• Less aviation usage and more public
transportation in the transport mix
• Lower likelihood of extreme weather
and subsequent physical risks
Lower policy action
• Higher use of fossil fuels in the
energy mix
• Higher aviation usage and mostly
trucks and cars used for transportation
• Higher likelihood of extreme weather
and significant physical risk
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Climate-related opportunities
Summary of opportunity
Overview of impact
2022 progress and next steps to capitalise opportunity
Enhance our
brand by
supporting
hotel owners
to decarbonise
their assets
Short-term
(1-5 years)
Potentially
material impact
Increased desire
for green hotels
could have a
material impact
on IHG revenues
Short-term
(1-5 years)
Potentially
material impact
We recognise that delivering on increased
stakeholder expectations by reducing
emissions will allow us to enhance our
brands and align with the values of our
customers. We therefore see an opportunity
in supporting our hotel owners to
decarbonise and future-proof their assets
to increase the commercial attractiveness
of hotels. However, our ability to fully seize
this opportunity is somewhat dependent on
technological improvements which will help
to reduce the disruption of required
measures on hotel operations.
We continue our development of
a transition plan through discussions
with IHG’s Owners Association and the
coordination of our decarbonisation efforts
from across the business to ensure a robust
plan to deliver on our SBT commitment.
We remain focused on engaging and
providing guidance to owners to support
them to decarbonise their assets, as well
as collaborating with and training both our
Board and key business functions on how
their roles can support the achievement
of our climate commitments.
For more details on how we support our
owners to decarbonise, see page 33 of our
Responsible Business Report.
An increasing number of customers have
higher sustainability expectations for their
travel experiences. This will have an impact
on consumer behaviour patterns, including a
higher demand for green hotels. We anticipate
this demand to increase under a 1.5°C
scenario, which offers us an opportunity
to capture a significant proportion of this
growing market.
As consumer behaviours continue to
evolve, we anticipate a growing demand
for green hotels under a 1.5°C scenario.
To take advantage of this opportunity, we
are undertaking work to clarify how green
hotels will be defined, given the broad
range of certifications and ratings in this
space, and how we can help our owners
to meet this evolving definition.
For more detail on our decarbonisation plans,
see our Transition Plan on pages 56 and 57.
Summary of physical risks
Summary of risk
Progress towards mitigation in 2022
Next steps to mitigate risk
Loss of franchise
royalty fees
following natural
disasters
Long-term
(15-30 years)
Potentially
minor impact
Impact
The likelihood of extreme weather
damaging our assets is expected to
increase over time as temperatures
rise, in particular under a 4°C scenario.
This could lead to our hotels having to
limit their capacity or close, reducing
their revenues and the amount of
royalty fees received at Group level,
as well as potentially reducing the
attractiveness of the hotel industry
to owners in certain locations.
In 2021, we conducted scenario analysis
of acute physical risks (i.e. natural disasters)
which identified historical losses of franchise
revenue following natural disasters to be a
potential risk. To understand this risk better,
in 2022 we modelled the financial impact of
a sample of past events which were significant
enough to require IHG to provide disaster
relief support, and this showed there was
no material impact on IHG’s revenue at the
country level.
We have mapped acute physical risks
(i.e. natural disasters) at the regional level
to assess which areas are exposed to the
greatest threat. We have used the WRI
Aqueduct Atlas to map out our water risk for
all hotel locations, making a baseline dataset
to inform future work.
We continue to provide support following
natural disasters through our humanitarian
aid partners as well as through access to
IHG colleague assistance funds and natural
disaster playbooks (see page 30 of our
Responsible Business Report for more details).
Evolve our physical climate-related risk
assessment to look at the impact of both
acute and chronic physical risks (such as
longer-term weather pattern changes)
on IHG directly but also for our franchise
owners, particularly improving our
understanding of the impact of chronic
physical risks.
Conduct more detailed analysis to establish
which hotels are in areas of high exposure
to both acute and chronic physical risks
and how this is likely to change under
three climate scenarios to 2030 and 2050.
Identify hotels most at risk and the potential
impacts to our supply chain.
Use findings to assess how we can
support hotels to mitigate climate risks
and future-proof their assets. Identifying
potentially at-risk locations will enable us
to drive climate adaptation and mitigation
measures to help reduce the impact of
material physical risks to our owners,
colleagues and guests.
Delivering on the recommendations of TCFD
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Delivering on the
recommendations of TCFD continued
Summary of transition risks
Summary of risk
Progress towards mitigation in 2022
Next steps to mitigate risk
Our updated scenario analysis has indicated
this risk will be material in the short term
under a 1.5°C scenario driven by a significant
uptake and progress towards SBTs across
all sectors. Under a 4°C scenario, the
longer-term reputational risk will be lower
as most companies and governments fail
to meet their own targets.
As mentioned in our transition plan and in
our Responsible Business Report on pages
32 to 34, we have progressed a number of
workstreams this year to decarbonise and
deliver on our SBT commitment.
Under a 1.5°C scenario, we expect a
reduction in aviation travel; however, the
number of aviation passengers rebounded
faster than expected following Covid-19 and
so we expect this transition risk to have less
of a material impact in the short- and
medium-term, with adverse impacts
potentially increasing over time.
This year, we have reviewed aviation travel
data to better understand the impact of
this risk.
We will evolve this risk to assess the
challenge of achieving our SBT rather than
the reputational impact of not achieving it.
This will enable us to focus on delivering the
intent of the transition plan and to quantify
this risk as the potential capital deployment
cost to meet our SBT.
We will also finalise the details of our
transition plan to enable us to provide
more quantitative information in line with
recommended guidance. We will continue
to align business strategy with our climate
commitments by evolving current business
processes to ensure consideration of our
SBT and the environment is a material factor
in decision-making.
We will work to evolve the aviation risk to
explore the impact of climate change on
customer travel patterns across all transport
modes, refining our data collection methods,
to better understand existing travel patterns
and how far our hotels and offices are from
existing transport hubs. This will enable us
to future-proof our business and adapt our
strategy to changing customer and
colleague needs in this space.
Inability to meet
stakeholder
expectations
around IHG’s role
in the energy
transition
Short-term
(1-5 years)
Potentially
material impact
Impact
We understand that our key
stakeholders, from guests to
governments, have increasingly
high expectations for businesses to
influence positive change and deliver
on their environmental commitments.
Under a 1.5°C scenario, we expect an
increasing number of companies to
set SBTs, and therefore the pressure on
IHG to meet its SBT will also increase.
Reduction in
aviation passenger
numbers expected
to impact hotel
demand
Long-term
(15-30 years)
Potentially
material impact
in long-term and
moderate impact
in short- to
medium-term
Impact
The global tourism industry
contributes 8-10% of the world’s
carbon emissions. Under a 1.5°C
scenario, consumers that are more
conscious of their carbon footprint
may reduce aviation travel thus
reducing the number of guest visits
to our hotels.
Increased desire
for green hotels
could have a
material negative
impact on
IHG revenues
Short-term
(1-5 years)
Potentially
material impact
There is a greater demand for green hotels
and higher revenue exposure in the short-,
medium- and long-term under a 1.5°C
scenario, relative to 2°C, as both business
and leisure customers act early to begin
to seek more eco-friendly options.
Impact
We anticipate demand for green hotels
will increase under a 1.5°C scenario,
which may present a risk to IHG’s
revenues, if our hotels are unable to
meet growing customer demands for
sustainable stays.
In 2021/22, we have seen a significant
increase in interest from corporate customers
in sustainability with 60% of RFPs including
ESG requirements.
To help us continue to meet guest
expectations, we have been working to
improve the environmental credentials of
our hotels (see page 22 of our Responsible
Business Report for more information on
our Journey to Tomorrow programme).
We will collect customer data on attitudes
toward green travel and continue to monitor
and engage in industry-wide forums to drive
standardisation of the definition of
sustainable hotel experiences.
We will explore and develop support
pathways for hotels to obtain third-party
certifications.
We will improve our hotel data collection
and reporting methodology to improve the
scope and accuracy of ESG information we
can provide to our B2B customers and meet
online travel agency and search engine
criteria for sustainable hotels.
We will improve our sustainable stay, meeting
room and events offerings.
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Carbon pricing
We have also conducted a carbon price exposure assessment
to help us understand our potential exposure to carbon pricing
legislation. This assessment looked at our existing GHG emissions
and how they could change over time, and applied a projected
carbon price under a 1.5°C scenario to quantify the potential
financial exposure we could face both at Group level and at the
individual hotel level. We have considered opportunities for us to
use internal carbon prices through different mechanisms already
available in the business to ensure such a measure can be
effectively embedded into our business to influence decision-
making at every level, including informing the decisions of our
owners. We have also developed a marginal abatement cost curve
(MACC) to ensure the internal price we set on carbon is enough to
support us in achieving the decarbonisation needed to meet our
ambitious 1.5°C SBT. The outputs of this work will help to inform
the best way to implement an internal price on carbon and will
be used to drive action across our business by investigating how
various GHG reduction initiatives could deliver financial benefit
by mitigating the risks associated with carbon pricing.
Metrics and targets
To help us to monitor and track progress against our climate commitments, we are developing metrics and targets to align with the
TCFD’s recommendations.
We use the GHG Protocol for our GHG accounting and report in line with the Sustainability Accounting Standards Board (SASB).
Where our metrics and targets are still in progress, we have provided detail in the below table on our ongoing work to develop them
for disclosure in future reporting.
TCFD cross-industry metric category
Our approach
GHG emissions
Target
Our SBT: to reduce absolute GHG emissions from our Scope 1 and 2, and Scope 3 emissions from our
fuel and energy-related activities (FERA) and franchise estate by 46% by 2030 from a 2019 base year.
Transition risks
Physical risks
Metric
See pages 237 to 239 for our absolute Scope 1, 2 and 3 (from FERA and franchise) GHG emissions
We completed scenario analysis in 2021 and identified which transition risks are more likely to have
a material impact on our business relative to physical risks. During 2022, we refreshed our scenario
analysis to investigate our most material climate-related risks under a 1.5°C scenario (see section
Climate risk-management and strategy on pages 58-60 for more details).
Our business model helps to protect us from physical risk exposure due to our asset-light and
geographically diverse structure. However, we have performed initial analysis and are improving data
collection methods to continually monitor physical risks over time (see pages 59-60 for more details).
Climate-related opportunities
We have identified climate-related opportunities including energy efficiency and a consequent
reduction in energy costs to our owners that are supported by our energy reduction metrics and
targets (see pages 58 and 59 for more details).
Capital deployment
We are continuing to use tools such as Green Engage to collect data and the HERO tool to analyse
and inform data-driven decisions across our portfolio. These will help us and our hotel owners to
better understand the expected cost associated with delivering on our decarbonisation ambitions
over time. This is likely to be the biggest climate-related requirement for capital deployment for IHG
and our owners.
Internal carbon prices
We have engaged with third-party experts to identify and assess the most appropriate ways to
incentivise decarbonisation across our portfolio of hotels using an internal carbon price (see section
above on carbon pricing for more details).
Remuneration
The 2023-2025 cycle for LTIP will include a new ESG measure, part of which will be targets related
to decarbonisation actions.
Delivering on the recommendations of TCFD
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Key performance indicators (KPIs)
Our KPIs are carefully selected to allow us to monitor the
delivery of our strategy and long-term success. They are
organised around our strategy, which articulates our
purpose, ambition and priorities (see page 18). KPIs are reviewed
annually by senior management to ensure continued alignment
to our strategy and are included in internal reporting and
regularly monitored.
Measures included are those considered most relevant in assessing
the performance of the business and relate to our growth agenda
and commitment to our key stakeholders including owners, guests,
employees, shareholders and the communities in which we work.
KPIs should be read in conjunction with the other sections of the
Strategic Report, and where applicable, references to specific
relevant topics are noted against each KPI.
A guide to this KPI section
Link between KPIs and Director remuneration
While performance continued to recover from
the impact of Covid-19 in 2022 as restrictions
were lifted, our long-term focus remained to
deliver high-quality growth and, as in prior
years, Directors’ remuneration for 2022 was
directly related to key aspects of our strategy.
The following indicates which KPIs have
impacted Directors’ remuneration:
For more information on Directors’
remuneration, see pages 114 to 136.
Link to our strategy
Our four strategic priorities are core to our
success and represented as follows:
A
Annual Performance Plan
LT
Long Term Incentive Plan
• 70% was linked to operating profit from
• 30% was linked to Total Shareholder Return
reportable segmentsª
• 30% was linked to relative net system
• 15% was linked to strategic focus on net system
size growth
size growth through openings
• 15% was linked to strategic focus on future net
system size growth through signings
• 20% was linked to total gross revenue growth
• 20% was linked to cash flow generation
Build loved and
trusted brands
Customer centric
in all we do
Create digital
advantage
Care for our people,
communities and planet
KPIs
2022 status and 2023 priorities
Net rooms supply
Net total number of rooms in the
IHG System.
Increasing our rooms supply provides
significant advantages of scale,
including increasing the value of our
loyalty programme. This measure is
a key indicator of achievement of our
growth agenda (see page 18).
Signings
Gross total number of rooms added
to the IHG pipeline.
Continued signings secure the future
growth of our system and continued
efficiencies of scale. Signings indicate
our ability to deliver sustained growth
(see page 18).
A
LT
2022
2021
2020
2019
2018
A
2022
2021
2020
2019
2018
911,627
880,327
886,036
883,563
836,541
80,338
68,870
56,146
97,754
98,814
2022 status
Net system size growth of 3.6% included 12,402 rooms opened as Iberostar
Beachfront Resorts; adjusted net system size growth of 4.3% excludes the
impact of ceasing operations in Russia. Gross system size growth was 5.6%;
4.2% excluding the Iberostar Beachfront Resorts additions.
Signings of 80,338 rooms (467 hotels) represented 16.7% growth on the prior
year but was below pre-pandemic levels and particularly impacted by Covid-19
restrictions in Greater China. Total pipeline of 281,468 rooms increased by
3.9% compared to 2021, with more than 40% under construction.
Overall performance was driven by:
• Continued strength of the Holiday Inn Brand Family with 20,265 rooms
opened and 23,056 rooms signed, representing nearly 30% of our
rooms signings.
• 18,467 rooms signed for Iberostar Beachfront Resorts taking the total
number of brands to 18.
• Progression with our Luxury & Lifestyle portfolio to 13% of system size
and 20% of pipeline.
• Further growth of our recently launched brands with:
– The continued global expansion of voco to around 100 open and signed
hotels since the launch in 2018, across 29 countries.
– Opened the first two Atwell Suites and grew the pipeline to 30 hotels.
– Since the launch of Vignette Collection in 2021, 17 properties secured.
– avid hotels has nearly 60 hotels open, and there are more than 140 further
properties in the pipeline, as we develop avid hotels to be our next brand
of scale.
2023 priorities
• Focus on our ambition to deliver industry-leading growth in our scale,
with leading brands in the largest markets and segments.
• Scaling our home-grown brands; expand the growth of avid hotels and
Atwell Suites in the Americas and voco and Vignette Collection globally.
• Expand our Luxury & Lifestyle offer through acquired brands Regent,
Six Senses and Kimpton, and our recently launched Vignette Collection.
• Continue to explore further opportunities for growth through other
commercial agreements.
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KPIs
2022 status and 2023 priorities
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
2022 status
• Strong growth in 2022 took RevPARb to 97% of 2019 levels. This was driven
by continued leisure strength supported by improvement in corporate and
group bookings. The US and UK saw RevPARb exceed 2019 performance,
while other markets improved as travel restrictions eased.
• Through 2022 we have remained committed to supporting our owners
2022 36.6%
2021
46.0%
-52.5%
2020
to optimise revenues as we:
-0.3%
2019
2018 2.5%
– Launched a next-generation IHG mobile app to make it the platform
of choice for IHG One Rewards members; optimised web and mobile
booking to drive a better guest experience and improve conversion and
direct bookings.
– Differentiated our brands by continuing to focus on quality, design and
innovation to meet evolving needs of guests and drive guest satisfaction
while optimising for owner returns.
– Simplified our pricing by reducing the number of available rates and
2022 28.2%
introduced Advance Saver rate.
-45.0%
2020
2021
37.7%
– Optimised revenue by combining rooms and rates pages, simplifying
pricing approach and reducing the number of clicks to book across all
brands and booking channels.
Global RevPARb growth
Revenue per available room:
rooms revenue divided by the number
of room nights that are available.
RevPAR growth indicates the
increased value guests ascribe to our
brands in the markets in which we
operate and is a key measure widely
used in our industry (see page 8).
Definition of this key performance
measure can be found on page 85.
Growth in underlying
fee revenuesa
Group revenue from reportable
segments excluding revenue from
owned, leased and managed lease
hotels, significant liquidated damages
and current year acquisitions, stated
at constant currency.
Underlying fee revenue growth
demonstrates the continued
attractiveness to owners and guests
of IHG’s franchised and managed
business (see page 11).
Total gross revenue from
hotels in IHG’s System
Total rooms revenue from
franchised hotels and total hotel
revenue from managed, owned,
leased and managed lease hotels.
Other than for owned, leased and
managed lease hotels, it is not
revenue wholly attributable to IHG,
as it is mainly derived from hotels
owned by third parties.
The growth in gross revenue from
IHG’s System illustrates the value
of our overall System to our owners
(see page 11). Definition of this key
performance measure can be found
on page 85.
2019
2.0%
2018
6.4%
A
LT
2022
2021
2020
2019
2018
$25.8bn
$19.4bn
$13.5bn
$27.9bn
$27.4bn
Enterprise contribution to revenue
The percentage of room revenue
booked through IHG managed
channels and sources: direct via
our websites, apps and call centres;
through our interfaces with Global
Distribution Systems (GDS) and
agreements with Online Travel
Agencies (OTAs); other distribution
partners directly connected to our
reservation system; and Global Sales
Office business or IHG One Reward
members that book directly at a hotel.
Enterprise contribution is one
indicator of IHG value-add and the
success of our technology platforms
and our marketing, sales and loyalty
distribution channels (see page 11).
2022
2021
2020
2019
2018
77%
74%
72%
76%
78%
– Reduced pricing disparities and increased consumer confidence to book
directly by consolidation of wholesale suppliers with one key supplier.
– Enhanced revenue management systems to quickly identify and act
on revenue opportunities using business intelligence and data.
– Improved rate negotiations on behalf of our owners using IHG’s centralised
RFP processes, with more than 2,900 hotels now using the service.
– Amplified data-driven, targeted campaigns and offers to appeal to our
largest, fastest-growing and highest-value segments.
• Enterprise contribution improved to 77% in 2022, driven by robust growth
in both digital and OTA channels on strong leisure demand. Digital channels
benefitted from the relaunch of the mobile app and design enhancements
on the website, leading to improved conversion rates. GDS was also a driver
of enterprise contribution growth as corporate demand showed steady
improvement through the year.
• Fully re-envisioned the loyalty programme and mobile app by reimagining
every touchpoint to transform the guest and owner proposition,
contributing to an acceleration in IHG One Rewards member enrolments
and increased conversion rate.
• Launched Guest How You Guest, the largest campaign in a decade,
to drive awareness of the IHG Hotels & Resorts masterbrand, the launch
of IHG One Rewards, and our portfolio of brands.
2023 priorities
• Lead with our data-driven insights, including mobile and AI, to unlock
opportunities and drive revenue-enhancing activities by digitising more
areas of end-to-end self-service and enabling guests to own their booking
experience.
• Leverage enhanced global reservations system (GRS) capabilities to deliver
attribute pricing and stay enhancements, maximising revenue generation
to owners by leveraging the unique attributes of their inventory.
• Continue to develop our digital-first approach, leveraging cloud-based
technology to help owners and hotel colleagues better understand and
drive the business.
• Further expand and strengthen our IHG Hotels & Resorts masterbrand
to better promote our portfolio of brands.
• Build on the 2022 relaunch of IHG One Rewards to drive innovation and
support the growth and engagement of loyalty members, staying
competitive in a dynamic market.
• Continue to increase contribution from IHG One Rewards members and
optimise our mobile and web channels to drive direct bookings.
• Drive groups and meetings revenue by continuing to expand our third-party
agency and technology partnerships to enable our property sales teams
to increase existing and acquire new business.
a Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described
as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted
IFRS figures. Further explanation in relation to these measures can be found on pages 85 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226
to 232.
b Comparable RevPAR includes the impact of hotels temporarily closed as a result of Covid-19.
Key performance indicators (KPIs)
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Key performance indicators (KPIs) continued
KPIs
Guest Love
IHG’s guest satisfaction
measurement indicator.
Guest satisfaction is fundamental to
our continued success and is a key
measure to monitor our ability to
deliver an experience that meets
and exceeds guests’ expectations
(see page 50 for details).
Fee margina
Operating profit as a percentage
of revenue, excluding System Fund,
reimbursement of costs, revenue and
operating profit from owned, leased
and managed lease hotels, significant
liquidated damages, the results of the
Group’s captive insurance company
and exceptional items.
Our fee margin progression indicates
the profitability of our fee revenue
growth and benefit of our asset-light
business model (see page 10).
Adjusted free cash flowa
Cash flow from operating activities
excluding payments of contingent
purchase consideration, less purchase
of shares by employee share trusts,
maintenance capital expenditure
and lease payments.
Adjusted free cash flow provides
funds to invest in the business,
sustainably grow the dividend and
return any surplus to shareholders
(see page 12). It is a key component
in measuring the ongoing viability
of our business (see page 52).
2022 status and 2023 priorities
2022 status
• Guest satisfaction of 78.6% dropped slightly compared to 2021 reflecting
challenges such as labour shortages as the industry continues to recover
from Covid-19 impacts.
• Externally measured Guest Satisfaction Index (GSI) achieved scores above
100 in 2022 (meaning we outperformed our competitors) on improvements
in our online social ratings from guests and the travel community.
• Continued efforts to ensure a consistent high-quality experience for each
of our brands, including improvements in food & beverage, hotel condition
and service.
78.6%
78.9%
81.6%
82.4%
81.7%
• Launched a new mobile app to support guests with desired
digital experiences.
• Rolled out the new loyalty programme, IHG One Rewards, with extensive
in-hotel training to deliver upgraded loyalty experience.
2023 priorities
• Maintain a high focus on guest satisfaction across our entire portfolio with
particular emphasis on quality and service standards.
• Continue to invest in brands, including service, brand hallmarks and food
& beverage.
• Continue to invest in digital experiences to enhance the guest journey from
booking through check-out.
34.1%
56.2%
49.6%
54.1%
53.3%
2022 status
• Strong recovery in trading taking fee revenue to 4% below 2019 levels,
combined with disciplined cost management and sustainable savings
embedded through 2020 and 2021 resulted in a fee margin of 56.2%,
2.1%pts above 2019 levels.
2023 priorities
• Continue to be agile and thoughtfully reinvest in the business to drive
growth, continuing to expand margin over the long term.
• Achieve further operational efficiencies through greater application
of technology and process enhancements.
2022 status
• Adjusted free cash flowa was an inflow of $565m, consistent with the prior
year driven by an improvement in operating profit from reportable segmentsa
offset by tax paid and other working capital movements. Closing liquidity
was $2,224m.
2023 priorities
• Deliver consistent, sustained growth in cash flow.
• Control capital deployment in line with business priorities.
$565m
$571m
$509m
$611m
A
2022
2021
2020
2019
2018
A
2022
2021
2020
2019
2018
LT
2022
2021
2020 $29m
2019
2018
a Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described
as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted
IFRS figures. Further explanation in relation to these measures can be found on pages 85 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226
to 232.
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KPIs
2022 status and 2023 priorities
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Employee engagement
survey scores
Colleague HeartBeat survey,
completed by IHG employees or
those colleagues who are employed
at managed or managed lease hotels
(excluding our joint ventures).
We measure employee engagement
to monitor risks relating to talent
(see page 50) and to help us
understand the issues that are
relevant to our people as we build
a diverse and inclusive culture
(see page 29).
A
2022
2021
2020
2019
2018
86.0%
85.0%
79.0%
87.0%
86.0%
2022 status
• In 2022, the score of 86% improved on last year and was 8% higher than
external benchmarks.
• Prioritised employee development and retention activities:
– Rolled out a new Leadership Development offering for directors and
managers and finalised a programme for senior leaders.
– Launched a new learning technology platform to support the rollout
of an enhanced learning offering and a new learning subscription model,
capable of supporting more personalised development opportunities.
• Delivered on diversity, equity and inclusion (DE&I) initiatives:
– Extended our conscious inclusion training to additional frontline colleagues.
– Expanded our Employee Resource Groups (ERG) membership and
presence globally.
– Further raised our representation of diverse leaders across our Senior
Leadership populations.
• Continued to focus on employee wellbeing:
– Established regular touchpoints to encourage employees to take care
of their mental health.
– Marked World Mental Health Day with global webinars and a video series.
• Invested in HR systems including our Talent Attraction capabilities with the
relaunch of an updated Employer Value Proposition, refreshed our careers
site and increased social and paid media activities.
2023 priorities
• Continue to build an inclusive culture and maintain a strong focus on
increasing the diversity of our leadership and talent pipelines.
• Focus on enabling effective decision-making to support organisational
agility and driving change.
• Roll out the Senior Leadership development strategy, focusing on the
growth of our top leaders.
• Continue to focus on technology to enable better infrastructure and create
digital advantage.
2022 status
• Completed global release of IHG Skills Academy, a virtual learning platform,
offering both the system and core content in multiple languages.
• Increased the number of IHG Skills Academy users and partnerships.
• Internships and work experience placements across hotels and corporate
functions, utilising both in-house experiences and virtual solutions.
IHG® Academy
Number of people participating
in IHG Academy programmes.
Sustained participation in the
IHG Academy indicates the strength
of our progress in creating career
building opportunities and
engagement with the communities
in which we operate (see page 33).
Absolute carbon footprint
Our global carbon reduction target
is to reduce GHG emissions by 46%
by 2030 across our Scope 1 and 2
GHG emissions, and our Scope 3
GHG emissions covering both our
FERA and franchise estate, based on
our 2019 carbon footprint (see pages
61 and 237 for further information).
2018
This target has been validated by
the Science Based Targets initiative
(SBTi) as being consistent with climate
science and the Paris Agreement to
limit global temperature rise to 1.5°C
above pre-industrial levels, helping to
prevent the worst impacts of climate
change. We work with our hotels to
drive energy efficiency and carbon
reductions across our estate and
deliver our target.
2022
2021
7,431
5,815
2020 3,277
2019
2018
A
2022
2021
2020
2019
15,081
13,531
2023 priorities
• Increase the number of internships and work experiences through
IHG Academy compared to 2022.
6.2m tCO2e
5.7m tCO2e
4.5m tCO2e
6.4m tCO2e
• Update and re-communicate the IHG Academy offering to hotel and
corporate functions, and on the IHG Skills Academy activation within their
local communities.
• Raise awareness of IHG Skills Academy to increase skills training
opportunities and maximise IHG Academy participants.
2022 status
• At the end of 2022, our absolute carbon footprint reduced by 3.4% against
our 2019 baseline, driven by our targeted work with owners to maximise
energy efficiency as hotel demand recovers from Covid-19-related impacts.
• To facilitate progress we have set new energy-efficiency targets for all hotels
and introduced a range of Energy Conservation Measures (ECMs) into brand
standards, for implementation by the end of 2025.
2023 priorities
• Continue to roll out our decarbonisation roadmap focusing on
energy-efficiency measures in the existing estate, transitioning to
renewable energy and operating very low/zero-carbon new-build hotels.
• We are developing a suite of further ECMs for both existing and new-build
hotels, which are expected to deliver future energy reductions. Our Long
Term Incentive Plan for the 2023-25 cycle will include a new ESG measure,
with targets related to decarbonisation actions.
Key performance indicators (KPIs)
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Strategic Report
Chief Financial
Officer’s review
We achieved this while continuing to invest,
including in infrastructure to support Luxury
& Lifestyle as we increase exposure to this
high fee income segment, enhancing core
HR systems and beginning the integration
of Iberostar Beachfront Resorts.
Cash generation and liquidity
We generated net cash from operating
activities of $646m and adjusted free cash
flowb of $565m, broadly in line with 2021.
Through the year, we paid $233m in ordinary
dividends and $482m related to share
buybacks. By the end of the year, our net
debt: adjusted EBITDAb ratio reduced to 2.1x,
beneath the 2.5-3.0x range we aim to maintain.
We also strengthened the Group’s liquidity
position by entering into a new $1.35bn
syndicated bank revolving credit facility in April.
After reinstating dividends for 2021, and
shareholder returns in 2022, the Board has
proposed a final dividend of 94.5¢, +10%
vs 2021, taking the total dividend for the
year to 138.4¢. The Board has also proposed
a further share buyback programme to return
an additional $750m to shareholders.
Our uses of cash remain unchanged:
ensuring the business is appropriately
invested in to optimise growth; funding
a sustainably growing dividend; and then
returning excess funds to shareholders.
Future growth and 2023 priorities
While there are economic uncertainties
heading into 2023, we expect the further
return of business and group travel along
with continued strength in leisure demand.
We continue to prioritise investment across
our own resources, and those of the System
Fund, to deliver on our ambition. The 1,800
hotels in our pipeline represent future growth
of over 30% of today’s system size. We will
continue our multi-year investment behind
our brand portfolio, loyalty programme and
revenue-generating technology platforms
and remain focused on improving returns
for owners through demand delivery and
operational efficiencies, while managing
the pressure of underlying cost inflation
and achieving our sustainability targets.
We look forward with confidence with a
proven business model delivering strong
cash generation that is funding a sustainably
growing ordinary dividend and additional
returns to shareholders.
Paul Edgecliffe-Johnson
Chief Financial Officer
& Group Head of Strategy
Paul Edgecliffe-Johnson Chief Financial Officer & Group Head of Strategy
In the second half of 2022, RevPARa
and profitability recovered to
pre-pandemic levels with strong
cash generation funding additional
returns to shareholders.
In 2022 we saw demand continue to
return in most of our markets which,
alongside strong pricing, led to Group
RevPARa being back close to 2019 levels
and fee marginb ahead. In the second half
of the year, we exceeded 2019 levels of
both RevPARa and profitability through
disciplined cost management and targeted
investments to support growth.
Trading performance
The investments we have made in our
enterprise platform helped our owners to
capture demand and grow their business,
resulting in RevPARa recovering to 97%
of 2019 levels.
Trading improved sequentially in each quarter
of 2022 such that by the fourth quarter,
RevPARa was 4% ahead of 2019, supported
by continued strong leisure demand and the
steady increase in business and group travel.
Regional performance varied, with Americas
RevPARa ahead of 2019 levels, EMEAA
experiencing a strong recovery as travel
restrictions eased through the year and
trading in Greater China fluctuating due to
intermittent Covid-19-related travel restrictions.
We worked closely with our owners to
optimise staffing and to control costs
through the challenges of a rapid recovery
of demand in many markets in an
environment of high inflation.
System growth
Gross system growth of 5.6%, or 4.2%
excluding openings under the Iberostar
Beachfront Resorts brand, demonstrates
the significant strengthening of our brand
portfolio over the past five years.
Adjusted net system size growth of 4.3%
(2.9% excluding Iberostar Beachfront
Resorts), which excludes the removals
related to our exit from Russia, demonstrates
an ongoing commitment to quality and
consistency across our brands.
Operating profit
Operating profit of $628m improved from
$494m in 2021. Operating profit from
reportable segmentsb recovered to $828m,
up 55% on 2021. The recovery in revenue
combined with our disciplined approach
to cost management has resulted in fee
marginb of 56.2%, 2.1%pts above 2019.
a Comparable RevPAR includes the impact of hotels temporarily closed as a result of Covid-19.
b Use of Non-GAAP measures: In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as
Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS
figures. Further explanation in relation to these measures can be found on pages 85 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.
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Performance
Group
Group Income Statement summary
Revenuea
Americas
EMEAA
Greater China
Central
Revenue from reportable segmentsb
System Fund revenues
Reimbursement of costs
Total revenue
Operating profita
Americas
EMEAA
Greater China
Central
Operating profit from reportable segmentsb
Analysed as:
Fee business excluding Central
Owned, leased and managed lease
Central
System Fund result
Operating profit before exceptional items
Operating exceptional items
Operating profit/(loss)
Net financial expenses
Analysed as:
Adjusted interest expenseb
System Fund interest
Exceptional financial expenses
Foreign exchange gains
Fair value gains on contingent purchase consideration
Profit/(loss) before tax
Tax
Analysed as:
Tax before exceptional items, foreign exchange gains
and System Fundb
Tax on foreign exchange gains
Tax on exceptional items and exceptional tax
Profit/(loss)
Adjusted earningsd
Basic weighted average number of ordinary shares
(millions)
Earnings/(loss) per ordinary share
Basic
Adjustedb
Dividend per share
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
2022
$m
2021
$m
2022 vs 2021
% change
12 months ended 31 December
2020
$m
2021 vs 2020
% change
1,005
552
87
199
1,843
1,217
832
3,892
761
152
23
(108)
828
917
19
(108)
(105)
723
(95)
628
(96)
(122)
16
–
10
8
540
(164)
(194)
4
26
376
511
181
774
303
116
197
1,390
928
589
2,907
559
5
58
(88)
534
658
(36)
(88)
(11)
523
(29)
494
(139)
(142)
3
–
–
6
361
(96)
(125)
–
29
265
269
183
207.2¢
282.3¢
138.4¢
145.4¢
147.0¢
85.9¢
29.8
82.2
(25.0)
1.0
32.6
31.1
41.3
33.9
36.1
NMC
(60.3)
22.7
55.1
39.4
NMC
22.7
854.5
38.2
227.6
27.1
(30.9)
(14.1)
433.3
–
–
33.3
49.6
70.8
55.2
–
(10.3)
41.9
90.0
(1.1)
42.5
92.1
61.1
11.0
512
221
77
182
992
765
637
2,394
296
(50)
35
(62)
219
340
(59)
(62)
(102)
117
(270)
(153)
(140)
(130)
4
(14)
–
13
(280)
20
(32)
–
52
(260)
57
182
(142.9)¢
31.3¢
–¢
$1 £0.78
51.2
37.1
50.6
8.2
40.1
21.3
(7.5)
21.4
88.9
NMC
65.7
41.9
143.8
93.5
(39.0)
41.9
(89.2)
347.0
(89.3)
NMC
(0.7)
9.2
(25.0)
–
–
(53.8)
NMC
NMC
290.6
–
(44.2)
NMC
371.9
0.5
NMC
369.6
–
(6.4)
Average US dollar to sterling exchange rate
$1: £0.81
$1: £0.73
a Americas and EMEAA include revenue and operating profit before exceptional items from both fee business and owned, leased and managed lease hotels. Greater China includes
revenue and operating profit before exceptional items from fee business.
b Definitions for non-GAAP measures can be found in the Use of key performance measures and non-GAAP measures section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements which can be found on pages 226 to 232.
c Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
d Adjusted earnings as used with adjusted earnings per share, a non-GAAP measure.
Performance
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Performance continued
Group continued
Highlights for the year ended
31 December 2022
Trading improved in each quarter of 2022,
with Group comparable RevPARa exceeding
pre-pandemic levels in the third and fourth
quarters alongside the continued lifting of
Covid-19-related travel restrictions. Both the
Americas and EMEAA saw strong sequential
improvement, and full year RevPARa
exceeded pre-pandemic levels in the US
and UK. Trading continued to be driven by
strong leisure demand, which was supported
by improvement in both corporate and group
bookings in the second half of the year.
Greater China remained impacted by localised
travel restrictions for much of the year.
Revenue
Group comparable RevPARa improved
year-on-year by 60.8% in the first quarter,
then grew 43.9% in the second quarter,
27.8% in the third quarter, 25.6% in the
fourth quarter and 36.6% in the full year.
When compared to the pre-pandemic levels
of 2019, Group comparable RevPARa
declined 17.7% in the first quarter and 4.5%
in the second quarter, then grew 2.7% in the
third quarter and 4.1% in the fourth quarter,
with the full year 3.3% below 2019. Overall,
average daily rate strengthened to 8.2%
ahead of 2019 and occupancy continued
to recover to 7.4%pts below 2019 levels.
Our other key driver of revenue, net system
size, increased by 3.6% year-on-year to
911.6k rooms, impacted by the removal of
6.5k rooms in the first half of the year relating
to the ceasing of operations in Russia.
Adjusting for this, net system size
increased 4.3%.
Total revenue increased by $985m (33.9%)
to $3,892m, including a $243m increase in
cost reimbursement revenue. Revenue from
reportable segmentsb increased by $453m
(32.6%) to $1,843m, driven by the improved
trading conditions. Underlying revenueb
increased by $509m to $1,817m, with
underlying fee revenueb increasing by $317m.
Owned, leased and managed lease revenue
increased by $157m.
Operating profit and margin
Operating profit improved by $134m from
$494m to $628m, including a $66m increase
in charges from operating exceptional items
and a $94m increase in the reported System
Fund loss.
Operating profit from reportable segmentsb
increased by $294m (55.1%) to $828m,
with fee business operating profit increasing
by $239m (41.9%) to $809m, due to the
improvement in trading which drove a $41m
increase in incentive management fees to
$103m. Owned, leased and managed lease
operating profit improved from a $36m loss
to a $19m profit on continued growth in
Americas and EMEAA. Underlying operating
profitb increased by $282m (52.5%) to $819m.
Fee marginb increased by 6.6%pts over the
prior year (2.1%pts above 2019) to 56.2%
benefitting from the improvement in trading
and ongoing disciplined cost management,
including sustaining $75m of the cost savings
achieved in 2021.
The impact of the movement in average USD
exchange rates for 2021 compared to 2022
netted to a nil impact on operating profit
from reportable segmentsb when calculated
as restating 2021 figures at 2022 exchange
rates, but negatively impacted operating
profit from reportable segmentsb by $17m
when applying 2021 rates to 2022 figures.
This difference is due to high growth in
non-US dollar markets in 2022, meaning
that 2022 operating profit from reportable
segments would be $17m higher if foreign
exchange rates had remained constant
with 2021.
If the average exchange rate during January
2023 had existed throughout 2022, the 2022
operating profit from reportable segmentsb
would have been $9m lower.
System Fund
The Group operates a System Fund to
collect and administer cash assessments
from hotel owners for the specific purpose
of use in marketing, reservations and the
Group’s loyalty programme, IHG One
Rewards. The System Fund also benefits
from proceeds from the sale of loyalty points
under third-party co-branding arrangements.
The Fund is not managed to generate a
surplus or deficit for IHG over the longer term,
but is managed for the benefit of hotels in
the IHG system with the objective of driving
revenues for the hotels in the system.
In the year to 31 December 2022, System
Fund revenues increased $289m (31.1%) to
$1,217m, primarily driven by the continued
recovery in travel demand yielding higher
assessment revenues.
The growth in the IHG One Rewards
programme means that, although
assessments are received from hotels up
front when a member earns points, more
revenue is deferred each year than is
recognised in the System Fund. This can
lead to accounting losses in the System
Fund each year as the deferred revenue
balance grows which do not necessarily
reflect the Fund’s cash position and the
Group’s capacity to invest.
The reported System Fund loss increased
by $94m to $105m, reflecting increased
investments in consumer marketing, loyalty
and direct channels, largely driven by the
re-launch of the Group’s loyalty programme
and higher levels of Reward Night
redemptions, which offset the increase
in assessment income.
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IHG | Annual Report and Form 20-F 2022
Reimbursement of costs
Cost reimbursement revenue represents
reimbursements of expenses incurred on
behalf of managed and franchised properties
and relates, predominantly, to payroll costs
at managed properties where we are the
employer. As we record cost reimbursements
based upon costs incurred with no added
mark-up, this revenue and related expenses
have no impact on either our operating profit
or net profit for the year.
In the year to 31 December 2022,
reimbursable revenue increased by $243m
(41.3%) to $832m. Over 90% of the increase
was in the US and Canada reflecting the
overall recovery in trading conditions.
Operating exceptional items
Exceptional items are identified by virtue
of their size, nature or incidence and are
excluded from the calculation of adjusted
earnings per ordinary shareb as well as other
Non-GAAP measures (see Use of Non-GAAP
measures, pages 226 to 232) in order to allow
a better understanding of the underlying
trading performance and trends of the Group
and its reportable segments. Examples of
exceptional items can include, but are not
restricted to, gains and losses on the disposal
of assets, impairment charges and reversals,
the costs of individually significant legal
cases or commercial disputes and
reorganisation costs.
Operating exceptional items totalled a charge
of $95m, driven by the following items:
• the costs and impairment charges of
ceasing operations in Russia ($17m);
• commercial litigation and disputes ($28m);
• impairment reversals ($22m) reflecting
improved trading conditions in both the
Americas and EMEAA regions;
• impairment charges ($12m) relating to one
hotel in the EMEAA region; and
• shares of losses from the Barclay associate
($60m) arising from an allocation of
expenses in excess of the Group’s
percentage share.
Further information on exceptional items
can be found in note 6 to the Group
Financial Statements.
a Comparable RevPAR includes the impact of hotels
temporarily closed as a result of Covid-19.
b Definitions for Non-GAAP revenue and operating profit
measures can be found on pages 85 to 88.
Reconciliations of these measures to the most directly
comparable line items within the Group Financial
Statements can be found on pages 226 to 232.
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Share price and market capitalisation
The IHG share price closed at £47.44 on
Friday 30 December 2022, down 0.8% from
£47.81 on 31 December 2021. The market
capitalisation of the Group at the year-end
was £8.3bn.
For discussion of 2021 results, and the
changes compared to 2020, refer to
the 2021 Annual Report and Form 20-F.
www.ihgplc.com/investors under
Annual Report
a Definitions for Non-GAAP revenue and operating
profit measures can be found on pages 85 to 88.
Reconciliations of these measures to the most directly
comparable line items within the Group Financial
Statements can be found on pages 226 to 232.
Accounting principles
The Group results are prepared under
International Financial Reporting
Standards (IFRS). The application of
IFRS requires management to make
judgements, estimates and assumptions,
and those considered critical to the
preparation of the Group results are
set out on page 158 of the Group
Financial Statements.
The Group discloses certain financial
information both including and excluding
exceptional items. For comparability
of the periods presented, some of
the performance indicators in this
performance review are calculated after
eliminating these exceptional items.
An analysis of exceptional items is
included in note 6 on page 175 to 178
of the Group Financial Statements.
Net financial expenses
Net financial expenses decreased to $96m
from $139m. Adjusted interestb, as reconciled
on page 231, and which excludes exceptional
finance expenses and foreign exchange
gains and adds back interest relating to the
System Fund, decreased by $20m to an
expense of $122m. The decrease in adjusted
interestb was primarily driven by favourable
impacts of FX rates on the sterling bonds
and an increase in interest received on
deposits, offset by an increase in interest
payable to the System Fund.
IHG pursues an approach to tax that is
consistent with its business strategy and
its overall business conduct principles.
The approach seeks to ensure full compliance
with all tax filing, payment and reporting
obligations on the basis of communicative
and transparent relationships with tax
authorities. The IHG Audit Committee reviews
IHG’s approach to tax annually, including
consideration of the Group’s current tax
profile. Further information on tax can
be found in note 8 to the Group
Financial Statements.
Financial expenses include $82m
(2021: $91m) of total interest costs on public
bonds, which are fixed rate debt. Interest
expense on lease liabilities was $29m
(2021: $29m).
Fair value gains on contingent
purchase consideration
Contingent purchase consideration arose
on the acquisition of Regent. The gain of
$8m (2021: $6m of which $1m related to
Regent and $5m to contingent consideration
no longer payable) relates to a favourable
movement in the bond rates used in the
valuation. The total contingent purchase
consideration liability at 31 December 2022
is $65m (31 December 2021: $73m).
Taxation
The effective rate of tax on profit before
exceptional items, foreign exchange gains
and System Funda was 27% (2021: 31%);
this was lower than 2021 largely due to the
improved profit base. An overall $26m tax
credit ($33m current tax credit and a $7m
deferred tax charge) arose in respect of
exceptional items (2021: $29m credit).
Further information on tax within exceptional
items can be found in note 6 to the Group
Financial Statements. Net tax paid in 2022
totalled $211m (2021: $86m); the 2021
comparative included $15m of tax refunds,
of which there were none in 2022. The Group
continued to recognise significant deferred
tax assets of $109m (2021: $127m) in the
UK in respect of revenue losses and other
temporary differences. Further information
on tax can be found in note 8 to the Group
Financial Statements.
IHG’s Approach to Tax policy is available at
www.ihgplc.com/responsible-business
under policies
Earnings per ordinary share
The Group’s basic earnings per ordinary
share is 207.2¢ (2021: 145.4¢). Adjusted
earnings per ordinary sharea increased
by 135.3¢ to 282.3¢.
Dividends and returns
The Board is proposing a final dividend of
94.5¢ in respect of 2022, which is growth
of 10% on 2021. An interim dividend of 43.9¢
was resumed and paid in October 2022.
The total dividend for the year would therefore
be 138.4¢, representing an increase of 61%
as no interim dividend was paid in 2021.
The ex-dividend date is Thursday 30 March
2023 and the Record Date is Friday 31 March.
The corresponding dividend amount in
Pence Sterling per ordinary share will be
announced on 26 April 2023, calculated
based on the average of the market
exchange rates for the three working days
commencing 21 April 2023. Subject to
shareholder approval at the AGM on Friday
5 May 2023, the dividend will be paid on
Tuesday 16 May 2023.
The dividend payments for 2022 will
have returned close to $250m to IHG’s
shareholders. An additional $500m of
surplus capital was returned to shareholders
through a share buyback programme that
concluded in January 2023. This repurchased
9,272,994 shares at an average price of
£46.57 per share and reduced the total
number of voting rights in the Company
by 5.0%.
The Board has also announced a further
share buyback programme to return an
additional $750m to shareholders in 2023.
Performance
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Strategic Report
Performance continued
Group continued
Adjusted EBITDAb reconciliation
Cash flow from operations
Cash flows relating to exceptional items
Impairment loss on financial assets
Other non-cash adjustments to operating profit/lossc
System Fund result
System Fund depreciation and amortisation
Other non-cash adjustments to System Fund result
Working capital and other adjustments
Capital expenditure: contract acquisition costs
(key money), net of repayments
Adjusted EBITDAb
Group Cash Flow summary
Adjusted EBITDAb
Working capital and other adjustments
Impairment loss on financial assets
Non-cash adjustments to operating profit/lossc
System Fund result
Non-cash adjustments to System Fund result
Capital expenditure: contract acquisition costs
(key money) net of repayments
Capital expenditure: maintenance
Cash flows relating to exceptional items
Net interest paid
Tax paid
Principal element of lease payments
Purchase of shares
Adjusted free cash flowb
Capital expenditure: gross recyclable investments
Capital expenditure: gross System Fund
capital investments
Deferred purchase consideration paid
Disposals and repayments, including other financial assets
Distributions from associates and joint ventures
Other items
Repurchase of shares, including transaction costs
Dividends paid to shareholders
Net cash flow before other net debt movements
Add back principal element of lease repayments
Exchange and other non-cash adjustments
Decrease in net debtb
Net debtb at the beginning of the year
Net debtb at the end of the year
2022
$m
961
43
(5)
(61)
105
(86)
(24)
(101)
64
896
2022
$m
896
101
5
61
(105)
110
(64)
(44)
(43)
(104)
(211)
(36)
(1)
565
(15)
(35)
–
16
–
–
(482)
(233)
(184)
36
178
30
(1,881)
(1,851)
2021
$m re-presenteda
2022 vs 2021
$m change
2020
$m re-presenteda
2021 vs 2020
$m change
12 months ended 31 December
848
12
–
(71)
11
(94)
(6)
(110)
42
632
2021
$m
632
110
–
71
(11)
100
(42)
(33)
(12)
(126)
(86)
(32)
–
571
(5)
(19)
(13)
58
–
–
–
–
592
32
24
648
(2,529)
(1,881)
264
2022 vs 2021
$m change
264
(6)
(776)
(618)
30
308
87
(40)
(60)
102
(62)
(97)
27
64
329
303
12 months ended 31 December
2020
$m
329
(27)
40
60
(102)
159
(64)
(43)
(87)
(130)
(41)
(65)
–
29
(6)
(35)
–
18
5
3
–
–
14
65
57
136
(2,665)
(2,529)
2021 vs 2020
$m change
303
542
578
512
648
a The definition and reconciliation of adjusted EBITDA has been amended to reconcile to the nearest GAAP measure, cash flow from operations, reflecting that adjusted EBITDA is primarily
used by the Group as a liquidity measure. The value of adjusted EBITDA is unchanged.
b Definitions for non-GAAP measures can be found in the ‘Use of key performance measures and non-GAAP measures’ section along with reconciliations of these measures to the most
directly comparable line items within the Group Financial Statements which can be found on pages 226 to 232.
c 2020 excludes $48m related to trade deposits and loans which were recognised as exceptional items.
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Cash flow from operations
For the year ended 31 December 2022,
cash flow from operations was $961m,
an increase of $113m on the previous year,
primarily reflecting the increase in operating
profit. Cash flow from operations is the
principal source of cash used to fund interest
and tax payments, capital expenditure and
ordinary dividend payments of the Group.
Adjusted free cash flowa
Adjusted free cash flowa was an inflow
of $565m, consistent with the prior year
of $571m. Adjusted EBITDAa increased by
$264m due to improved trading in the year
and was offset by an increase in tax paid of
$125m and an increase in the System Fund
reported loss of $94m. Working capital and
other adjustments includes $108m of cash
inflow related to deferred revenue, driven
primarily by the loyalty programme.
Exceptional cash costs of $43m includes
the cost of ceasing operations in Russia and
payments relating to commercial litigation
and disputes.
Net and gross capital expenditure
Net capital expenditurea was $59m
(2021: $50m inflow) and gross capital
expenditurea was $161m (2021: $100m).
Gross capital expenditurea comprised:
$111m maintenance capex and key money,
$15m gross recyclable investments, and
$35m System Fund capital investments.
Net capital expenditurea includes the offset
from $13m proceeds from other financial
assets, $3m net disposal proceeds, $3m key
money repayments and $83m System Fund
depreciation and amortisationb.
Net debta
At 31 December 2022, net debta was $1,851m
(31 December 2021: $1,881m), including
favourable net foreign exchange of $230m
driven by translation of the Group’s sterling
bond debt, offset by $52m of other non-cash
adjustments. There were $715m of payments
related to ordinary dividends and the
share buyback.
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Balance sheet
Goodwill and other
intangible assets
Other non-current assets
Cash and cash equivalents
Other current assets
Total assets
2022
$m
2021
$m
1,144
1,394
976
702
4,216
1,195
1,455
1,450
616
4,716
Loans and other borrowings
(2,396)
(2,845)
Other current liabilities
(1,489)
(1,332)
Other non-current liabilities
(1,939)
(2,013)
Total liabilities
Net liabilities
(5,824)
(6,190)
(1,608)
(1,474)
Net liabilities
The Group had net liabilities of $1,608m at
31 December 2022 ($1,474m at 31 December
2021). In accordance with accounting
standards, the Group’s internally developed
brands are not recorded on the Group’s
balance sheet, and its asset light business
model means that most properties from
which income is derived are not owned.
This does not have an impact on the ability
of the Group to raise external funding or
the dividend capacity of the Group.
Goodwill and other intangible assets
Goodwill and other intangible assets
total $1,144m. This was a decrease of $51m
compared to the prior year. Goodwill and
brands have a total net book value of $774m
as at 31 December 2022 ($780m as at
31 December 2021). Brands relate to the
acquisitions of Kimpton, Regent and
Six Senses. They are each considered to have
an indefinite life given their strong brand
awareness and reputation, and management’s
commitment to continued investment in
their growth. Goodwill and brands are
allocated to cash generating units (CGUs),
and they are tested annually for impairment,
with no impairment recognised in 2022
given the recoverable amounts of the CGUs
exceeded their carrying value. The movement
in the year is due to exchange rates.
Remaining intangible assets relate to
software ($339m), management agreements
($21m) and other intangible assets ($10m).
Working capital
Trade receivables increased by $94m, from
$399m at 31 December 2021 to $493m,
primarily due to improved trading in the last
quarter of 2022 compared to the last quarter
of 2021. Current trade and other payables
increased by $118m, primarily driven by an
increase of trade payables of $43m due to
higher marketing and other spend compared
to 2021 and $29m related to the share
repurchase programme. Deferred revenue
increased by $111m, driven by an increase in
the future redeemable points balance related
to the loyalty programme.
Cash and borrowings
Net debta of $1,851m (2021: $1,881m)
is analysed by currency as follows:
Borrowings
Sterling*
US dollar
Euros
Other
Cash and cash equivalents
Sterling
US dollar
Euros
Canadian dollar
Chinese renminbi
Other
Net debta
Average net debt level
2022
$m
2021
$m
2,378
2,860
416
4
29
(380)
(494)
(15)
(7)
(37)
(43)
1,851
1,763
431
5
35
(532)
(756)
(18)
(7)
(105)
(32)
1,881
2,334
* Including the impact of currency swaps.
Cash and cash equivalents includes $24m
(2021: $77m) that is not available for use by
the Group due to local exchange controls,
$11m (2021: $9m) which is restricted for use
on capital expenditure under hotel lease
agreements and $12m (2021: $nil) subject
to contractual and regulatory restrictions
(reclassed to cash and cash equivalents
in 2022) which were previously presented
within other financial assets.
Information on the maturity profile and interest
structure of borrowings is included in notes 21
to 23 to the Group Financial Statements.
Borrowings included bank overdrafts of
$55m (2021: $59m), which were matched
by an equivalent amount of cash and cash
equivalents under the Group’s cash pooling
arrangements. Under these arrangements,
each pool contains a number of bank
accounts with the same financial institution,
and the Group pays interest on net overdraft
balances within each pool. The cash pools
are used for day-to-day cash management
purposes and are managed daily as closely
as possible to a zero balance on a net basis
for each pool. Overseas subsidiaries are
typically in a cash-positive position, with
the most significant balances in the US,
and the matching overdrafts are held by the
Group’s central treasury company in the UK.
Information on the Group’s approach to
allocation of capital resources can be found
on pages 12 and 13.
a Definitions for Non-GAAP measures can be found on
pages 85 to 88. Reconciliations of these measures to
the most directly comparable line items within the Group
Financial Statements can be found on pages 226 to 232.
b Excluding $3m depreciation of right-of-use assets.
Performance
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Strategic Report
Performance continued
Group continued
Sources of liquidity
As at 31 December 2022, the Group had
total liquidity of $2,224m (31 December
2021: $2,655m), comprising $1,350m of
undrawn bank facilities and $874m of cash
and cash equivalents (net of overdrafts
and restricted cash). The reduction in total
liquidity from December 2021 is primarily
due to the overall net cash outflow before
other net debt movementsa of $184m and
the repayment of $209m of bond debt.
The Group currently has $2,341m of sterling
and euro bonds outstanding. The bonds
mature in October 2024 (€500m), August
2025 (£300m), August 2026 (£350m), May
2027 (€500m) and October 2028 (£400m).
There are currency swaps in place on both
the euro bonds, fixing the October 2024
bond at £454m and the May 2027 bond at
£436m. The Group currently has a senior
unsecured long-term credit rating of BBB
from Standard and Poor’s.
In April 2022, IHG entered into a new $1.35bn
syndicated bank revolving credit facility
(RCF). The previous $1.275bn syndicated
facility and $75m bilateral facility have been
cancelled. The new five-year RCF matures in
April 2027. Two one-year extension options
are at the lenders’ discretion. There are two
financial covenants: interest cover and
leverage ratio. Covenants are tested at half
year and full year on a trailing 12-month basis.
The interest cover covenant requires a ratio
of Covenant EBITDA to Covenant interest
payable above 3.5:1 and the leverage ratio
requires Covenant net debt to Covenant
EBITDA below 4.0:1. These covenants now
include the impact of IFRS 16, Leases, which
was previously excluded due to ‘frozen
GAAP’ treatment in the previous agreement.
The new facility uses alternative reference
rates instead of LIBOR. See note 23 to
the Group Financial Statements for
further information.
At 31 December 2022, the leverage ratio
was 2.12x and the interest cover ratio was
8.22x. See note 23 to the Group Financial
Statements for further information. The facility
was undrawn at 31 December 2022.
The Group is in compliance with all of the
applicable financial covenants in its loan
documents, none of which are expected to
present a material restriction on funding in
the near future.
In the Group’s opinion, the available facilities
are sufficient for the Group’s present
liquidity requirements.
Off-balance sheet arrangements
At 31 December 2022, the Group had no
off-balance sheet arrangements that have,
or are reasonably likely to have, a current or
future material effect on the Group’s financial
condition, revenues or expenses, results of
operations, liquidity, capital expenditures
or capital resources.
Contingent liabilities
Contingent liabilities include guarantees over
loans made to facilitate third-party ownership
of hotels of up to $50m and outstanding
letters of credit of $55m. The Group may
also be exposed to additional liabilities
resulting from litigation and security incidents.
See note 30 to the Group Financial Statements
for further details.
Future cash requirements from
contractual obligations
The Group’s future cash flows arising
from contractual commitments relating
to long-term debt obligations (including
interest payable), derivatives, lease liabilities
and other financial liabilities are analysed in
note 23 to the Group Financial Statements.
Other cash requirements relate to future
pension scheme contributions (see note 26
to the Group Financial Statements) and
capital commitments (see note 29 to the
Group Financial Statements).
The Group also has future commitments for
key money payments which are contingent
upon future events and may reverse.
Disaggregation of total gross revenueb in IHG’s System
Total gross revenue provides a measure of the overall strength of the Group’s brands.
It comprises total rooms revenue from franchised hotels and total hotel revenue from
managed, owned, leased and managed lease hotels and excludes revenue from the System
Fund and reimbursement of costs. Other than owned, leased and managed lease hotels,
total gross revenue is not revenue attributable to IHG as it is derived from hotels owned
by third parties. The definition of this key performance measure can be found on page 85.
Analysed by brand
InterContinental
Kimpton
Hotel Indigo
HUALUXE
Crowne Plaza
EVEN Hotels
Holiday Inn
Holiday Inn Express
Staybridge Suites
Candlewood Suites
Other
Total
Analysed by ownership type
Fee business (revenue not attributable
to IHG)
Owned, leased and managed lease (revenue
recognised in Group income statement)
Total
2022
$bn
4.0
1.2
0.7
0.1
3.0
0.1
5.2
8.3
1.2
0.8
1.2
25.8
25.4
0.4
25.8
12 months ended 31 December
2021
$bn
%
changec
2.7
0.7
0.4
0.1
2.3
0.1
4.0
6.5
1.0
0.7
0.9
19.4
19.2
0.2
19.4
50.8
62.6
56.3
2.3
28.3
65.2
29.5
26.0
22.0
12.9
57.9
33.1
32.7
64.9
33.1
Total gross revenue in IHG’s system increased by 33.1% (36.8% increase at constant currency)
to $25.8bn as a result of improved trading conditions in many markets throughout the year
along with growth in the number of hotels in our system.
a As shown in the Cash Flow summary on page 70.
b Definitions for the key performance measures can be found in the Use of key performance measures and non-GAAP
measures section, which can be found on pages 85 to 88. Reconciliations of these measures to the most directly
comparable line items within the Group Financial Statements can be found on pages 226 to 232.
c Year-on-year percentage movement calculated from source figures.
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Group hotel and room count
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Vignette Collection
Kimpton
Hotel Indigo
voco
HUALUXE
Crowne Plaza
EVEN Hotels
Holiday Inna
Holiday Inn Express
avid hotels
Atwell Suites
Staybridge Suites
Candlewood Suites
Iberostar Beachfront Resortsb
Otherc
Total
Analysed by ownership type
Franchised
Managed
Owned, leased and managed lease
Total
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Rooms
Change over
2021
(46)
838
404
433
25
2,111
2,979
1,380
(759)
186
(303)
9,573
1,073
186
(345)
728
12,402
435
31,300
30,316
1,386
(402)
31,300
Hotels
Change over
2021
(2)
2
3
2
1
13
14
5
(1)
1
8
75
11
2
(1)
7
33
–
173
169
7
(3)
173
2022
19
9
207
3
76
143
45
21
403
22
1,226
3,091
59
2
314
368
33
123
6,164
5,202
946
16
6,164
2022
1,366
3,028
69,806
579
13,308
18,454
10,424
5,983
110,419
3,180
224,381
326,902
5,353
186
33,961
32,753
12,402
39,142
911,627
656,431
250,977
4,219
911,627
Net system size increased by 3.6%
year-on-year, or 4.3% when adjusting for the
0.7% impact of exiting Russia. 49,443 rooms
(269 hotels) were opened in the year, 12%
more than in 2021, including 12,402 rooms
(33 hotels) under the Iberostar Beachfront
Resorts brand.
a Includes 28 Holiday Inn Club Vacations properties
(8,822 rooms) (2021: 28 Holiday Inn Club Vacations
properties (8,679 rooms)).
b Iberostar Hotels & Resorts joined IHG’s system
as part of a long-term commercial agreement.
C Includes eight open hotels that will be re-branded
to voco and two open hotels that will be re-branded
to Vignette Collection.
In 2022, 96 hotels (18,143 rooms) left the IHG
system, including 28 hotels (6,457 rooms)
as part of ceasing operations in Russia.
In 2021, 264 hotels (49,667 rooms) left the
IHG system, including 151 Holiday Inn and
Crowne Plaza hotels (34,345 rooms) as we
concluded our review of these brands.
Total number of hotels
6,164
Total number of rooms
911,627
Performance
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Strategic Report
Performance continued
Group continued
Group pipeline
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Vignette Collection
Kimpton
Hotel Indigo
voco
HUALUXE
Crowne Plaza
EVEN Hotels
Holiday Inna
Holiday Inn Express
avid hotels
Atwell Suites
Staybridge Suites
Candlewood Suites
Iberostar Beachfront Resortsb
Otherc
Total
Analysed by ownership type
Franchised
Managed
Owned, leased and managed lease
Total
Hotels
Rooms
2022
Change over 2021
2022
Change over 2021
38
10
90
7
41
119
39
21
111
31
230
617
145
30
162
124
15
29
1,859
1,313
545
1
1,859
5
2
11
7
6
5
1
(2)
15
2
(14)
(28)
(19)
7
6
31
15
12
62
23
39
–
62
2,631
2,310
22,581
600
8,443
19,851
10,229
5,350
28,950
5,279
44,242
76,735
12,385
3,001
17,995
10,268
6,065
4,553
281,468
163,311
118,002
155
281,468
207
372
2,902
600
1,591
1,399
139
(695)
3,689
372
(3,836)
(6,291)
(2,110)
726
1,152
2,503
6,065
1,723
10,508
5,479
5,029
–
10,508
At the end of 2022, the global pipeline
totalled 281,468 rooms (1,859 hotels), a
3.9% increase of 10,508 rooms (62 hotels),
as signings outpaced openings and attrition.
a Includes one Holiday Inn Club Vacations property
(152 Rooms) (2021: nil Holiday Inn Club Vacations
properties (nil rooms)).
b Iberostar Hotels & Resorts joined IHG’s system
as part of a long-term commercial agreement.
The IHG pipeline represents hotels where
a contract has been signed and the
appropriate fees paid.
Group signings increased from 437 hotels
in 2021 to 467 hotels in 2022, and rooms
increased from 68,870 in 2021 to 80,338
rooms in 2022, growth of 16.7%. Signings in
2022 included 159 hotels (23,056 rooms) for
the Holiday Inn Brand Family and 48 hotels
(18,467 rooms) for Iberostar Beachfront
Resorts. Conversions represented around
a quarter of signings in 2022 (excluding
Iberostar Beachfront Resorts).
c Includes six voco pipeline hotels and five
Vignette Collection pipeline hotels.
Total number of hotels in the pipeline
1,859
Total number of rooms in the pipeline
281,468
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Americas
Elie Maalouf Chief Executive Officer, Americas
The strength of our brands and enterprise
platform was on full display as guests trusted us
with their stays and owners with their investment.
From strong performances of our Essentials
and Suites brands, to the addition of exceptional
Luxury & Lifestyle properties and brand debuts
in key markets, we continue to accelerate
our growth.
Americas revenue 2022
($1,005m)
Comparable RevPARa movement
on previous year
(12 months ended 31 December 2022)
55%
Americas number of rooms
(515,496)
Fee business
InterContinental
Kimpton
Hotel Indigo
Crowne Plaza
EVEN Hotels
Holiday Inn
Holiday Inn Express
avid hotels
Staybridge Suites
Candlewood Suites
All brands
Owned, leased and managed lease
All brands
57%
85.7%
58.7%
36.1%
51.4%
68.6%
32.3%
21.2%
30.2%
18.7%
11.6%
28.3%
63.7%
voco and Holiday Inn Chicago Downtown
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Industry performance in 2022
Industry RevPAR in the Americas increased
by 35.5% compared to 2021 (increased
by 7.7% against 2019), driven by continued
recovery in Canada and Mexico and the
relative strength of the luxury and upper
upscale markets in the US. RevPAR in most
markets across the Americas has recovered
to 2019 levels, driven by improving average
daily rates (up 19.3% over 2021), which
exceeded pre-pandemic levels by more
than 13%. Occupancy levels continued to
recover in 2022 (increasing 7.3%pts from 2021)
but remained behind pre-pandemic levels.
Overall demand for hotel rooms increased
by 14.3% and supply increased by 0.7%.
The US lodging industry reported the
highest-ever RevPAR and average daily rate
in 2022, with RevPAR increasing by 31.4%
(increased by 7.7% against 2019) and average
daily rate increasing by 19.1% compared to
2021. Room demand increased by 11.0% in
2022 while supply grew 0.6%, suppressed
due to supply-side construction delays.
RevPAR in the US upper midscale chain
scale, where the Holiday Inn and Holiday Inn
Express brands operate, increased by 22.3%.
Industry RevPAR increased by 87.7% in
Canada and 61.3% in Mexico, driven by both
occupancy and average daily rate increases.
IHG’s regional performance in 2022
IHG’s comparable RevPARa in the Americas
increased by 28.5% compared to 2021
(increased by 3.3% against 2019), driven
by a 7.0%pts increase in occupancy coupled
with a 15% increase in average daily rate.
The region is predominantly represented
by the US, where comparable RevPARa
increased by 24.5% compared to 2021
(increased by 3.5% against 2019), and where
we are most represented by our upper
midscale brands Holiday Inn and Holiday
Inn Express. US RevPARa for the Holiday Inn
brand increased by 25.4% while the Holiday
Inn Express brand increased by 18.6%.
RevPARa in Canada increased by 86.6%,
while Mexico increased by 46.9%.
a Comparable RevPAR and occupancy include the impact
of hotels temporarily closed as a result of Covid-19.
Performance
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Strategic Report
Performance continued
Americas continued
Americas results
2022
$m
879
126
1,005
741
20
761
(46)
715
2021
$m
2022 vs 2021
% change
2020
$m
2021 vs 2020
% change
12 months ended 31 December
691
83
774
568
(9)
559
(22)
537
27.2
51.8
29.8
30.5
NMc
36.1
109.1
33.1
457
55
512
323
(27)
296
(118)
178
51.2
50.9
51.2
75.9
(66.7)
88.9
(81.4)
201.7
Owned, leased and managed lease
revenue increased by $43m to $126m, with
comparable RevPARb up 64% vs 2021 leading
to an owned, leased and managed leased
operating profit of $20m compared to
a $9m loss in the prior year.
Excluding the results of three owned EVEN
hotels which were disposed and retained
under franchise contracts in November 2021,
revenue increased by $54m and operating
profit improved by $26m.
For discussion of 2021 results, and the
changes compared to 2020, refer to
the 2021 Annual Report and Form 20-F.
www.ihgplc.com/investors under
Annual Report
a Definitions for Non-GAAP revenue and operating
profit measures can be found on pages 85 to 88.
Reconciliations of these measures to the most directly
comparable line items within the Group Financial
Statements can be found on pages 226 to 232.
b Comparable RevPAR and occupancy include the impact
of hotels temporarily closed as a result of Covid-19.
c Percentage change considered not meaningful, such as
where a positive balance in the latest period is comparable
to a negative or zero balance in the prior period.
Americas comparable RevPARb grew 58% in
the first quarter, 37% in the second quarter,
17% in the third quarter, 17% in the fourth
quarter and 28% in the full year, all compared
to 2021. Compared to 2019, RevPARb
declined 8% in the first quarter, then grew
4% in the second quarter, 7% in the third
quarter, 9% in the fourth quarter and 3%
in the full year.
Revenue from the reportable segmenta
increased by $231m (30%) to $1,005m.
Operating profit increased by $178m to
$715m, driven by the increase in revenue,
partially offset by an increase in exceptional
items of $24m. Operating profit from the
reportable segmenta increased by $202m
(36%) to $761m.
Revenue and operating profit from the
reportable segmenta are further analysed
by fee business and owned, leased and
managed lease hotels.
Fee business revenuea increased by $188m
(27%) to $879m. Fee business operating
profita increased by $173m (31%) to $741m,
driven by the improvement in trading.
Together with the prior delivery of
sustainable fee business cost savings, fee
margina increased to 84.3%, compared to
82.2% in 2021. There were $18m of incentive
management fees earned (2021: $8m).
There was also $2m of support received in
the form of payroll tax credits which relate
to the Group’s corporate office presence
in certain locations (down from $11m benefit
in 2021) and a one-time payroll tax credit of
$2m related to Covid-19.
Revenue from the reportable segmenta
Fee business
Owned, leased and managed lease
Total
Operating profit from the reportable segmenta
Fee business
Owned, leased and managed lease
Operating exceptional items
Operating profit
Review of the year ended
31 December 2022
With 4,356 hotels (515,496 rooms), the
Americas represents 57% of the Group’s
room count. The key profit-generating region
is the US, and the Group is also represented
in Latin America, Canada, Mexico and the
Caribbean. 93% of rooms in the region
are operated under the franchise business
model, primarily under our brands in the
upper midscale segment (including the
Holiday Inn Brand Family). In the upscale
market segment, Crowne Plaza is
predominantly franchised whereas, in the
luxury market segment, InterContinental
branded hotels are operated under both
franchise and management agreements,
while Kimpton is predominantly managed.
15 of the Group’s 18 hotel brands are
represented in the Americas.
Trading in January was challenging given
the initial impacts on travel volumes as a
result of the Omicron variant of Covid-19;
from April onwards RevPARb was ahead of
2019 levels with sequential improvements
in each quarter.
Strong US RevPARb in the second half of
the year was supported by leisure demand,
led by the US franchised estate, which
continued into the final quarter of the year.
Business demand strengthened as the year
went on with more corporate bookings,
group activity and events returning.
In Q4, average daily rate was 12% higher
than 2019 levels, with occupancy just
1.5%pts lower. Across our US franchised
estate, which is weighted to domestic
demand in upper midscale hotels, Q4
RevPARb increased by 9% vs 2019. The US
managed estate, weighted to upscale and
luxury hotels in urban locations, increased
by 1% vs 2019.
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Americas hotel and room count
At 31 December
Analysed by brand
Six Senses
InterContinental
Kimpton
Hotel Indigo
voco
Crowne Plaza
EVEN Hotels
Holiday Inna
Holiday Inn Express
avid hotels
Atwell Suites
Staybridge Suites
Candlewood Suites
Iberostar Beachfront Resortsb
Otherc
Total
Analysed by ownership type
Franchised
Managed
Owned, leased and managed lease
Total
Hotels
Change over
2021
(1)
(1)
(2)
7
3
(2)
–
8
36
11
2
–
7
23
(3)
88
98
(10)
–
88
2022
–
42
62
73
8
110
19
724
2,472
59
2
296
368
23
98
4,356
4,185
168
3
4,356
2022
–
15,541
10,604
9,747
923
28,334
2,743
122,189
225,084
5,353
186
31,029
32,753
9,027
21,983
515,496
478,448
35,721
1,327
515,496
a Includes 28 Holiday Inn Club Vacations properties (8,822 rooms) (2021: 28 Holiday Inn Club Vacations properties (8,679 rooms)).
b Iberostar Hotels & Resorts joined IHG’s system as part of a long-term commercial agreement.
c Includes four open hotels that will be re-branded to voco.
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
Total number of hotels
Rooms
Change over
2021
4,356
(20)
(110)
(404)
1,002
454
404
–
1,339
3,357
1,073
186
(68)
728
9,027
(561)
16,407
18,191
(1,784)
–
16,407
Total number of rooms
515,496
Gross system size growth was 4.1% year-on-
year. We opened 20.6k rooms (125 hotels)
during the year, including 62 hotels across
the Holiday Inn Brand Family and 23 under
the Iberostar Beachfront Resorts brand.
There were 11 avid hotels opened, including
the first in Canada, nine Candlewood Suites
and eight Hotel Indigo properties. The first
two Atwell Suites properties opened in
Miami and Denver.
There were 4.2k rooms (37 hotels) removed
in the year; the removal rate of 0.8% was
lower than the historical average, with fewer
removals in 2022 including the effect of the
2021 Holiday Inn and Crowne Plaza review.
Net system size grew 3.3% year-on-year.
Excluding the Iberostar Beachfront Resorts
properties, net growth would have been 1.5%.
Americas pipeline
At 31 December
Analysed by brand
Six Senses
InterContinental
Vignette Collection
Kimpton
Hotel Indigo
voco
Crowne Plaza
EVEN Hotels
Holiday Inna
Holiday Inn Express
avid hotels
Atwell Suites
Staybridge Suites
Candlewood Suites
Iberostar Beachfront Resortsb
Otherc
Total
Analysed by ownership type
Franchised
Managed
Total
Hotels
Change over
2021
–
1
2
5
(3)
(1)
(1)
–
(8)
2
(19)
7
5
31
5
2
28
27
1
28
2022
6
10
2
24
26
4
7
10
66
340
145
30
142
124
5
13
954
916
38
954
2022
323
2,403
175
4,583
3,647
747
1,318
1,171
8,122
32,892
12,385
3,001
14,923
10,268
2,391
1,970
100,319
94,258
6,061
100,319
Total number of hotels in the pipeline
Rooms
Change over
2021
954
(148)
151
175
1,152
(423)
(298)
(325)
5
(1,346)
191
(2,110)
726
873
2,503
2,391
199
3,716
Total number of rooms in the pipeline
100,319
There were 32.5k rooms (231 hotels) signed
during the year, including 15.6k rooms
(73 hotels) during Q4, of which 11.4k rooms
(28 hotels) were Iberostar Beachfront Resorts
signings. During the year, there were 73 hotel
signings across the Holiday Inn Brand Family
and 69 across Staybridge Suites and
Candlewood Suites, along with 14 further
avid hotels and 11 further Atwell Suites.
Other notable signings included a strong
year for Kimpton with six signings and the
first two Vignette Collection properties in
the region.
3,526
190
3,716
The pipeline stands at 100.3k rooms
(954 hotels), which represents around 20%
of the current system size in the region.
a Includes one Holiday Inn Club Vacations properties (152 rooms) (2021: nil Holiday Inn Club Vacations properties (nil rooms)).
b Iberostar Hotels & Resorts joined IHG’s system as part of a long-term commercial agreement.
c Includes one pipeline hotel that will be re-branded to voco.
Performance
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Strategic Report
Performance
continued
EMEAA
Kenneth Macpherson Chief Executive Officer, EMEAA
2022 was a year of significant progress. Although
challenges remained, our focus continued to be
supporting our colleagues, guests and owners,
while strengthening our operating model in priority
markets to drive long term sustainable growth.
We enhanced our Luxury & Lifestyle expansion
with the success of Vignette Collection, as we
continued to scale our brands across all segments,
and elevate the quality of our estate.
EMEAA revenue 2022
($552m)
Comparable RevPARa movement
on previous year
(12 months ended 31 December 2022)
30%
EMEAA number of rooms
(229,664)
25%
Fee business
Six Senses
Regent
InterContinental
Kimpton
Hotel Indigo
voco
Crowne Plaza
Holiday Inn
Holiday Inn Express
Staybridge Suites
All brands
Owned, leased and managed lease
All brands
Kimpton St Honoré, Paris
124.3%
67.5%
99.1%
249.5%
122.8%
52.0%
86.5%
90.3%
90.3%
44.2%
92.2%
142.3%
Industry performance in 2022
Industry RevPAR in EMEAA increased by
76.1% compared to 2021 (declined by 11.2%
against 2019), driven by an occupancy
increase of 20.5%pts and a 14.8% increase
in average daily rate. In Europe, RevPAR
increased by 86.6% compared to 2021
(declined by 4.6% against 2019), driven
by both occupancy and average daily rate.
In the UK, industry RevPAR increased by
71.5% compared to 2021 (increased by 2.2%
against 2019). UK room demand increased
by 53.6% with supply growth at 1.3%.
In Germany, RevPAR increased by 97.7%
compared to 2021 (declined by 22.4%
against 2019). France saw RevPAR increase
by 92.8%, driven by demand growth of 61.2%.
RevPAR increased by 42.1% in the Middle
East, driven by both occupancy and average
daily rates.
Elsewhere in EMEAA, RevPAR in Australia
increased 58.4%, Japan increased by 48.9%
and Thailand increased by 219.9%, driven
by demand growth following the easing
of travel restrictions.
IHG’s regional performance in 2022
EMEAA comparable RevPARa increased by
93.2% compared to 2021 (declined 7.5%
against 2019), driven by a 21.2%pts increase
in occupancy coupled with a 28.2% increase
in average daily rate. In the UK, where IHG
has the largest regional presence, RevPARa
increased by 67.7% compared to 2021
(increased by 1.4% against 2019), led by the
Provinces, which benefitted from domestic
leisure travel. Germany saw a RevPARa
increase of 170.3% and France increased
by 123.1%.
RevPARa in the Middle East increased by
52.3%, with the fourth quarter up 37.8%
reflecting demand related to the FIFA World
Cup. India RevPARa increased by 95.7%.
Elsewhere in EMEAA, RevPARa increased in
Australia by 95.0%, and in Japan by 78.0%
as international travel restrictions were lifted
in the latter part of the year. Lifting of travel
restrictions also saw leisure demand return
to our resort destinations in Thailand
and Vietnam.
a Comparable RevPAR and occupancy include the impact
of hotels temporarily closed as a result of Covid-19.
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i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
EMEAA results
Revenue from the reportable segmenta
Fee business
Owned, leased and managed lease
Total
Operating profit/(loss) from the reportable segmenta
Fee business
Owned, leased and managed lease
Operating exceptional items
Operating (loss)/profit
2022
$m
284
268
552
153
(1)
152
(49)
103
2021
$m
2022 vs 2021
% change
2020
$m
2021 vs 2020
% change
12 months ended 31 December
149
154
303
32
(27)
5
(7)
(2)
90.6
74.0
82.2
378.1
(96.3)
NMc
600.0
NMc
107
114
221
(18)
(32)
(50)
(128)
(178)
39.3
35.1
37.1
NMc
(15.6)
NMc
(94.5)
(98.9)
Review of the year ended
31 December 2022
Comprising 1,169 hotels (229,664 rooms)
at the end of 2022, EMEAA represented 25%
of the Group’s room count. Revenues are
primarily generated from hotels in the UK
and gateway cities in continental Europe, the
Middle East and Asia. The largest proportion
of rooms in the UK and continental Europe
are operated under the franchise business
model, primarily under our upper midscale
brands (Holiday Inn and Holiday Inn Express).
In the upscale market segment, Crowne
Plaza is evenly proportioned between the
franchised and managed operating models,
whereas in the luxury market segment,
the majority of InterContinental branded
hotels are operated under management
agreements. The majority of hotels in
markets outside Europe are operated under
the managed business model.
The industry faced some renewed challenges
to travel volumes at the start of the year from
the Omicron variant of Covid-19.
However, from February and over
subsequent months, easing of previous
restrictions on international travel contributed
to strong sequential improvements in
RevPARb. Leisure stays and transient business
were the strongest categories, with corporate
bookings and group activity picking up in
their pace of recovery as the year went on.
By the end of the year, restrictions were
no longer in place in almost all markets.
Continental Europe continued to benefit
from domestic leisure demand. The UK,
which saw one of the earlier easings of
restrictions, saw RevPARb up 1% for the 2022
year as a whole vs 2019, improving to 12% in
Q4. Elsewhere, international demand for the
FIFA World Cup helped to drive 25% growth
in the Middle East in Q4 vs 2019.
EMEAA comparable RevPARb grew 122% in
the first quarter, 147% in the second quarter,
76% in the third quarter, 65% in the fourth
quarter and 93% in the full year, all
compared to 2021. Compared to 2019,
RevPARb declined 33% in the first quarter,
10% in the second quarter, was in line in the
third quarter, then grew 9% in the fourth
quarter, declining 8% in the full year.
Owned, leased and managed lease revenue
sharply increased by $114m to $268m,
with comparable RevPARb up 142% vs 2021
leading to an owned, leased and managed
lease operating loss that decreased to
just $1m compared to a $27m loss in 2021.
The lifting of travel restrictions, predominantly
in the UK, eased the trading challenges on
this largely urban-centred portfolio.
Excluding the results of three UK portfolio
hotels and one InterContinental hotel, which
were exited in 2022, revenue increased by
$120m and the operating loss improved
by $19m.
For discussion of 2021 results, and the
changes compared to 2020, refer to
the 2021 Annual Report and Form 20-F.
www.ihgplc.com/investors under
Annual Report
a Definitions for non-GAAP measures can be found in
the Use of key performance measures and non-GAAP
measures section along with reconciliations of these
measures to the most directly comparable line items
within the Group Financial Statements which can be
found on pages 226 to 232.
b Comparable RevPAR and occupancy include the impact
of hotels temporarily closed as a result of Covid-19.
c Percentage change considered not meaningful, such
as where a positive balance in the latest period is
comparable to a negative or zero balance in the
prior period.
Revenue from the reportable segmenta
increased by $249m (82%) to $552m.
Operating profit increased by $105m to
a $103m profit, driven by the increase
in revenue, partially offset by an increase in
exceptional items of $42m. Operating profit
from the reportable segmenta increased
by $147m to a $152m profit. Incentive
management fees earned improved
significantly to $69m (2021: $29m).
Revenue and operating profit from the
reportable segmenta also included the benefit
of a $7m individually significant liquidated
damages settlement in the first half of
the year.
Revenue and operating profit from the
reportable segmenta are further analysed
by fee business and owned, leased and
managed lease hotels.
Fee business revenuea increased by $135m
(91%) to $284m. Fee business operating
profita increased to $153m from $32m
in the prior year, driven by the significant
improvement in trading. Together with the
prior delivery of sustainable fee business
cost savings, 2022 fee margina recovered
strongly to 52.7%, compared to 21.5%
in 2021.
Performance
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Strategic Report
Performance continued
EMEAA continued
EMEAA hotel and room count
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Vignette Collection
Kimpton
Hotel Indigo
voco
Crowne Plaza
Holiday Inn
Holiday Inn Express
Staybridge Suites
Iberostar Beachfront Resortsa
Otherb
Total
Analysed by ownership type
Franchised
Managed
Owned, leased and managed lease
Total
Hotels
Change over
2021
(1)
1
3
2
2
3
8
–
(6)
8
(1)
10
3
32
35
–
(3)
32
2022
18
4
111
3
12
51
29
182
374
341
18
10
16
1,169
802
354
13
1,169
2022
1,236
1,113
32,861
579
2,397
5,733
7,926
43,942
67,867
49,875
2,932
3,375
9,828
229,664
131,916
94,856
2,892
229,664
a Iberostar Hotels & Resorts joined IHG’s system as part of a long-term commercial agreement.
b Includes three open hotels that will be re-branded to voco and two open hotels that will be re-branded
to Vignette Collection.
EMEAA pipeline
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Vignette Collection
Kimpton
Hotel Indigo
voco
Crowne Plaza
Holiday Inn
Holiday Inn Express
Staybridge Suites
Iberostar Beachfront Resortsa
Otherb
Total
Analysed by ownership type
Franchised
Managed
Owned, leased and managed lease
Total
Hotels
Change over
2021
5
–
8
5
(1)
2
1
–
(14)
(11)
1
10
10
16
(11)
27
–
16
2022
28
6
51
5
8
46
32
40
84
88
20
10
16
434
164
269
1
434
2022
2,075
1,368
11,796
425
1,534
8,044
8,827
10,377
16,436
13,199
3,072
3,674
2,583
83,410
26,688
56,567
155
83,410
a Iberostar Hotels & Resorts joined IHG’s system as part of a long-term commercial agreement.
b Includes five voco pipeline hotels and five Vignette Collection pipeline hotels.
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Total number of hotels
Rooms
Change over
2021
1,169
(34)
342
300
433
251
550
2,044
(886)
(2,957)
1,327
(277)
3,375
996
5,464
6,209
(343)
(402)
5,464
Total number of rooms
229,664
Gross system size growth was 7.2%
year-on-year. We opened 16.2k rooms
(79 hotels) during the year. There were 32
openings across the Holiday Inn Brand Family.
Ten openings were added under the Iberostar
Beachfront Resorts brand. There were eight
voco properties in seven different countries
opened during 2022, including Doha West
Bay, Johannesburg and a flagship new-build
at Melbourne Central.
There were 10.7k rooms (47 hotels) removed
in the year, of which 6.5k (28 hotels) related
to ceasing operations in Russia. Net system
size grew 2.4% year-on-year; adjusting for
the removal of hotels in Russia, net system
size growth was 3.1% higher at 5.5%.
Excluding the Iberostar Beachfront Resorts
properties that were added to the system,
net growth would have been 3.9%.
Total number of hotels in the pipeline
Rooms
Change over
2021
434
355
27
2,276
425
(140)
1,040
74
(84)
(4,578)
(2,394)
279
3,674
1,524
2,478
(357)
2,835
–
2,478
Total number of rooms in the pipeline
83,410
There were 25.8k rooms (128 hotels) signed
during the year, including 15.2k rooms
(66 hotels) during Q4, of which 7.0k rooms
(20 hotels) were Iberostar Beachfront
Resorts signings. During the year, there were
33 signings across the Holiday Inn Brand
Family and a particularly strong year for the
InterContinental brand with 14 signings and
for Six Senses with six signings. A strong
year for conversions, which represented
around 40% of all signings (excluding
Iberostar Beachfront Resorts), included
16 voco and eight Vignette properties.
One of six multi-brand portfolio deals will
bring the Hotel Indigo, Crowne Plaza and
Holiday Inn Express brands to the UNESCO
World Heritage Site at Hoi An, Vietnam.
The pipeline stands at 83.4k rooms
(434 hotels), which represents 36% of the
current system size in the region.
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Greater China
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Industry performance in 2022
The industry performance across Greater
China fluctuated in 2022, impacted by
temporary localised lockdowns throughout
the year. Industry RevPAR in Greater China
declined by 17.7% compared to 2021
(decreased by 39.9% against 2019).
Supply grew by 3.5% and demand
decreased 7.0%.
RevPAR across all tiers declined compared
to 2021. Tier 1 cities saw a 21.3% decline
in RevPAR compared to 2021, as room
demand decreased by 11.9%. In Tier 2
cities, RevPAR decreased 11.8% compared
to 2021, driven by both occupancy and
average daily rate, while RevPAR declined
13.6% in Tier 3 cities. In Tier 4 cities, RevPAR
decreased by 15.6% compared to 2021,
driven by demand declining by 8.4%.
RevPAR in Hong Kong SAR increased by
41.9% driven by average daily rate, which
increased 34.9%. Macau SAR RevPAR
declined 32.6% against 2021, with demand
declining 11.3% due to its reliance on
Mainland China travel.
IHG’s regional performance in 2022
IHG’s regional comparable RevPARa in
Greater China declined by 13.5% compared
to 2021 (declined by 38.1% against 2019),
driven by a 5.5%pts decrease in occupancy
and a 2.5% decrease in average daily rate
as the region remained impacted by
localised travel restrictions.
In Mainland China, RevPARa decreased
by 17.4%, with the greatest decline in Tier 1
cities, down by 23.6%, while Tier 2-4 cities
declined by 14.8%.
RevPARa in Hong Kong SAR increased by
64.9% while RevPARa in Macau SAR
decreased by 12.7%.
a Comparable RevPAR and occupancy include the
impact of hotels temporarily closed as a result
of Covid-19.
Jolyon Bulley Chief Executive Officer, Greater China
With further intermittent lockdowns and travel
restrictions in 2022, we remained commercially
agile and focused on the safety of our guests
and colleagues and supporting our owners during
this challenging year. We continue to strengthen
our brand proposition for guests and invest
to prepare for the post‑pandemic recovery.
Greater China revenue 2022
($87m)
Comparable RevPARa movement
on previous year
(12 months ended 31 December 2022)
5%
Fee business
Regent
InterContinental
Hotel Indigo
HUALUXE
Crowne Plaza
Holiday Inn
Holiday Inn Express
Greater China number of rooms
(166,467)
All brands
18%
(4.6%)
(22.4%)
(6.6%)
(8.5%)
(11.0%)
(8.7%)
(11.9%)
(13.5%)
HUALUXE Ningbo Harbor City, China
Performance
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Strategic Report
Performance continued
Greater China continued
Greater China results
2022
$m
2021
$m
2022 vs 2021
% change
2020
$m
2021 vs 2020
% change
12 months ended 31 December
87
87
23
–
23
116
116
58
–
58
(25.0)
(25.0)
(60.3)
–
(60.3)
77
77
35
(5)
30
50.6
50.6
65.7
–
93.3
Greater China comparable RevPARb declined
7% in the first quarter, 40% in the second
quarter, then grew 12% in the third quarter
before declining 13% in the fourth quarter
and 14% in the full year, all compared to
2021. Compared to 2019, RevPARb declined
42% in the first quarter, 49% in the second
quarter, 20% in the third quarter, 42% in the
fourth quarter and 38% in the full year.
Revenue from the reportable segmenta
in 2022 decreased by $29m (25%) to $87m.
Driven by the reduction in revenue, operating
profit decreased by $35m (60%) to $23m.
The impact on trading of the Covid-19
related restrictions at our managed hotels
led to incentive management fees reducing
to $16m from $25m in 2021. 2022 fee margina
reduced to 26.4%, compared to 47.3%
in 2021.
For discussion of 2021 results, and the
changes compared to 2020, refer to
the 2021 Annual Report and Form 20-F.
www.ihgplc.com/investors under
Annual Report
a Definitions for Non-GAAP revenue and operating
profit measures can be found on pages 85 to 88.
Reconciliations of these measures to the most directly
comparable line items within the Group Financial
Statements can be found on pages 226 to 232.
b Comparable RevPAR and occupancy include the impact
of hotels temporarily closed as a result of Covid-19.
Revenue from the reportable segmenta
Fee business
Total
Operating profit from the reportable segmenta
Fee business
Operating exceptional items
Operating profit
Review of the year ended
31 December 2022
Comprising 639 hotels (166,467 rooms)
at 31 December 2022, Greater China
represented approximately 18% of the
Group’s room count. The majority of rooms
in Greater China operate under the managed
business model, although the franchise
segment continues to grow, representing
approximately one-third.
Localised travel restrictions were
re-implemented numerous times over the
course of 2022 in response to increased
Covid-19 cases, which saw the industry
substantially impacted. At times during the
year, around one-third of IHG’s estate was
repurposed for quarantine hotels or
temporarily closed.
The monthly RevPARb performance
bottomed in the March to May period when
it was down by more than 50% vs 2019 levels;
by July and August there were marked
improvements with RevPARb vs 2019 down
15% and 18% respectively in those months;
after more restrictions were re-introduced
in September, Q4 saw RevPARb revert back
to 53% below 2019.
For the year as a whole, Tier 1 cities were the
most severely impacted by the restrictions
due to the exposure to international and
corporate travel, declining 53% in 2022
vs 2019. Tier 2-4 cities, which are more
weighted to domestic and leisure demand,
performed better with a decline of 30%;
these cities were still significantly impacted
given the larger Tier 1 cities represent much
of the source markets for travellers into these
locations. All prior restrictions have now
largely been removed, with a marked
improvement for the industry expected
in 2023.
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a
t
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R
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p
o
r
t
Greater China hotel and room count
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Kimpton
Hotel Indigo
voco
HUALUXE
Crowne Plaza
EVEN Hotels
Holiday Inn
Holiday Inn Express
Othera
Total
Analysed by ownership type
Franchised
Managed
Total
Hotels
Change over
2021
–
1
1
1
3
3
5
1
1
6
31
–
53
36
17
53
2022
1
5
54
2
19
8
21
111
3
128
278
9
639
215
424
639
2022
130
1,915
21,404
307
2,974
1,575
5,983
38,143
437
34,325
51,943
7,331
166,467
46,067
120,400
166,467
a Includes one open hotel that will be re-branded to voco.
Total number of hotels
Rooms
Change over
2021
639
8
496
214
178
559
481
1,380
(277)
186
1,315
4,889
–
9,429
5,916
3,513
9,429
Total number of rooms
166,467
Gross system size growth was 8.1% year-on-
year, with the Covid-19 related restrictions
in 2022 also impacting the ability for new
hotels to open. There were 12.7k rooms
(65 hotels) added to our system during the
year, a reduction from 18.1k rooms (88 hotels)
achieved in 2021. Openings in 2022 included
35 Holiday Inn Express and nine Holiday Inn
properties. Other notable openings were
five HUALUXE properties including Shanghai
Changfeng Park and Qingdao Licang, three
voco properties as the brand builds its
presence and the reopening of the flagship
Regent Hong Kong.
There were 3.2k rooms (12 hotels) removed
in the year, representing a removal rate of
2.1%. Net system size growth was 6.0%
year-on-year.
Greater China pipeline
Total number of hotels in the pipeline
At 31 December
Analysed by brand
Six Senses
Regent
InterContinental
Kimpton
Hotel Indigo
voco
HUALUXE
Crowne Plaza
EVEN Hotels
Holiday Inn
Holiday Inn Express
Other
Total
Analysed by ownership type
Franchised
Managed
Total
Hotels
Change over
2021
–
2
2
2
6
1
(2)
16
2
8
(19)
–
18
7
11
18
2022
4
4
29
9
47
3
21
64
21
80
189
–
471
233
238
471
2022
233
942
8,382
2,326
8,160
655
5,350
17,255
4,108
19,684
30,644
–
97,739
42,365
55,374
97,739
Rooms
Change over
2021
471
–
345
475
579
782
363
(695)
4,098
367
2,088
(4,088)
–
4,314
2,310
2,004
4,314
Total number of rooms in the pipeline
97,739
There were 22.0k rooms (108 hotels) signed
during the year, (including 5.5k rooms
(29 hotels) during Q4). Signings in 2022
included 34 for Holiday Inn Express and 19
for Holiday Inn. This was a record-breaking
year for Crowne Plaza, with a total of 23
signings growing its pipeline to 64 hotels.
Other notable signings included those
across our Luxury & Lifestyle brands, with
two Regent properties (Shanghai On The
Bund and Shenzhen Bay), three Kimpton and
four InterContinental properties added to
the pipeline, along with a further 11 for Hotel
Indigo; Luxury & Lifestyle now represents
over 20% of the pipeline in the region.
The pipeline in total stands at 97.7k rooms
(471 hotels), which represents 59% of the
current system size in the region.
Performance
IHG | Annual Report and Form 20-F 2022
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Strategic Report
Performance continued
Central
Central results
Revenue
Gross costs
Operating exceptional items
Operating loss
2022
$m
199
(307)
(108)
–
(108)
2021
$m
197
(285)
(88)
–
(88)
2022 vs 2021
% change
1.0
7.7
22.7
–
22.7
12 months ended 31 December
2020
$m
182
(244)
(62)
(19)
(81)
2021 vs 2020
% change
8.2
16.8
41.9
–
8.6
Review of the year ended
31 December 2022
Central revenue, which is mainly comprised
of technology fee income, increased by
$2m (1.0%) to $199m. Central revenue
was impacted by trading in Greater China
resulting in lower technology fees.
Gross costs increased by $22m (7.7%)
year-on-year, driven by investment spend
to support growth and enhancing the
capabilities of our core HR systems,
in addition to underlying inflationary pressures
on costs. Investment also included $5m in
costs related to Iberostar Beachfront Resorts,
with a further net impact on operating profit
from reportable segments expected to be
$10-15m in 2023. Increases in gross costs
were partially offset by favourable
currency movements.
The resulting $108m operating loss was
an increase of $20m year-on-year.
Holiday Inn Beijing Airport Zone
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Key performance measures and non-GAAP measures
Key performance measures and non-GAAP measures used by management
The Annual Report and Form 20-F presents certain financial measures when discussing the Group’s performance which are not measures
of financial performance or liquidity under International Financial Reporting Standards (IFRS). In management’s view, these measures
provide investors and other stakeholders with an enhanced understanding of IHG’s operating performance, profitability, financial strength
and funding requirements. These measures do not have standardised meanings under IFRS, and companies do not necessarily calculate
these in the same way. As these measures exclude certain items (for example, impairment and the costs of individually significant legal cases
or commercial disputes), they may be materially different to the measures prescribed by IFRS and may result in a more favourable view of
performance. Accordingly, they should be viewed as complementary to, and not as a substitute for, the measures prescribed by IFRS and
as included in the Group Financial Statements (see pages 140 to 216).
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Linkage of performance measures to Directors’ remuneration and KPIs
A Annual Performance Plan
LT Long Term Incentive Plan
KPI Key Performance Indicators
See pages 114 to 136 for more
information on Directors’
remuneration and pages 62 to 65
for more information on KPIs.
Measure
Commentary
Global revenue per available
room (RevPAR) growth
RevPAR is the primary metric used by management to track hotel performance across regions and brands.
RevPAR is also a commonly used performance measure in the hotel industry.
KPI
RevPAR, average daily rate and
occupancy statistics are disclosed
on pages 232 and 234.
Total gross revenue from hotels
in IHG’s System
A
LT
KPI
Owned, leased and managed lease
revenue as recorded in the Group
Financial Statements is reconciled
to total gross revenue on page 72.
RevPAR comprises IHG’s System (see Glossary, page 265) rooms revenue divided by the number of room nights
available and can be derived from occupancy rate multiplied by average daily rate (ADR). ADR is rooms revenue
divided by the number of room nights sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis, comprising groupings of hotels
that have traded in all months in both the current and comparable year. The principal exclusions in deriving this
measure are new hotels (including those acquired), hotels closed for major refurbishment and hotels sold in either
of the comparable years. These measures include the impact of hotels temporarily closed as a result of Covid-19.
RevPAR and ADR are quoted at a constant US$ conversion rate, in order to allow a better understanding of the
comparable year-on-year trading performance excluding distortions created by fluctuations in exchange rates.
Total gross revenue is revenue not wholly attributable to IHG; however, management believes this measure is
meaningful to investors and other stakeholders as it provides a measure of System performance, giving an indication
of the strength of IHG’s brands and the combined impact of IHG’s growth strategy and RevPAR performance.
Total gross revenue refers to revenue which IHG has a role in driving and from which IHG derives an income stream.
IHG’s business model is described on pages 10 to 13. Total gross revenue comprises:
• total rooms revenue from franchised hotels;
• total hotel revenue from managed hotels including food and beverage, meetings and other revenues and reflects
the value IHG drives to managed hotel owners by optimising the performance of their hotels; and
• total hotel revenue from owned, leased and managed lease hotels.
Other than total hotel revenue from owned, leased and managed lease hotels, total gross revenue is not revenue
attributable to IHG as managed and franchised hotels are owned by third parties.
Total gross revenue is used to describe this measure as it aligns with terms used in the Group’s management and
franchise agreements and therefore is well understood by owners and other stakeholders.
Revenue and operating
profit measures
The reconciliation of the most
directly comparable line item within
the Group Financial Statements
(i.e. total revenue and operating
profit, accordingly) to the non-IFRS
revenue and operating profit
measures is included on
pages 226 to 232.
Revenue and operating profit from (1) fee business and (2) owned, leased and managed lease hotels, are described
as ‘revenue from reportable segments’ and ‘operating profit from reportable segments’, respectively, within note 2
to the Group Financial Statements. These measures are presented for each of the Group’s regions.
Management believes revenue and operating profit from reportable segments are meaningful to investors and other
stakeholders as they exclude the following elements and reflect how management monitors the business:
• System Fund – the Fund is not managed to generate a surplus or deficit for IHG over the longer term, but is managed
for the benefit of the hotels within the IHG system. As described within the Group’s accounting policies (page 158),
the System Fund is operated to collect and administer cash assessments from hotel owners for specific purposes
such as use in marketing, the Guest Reservation System and hotel loyalty programme.
Performance
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Strategic Report
Performance continued
Key performance measures continued
Measure
Commentary
Revenue and operating
profit measures continued
Underlying revenue and
underlying operating profit
• Revenues related to the reimbursement of costs – as described within the Group’s accounting policies (page 160),
there is a cost equal to these revenues so there is no profit impact. Cost reimbursements are not applicable to all
hotels, and growth in these revenues is not reflective of growth in the performance of the Group. As such,
management does not include these revenues in their analysis of results.
• Exceptional items – these are identified by virtue of either their size, nature or incidence with consideration given
to consistency of treatment with prior years and between gains and losses. Exceptional items include, but are not
restricted to, gains and losses on the disposal of assets, impairment charges and reversals, the costs of individually
significant legal cases or commercial disputes and reorganisation costs. As each item is different in nature and scope,
there will be little continuity in the detailed composition and size of the reported amounts which affect performance
in successive periods. Separate disclosure of these amounts facilitates the understanding of performance including
and excluding such items. The Group’s accounting policy for exceptional items and further detail of those items
presented as such are included in the Group Financial Statements (see pages 161 and 174 to 178).
In further discussing the Group’s performance in respect of revenue and operating profit, additional non-IFRS
measures are used and explained further below:
• Underlying revenue;
• Underlying operating profit;
• Underlying fee revenue; and
• Fee margin.
Operating profit measures are, by their nature, before interest and tax. The Group’s reported operating profit
additionally excludes fair value changes in contingent purchase consideration, which relates to financing of acquisitions.
Management believes such measures are useful for investors and other stakeholders when comparing performance
across different companies as interest and tax can vary widely across different industries or among companies within
the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels
and credit ratings. In addition, the tax positions of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate.
Although management believes these measures are useful to investors and other stakeholders in assessing the
Group’s ongoing financial performance and provide improved comparability between periods, there are limitations
in their use as compared to measures of financial performance under IFRS. As such, they should not be considered in
isolation or viewed as a substitute for IFRS measures. In addition, these measures may not necessarily be comparable
to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation.
These measures adjust revenue from reportable segments and operating profit from reportable segments, respectively,
to exclude revenue and operating profit generated by owned, leased and managed lease hotels which have been
disposed, and significant liquidated damages, which are not comparable year-on-year and are not indicative of the
Group’s ongoing profitability. The revenue and operating profit of current year acquisitions are also excluded as these
obscure underlying business results and trends when comparing to the prior year. In addition, in order to remove the
impact of fluctuations in foreign exchange, which would distort the comparability of the Group’s operating
performance, prior year measures are restated at constant currency using current year exchange rates.
Management believes these are meaningful to investors and other stakeholders to better understand comparable
year-on-year trading and enable assessment of the underlying trends in the Group’s financial performance.
Underlying fee revenue growth
Underlying fee revenue is used to calculate underlying fee revenue growth. Underlying fee revenue is calculated
on the same basis as underlying revenue as described above but for the fee business only.
KPI
Fee margin
A
KPI
Management believes underlying fee revenue is meaningful to investors and other stakeholders as an indicator
of IHG’s ability to grow the core fee-based business, aligned to IHG’s asset-light strategy.
Fee margin is presented at actual exchange rates and is a measure of the profit arising from fee revenue. Fee margin
is calculated by dividing ‘fee operating profit’ by ‘fee revenue’. Fee revenue and fee operating profit are calculated
from revenue from reportable segments and operating profit from reportable segments, as defined above, adjusted
to exclude revenue and operating profit from the Group’s owned, leased and managed lease hotels and significant
liquidated damages.
In addition, fee margin is adjusted for the results of the Group’s captive insurance company, which is not part of the
Group’s main trading operations (see page 196 in the Group Financial Statements), and as such these amounts are
adjusted from the fee margin to better depict the profitability of the fee business.
Management believes fee margin is meaningful to investors and other stakeholders as an indicator of the sustainable
long-term growth in the profitability of IHG’s core fee-based business, as the scale of IHG’s operations increases with
growth in IHG’s system size.
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Measure
Commentary
Adjusted interest
Financial income and financial
expenses as recorded in the Group
Financial Statements is reconciled
to adjusted interest on page 231.
Tax excluding the impact of
foreign exchange gains/losses,
exceptional items and System Fund
A reconciliation of the tax charge
as recorded in the Group Financial
Statements to tax excluding the
impact of foreign exchange gains/
losses, exceptional items and System
Fund can be found in note 8 to the
Group Financial Statements on
page 179.
Adjusted interest is presented before exceptional items and excludes foreign exchange gains/losses primarily related
to the Group’s internal funding structure and the following items of interest which are recorded within the System Fund:
• Interest income is recorded in the System Fund on the outstanding cash balance relating to the IHG loyalty
programme. These interest payments are recognised as interest expense for IHG.
• Other components of System Fund interest income and expense, including capitalised interest, lease interest
expense and interest income on overdue receivables.
Given results related to the System Fund are excluded from adjusted measures used by management, these are
excluded from adjusted interest and adjusted earnings per ordinary share (see below).
The exclusion of foreign exchange gains/losses provides greater comparability with covenant interest as calculated
under the terms of the Group’s revolving credit facility.
Management believes adjusted interest is a meaningful measure for investors and other stakeholders as it provides
an indication of the comparable year-on-year expense associated with financing the business including the interest
on any balance held on behalf of the System Fund.
Foreign exchange gains/losses vary year-on-year depending on the movement in exchange rates and, as outlined
above, exceptional items also vary year-on-year. Both can impact the current year’s tax charge. The System Fund is
not managed to a profit or loss for IHG over the longer term and is, in general, not subject to tax.
Management believes removing these from both profit and tax provides a better view of the Group’s underlying tax
rate on ordinary operations and aids comparability year-on-year, thus providing a more meaningful understanding of
the Group’s ongoing tax charge. A reconciliation of the tax charge as recorded in the Group income statement, to tax
excluding the impact of foreign exchange gains/losses, exceptional items and System Fund, and the calculation of
the underlying tax rate can be found in note 8 to the Group Financial Statements.
Adjusted earnings per ordinary share
Profit available for equity holders is
reconciled to Adjusted earnings per
ordinary share on page 232.
Adjusted earnings per ordinary share adjusts the profit available for equity holders used in the calculation of basic
earnings per share to remove System Fund revenue and expenses, the items of interest related to the System Fund
and foreign exchange gains/losses as excluded in adjusted interest (above), change in fair value of contingent
purchase consideration, exceptional items, and the related tax impacts of such adjustments and exceptional tax.
Management believes that adjusted earnings per share is a meaningful measure for investors and other stakeholders
as it provides a more comparable earnings per share measure aligned with how management monitors the business.
Net debt
Net debt is included in note 22 to the
Group Financial Statements.
Net debt is used in the monitoring of the Group’s liquidity and capital structure and is used by management in the
calculation of the key ratios attached to the Group’s bank covenants and with the objective of maintaining an investment
grade credit rating. Net debt is used by investors and other stakeholders to evaluate the financial strength of the business.
Net debt comprises loans and other borrowings, lease liabilities, the exchange element of the fair value of derivatives
hedging debt values, less cash and cash equivalents. A summary of the composition of net debt is included in note 22
to the Group Financial Statements.
Adjusted EBITDA
Cash from operations as recorded
in the Group Financial Statements
is reconciled to adjusted EBITDA
on page 70.
One of the key measures used by the Group in monitoring its debt and capital structure is the net debt: adjusted
EBITDA ratio, which is managed with the objective of maintaining an investment grade credit rating. The Group has
a stated aim of maintaining this ratio at 2.5-3.0x. Adjusted EBITDA is defined as cash flow from operations, excluding
cash flows relating to exceptional items, cash flows arising from the System Fund result, other non-cash adjustments
to operating profit or loss, working capital and other adjustments, and contract acquisition costs (key money).
Adjusted EBITDA is useful to investors as an approximation of operational cash flow generation and is also relevant
to the Group’s banking covenants, which use Covenant EBITDA in calculating the leverage ratio. Details of covenant
levels and performance against these are provided in note 23 to the Group Financial Statements.
Performance
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Strategic Report
Performance continued
Key performance measures continued
Measure
Commentary
Gross capital expenditure,
net capital expenditure,
adjusted free cash flow
The reconciliation of the Group’s
statement of cash flows (i.e. net cash
from investing activities, net cash
from operating activities, accordingly)
to the non-IFRS capital expenditure
and cash flow measures is included
on pages 230 and 231.
These measures have limitations as they omit certain components of the overall cash flow statement. They are not
intended to represent IHG’s residual cash flow available for discretionary expenditures, nor do they reflect the Group’s
future capital commitments. These measures are used by many companies, but there can be differences in how each
company defines the terms, limiting their usefulness as a comparative measure. Therefore, it is important to view
these measures only as a complement to the Group statement of cash flows.
Gross capital expenditure
Gross capital expenditure represents the consolidated capital expenditure of IHG inclusive of System Fund capital
investments (see page 13 for a description of System Fund capital investments and recent examples).
Gross capital expenditure is defined as net cash from investing activities, adjusted to include contract acquisition
costs (key money). In order to demonstrate the capital outflow of the Group, cash flows arising from any disposals
or distributions from associates and joint ventures are excluded. The measure also excludes any material investments
made in acquiring businesses, including any subsequent payments of deferred or contingent purchase consideration
included within investing activities, which represent ongoing payments for acquisitions.
Gross capital expenditure is reported as either maintenance, recyclable or System Fund. This disaggregation
provides useful information as it enables users to distinguish between:
• System Fund capital investments which are strategic investments to drive growth at hotel level;
• Recyclable investments (such as investments in associates and joint ventures), which are intended to be recoverable
in the medium term and are to drive the growth of the Group’s brands and expansion in priority markets; and
• Maintenance capital expenditure (including contract acquisition costs), which represents a permanent cash outflow.
Management believes gross capital expenditure is a useful measure as it illustrates how the Group continues to invest
in the business to drive growth. It also allows for comparison year-on-year.
Net capital expenditure provides an indicator of the capital intensity of IHG’s business model. Net capital expenditure
is derived from net cash from investing activities, adjusted to include contract acquisition costs (net of repayments)
and to exclude any material investments made in acquiring businesses, including any subsequent payments of
deferred or contingent purchase consideration included within investing activities which are typically non-recurring
in nature. Net capital expenditure includes the inflows arising from any disposal receipts, or distributions from
associates and joint ventures.
In addition, System Fund depreciation and amortisation relating to property, plant and equipment and intangible
assets, respectively, is added back, reducing the overall cash outflow. This reflects the way in which System Funded
capital investments are recovered from the System Fund, over the life of the asset (see page 13).
Management believes net capital expenditure is a useful measure as it illustrates the net capital investment by IHG,
after taking into account capital recycling through asset disposal and the funding of strategic investments by the
System Fund. It provides investors and other stakeholders with visibility of the cash flows which are allocated to
long-term investments to drive the Group’s strategy.
Adjusted free cash flow is net cash from operating activities adjusted for: (1) the inclusion of the cash outflow
arising from the purchase of shares by employee share trusts reflecting the requirement to satisfy incentive schemes
which are linked to operating performance; (2) the inclusion of maintenance capital expenditure (excluding contract
acquisition costs); (3) the inclusion of the principal element of lease payments; and (4) the exclusion of payments
of deferred or contingent purchase consideration included within net cash from operating activities.
Management believes adjusted free cash flow is a useful measure for investors and other stakeholders as it
represents the cash available to invest back into the business to drive future growth and pay the ordinary dividend,
with any surplus being available for additional returns to shareholders.
Net capital expenditure
Adjusted free cash flow
LT
KPI
Changes in definitions to the 2021 Annual Report and Accounts
The following definitions have been amended:
• Adjusted interest, adjusted earnings per ordinary share and the definition of tax excluding the impact of exceptional items and System
Fund have been amended to exclude foreign exchange gains/losses recorded within financial expenses. Since the gains/losses are
principally as a result of the Group’s internal funding structure they are not reflective of the performance of the Group, and excluding
these amounts provides a more comparable year-on-year measure for investors and other users, aligned to how management monitors
the business. Comparatives have not been restated as the impact of these changes is not material in 2021.
• The definition and reconciliation of Adjusted EBITDA has been amended to reconcile to the nearest GAAP measure, cash flow from
operations, reflecting the fact Adjusted EBITDA is primarily used by the Group as a liquidity measure. The value of Adjusted EBITDA
is unchanged from 2021.
The performance review should be read in conjunction with the Non-GAAP reconciliations on pages 226 to 232 and the Glossary on pages 264 to 265.
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Governance
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90 Chair’s overview
91
Board and Committee membership
and attendance in 2022
92 Our Board of Directors
96 Our Executive Committee
98 Governance structure
99
Board activities
100 Key matters discussed in 2022
and Section 172 statement
102 Our shareholders and investors
103
104 Board development and effectiveness evaluation
105 Audit Committee Report
110 Responsible Business Committee Report
112 Nomination Committee Report
114 Directors’ Remuneration Report
137 Statement of compliance
Director appointments and induction
Hotel Indigo, Bath
Governance
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Governance
Chair’s overview
Since joining the Board in June and becoming Chair in
September 2022, I have been reminded of the importance
and value of strong governance structures and processes,
particularly when operating in an unpredictable geopolitical
and macroeconomic environment. I am therefore pleased
to introduce the Governance Report, which sets forth how
IHG’s robust governance framework and strong culture
ensure that the business continues to operate responsibly
as it delivers against its key strategic priorities.
Throughout 2022, the Board has continued to both challenge
and support management, considering the impact of decisions
on the interests of stakeholders and ensuring the appropriate
balance between addressing short-term needs and achieving
the Group’s longer-term strategic objectives. For example,
with the outbreak of the war in Ukraine, the Board liaised
closely with management on the Group’s response and impact
on various stakeholders, keeping a particular focus on the
support given to colleagues and the approach to engagement
with owners when approving the decision to cease operating
hotels in Russia.
Cybersecurity was also a principal feature on the Board’s agenda
throughout the year. The Board received regular updates on
the Group’s approach to cyber risk management and dedicated
significant time to assessing management’s response to the
criminal unauthorised access to its technology systems.
Despite the challenges faced by the business, the Board
remained focused on the Group’s longer-term strategy.
Growth opportunities featured prominently on the Board’s
agenda, with the Board pleased to support and approve the
Group’s long-term commercial agreement with Iberostar.
As IHG continues to grow at pace and evolve its business,
it will remain important for the Board’s governance framework
to continue to guide not only IHG’s growth agenda but also the
manner in which IHG delivers on the environmental and social
commitments set forth in our Journey to Tomorrow responsible
business plan. As we do this, the Board will continue to keep
the interests of our shareholders, hotel owners, guests,
employees and other stakeholders at the forefront of the
Board’s decision-making and governance framework.
Focus areas and activities
The Board had an active year in 2022 and a fuller description of its
activities is given on pages 99 to 104.
In addition to the areas of focus already noted, the Board monitored
the progress of the loyalty transformation programme, focusing
in particular on how performance of IHG One Rewards would be
monitored and measured, the competitive positioning of the
programme and the need for continued innovation.
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IHG | Annual Report and Form 20-F 2022
Alongside the evolution of our loyalty programme, progress in
relation to the Group’s technology initiatives, particularly those
which support the customer journey such as the new IHG mobile
app, and the Group’s longer-term technology strategy continued
to be regular areas of focus.
The Group’s proposition to hotel owners also featured in the Board’s
activities throughout the year. The Board received updates on the
strategic initiative to strengthen owner returns, including strategies
developed to help reduce the costs to owners of building, opening
and operating hotels.
The Board was also pleased to consider and approve additional
shareholder returns, through the $500m share buyback programme
announced during the year as well as approval of the final dividend
for 2021 and the interim dividend at the half-year in 2022.
Board composition
With my induction to the Board, we saw the retirement of
Patrick Cescau as Chair, following completion of his nine-year term.
During his tenure, Patrick played an essential role in driving IHG’s
strong culture of governance and reputation for doing
business responsibly.
During the year we welcomed Byron Grote as Independent Non-
Executive Director. Byron will assume the role of Audit Committee
Chair from March 2023, succeeding Ian Dyson who will retire from
the Board at the end of February 2023.
We also announced that Jill McDonald will retire from the Board
at the end of February 2023, to be succeeded as Chair of the
Responsible Business Committee by Graham Allan, the Senior
Independent Non-Executive Director.
Patrick, Jill and Ian have all been an integral part of the success of
IHG and its Board over their tenures, and I would like to again share
our appreciation for their dedication and contributions to the Group.
Further details of the appointments of Byron and Graham, as well
as other changes to the Audit Committee and Remuneration
Committee announced in December 2022, are set out in the
Nomination Committee Report on pages 112 and 113.
I am also proud to report that at the end of 2022, our Board exceeds
the FTSE 100 Women Leaders Review target for women on a FTSE 100
Board, and once again, IHG not only meets, but exceeds, the target
set by the Parker Review for at least one Director from an ethnically
diverse background, with three ethnically diverse Directors.
Committee activities
The Board delegates certain responsibilities to its Committees to
assist in ensuring effective corporate governance across the business.
During 2022:
• The Audit Committee focused on the Group’s controls framework
and risk management and resilience arrangements in relation to
principal and emerging risks (see its report on pages 105 to 109);
• The Remuneration Committee focused on the revised Directors’
Remuneration Policy and consultation with shareholders (see its
report on pages 114 to 136);
• The Responsible Business Committee focused on progress
against the 2022 responsible business priorities, which support the
Company’s Journey to Tomorrow responsible business plan (see its
report on pages 110 and 111); and
• The Nomination Committee focused on the execution of Board and
Committee succession plans (see its report on pages 112 and 113).
Further detail on the Group’s governance structure is given on
page 98.
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Board performance review
The Board made good progress on the agreed actions arising out
of the 2021 internal Board and Committee effectiveness evaluations.
In particular, the return to in-person Board meetings in 2022 allowed
for more robust dialogue and engagement among Board and
management on key strategic initiatives and emerging issues.
The members of the Board were particularly pleased to be able to
return to IHG’s offices in the UK and the US to engage with management
and employees, and we look forward to similar engagement at the
Company’s new global headquarters in Windsor, UK, in 2023.
As I formally started as Chair in September 2022, the Board
considered it appropriate to conduct an internal evaluation of the
Board’s performance in 2022, with a view to undertaking an external
evaluation exercise in 2023, which the Board considers would
provide more meaningful and productive insight. Further details
of the internal evaluation can be found on pages 103 and 104.
Individual Director feedback assessments were also conducted,
details of which can be found on page 104.
Compliance and our dual listing
IHG continues to operate as a dual-listed company with a premium
listing on the London Stock Exchange and a secondary listing on the
New York Stock Exchange. Under the UK listing rules, we are obliged
to make a statement as to how we have applied the principles of the
UK Corporate Governance Code (the Code), and under the NYSE
listing rules, as a foreign private issuer, we are required to disclose
any significant ways in which our corporate governance practices
differ from those of US companies. To ensure consistency of
information provided to both UK and US investors, we produce
a combined Annual Report and Form 20-F.
Our Statement of compliance with the Code is on pages 137 and
138. A summary outlining the differences between the Group’s UK
corporate governance practices and those followed by US
companies can be found on page 255.
Looking forward
In 2023, the Board will continue to ensure that robust governance
structures and processes are in place to enable the Group to focus
on achieving its long-term strategic objectives while doing business
responsibly and keeping stakeholder interests in mind.
Deanna Oppenheimer
Chair of the Board
20 February 2023
Board and Committee membership and attendance in 2022
Appointment
date
Committee
appointments
Total meetings held
Chair
Patrick Cescaub, c
Deanna Oppenheimerb, d
Chief Executive Officer
Keith Barr
Executive Directors
Paul Edgecliffe-Johnson
Elie Maalouf
01/01/13
01/06/22
01/07/17
01/01/14
01/01/18
N
N
Senior Independent Non-Executive Director
Graham Allan
Non-Executive Directors
Daniela Barone Soares
Arthur de Haast
Ian Dysone
Duriya Farooquif
Byron Groteg
Jo Harlow
Jill McDonaldh
Sharon Rothstein
01/09/20
A N R
01/03/21
01/01/20
01/09/13
07/12/20
01/07/22
01/09/14
01/06/13
01/06/20
R RB
R RB
A N R
A RB
A R
N R
A N RB
A RB
Board
8
4/4
5/5
8/8
8/8
8/8
8/8
8/8
8/8
7/8
8/8
5/5
8/8
7/8
8/8
Audit
Committeea
Responsible
Business
Committee
Nomination
Committee
Remuneration
Committee
5
–
–
–
–
–
5/5
–
–
5/5
5/5
3/3
–
4/5
5/5
4
–
–
–
–
–
–
4/4
4/4
–
3/4
–
–
4/4
4/4
5
3/3
3/3
–
–
–
5/5
–
–
5/5
–
–
5/5
5/5
–
5
–
–
–
–
–
5/5
5/5
5/5
5/5
–
3/3
5/5
–
–
a In principle the full Board attends the relevant sections of the Audit Committee
e Ian Dyson was unable to attend a Board meeting due to a prior engagement.
meetings when financial results are considered.
f Duriya Farooqui was unable to attend a Responsible Business Committee meeting due
b In principle the Chair attends all Committee meetings.
c Patrick Cescau retired from the Board on 31 August 2022.
to a prior engagement.
g Byron Grote was appointed to the Board from 1 July 2022.
d Deanna Oppenheimer was appointed to the Board from 1 June 2022 and became
Non-Executive Chair on 1 September 2022.
h Jill McDonald was unable to attend a Board meeting and an Audit Committee meeting
due to a prior engagement.
Board Committee membership key
A Audit Committee member
R Remuneration Committee member
RB Responsible Business Committee member
N Nomination Committee member
Chair of a Board Committee
Chair’s overview
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Governance
Our Board of Directors
At 20 February 2023, our Board of Directors comprises:
Deanna Oppenheimer
Non-Executive Chair
N R
Appointed to
the Board:
1 June 2022
Keith Barr
Chief Executive Officer (CEO)
Appointed to
the Board:
1 July 2017
Paul Edgecliffe-Johnson
Chief Financial Officer (CFO)
and Group Head of Strategy
Appointed to
the Board:
1 January 2014
Skills and experience
Deanna is founder of CameoWorks, LLC, an
advisory firm to CEOs of early-stage technology
companies, and BoardReady. Between 2005 and
2011, Deanna worked at Barclays plc where she
was Chief Operating Officer of the UK business
before becoming CEO of UK and Western Europe
Retail Banking and subsequently Vice Chair,
Global Retail Banking. Prior to this, Deanna was
the President of Consumer Banking at Washington
Mutual, Inc. She previously held a number of
Non-Executive board positions, including with
Tesco PLC (as Senior Independent Director),
Whitbread PLC, Worldpay, Inc., and AXA S.A.,
among others.
Board contribution
Deanna has extensive board-level and executive
leadership experience, across a number of
high-profile consumer-focused brands, and
brings valuable insights and perspectives to IHG.
As Chair, Deanna is responsible for leading the
Board and ensuring it operates in an effective
manner, promoting constructive relations with
IHG’s shareholders and with stakeholders.
Other appointments
Deanna is the Chair of Hargreaves Lansdown plc
and a Non-Executive Director of Thomson Reuters
Corporation. She also sits on the private board of
Slalom, LLC.
Board contribution
Keith is responsible for the executive management
of the Group and ensuring the implementation of
Board strategy and policy.
Other appointments
Keith is a Non-Executive Director of Yum! Brands.
He also sits on the Board of WiHTL (Women in
Hospitality, Travel and Leisure), the World Travel
& Tourism Council Executive Committee and the
International Advisory Board of EHL. Keith is a
graduate of Cornell University’s Nolan School of
Hotel Administration and is currently a member
of the Dean’s Advisory Board for The Nolan School
of Hotel Administration, Cornell SC Johnson
College of Business.
Board contribution
Paul is responsible, together with the Board, for
overseeing the financial operations of the Group
and for leading Group strategy.
Other appointments
Paul is a Non-Executive Director of Schroders plc.
Skills and experience
Keith has spent more than 30 years working in the
hospitality industry across a wide range of roles.
He started his career in hotel operations and
joined IHG in 2000. Since April 2011 he has been
a member of IHG’s Executive Committee.
Directly before being appointed CEO, Keith served
as Chief Commercial Officer for four years. In this
role, he led IHG’s global brand, loyalty, sales and
marketing functions, and oversaw IHG’s loyalty
programme (now IHG® One Rewards). Prior to this,
Keith was CEO of IHG’s Greater China business for
four years, setting the foundations for growth.
Skills and experience
Paul is a fellow of the Institute of Chartered
Accountants and is a graduate of the Harvard
Business School Advanced Management
Programme. He was previously CFO of IHG’s
Europe and Asia, Middle East and Africa regions,
a position he held since September 2011. He joined
IHG in August 2004 and has held a number of
senior-level finance positions, including Head
of Investor Relations, Head of Global Corporate
Finance and Financial Planning & Tax, and Head
of Hotel Development, Europe. Paul also acted
as Interim CEO of the Europe, Middle East and
Africa region (prior to the reconfiguration of
our operating regions).
Elie Maalouf
Chief Executive Officer, Americas
Appointed to
the Board:
1 January 2018
Skills and experience
Elie was appointed CEO, Americas at IHG in
February 2015. He joined the Group having
spent six years as President and CEO of HMSHost
Corporation, where he was also a member of
the board of directors. Elie brings broad global
experience spanning hotel development,
branding, finance, real estate and operations
management as well as food and beverage
expertise. Elie was Senior Advisor with McKinsey
& Company from 2012 to 2014.
Board contribution
Elie brings a deep understanding of the global
hospitality sector to the Board from multiple
leadership roles across major global franchise
businesses. He is responsible for business
development and performance of all hotel and
resort brands and properties in the Americas
region and has global responsibility for customer
development, providing oversight of the Global
Sales organisation, as well as our owner
management and services strategy.
Other appointments
Elie is a member of both the American Hotel
& Lodging Association Executive Committee
of the Board and the U.S. Travel Association CEO
Roundtable. In addition, Elie is a board member of
the Atlanta Committee for Progress and a member
of the Real Estate Roundtable.
Board Committee membership key
A Audit Committee member
R Remuneration Committee member
RB Responsible Business Committee member
N Nomination Committee member
Chair of a Board Committee
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Graham Allan
Senior Independent
Non-Executive Director (SID)
A
N R
Appointed to
the Board:
1 September 2020*
Skills and experience
Graham was Group Chief Executive of Dairy Farm
International Holdings Ltd from 2012 to 2017,
a leading Asian retailer headquartered in Hong Kong.
He previously served in several senior positions at
Pepsico/Yum! Brands from 1992 to 2012, assuming
the role of President Yum! Restaurants International in
2003, and led the development of global brands KFC,
Pizza Hut and Taco Bell in more than 120 international
markets. Prior to his tenure at Yum! Restaurants,
he worked as a consultant, including at
McKinsey & Company.
Ian Dyson
Independent
Non-Executive Director
A
N R
Appointed to
the Board:
1 September 2013
Jo Harlow
Independent
Non-Executive Director
N R
Appointed to
the Board:
1 September 2014
Jill McDonald
Independent
Non-Executive Director
A N RB
Appointed to
the Board:
1 June 2013
Byron Grote
Independent Non-Executive Director
RA
Appointed to
the Board:
1 July 2022
Skills and experience
Ian has held a number of senior executive and finance
roles, including Group Finance and Operations
Director for Marks and Spencer Group plc for five
years from 2005 to 2010, where he oversaw significant
changes in the business. In addition, Ian was CEO
of Punch Taverns plc, Finance Director for the Rank
Group Plc, and Group Financial Controller and Finance
Director for the hotels division of Hilton Group plc.
Ian was previously a Non-Executive Director of SSP
Group plc, Senior Independent Non-Executive
Director of Flutter Entertainment Plc, and most
recently was Chair of the Board of ASOS Plc.
Skills and experience
Jo most recently held the position of Corporate Vice
President of the Phones Business Unit at Microsoft
Corporation. She was previously Executive Vice
President of Smart Devices at Nokia Corporation,
following a number of senior management roles at
Nokia from 2003. Prior to that, she held marketing,
sales and management roles at Reebok International
Limited from 1992 to 2003 and at Procter & Gamble
Company from 1984 to 1992.
Skills and experience
Jill started her career at Colgate-Palmolive Company,
spent 16 years with British Airways Plc and has held
a number of senior marketing positions in the UK
and overseas. Jill was Chief Executive Officer UK
and President for the North West Europe division for
McDonald’s, and held a number of other senior roles
in the company from 2006. From May 2015 until
September 2017, Jill served as Chief Executive Officer
of the Halfords Group plc, and from 2017 to 2019,
Jill served as Managing Director of Marks & Spencer
Clothing and Home. Most recently, Jill was Chief
Executive Officer of Costa Coffee.
Skills and experience
Byron’s career spanned over 30 years in the
international oil and gas sector including Standard Oil
of Ohio and subsequently BP p.l.c., where he held
management positions in retail marketing, trading,
mining, exploration and production, renewables,
petrochemicals and finance. He served as an
Executive Director on the Board of BP p.l.c. for 13 years
and was the Chief Financial Officer from 2002 until
2011. He previously served as the Senior Independent
Director and Audit Committee Chair at Anglo American
plc, as a Non-Executive Director and Audit Committee
Chair at Unilever PLC and Unilever N.V., and Non-
Executive Director at Standard Chartered PLC.
Board contribution
Graham brings to the Board more than 40 years of
strategic, commercial and brand experience within
consumer–focused businesses across multiple
geographies. Graham was appointed as Senior
Independent Non-Executive Director from 1 January
2022 and will become Chair of the Responsible
Business Committee from 1 March 2023.
Other appointments
Graham is Senior Independent Non-Executive Director
at Intertek plc, Independent Non-Executive Director
of Associated British Foods plc and Independent
Non-Executive Director of Americana Restaurants
International plc. Previously, Graham was a Director
of Americana Foods, the former operating company
of the Americana Restaurants business. He also serves
as Chairman of Bata Footwear, a private company.
Board contribution
Ian has gained significant experience from working
in various senior finance roles, predominantly in the
retail, leisure and hospitality sectors. As Chair of the
Audit Committee, Ian has been responsible for leading
the Committee to ensure effective internal controls
and risk management systems are in place.
Other appointments
Ian is Chair of the Board of Currys plc.
Board contribution
Jo has more than 25 years’ experience working in
various senior roles, predominantly in the branded
and technology sectors. Jo became Chair of the
Remuneration Committee on 1 October 2017 and,
as such, she leads the Committee responsible for
setting our Remuneration Policy.
Other appointments
Jo is a Non-Executive Director and Chair of the
Remuneration Committee of Halma plc, and
Non-Executive Director and Chair of the Remuneration
Committee of J Sainsbury plc. She is also a member of
the Board of Chapter Zero, the Directors’ Climate Forum.
Board contribution
Jill has over 30 years’ experience working with
high-profile international consumer-facing brands at
both marketing and operational level. As Chair of the
Responsible Business Committee, she has led the
Committee responsible for responsible business
objectives and strategy and reviewing our approach
to sustainable development.
Other appointments
Jill is Executive Vice President and President,
International Operated Markets, at McDonald’s.
Board contribution
Byron has extensive experience across a range of
leading international businesses, both at Board level
and in senior management positions, particularly
in finance and chairing audit committees. He is
a participant in the European Audit Committee
Leadership Network and a member of the Regulation
Group of the Audit Committee Chairs’ Independent
Forum. Byron will assume the role of Chair of the
IHG Audit Committee in March 2023.
Other appointments
Byron is a Non-Executive Director at Tesco PLC,
where he is the Senior Independent Director and Audit
Committee Chair, and Inchcape PLC, as well as on the
Supervisory Board of Akzo Nobel N.V., where he is
the Deputy Chairman and Audit Committee Chair.
* Graham was a member of the Board from 1 January 2010 to 15 June 2012 prior to being appointed as Chief Operating Officer of Dairy Farm International Holdings Limited.
Our Board of Directors
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Governance
Our Board of Directors continued
Daniela Barone Soares
Independent
Non-Executive Director
RBR
Appointed to the Board:
1 March 2021
Arthur de Haast
Independent
Non-Executive Director
RBA
Appointed to the Board:
1 January 2020
Duriya Farooqui
Independent
Non-Executive Director
RBA
Appointed to the Board:
7 December 2020
Sharon Rothstein
Independent
Non-Executive Director
RBA
Appointed to the Board:
1 June 2020
Skills and experience
Daniela is currently Chief Executive Officer of
Snowball Impact Management Ltd. She was formerly
Chief Executive Officer of financial advisory and
strategic consultancy Granito Group. Prior to this,
she was Chief Executive Officer at Impetus, a
private equity foundation, and Executive Chair
of Gove.digital, a private technology business
working with the public sector to improve social
services in Brazil. She has served on various
commercial and non-profit boards and advisory
boards, including Halma plc, Evora S.A. in Brazil
and the UK National Advisory Board to the G8
Social Impact Investment Taskforce. She also
spent nearly 15 years combined in roles at
Save the Children, BancBoston Capital private
equity, Citibank and Goldman Sachs.
Skills and experience
Arthur has held several senior roles in the Jones
Lang LaSalle (JLL) group, including Chair of JLL’s
Capital Markets Advisory Council and Chair and
Global CEO of JLL’s Hotels and Hospitality Group.
Arthur is also a former Chair of the Institute
of Hospitality.
Board contribution
Daniela brings to the IHG Board a clear commitment
to ESG responsibilities and in-depth knowledge
of the role of technology in driving change.
Other appointments
Daniela is a Designated Member of Snowball
Impact Investments GP LLP, a diversified
investment fund focused on generating financial
returns with a positive social and environmental
impact. She is also a Trustee of the Haddad
Foundation, a Member of the Advisory Board
of Forward Institute and Trustee of the Institute
for the Future of Work.
Board contribution
Arthur has more than 30 years’ experience in the
capital markets, hotels and hospitality sectors,
along with significant board-level knowledge
around sustainability.
Other appointments
Arthur is Chair of JLL’s Capital Markets Advisory
Council, an Independent Non-Executive Director
of Chalet Hotels Limited and Chair of its Risk
Management Committee, and a member of the
Advisory Board of the Scottish Business School,
University of Strathclyde, Glasgow.
Skills and experience
Duriya is an Independent Director at Intercontinental
Exchange, Inc. (ICE), a leading operator of global
exchanges and clearing houses, and provider of
mortgage technology, data and listings services.
She is also an executive coach and mentor with
The Exco Group, focused on helping Fortune 500
companies develop high-performing leadership
teams. Duriya was previously President of Supply
Chain Innovation at Georgia-Pacific, leading an
organisation responsible for supply chain
transformation. Prior to this, she was Executive
Director of Atlanta Committee for Progress, a
coalition of over 30 CEOs providing leadership
on economic growth and inclusion opportunities
in Atlanta. Duriya has also been a principal at
Bain & Company and Chief Operating Officer
of the City of Atlanta.
Board contribution
Duriya’s diverse board and executive-level
experience brings valuable insights and
perspectives to IHG. She combines more than two
decades of relevant expertise in business strategy,
transformation and innovation, with a clear
commitment to driving responsible operations
and diversity.
Other appointments
Duriya is an Independent Director of
Intercontinental Exchange, Inc. She serves on the
boards of NYSE and ICE NGX, both subsidiaries
of ICE, and co-chairs the NYSE Board Advisory
Council. Duriya is also a Trustee of Agnes Scott
College, a member of the Board of Councilors
of The Carter Center and a Board Commissioner
of Atlanta Housing.
Skills and experience
Sharon currently serves as Operating Partner
of Stripes Group, a growth equity firm investing
in high-growth consumer and SaaS (Software as
a Service) companies. She previously served as
Executive Vice President, Global Chief Marketing
Officer and, subsequently, as Executive Vice
President, Global Chief Product Officer for
Starbucks Corporation. In addition, Sharon has
held senior marketing and brand management
positions at Sephora LLC, Godiva Chocolatier, Inc.,
Starwood Hotels & Resorts Worldwide, Inc., Nabisco
Biscuit Company and Procter & Gamble Company.
Board contribution
Sharon brings extensive brands, marketing and
digital expertise, having worked in senior positions
for more than 25 years at iconic global companies.
In addition to her knowledge of the hospitality
industry, Sharon has wide-ranging board-level
experience in a number of consumer-focused
businesses.
Other appointments
Sharon serves on the boards of Yelp, Inc. and
Block, Inc.; and also for private companies
True Food Kitchen, Inc., Califia Farms, LLC and
Levain Bakery, Inc.
Board Committee membership key
A Audit Committee member
R Remuneration Committee member
RB Responsible Business Committee member
N Nomination Committee member
Chair of a Board Committee
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Changes to the Board and its Committees, and Executive Committee
Graham Allan
Graham was appointed as Senior Independent Non-Executive Director and member of the Nomination Committee from 1 January 2022.
Graham will become Chair of the Responsible Business Committee and will step down from the Remuneration Committee with
effect from 1 March 2023
Patrick Cescau
Patrick retired from the Board on 31 August 2022
Arthur de Haast
Arthur joined the Audit Committee and stepped down as a member of the Remuneration Committee with effect from 1 January 2023
Ian Dyson
Ian will retire from the Board effective 28 February 2023
Paul Edgecliffe-Johnson
Paul will step down from the Board and his role as Chief Financial Officer and Group Head of Strategy on 19 March 2023
Michael Glover
Byron Grote
Jill McDonald
Michael’s appointment as Chief Financial Officer will take effect from 20 March 2023, when he will join the Board as an Executive
Director as well as the Executive Committee
Byron was appointed to the Board from 1 July 2022 and will become the Audit Committee Chair from 1 March 2023
Jill will retire from the Board effective 28 February 2023
Deanna Oppenheimer
Deanna was appointed to the Board from 1 June 2022 and became Non-Executive Chair on 1 September 2022. Deanna became
a member of the Remuneration Committee with effect from 1 January 2023
Gender split of Directors
Skills of Directors
Male, 7
Female, 6
Financial
Strategy
Risk
Hotels/Hospitality
Brands/Consumer
Real Estate
International
Tech/Digital
Sustainability
Franchising
US/UK Corporate Governance
CEO
2
6
6
7
7
7
4
4
5
5
11
13
Our Board of Directors
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Governance
Our Executive Committee
In addition to Keith Barr, Paul Edgecliffe-Johnson and Elie Maalouf, the Executive Committee comprises:
Claire Bennett
Global Chief Customer Officer
Appointed to the
Executive Committee:
October 2017
(joined the Group: 2017)
Jolyon Bulley
Chief Executive Officer, Greater China and Group
Transformation Lead, Luxury & Lifestyle
Appointed to the
Executive Committee:
November 2017
(joined the Group: 2001)
Yasmin Diamond, CB
Executive Vice President,
Global Corporate Affairs
Appointed to the
Executive Committee:
April 2016
(joined the Group: 2012)
Nicolette Henfrey
Executive Vice President,
General Counsel and
Company Secretary
Appointed to the
Executive Committee:
February 2019
(joined the Group: 2001)
Previously, she served as an Executive Board
Member of the World Travel and Tourism Council
(WTTC), was a Board Member of Tumi Inc., and has
participated on multiple industry advisory boards.
Claire is a Certified Public Accountant and holds
an MBA from the J.L. Kellogg Graduate School
of Management at Northwestern University.
Key responsibilities
Claire is responsible for guest experience, brand
design, commercial performance, partnerships,
marketing, and customer data analytics to ensure
a world-class, end-to-end guest experience.
Jolyon joined IHG in 2001, as Director of Operations
in New South Wales, Australia, and then held
roles of increasing responsibility across IHG’s
Asia-Pacific region. He became Regional Director
Sales and Marketing for Australia, New Zealand
and South Pacific in 2003, relocated to Singapore
in 2005 and held positions of Vice President
Operations South East Asia and India, Vice President
Resorts, and Vice President Operations, South East
and South West Asia. Jolyon graduated from
William Angliss Institute in Melbourne with
a concentration on Tourism and Hospitality.
Key responsibilities
Jolyon’s responsibilities include the management,
growth and profitability of IHG’s Greater China
region and working to develop and define a clear
strategy for our Luxury & Lifestyle brands.
In 2011, Yasmin was awarded a Companion of the
Order of the Bath (CB) in the New Year’s Honours
List in recognition of her career in government
communications. In addition, Yasmin is an
Independent Non-Executive Director of the Rugby
Football Union, sits on the Board of Trustees for the
British Council, the UK’s international organisation
for cultural relations and educational opportunities,
and is a Board Trustee member of the Sustainable
Hospitality Alliance.
Key responsibilities
Yasmin is responsible for all global corporate affairs
activity, focused on supporting and enabling IHG’s
broader strategic priorities. This includes all
external and internal communications, covering
both corporate and consumer brand PR; global
government affairs work; and leading IHG’s
Corporate Responsibility strategy.
Key responsibilities
Nicolette has global responsibility for all areas
of corporate governance, legal, risk management,
insurance, regulatory compliance, internal audit
and hotel standards.
Skills and experience
Claire has in-depth knowledge of the hospitality
industry having spent 11 years at American Express
in a range of senior executive roles across business
unit general management and operations. In her
tenure there, Claire was General Manager (GM)
Global Travel & Lifestyle, and held additional roles
as EVP and GM for Consumer Loyalty, GM for US
Consumer Travel, and SVP of Global Marketing.
Claire has also held senior marketing and general
manager positions at Dell, as well as finance and
brand management roles at PepsiCo/Quaker Oats
Company, building significant expertise across
technology, retail e-commerce, financial services,
and the travel and hospitality sectors.
Claire currently serves as an independent
non-executive Director of Samsonite International
S.A. and is on the Chief Digital Officer (CDO) Board
for the Mobile Marketing Association (MMA).
Skills and experience
Prior to his appointment as CEO for Greater China,
Jolyon was Chief Operating Officer (COO) for
the Americas, leading the region’s operations
for franchised and managed hotels, in addition to
cultivating franchisee relationships and enhancing
hotel operating performance. Jolyon also served
as COO for Greater China for almost four years,
with oversight of the region’s hotel portfolio and
brand performance, food and beverage brand
solutions, new hotel openings and owner relations.
In 2021, he was appointed to lead the Luxury
& Lifestyle Transformation Team.
Skills and experience
Before joining IHG in 2012, Yasmin was Director
of Communications at the Home Office, where she
advised the Home Secretary, ministers and senior
officials on the strategic development and daily
management of all the Home Office’s external
and internal communications. She was previously
Director of Communications at the Department
for Environment, Food and Rural Affairs; Head of
Communications for Welfare to Work and New Deal;
and Head of Marketing at the Department for
Education and Skills. Before joining government
communications, Yasmin was Publicity
Commissioner for the BBC, where she led
communications activity around the launch of
a new digital learning channel and around the
BBC’s educational output for both adults
and children.
Skills and experience
Nicolette joined IHG in 2001, and prior to leading
the Business Reputation and Responsibility
function, held a number of senior legal roles,
including Deputy Company Secretary, during
which time she worked with the Board, Executive
Committee and wider organisation to ensure
best-in-class delivery and compliance across legal,
governance and regulatory areas. Nicolette is
a solicitor qualified in England and South Africa
and previously worked as a corporate lawyer
at Linklaters in London and Findlay & Tait
(now Bowmans) in South Africa.
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Wayne’s most recent role at Unilever was as SVP,
HR – Global Centres of Expertise, where he held
responsibility for the Global Talent, Leadership
Development and Reward teams. He led the
development of the company’s HR strategy on
enabling a performance culture focused on growth.
Key responsibilities
Wayne has global responsibility for talent
management, learning and capability building,
diversity, organisation development, reward and
benefit programmes, employee relations and all
aspects of the people and organisation strategy
for the Group.
Key responsibilities
Kenneth is responsible for the management, growth
and profitability of the EMEAA region. He also
manages a portfolio of hotels in some of the
world’s most exciting destinations, in both mature
and emerging markets.
Key responsibilities
George’s responsibilities include distribution;
channels; revenue management; property, owner,
guest and enterprise solutions; guest reservations
and customer care; digital; information security;
technology; and global sales.
Skills and experience
Wayne has more than 30 years of experience in
HR and joined IHG from RCL FOODS, where he
spent seven years as the company’s Chief Human
Resources Officer, leading RCL FOODS’ culture
building and talent strategy for 25,000 employees.
Prior to joining RCL FOODS, Wayne spent 26 years
at Unilever, where he worked across a broad range
of roles in both mature and developing markets
across Europe, North America, Asia, Africa and the
Middle East.
Skills and experience
Kenneth became CEO, EMEAA in January 2018.
He was previously IHG’s CEO for Greater China,
a role he held from 2013 to 2017. He has extensive
experience across sales, marketing strategy,
business development and operations. In addition
to 12 years living and working in China, Kenneth’s
career includes experience in Asia, the UK, France
and South Africa. Before IHG, he worked for
20 years at Diageo, one of the UK’s leading
branded companies. His senior management
positions included serving as Managing Director
of Diageo Greater China, where he helped to build
the company’s presence and led the landmark deal
to acquire ShuiJingFang, a leading manufacturer
of China’s national drink, and one of the first
foreign acquisitions of a Chinese listed company.
Skills and experience
In February 2019, George was appointed as
Chief Commercial and Technology Officer. Prior to
this, he spent over a decade as IHG’s EVP, General
Counsel and Company Secretary, with responsibility
for corporate governance, risk and assurance,
legal, corporate responsibility and information
security. He is a solicitor, qualifying to private
practice in 1995. Before joining IHG, George spent
over 10 years with Imperial Chemical Industries
PLC, where he held various key positions including
Deputy Company Secretary and Senior
Legal Counsel.
Wayne Hoare
Chief Human Resources Officer
Appointed to the
Executive Committee:
September 2020
(joined the Group: 2020)
Kenneth Macpherson
Chief Executive Officer, EMEAA
Appointed to the
Executive Committee:
April 2013
(joined the Group: 2013)
George Turner
Chief Commercial
and Technology Officer
Appointed to the
Executive Committee:
January 2009
(joined the Group: 2008)
Gender split of Executive Committee
Male, 7
Female, 3
Our Executive Committee
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Governance
Governance structure
Our governance framework is headed by the Board, which delegates
certain management and oversight responsibilities to various
Committees to further IHG’s purpose, values and strategy, while
conducting business in a responsible manner. Executive management
are responsible for the implementation of strategy which is delivered
by the Group’s workforce.
The Board and its Principal Committees
The Board is responsible for promoting the long-term sustainable
success of the Group and establishes its purpose, values and
strategy. Operational matters, routine business and information
disclosure procedures are delegated by the Board to Management
Committees, with the exception of a number of key decisions and
matters that are reserved for the Board. The schedule of matters
reserved for the Board was reviewed and approved at the
December 2022 Board meeting and is available on our website.
The Board is supported by its four Principal Committees (Audit,
Nomination, Remuneration and Responsible Business), all of which
consist of Non-Executive Directors. These committees assist the
Board in carrying out its functions and in the oversight of the
delivery of the strategic objectives it sets for management.
Committee Reports, including information on their activities during 2022,
can be found on pages 105 to 136.
Pursuant to Section 172 of the Companies Act 2006, the Board has
a duty to promote the success of the Company, and in doing so it
must have regard to a number of factors including the interests of
key stakeholders. The Board’s Section 172 statement describing how
stakeholder considerations are taken into account is incorporated
in the description of the activities of the Board on pages 100 and 101.
Further details of key stakeholders and engagement during 2022 can
be found on pages 38 and 39.
The Board is also responsible for reviewing the means for the
workforce to raise concerns in confidence and the reports arising
from its operation (commonly known as whistleblowing) and it
reviewed confidential disclosure channel reports throughout 2022.
In addition, a Non-Executive Director is designated to represent
the Voice of the Employee in Board discussions. See our Voice
of the Employee disclosure on page 111.
More information on our Board and Committees is available at
www.ihgplc.com/investors under Corporate governance.
Management Committees
Operational matters, routine business and information disclosure
procedures are delegated by the Board to Management Committees.
The Management Committees are comprised of senior executives,
including, where relevant, the Executive Directors.
The Executive Committee is chaired by the CEO and considers and
manages the day-to-day strategic and operational issues facing the
Group. Its remit includes executing the strategic plan once agreed
by the Board, monitoring the Group’s performance and providing
assurance to the Board in relation to overall performance and
risk management.
The General Purposes Committee is chaired by an Executive
Committee member and attends to items of a routine nature and
to the administration of matters, the principles of which have been
agreed previously by the Board or an appropriate Committee.
The Disclosure Committee is chaired by the Group’s Financial
Controller and ensures that proper procedures are in place for
statutory and listing requirements. This Committee reports to the
Chief Executive Officer, the Chief Financial Officer and the
Audit Committee.
Conduct of Board and Committee meetings
The Chair and Company Secretary operate a collaborative process
for setting the Board agenda to ensure that the focus and discussion
strike the appropriate balance between the short-term needs of
the business and the longer-term strategic objectives. The Chair
or Committee Chairs, CEO and Company Secretary also liaise in
advance of each Board and Committee meeting to finalise the
agendas, set the order in which items are considered and ensure
that each matter is allocated sufficient time. The Company Secretary
maintains an annual agenda schedule for Board meetings that sets
out strategic and operational matters to be considered.
The Board held eight scheduled meetings during the year and
individual attendance is set out on page 91. All Directors are expected
to attend all Board meetings and relevant Committee meetings unless
they are prevented from doing so by prior commitments, illness
or a conflict of interest. If Directors are unable to attend Board or
Committee meetings, they are sent the relevant papers and asked to
provide comments to the Chair of the Board or Committee in advance
of the meeting so that their comments can be duly considered.
Time is set aside at the start and end of each Board meeting for
the CEO to meet with the Chair and Non-Executive Directors,
and for the Chair to meet privately with the Senior Independent
Non-Executive Director (SID) and Non-Executive Directors to discuss
any matters arising. The SID continues to be available to discuss
concerns with shareholders, in addition to the normal channels
of shareholder communication.
Our Board and Committee governance structure
BOARD
Responsible
Business
Committee
Nomination
Committee
Remuneration
Committee
Executive
Committee
General Purposes
Committee
Audit
Committee
Disclosure
Committee
Board Committees
Management Committees
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Board activities
Matters the Board discussed in 2022
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Board meetings
The following table gives an overview of the regular and standing items discussed and decisions made at Board meetings during the year.
The table overleaf details the key matters discussed by the Board in 2022 and our Section 172 statement includes information about how
stakeholders were considered. In both tables, commercially sensitive information has been excluded. In several areas, much of the substantive
preparation work took place within the Board’s Committees and was later confirmed by the Board or the whole Board attended certain
sections of Committee meetings. Where this was the case, the discussions are treated as having taken place at Board level.
Regular and standing items
In addition to key focus areas outlined on the following pages, the Board considers a number of regular and standing items at each meeting:
Area of discussion
Chair's matters
Chief Executive
Officer's matters
Updates from each of
the Board Committees
Financial performance
Corporate governance
Regional performance
Cybersecurity
Principal risks, internal controls
and risk management systems
Investor relations
Corporate affairs
Discussion topic and decisions made
The Chair provided an update on Board developments and meeting plans and his/her current areas
of focus and engagement.
The Chief Executive Officer provided an update on developments within the business, with a particular
focus on net system size growth progress during the year and progress against key strategic initiatives.
The Committee Chairs reported back to the Board on matters covered during their meetings. Details of
Committee activities during 2022 can be found on pages 105 to 136.
The Board received regular updates from the Chief Financial Officer on recent and current trading,
including RevPAR, operating profit, net system size growth and cash flow performance, and these were
also compared to competitors’ results and budget. Internal projections were compared with the
consensus of analysts’ forecasts to ensure that the Company’s prospects were appropriately reflected
in market expectations.
The Board received regulatory development updates from the Company Secretary and General
Counsel, covering regulatory changes in areas such as corporate reporting and governance, executive
remuneration, climate change, shareholder body voting guidelines and other ESG matters.
Throughout the year, the Board received regional performance updates from each of the regional
Chief Executive Officers, covering regional market and competitive landscapes, financial performance,
regional strategy and progress on regional initiatives, and risks and mitigation measures.
The Board received regular updates on cyber activity and information security, including ongoing
assessment of the Group’s cybersecurity risk profile and the key risk indicators monitored by
management.
The Board received regular updates on principal and emerging risks, internal controls, risk management
systems, the Group’s risk appetite, business continuity and the global insurance programme. Committee
Chairs also delivered reports on risk topics in relation to the areas of remit for their respective Committees.
The Board regards the management of risks in business as fundamental to its role and does this by
ensuring that appropriate controls and processes are in place. The regular monitoring of the Group’s risk
management systems allows the Board to ensure that issues that might otherwise impact the Group’s
reputation for high standards of business conduct are avoided or mitigated as appropriate and that the
Group is positioned to respond to uncertainty in an agile manner.
The Board receives a regular report outlining share register movements, relative share price performance,
investor relations activities and engagement with shareholders. The Board also considered views shared
from the regular investor and analyst perception studies and feedback surveys as well as individual
meetings with investors.
The Board receives a regular report outlining various geopolitical and social issues pertaining to IHG
and its business; corporate affairs activity supporting IHG’s corporate reputation, brands and responsible
business agenda; owner and colleague engagement; government and advocacy programmes; and
industry-body engagement.
In addition to the scheduled meetings during the year, the Board also convened separate meetings specifically to consider the Group’s
ongoing operations in Russia following the invasion of Ukraine and management’s response to the criminal, unauthorised access to its
technology systems. See pages 46, 101, 105, 107 and 212 for additional information on management’s response to criminal, unauthorised
access to its technology systems and pages 48, 100, 102, 105, 106 and 176 for more information on the Group’s response to the war
in Ukraine.
Board activities
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Governance
Board activities continued
Key matters discussed in 2022 and Section 172 statement
Section 172 of the Companies Act 2006 requires a director of a company to promote the success of that company, and in doing so the
director must have regard to six factors. These are: the long-term consequences of a decision; the interests of its employees; business
relationships with suppliers, customers and others; its impact on the community and environment; the desirability of maintaining high
standards of business conduct; and the need to act fairly between members of the company. The table below summarises some of the
main matters dealt with by the Board during the year and how it took the Section 172 factors into account. The relevant Section 172 factors
are identified in the key at the bottom of the page.
Finance and performance
Shareholder returns
The Board considered and approved a final
dividend for 2021, an interim dividend for 2022
and a $500m share buyback programme.
A E F
In considering the dividends paid during the year and the share buyback programme,
the Board took into account the creation of value for shareholders, analysts’ expectations
in the context of the Company’s trading and viability assessments and capacity to pay as
well as the external environment, including the geopolitical situation and macroeconomic
developments, while having regard to the Group’s dividend policy.
Group finance facility
The Board considered and approved the
refinancing of the Group’s $1.35bn syndicated
revolving credit facility.
A B C E
When deciding to approve the refinancing of the Group’s $1.35bn revolving credit
facility, the Board recognised the importance of the new facility to the Group’s short
and medium-term funding and liquidity prospects and noted the positive implications
of having the new facility in place for the Group’s stakeholders, including employees,
suppliers, owners, guests and shareholders.
Financial statements
The Board considered and approved the
full and half year financial results statements,
including the going concern and viability
statements, and whether the Annual Report
was fair, balanced and understandable.
E F
Strategic and operational matters
Brand portfolio
The Board approved the long-term commercial
agreement for resort and all-inclusive hotels
with Iberostar.
A B C D
In reviewing and approving for publication the Group’s financial statements, the Board
ensured that the Group has met its regulatory requirements in relation to providing
shareholders and other stakeholders with accurate information regarding the Group
and further maintained the Group’s reputation for operating with high ethical standards.
In approving the commercial agreement with Iberostar, the Board considered a variety
of factors including the long-term culture fit between IHG and Iberostar, the enhanced
attractiveness for IHG One Rewards members to gain access to a significant number
of resorts globally, and the longer-term financial impact of the agreement, including
the impact on IHG’s system size and growth strategy. The Board also considered the
opportunities to advance a sustainable tourism agenda and the Group’s Journey to
Tomorrow initiatives.
Brand portfolio
The Board considered and endorsed the
approach to IHG’s Luxury & Lifestyle operating
model.
A B C D
As part of the Board’s oversight of brand strategy, and recognising the long-term need to
grow IHG’s Luxury & Lifestyle portfolio to respond to guest preference, the Board considered
and endorsed the development of IHG’s Luxury & Lifestyle operating model to drive
strategic growth in this area, effectively support owners in the operation of hotels, and
develop colleagues to create a longer-term, more diverse talent pipeline for this estate.
Loyalty strategy
The Board considered and endorsed the
ongoing approach to the re-launch of
the IHG One Rewards programme.
A B C
Operating regions
The Board approved the decision to cease
the Group’s hotel operations in Russia.
A B C D E F
Operating regions
The Board approved the restructuring of leases
for a portfolio of hotels in the UK.
A C
As part of the Board’s oversight of brand strategy in relation to IHG’s masterbrand,
the Board, in monitoring and endorsing the approach to the ongoing roll-out of IHG One
Rewards, had particular regard for the cost and operational complexity for owners, the
impact on guest expectations and experience, and the long-term competitive positioning
of the programme.
In approving the decision, the Board took into consideration the impact of IHG’s withdrawal
from Russia on IHG’s owners and colleagues, shareholder and guest expectations
in relation to companies continuing to operate in Russia in light of the war in Ukraine,
regulatory considerations, corporate governance and reporting requirements, and IHG’s
reputation for operating responsibly.
In its decision to approve the restructuring of leases for a portfolio of hotels in the UK, the
Board paid particular regard to the impact of the restructuring on the hotels’ employees,
the long-term financial impact of the changes, and the opportunity to use the hotels
to advance the Group’s Journey to Tomorrow commitments, particularly with respect
to carbon reduction initiatives. The Board also took into account the positive impact
of retaining high-profile assets in key locations on investors, hotel owners and guests.
Key to considerations
A Long term
C Suppliers and customers
E High standards
B Employees
D Community and environment
F Act fairly between members
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Technology
The Board reviewed and endorsed
management’s response to the criminal,
unauthorised access to the Group’s
technology systems.
A B C E
Technology
The Board endorsed the strategic plan
for delivery of technology supporting the
customer journey.
A B C
Growth strategy in regions
– Americas, EMEAA and Greater China
The Board received in-depth regional updates
from the CEOs of each of the Group’s three
regions, and provided oversight with regard
to the Group’s growth strategy over both the
short and long term.
A C
Board governance
Board composition
The Board approved the appointments of
Deanna Oppenheimer as Chair of the Board,
Byron Grote as Non-Executive Director and
Chair Designate of the Audit Committee,
and Graham Allan as Chair Designate of the
Responsible Business Committee.
A B E
Board composition
The Board approved the appointment of
Michael Glover as Chief Financial Officer
and Executive Director.
A B E
Policy governance
The Board approved the IHG Policy
Governance Policy.
A E F
People
The Board received and considered updates regarding management’s response to the
criminal, unauthorised access to IHG’s technology system, including in relation to the impact
on guest data, regulatory and governance requirements and communications, the short
and long-term consequences of the manner in which IHG responded to the incident,
and the impact on IHG’s reputation.
In considering and endorsing the long-term technology strategy and digital roadmap,
including the roll-out of IHG’s new mobile booking app, the Board had specific regard
for the impact to guests, owners and on-property colleagues in relation to ease of use,
retention of loyal guests, and booking optimisation. The Board further considered the
long-term impact on the IHG Masterbrand and loyalty programme, risks associated with
reliance on third-party suppliers, and the need to remain agile to address industry changes.
The Board received regular updates from the Group’s operating regions, covering
the Group’s positioning and performance in relevant markets and in relation to brand
performance, underlying growth drivers and the competitive environment, and further
focused on actions to accelerate the Group’s growth. In its discussions, the Board paid
particular attention to critical owner considerations in relation to building, operating
and renovating hotels, such as financing and cost and supply constraints.
When approving Board succession plans, the Board had particular regard for ensuring
that both the Board and its Principal Committees have the appropriate mix of skills,
experience and knowledge to provide effective oversight over the short and long-term
strategic objectives of the Group and effectively consider the interests of its stakeholders
while also maintaining high standards of business conduct and complying with the UK
Corporate Governance Code.
When progressing and approving Board and Executive Committee succession plans, the
Board had regard for ensuring that both have the appropriate mix of skills, experience and
knowledge, and further considered shareholder expectations, the impact to colleagues,
IHG’s desire to maintain its high standards of business conduct, and the long-term
financial success of the Group.
The Board approved a new Global Policy Governance Policy to drive clarity, consistency
and alignment of IHG’s global policies across the business. In doing so, the Board focused
on maintaining high standards of business conduct and ensuring that the impact on
various stakeholders was considered in the development of IHG global policies.
Diversity, equity and inclusion
The Board approved the Group’s updated
Global Diversity, Equity, Inclusion and
Equal Opportunities (DE&I) Policy, and further
had oversight of the Group’s DE&I initiatives.
A B D E
In approving the revised DE&I Policy, the Board acknowledged the critical role the policy
plays in defining and embedding IHG’s culture, and further noted the impact of IHG’s
culture on its business relationships with third parties including investors, hotel owners
and guests as well as employees.
The Board also recognised the increased broader societal scrutiny on ESG matters such
as diversity and inclusion, endorsing the revised policy’s alignment with the Group’s
broader Journey to Tomorrow ambitions and commitments.
Our people and culture
The Board regularly considered workplace
culture, taking into account feedback from
the Voice of the Employee engagement plan.
B D
The Board assessed and monitored culture throughout the year, receiving regular updates
from the CEO and from the Voice of the Employee engagement plan, overseen by the
designated Non-Executive Director for workforce engagement. The Board had particular
regard for the feedback received via the Voice of the Employee programme in relation
to culture, ways of working, diversity, wellbeing and benefits, executive remuneration
and IHG’s strategy and communications processes.
See pages 38 and 39 for information about how we have engaged with our stakeholders in 2022. Further details of our regard for the environment are on
pages 35 to 37 and 54 to 61.
Board activities
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Governance
Board activities continued
Our shareholders and investors
During 2022, IHG continued its open dialogue with shareholders and
investors, and conducted its annual programme of investor relations
activities, with support from its brokers and advisers. The Board
received regular updates and considered feedback as outlined on
page 99. In addition, our Registrar and American Depositary Receipts
(ADR) programme custodians have supported shareholders and
ADR holders with their queries.
Committee Chairs and the Senior Independent Director are available
for shareholders if they have concerns they wish to discuss.
Annual General Meeting (AGM)
The Board was pleased to be able to meet shareholders in person
at the 2022 AGM, following two years of ‘virtual’ meetings.
Our 2023 AGM will be held on Friday 5 May 2023. The notice of
meeting will be sent to shareholders and be made available on
our website in due course.
Visit www.ihgplc.com/investors under Shareholder centre.
Further information on the Board’s engagement with shareholders
and investors is included on page 38
Balancing the interests of stakeholders – Ending our operations
in Russia
Following Russia’s invasion of Ukraine and in response to the
ongoing war, the Board specifically convened to review IHG’s
hotel operations in Russia, ultimately agreeing that all operations
should cease. The Board carefully considered a number of factors,
including evolving sanctions laws in the UK, US and EU, and the
impact to IHG’s stakeholders.
• Colleagues: The Board prioritised consideration of employees,
focusing on their safety and mitigating the impact to those
employees directly employed by IHG, including in our corporate
office in Moscow, General Managers in hotels, and employees
in other regional offices outside of Russia who provided support
to hotels and owners in the region.
• Owners: All of our hotels in Russia, both managed and franchised,
were owned by third parties who employed the majority of workers
at their properties. The Board considered the interests of our
owners at length, understanding the impact of ceasing operations
on these relationships, and further considered the impact to IHG’s
reputation among the larger hotel owner community.
• Guests & Communities: IHG’s reputation with guests and the
wider community was considered at length, including the impact
on IHG’s brands and the importance of maintaining high
standards of business conduct.
• Shareholders: In addition to evaluating the impact to IHG’s
reputation, the Board also had regard for the impact on our
long-term growth strategy in the region as well as wider
geopolitical tensions.
The Board continues to monitor the war and, in particular, the
impact to our two hotels in Ukraine. IHG’s operations team
continues to support these hotels and their colleagues, while IHG
has also provided support to refugees through hotel stays, meals
and humanitarian aid.
Although IHG is no longer operating in Russia, the Board continues
to monitor ongoing impacts arising from the war as part of its
review of principal and emerging risks, crisis management and
business continuity.
See pages 175 and 176, note 6 for further details regarding the financial
impact of IHG’s exit from its Russia operations.
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Director appointments and induction
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Director appointments
Details of the appointments to the Board made during 2022 are
described in the Nomination Committee Report on pages 112 and 113.
New Director inductions
Upon appointment, all new Directors undergo a comprehensive
and formal induction programme which is tailored to meet their
individual needs. We believe this is crucial to ensure our Directors
have the full understanding of all aspects of our business and
familiarity with the Group’s purpose, culture and values, to ensure
they are able to contribute effectively to the Board.
For Deanna Oppenheimer and Byron Grote, tailored induction
plans were prepared in advance of their appointments to the Board.
Their plans broadly covered the following topics, while being tailored
to their respective roles as incoming Chair of the Board and Chair of
the Audit Committee, with a particular emphasis on understanding
IHG’s business, long-term strategy and governance processes
and controls:
• information on the Group’s purpose, culture, values and strategy,
including its business model, brands and the markets in which
it operates;
• key strategic initiatives;
• our approach to internal controls and our risk management strategy;
• information on the Board, its Committees and IHG’s
governance processes;
• a reminder of the rules relating to maintaining the confidentiality of
inside information and restrictions in dealing in IHG shares, together
with a briefing on the policies and procedures IHG has in place to
ensure compliance with such rules; and
• meetings with members of the Board and the Executive Committee,
senior management from functions across the Group, the external
Auditor and other key external advisers.
Additional appointments
During 2022, the Board considered and endorsed the following
additional appointments of Directors:
• Graham Allan as a director of Ikano Pte. Ltd.
• Ian Dyson as Chair of Currys plc, following completion of his role
as Chair of ASOS plc.
• Paul Edgecliffe-Johnson as non-executive director of Schroders plc.
• Duriya Farooqui as a member of the Board of Commissioners of the
Atlanta Housing Authority.
• Byron Grote as non-executive director of Inchcape PLC.
• Jill McDonald as Executive Vice President and President, International
Operated Markets of McDonald’s Corporation, transitioning from
her position as CEO of Costa Coffee.
• Sharon Rothstein as a Board member of Califia Farms, LLC and a
Board member of Block, Inc., following the acquisition of Afterpay
Limited by Block, Inc.
In each case, the Board took into account other appointments, the
time commitment required for each role and the context of the UK
Corporate Governance Code, including institutional investor and
proxy adviser guidelines concerning over-boarding. It was concluded
that the additional appointments should not adversely impact their
performance but should enhance their ability to provide
constructive challenge and strategic guidance.
Ongoing Director training and development
We understand the importance of an ongoing training programme
for Directors to enable them to fully understand the Group’s
business and operations in the context of the rapidly developing
environment in which it operates. The Chair continues to review
the training and development needs with each Director on a regular
basis and the Board is made aware of training opportunities.
Board and Committee meetings are regularly used to update
Directors on developments in the environment in which the business
operates and in-depth presentations are provided on key topical
areas. In 2022, these sessions included detailed discussions on the
socio-political and economic outlook against the background of
the war in Ukraine, labour market challenges, China’s zero-Covid-19
policy and the move to a more decarbonised economy. The Board
also received an in-depth update on loyalty programmes, including
the hotel loyalty programme landscape and the future of
loyalty programmes.
In addition, the Company Secretary provides regular updates on
regulatory, corporate governance and legal matters, and Directors
are able to meet individually with senior management if necessary.
In addition to training provided during Board and Committee
meetings, the reopening of IHG’s corporate offices allowed for
additional Board training and engagement sessions at IHG’s
Americas headquarters in Atlanta, in particular for Non-Executive
Directors who joined the Board during the pandemic in 2021 and
2022. These sessions, joined by Arthur de Haast, Sharon Rothstein,
Duriya Farooqui and Byron Grote, covered a range of topics relating
to Brands and Marketing, Finance, Commercial and Technology,
and the Americas region’s performance and strategy, and further
included site visits to several hotels across IHG’s portfolio of brands
as well as IHG’s design center.
Internal evaluation
Given the shortness of the incoming Chair’s time in role in 2022, the
Board undertook an internal evaluation of the Board’s performance,
with the intention to undertake an external evaluation in 2023.
Board members were asked to consider the Board’s overall
effectiveness by completing an internal questionnaire, which
focused on the following areas:
• progress in implementing agreed action items from the 2021
effectiveness review;
• Board composition, including knowledge, experience and
competencies, and succession planning;
• Board dynamics and information flow from management
to the Board;
• engagement between the Board and management; and
• Board leadership and strategic focus.
The responses of Board members to the questionnaire were
largely favourable in relation to all areas of the Board’s operation.
The feedback highlighted that the Board’s engagement with
management continues to be robust and effective, with the reporting
from management to the Board comprehensive, in particular in relation
to strategic priorities, risk management, stakeholder engagement,
and liquidity and financial resilience. Board members commented
positively that the Board continues to thoughtfully and effectively
challenge management while supporting management’s decisions.
The feedback further confirmed that the Board continues to be
effective in safeguarding the governance, reputation, viability and
future value of IHG.
With regard to implementation of the actions agreed in relation to
the 2021 Board effectiveness evaluation, Board members generally
agreed that this work had progressed, particularly in relation to
Board dynamics, with the return to in-person meetings in 2022
facilitating more effective discussions.
Board activities
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Governance
Board activities continued
Board development and effectiveness evaluation
The following areas of continued focus and recommended actions for 2023 were noted:
Area for focus
Action items
Long-term strategy
Board agenda, materials
& dynamics
Board composition
& succession planning
Board members positively noted the progress made in relation to the additional focus on implementation
of the long-term strategy in particular, and noted this should continue in 2023, in light of the increasingly
competitive landscape and other complex geopolitical and economic factors.
Feedback indicated that Board agendas continue to be well constructed and the materials are informative
and comprehensive, with good progress having been made on more forward-looking information,
but this should continue to be a priority for 2023, with a view to making the materials more concise.
Board members also noted that meetings could benefit from more streamlined presentations, allowing
for additional discussion time.
The responses of Board members noted that the current balance of skills, knowledge and experience
at the Board was appropriate, but this should be kept under review, particularly as Board members retire.
Looking ahead, it was felt that the Board could benefit from increased digital/technology, remuneration
and global C-suite experience.
Directors’ performance evaluation
In addition to the internal Board evaluation process outlined above,
the Chair considered the individual performance of the Non-Executive
Directors, focusing on their contribution to the Board and Principal
Committees and engagement with fellow Directors, in light of their
relevant skills, knowledge and experience. Particular points of note
were shared with the individual Directors and overall, the Chair
concluded that the Directors perform their duties independently
and effectively and that they dedicate sufficient time to discharge
their Board responsibilities.
The performance assessment of the Chair was led by the SID.
Given the limited tenure of the Chair in 2022, the evaluation focused
on overall leadership during the transition, with a more extensive
evaluation to occur following the Chair’s completion of the first full
year of her term.
The CEO evaluation was led by the Chair, who collected feedback
from the Non-Executive Directors. Key areas of focus included:
• company performance and impact of the CEO;
• the relationship and ability to work collaboratively
and transparently with the Board;
• delivery of the Group’s growth agenda;
• regard for community and the environment;
• building talent and organisational capabilities; and
• progress in relation to IHG’s 2022 plan and future needs.
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Audit Committee Report
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As Chair of the Audit Committee, I am pleased to present the
Committee’s report for the year ended 31 December 2022.
The Committee supports the Board in fulfilling its responsibilities
regarding financial reporting, the effectiveness of the Group’s
risk management and internal controls systems and other
compliance matters.
During the year, the Group operated in a volatile and uncertain
environment while continuing to drive an ambitious agenda of
initiatives in pursuit of growth. In this context, the Committee
remained agile throughout the year and focused its attention
on reviewing and obtaining assurance on evolving risk
management and resilience arrangements in relation to the
Group’s principal and emerging risks.
The Committee’s review and oversight of the effectiveness
of the Group’s internal control and risk management systems
included specific focus on management’s response to the
criminal, unauthorised access to its technology systems and
the governance and assurance relating to the transition of the
Group’s primary HR systems and the Committee concluded
there were no material weaknesses in the control environment.
In terms of the broader regulatory landscape, the Committee
considered emerging reporting requirements, including in
relation to independent assurance of disclosures particularly
relating to ESG and climate reporting, as well as ongoing UK
audit and corporate governance reform, and further reviewed
the Company’s plans to address these evolving requirements.
As the Company announced in May 2022, I will retire from the
Board on 28 February 2023 and will be succeeded as Chair of
the Committee by Byron Grote on 1 March 2023. Accordingly
the Committee and I have worked closely with Byron to ensure
an orderly transition.
Looking back over my tenure, maintaining strong financial
governance and effective internal controls has remained
paramount in an increasingly complex risk and financial
reporting environment. I would like to thank all those who, during
my tenure, have contributed to the Committee and the robust
governance framework and culture that continue to guide the
Group in operating responsibly.
Ian Dyson
Chair of the Audit Committee
20 February 2023
Key duties and role of the Committee
Key objectives and summary of responsibilities
The Audit Committee is responsible for ensuring that IHG maintains
a strong control environment. It monitors the integrity of IHG’s
financial reporting, including significant financial reporting
judgements, maintains oversight and reviews our systems of internal
control and risk management, monitors and reviews the effectiveness
and performance of internal and external audit functions, as well as
reviewing the behaviours expected of IHG’s employees through the
Code of Conduct and related policies.
The Committee’s role, responsibilities and authority delegated to it
by the Board are set out in its Terms of Reference (ToR), which are
reviewed annually and approved by the Board.
The ToR are available at www.ihgplc.com/investors under
Corporate governance.
As noted, the Committee focused its attention on reviewing and
obtaining assurance in relation to emerging and evolving risks as
well as the Group’s financial statements and controls. Key areas
of focus over the year have been:
• review of the Group’s approach to management of risk in an
uncertain and volatile geopolitical and macroeconomic environment,
including the risk, legal and accounting implications of the Group’s
exit from its hotel operations in Russia;
• review and oversight of management’s response to the criminal,
unauthorised access to the Group’s technology systems, including
recovery of systems and assessment of steps taken to mitigate risk
to the Group’s financial systems, controls and position;
• oversight of the Group’s financial governance programme,
including review of the governance and assurance relating to the
transition of the Group’s primary HR systems;
• review of and challenge to financial reporting throughout the year
to ensure the Financial Statements provide a true and fair view of
the Group’s performance and that latest guidance and reporting
regulations by regulators were appropriately applied;
• consideration of the Group’s approach to governance, risk
management and internal control arrangements in relation
to franchised and managed deal approval;
• review of the Group’s approach to the management of operational
safety and security risks as well as key compliance programmes
in relation to ethics and compliance and privacy; and
• the future role of the Committee in relation to non-financial
reporting assurance.
Membership and attendance at meetings
Details of the Committee’s membership and attendance at meetings
are set out on page 91. The CEO, CFO, General Counsel and Company
Secretary, Group Financial Controller, Head of Risk and Assurance
and our external Auditor attended all meetings in 2022. The Chair
of the Board also aims to attend all meetings and in 2022 attended
all but one of the meetings. Other attendees are invited to meetings
as appropriate and the CEO and all other Directors were invited to
Committee meetings where the approval of financial reporting was
considered and discussed. The Committee continues to hold private
sessions with the internal and external Auditors without the presence
of management to ensure that a culture of transparency is maintained.
The Committee Chair continues to have recent and relevant financial
experience and all members of the Committee are Independent
Non-Executive Directors. In accordance with the Code, the Board
also considers that the Committee as a whole possesses competence
relevant to the Company’s sector, having a range of financial and
commercial experience in the hospitality industry and the broader
commercial environment in which the Group operates. Further details
of the skills and experience of the Committee members can be
found on pages 93 to 95.
Audit Committee Report
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Governance
Audit Committee Report continued
Reporting to the Board
Following each Committee meeting, the Committee Chair updates
the Board on key issues discussed. The papers and minutes for
each meeting are circulated to all Board members, who are invited
to request further information if required and to provide any
challenge where necessary.
Effectiveness of the Committee
During the year, the Committee’s effectiveness was reviewed as part
of the internal Board evaluation process. It was concluded that the
Committee remains effective.
Focus areas and activities
Financial and narrative reporting
During the year, the Committee reviewed and recommended approval
of the interim and annual Financial Statements (considering the
relevant accounting and reporting matters such as key judgement
areas, going concern and viability statements, the financial reporting
impacts of commercial litigation and disputes, exceptional items
and impairment reviews) and the Group’s quarterly trading updates.
All members of the Board are asked to attend these meetings.
As well as receiving input and guidance from the external Auditor
on the areas outlined above, the Committee also received regular
reports from the Chair of the Disclosure Committee, which liaised
closely with other external advisers of the Group to ensure that
disclosure and regulatory requirements were being appropriately
considered and met. Copies of the Disclosure Committee’s minutes
were also provided to the Committee.
The Committee received early drafts of the Annual Report and
Form 20-F 2022 (Annual Report), and when providing comments
considered: (i) the process for preparing and verifying the Annual
Report, which included review by the Executive Committee and
input from senior employees in the Company Secretariat, Legal,
Operations, Strategy, Human Resources, Finance, Risk and
Assurance teams; (ii) a report from the Chair of the Disclosure
Committee; and (iii) a checklist prepared by the Annual Report team
confirming compliance with the relevant regulatory requirements.
The Committee also considered management’s analysis of how
the content, taken as a whole, was ‘fair, balanced and understandable’,
and whether it contained the necessary information for shareholders
to assess the Group’s position, performance, business model and
strategy. In order to reach this conclusion, a dedicated project
team worked on the contents of the Annual Report and a detailed
verification process to confirm the accuracy of the information
contained within the Annual Report was undertaken by the Financial
Planning and Analysis department. The Committee then considered
both the structure and content of the Annual Report to ensure that
the key messages were effectively and consistently communicated
and that meaningful links between the business model, strategy, KPIs,
principal risks and remuneration were clearly identified throughout the
Annual Report. The Committee specifically considered the impact of
the ongoing trading recovery following the pandemic on performance,
strategy and business resilience and where it impacted the nature
of the judgements and estimation uncertainty. The Committee also
considered the proportionate and consistent consideration of
climate matters across the Annual Report, including the TCFD
statement and an asset-by-asset review for impairment purposes.
Alongside this review, the Committee considered guidance provided
by the FRC throughout the year including in relation to TCFD
disclosures and climate risk in the Financial Statements, judgements
and estimates, deferred tax assets, earnings per share and business
combinations and concluded that appropriate enhancements had
been made to ensure alignment with the latest guidance.
Following a review of the contents of the Annual Report alongside
the aforementioned criteria, the Committee reported its
recommendation to approve the Annual Report to the Board.
Significant matters in the 2022 Financial Statements
Throughout 2022, the Committee provided ongoing challenge
to management’s accounting, reporting and internal controls.
The Committee discussed with management and the external
Auditor the significant areas of complexity, management judgement
and estimation in relation to the Financial Statements, and the impact
of any accounting developments or legislative changes. The Committee
has satisfied itself that management had adequately identified and
considered all potentially significant accounting and disclosure
matters. The key items discussed are outlined on pages 108 and 109.
Correspondence with US regulator
The Group received a letter dated 11 July 2022 from the US Securities
and Exchange Commission (SEC) with comments on the Group’s
Form 20-F 2021 disclosures in connection with non-GAAP measures.
The Group addressed the SEC’s comments and took them into
account in the preparation of the 2022 interim Financial Statements
as well as the Annual Report and Form 20-F 2022.
Internal control and risk management
The Board is responsible for establishing procedures to manage
risk, overseeing the internal control framework and determining
the nature and extent of the principal risks the Company is willing
to take to achieve its long-term objectives. The Committee supports
the Board by reviewing the effectiveness of the Group’s internal
control and risk management systems and assessing emerging
and principal risks.
In order to effectively review the internal control and risk management
systems, the Committee:
• receives regular reports from management, the Risk and Assurance
team and the external Auditor on the effectiveness of the systems
for risk management and internal controls, including financial,
operational and compliance controls;
• reviews the process by which risks are identified (including
procedures in place to identify emerging risks and linkage to wider
consideration of strategy and resilience) and assesses the timeliness
and effectiveness of action taken by management, including regular
reports on the Company’s overall risk management and internal
controls systems and principal risks; and
• receives regular reports relevant to risk management internal
controls, both financial and non-financial, to ensure that current
and emerging risks are identified and assessed and that there is an
appropriate management response (see pages 44 to 51 for further
detail on our risks and initiatives to manage them).
As part of the Committee’s review of the internal control and risk
management systems, key financial, operational and compliance
controls across the business continue to be monitored and tested
throughout the year. The Committee assesses the approach to
Sarbanes-Oxley Act 2002 (SOX) compliance in accordance with
our US obligations and reviews reports on the progress of the SOX
programme at each meeting.
During 2022, the Committee considered the activity undertaken
by the Risk and Assurance team to review and refresh risk profiles
and integrate resilience planning into the prioritisation and capability
building of the Group’s business teams. The Committee also
received updates on key assurance projects relating to the evolution
of the Group’s loyalty programme and the transition of the Group’s
primary HR system. The Committee reviewed emerging risks in
relation to the war in Ukraine and the impact of the Group ceasing
operations in Russia, including in relation to financial statements.
The Committee also reviewed the response to the unauthorised
access to its technology systems, including the roles played by
management teams, risk functions and Internal Audit, focusing
in particular on considerations for and assessment of the financial
control environment.
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Having reviewed the internal controls and risk management
systems throughout the year, the Committee concluded that the
Group continues to have an effective system of risk management
and internal controls, and that there are no material weaknesses
in the control environment.
Tax risks, policies and governance
The Group’s CFO has responsibility for tax and tax policies at
Board level. These policies and procedures are subject to regular
review and update and are approved by the Audit Committee.
Procedures to minimise risk include the preparation of thorough
tax risk assessments for all transactions carrying material tax risk and,
where appropriate, material tax uncertainties are discussed and
resolved with tax authorities in advance.
Our Approach to Tax document is available at
www.ihgplc.com/en/responsible-business/policies
Principal risk areas
During the year, the Committee discussed and assessed the range
and aggregate impact of dynamic risks that the Group faced in the
context of the volatile geopolitical and macroeconomic environment.
The Committee considered the following areas:
• operational risks and wider stakeholder considerations and
uncertainties relating to information security, sanctions, payment
systems and supply chain caused by the war in Ukraine;
• additional supply chain uncertainties arising as a result of continuing
Covid-19 restrictions in Greater China; and
• the ongoing competitive labour and salary environment, heightening
risks to achievement of strategy and goals, process continuity,
and employee wellbeing.
Particular attention was also paid to cybersecurity and governance
in the context of the criminal, unauthorised access to the Group’s
technology systems.
Further details of our principal risks, uncertainties and review process
can be found on pages 44 to 51.
Non-audit services
The independence and objectivity of the non-audit services provided
by the external Auditor to the Group are safeguarded by IHG’s Audit
and Non-Audit Services Pre-Approval Policy. The policy is reviewed
by the Audit Committee annually.
The policy requires that pre-approval is obtained from the Audit
Committee for all services provided by the external Auditor before
any work can commence, in line with US SEC requirements, without
any de minimis threshold and UK ethical standards. The Committee
reviewed the audit and non-audit fees incurred with the external
Auditor and noted that there had been no prohibited services
(as defined by SOX or under UK ethical standards) provided to the
Group during the year. The Committee is prohibited from delegating
non-audit services approval to management and compliance with
the policy is actively managed.
IHG is committed to maintaining non-audit fees at a low level and
the Committee remains cognisant of investor advisory bodies’
guidelines on non-audit fees. During 2022, 11% of services provided
to the Group were non-audit services (2021: 11%), primarily related to
System and Organisation Controls (SOC) Reports. Details of the fees
paid to PwC for non-audit and statutory audit work during 2022 can
be found on page 174. The Committee is satisfied that the Company
was compliant during the year with the FRC’s Ethical and Auditing
Standards in respect of the scope and maximum permitted level
of fees incurred for non-audit services provided by PwC. Where
non-audit work is performed by PwC, both the Company and PwC
ensure adherence to robust processes to prevent the objectivity
and independence of the external Auditor being compromised.
Risk and assurance – Internal Audit
The Committee discusses and approves the Internal Audit annual
plan, which aims to provide objective and insightful assurance that
appropriate controls are in place to support our strategy and growth
ambitions. Progress against the Internal Audit plan is reported at each
meeting and, during 2022, the Committee reviewed several areas set
out in the plan, including data ownership and integrity, governance
and assurance in relation to metrics, and controls access.
The 2023 plan presented to the Committee in December 2022
maintains focus on the integrity of the risk management and internal
control system, providing independent assurance to complement
management’s own activities where these are relatively mature,
well-governed and/or regulated. Areas of focus in 2023 include
attention on principal risks related to data and information usage
and storage and operational resilience to incidents/disruption.
Following consideration, the Committee confirmed its agreement
to the 2023 Internal Audit plan, including the assurance objectives
identified. The Committee reviews the results of completed audits
and observations from other ongoing assurance and control
improvement support, as well as actions taken by management
in response to Internal Audit’s work.
The functional effectiveness of Internal Audit is assessed on an
ongoing basis and reported to the Committee throughout the year.
During 2022, this has involved feedback from auditees and self-
assessment of execution against methodology. This has highlighted
ongoing conformance to recognised standards for internal
auditing and positive feedback on the team’s sustained support to
management to understand risks and control approaches through
their work, and considered opportunities for continuous improvement,
for example, relating to the application of market best practice,
application of audit management tools, and protocols for ethics
reporting. An independent quality evaluation of the function will
be conducted in early 2023.
Governance and compliance
The Committee is also responsible for reviewing the Group’s Code
of Conduct and related policies.
Looking forward
During 2023, the Committee will remain focused on ensuring that
standards of good governance are maintained and that appropriate
assurance is obtained across all areas of the business, with a
particular focus on the Group’s principal risks, control environment
and approach to financial reporting, taking into account new and
emerging legislation and regulation.
External Auditor – Reappointment of PwC
The Committee reviewed and assessed PwC’s performance during
the year and considered its reappointment as the Group’s external
Auditor. PwC was originally appointed as the Group’s Auditor in
March 2021, following a tender process in 2019. Giles Hannam
remained as PwC’s lead audit partner in 2022.
As part of its assessment, the Committee:
• regularly reviewed and assessed the progress of the audit
throughout the year;
• reviewed the findings from the FRC’s annual audit inspection
and the actions PwC has undertaken as a result of this inspection.
Particular attention was given to the observations which could
be relevant in the audit of the Group;
• enquired as to the focus areas of the engagement quality partner;
• reviewed the results of a detailed survey sent to Committee
members and a number of senior IHG employees in respect of
areas such as audit planning, professional scepticism, technical
strength and communication; and
• met privately with the external Auditor to review key issues.
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Audit Committee Report continued
The Committee also considered if PwC met the required levels of
independence and objectivity. The Committee concluded that PwC’s
audit team was providing the required quality in its provision of audit
services. The audit team had shown the necessary commitment and
ability to provide the services together with a demonstrable depth of
knowledge, robustness, independence and objectivity as well as an
appreciation of complex issues. The team had posed constructive
challenge to management and the Committee noted the quality of
reporting provided to it. Accordingly, the Committee recommended
the reappointment of PwC to the Board.
The Group has complied with the requirements of the Statutory
Audit Services for Large Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014, which relates to the frequency and
governance of tenders for the appointment of the external auditor
and the setting of a policy on the provision of non-audit services.
Case study – Auditor effectiveness
Two of the Group’s significant focus areas, the IHG One Rewards
loyalty programme and the System Fund, are audited by a PwC
component team. The Audit Committee considered if PwC
had maintained effective oversight of the component team and
were able to obtain sufficient and appropriate audit evidence.
Specific factors considered included:
• the consistency of the audit execution with that outlined
in the plan;
• a site visit undertaken by the group team to the component
team, including the lead audit partner. During the visit, PwC
specifically reviewed these areas and held deep-dive meetings
with management;
• the use of PwC’s own actuarial experts in respect of the
IHG One Rewards loyalty programme;
• the review performed by PwC’s engagement quality partner
in these areas; and
• specific feedback from management covering PwC’s planning,
execution and its understanding of complex issues.
The Audit Committee was satisfied that PwC had executed the
appropriate level of audit quality in these areas.
Significant matters in the 2022 Financial Statements
Area for focus
Issue/Role of the Committee
Conclusions/Actions taken
Accounting
for IHG
One Rewards
Accounting for IHG One Rewards
requires significant use of
estimation techniques and represents
a material deferred revenue balance.
The Committee reviews the controls,
judgements and estimates related
to accounting for IHG One Rewards.
Accounting
for the
System Fund
Given the unique nature of the
System Fund, the Committee reviews
the controls and processes related
to System Fund accounting.
Expected
credit losses
Expected credit losses are subject
to uncertainty. During 2022, the level
of uncertainty has decreased in both
the Americas and EMEAA, with
uncertainty remaining in Greater China.
The Committee reviews the provision
and, where historical experience is not
considered relevant, reviews the nature
and impact of assumptions made.
The Committee reviewed the deferred revenue balance, the valuation approach,
the results of the external actuarial review and procedures completed to
determine the breakage assumption for outstanding IHG One Rewards points.
Member behaviour during the pandemic was incorporated into the breakage
analysis but was not given the same weighting as pre-pandemic activity.
The Committee considered changes to the rewards programme in the year and
in particular the introduction of Milestone Rewards. The Committee reviewed
a paper which summarised the impacts of these changes and amendments
to the deferred revenue model which have been made to accommodate them.
The Committee concluded that the deferred revenue balance is
appropriately stated.
The Committee met with senior finance management to review and evaluate
the risk areas associated with the System Fund. The Committee reviewed a
paper from management summarising the principles determining the allocation
of revenues and expenses to the System Fund, and the related governance and
internal control environment. The Committee concluded that the accounting
treatment of the System Fund and related disclosures are appropriate.
The Committee reviewed management’s papers setting out the approach to
calculating the provision for expected credit losses, including updates made
in respect of Greater China to reflect the ongoing challenges within the region.
The Committee concluded it agreed with the basis of calculation, that this is
no longer a significant estimate (as a material change is not expected in the
next 12 months), and that the related disclosures are appropriate.
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Issue/Role of the Committee
Conclusions/Actions taken
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Impairment reviews require significant
judgement in estimating recoverable
values of assets or cash-generating
units and the Committee therefore
scrutinises the methodologies applied
and the inherent sensitivities in
determining any potential asset
impairment or impairment reversal and
the adequacy of related disclosures.
The Committee reviewed management reports outlining the approach taken
on impairment testing and key assumptions and sensitivities supporting the
conclusion on the various asset categories. The Committee examined in detail
whether triggering events for impairment testing had occurred, including
testing for impairment reversals, and the assumptions applied in estimating the
recoverable values with a focus on the underlying cash projections. The Committee
agreed with the determinations reached on impairment and that the related
disclosures are appropriate.
From time to time, the Group is subject
to legal proceedings with the ultimate
outcome of each being subject to
many uncertainties. The Committee
reviews and evaluates the need for
provisioning and considers the
adequacy of the disclosure.
At each meeting during the year, the Committee considered reports detailing
all material litigation matters including commercial disputes. The Committee
discussed and agreed any provisioning requirements based on underlying factors.
Disclosures were assessed, with particular emphasis on the completeness of
uncertainties disclosed. Where the Group has contingent assets, the Audit
Committee considered management’s assessment of their probability and the
extent of related disclosures and is satisfied these are appropriate.
Impairment
testing
Litigation and
contingencies
Exceptional
items
The Group exercises judgement
in presenting exceptional items.
The Committee reviews and challenges
the classification of items as exceptional
based on their size, nature or incidence,
with consideration given to consistency
of treatment with prior years and
between gains and losses.
Going
concern
and viability
The Committee reviews management’s
financial modelling to conclude on the
appropriateness of the going concern
and viability statement.
Climate risk
In preparing the Financial Statements,
the potential impacts of climate
change have been considered.
The Committee reviewed papers by management and considered the consistency
of treatment and nature of items classified as exceptional. The Committee
reviewed and challenged the significance, timing and nature of the exceptional
items (see pages 175 to 178). The Committee also considered the sufficiency
of disclosure and whether such disclosure explained the rationale for why
each item is considered to be exceptional. The Committee concluded that the
disclosures and the treatment of the items shown as exceptional are appropriate.
The Committee considered other one-off items which are not considered to be
exceptional and concluded that the treatment of such items is appropriate and
adequately disclosed.
The Committee reviewed and challenged the scenarios considered by
management, the detailed cash flow forecasts and the mitigating actions available
to management considered in its going concern assessment to June 2024 and
the three-year viability assessment and concluded these were appropriate.
The Committee also reviewed and challenged the reverse stress test assumptions
to confirm the viability of the Group. The Committee reviewed going concern
disclosures (page 157) and the viability statement (pages 52 to 53) and is
satisfied these are appropriate.
The Committee reviewed an analysis from management summarising the
approach taken to consider climate risk on an asset-by-asset basis and concluded
that the disclosures were appropriate. The Committee agreed that the disclosures
made in respect of the Task Force on Climate-related Financial Disclosures were
appropriate. The Committee satisfied itself that the approach across the Annual
Report has been proportionate and consistent.
UK deferred
tax asset
Given the size of the Group’s UK
deferred tax asset ($109m), the
Committee reviewed and challenged
the key assumptions determining the
recoverability of the deferred tax asset
and whether this should be disclosed
as a significant estimate.
The Committee confirmed the estimates used to support the recovery of the UK
deferred tax asset were consistent with those used in the impairment and going
concern and viability assessments. Given the recovery to levels of profitability
assumed in these estimates, the Committee concluded that it agreed with the
recognition of the deferred tax asset, that this was not a significant estimate,
as a material change in estimate is not expected in the next 12 months, and that
the disclosures are appropriate.
Assessment
of the impact
of IFRS 17
IFRS 17 ‘Insurance Contracts’ will
be adopted from 1 January 2023.
An assessment is made in advance
of new accounting standards of the
expected impact to the Group’s results.
The Committee reviewed a paper from management summarising the impact
of IFRS 17 and the key considerations made by management during their
assessment. The Committee concluded that the assessment and related
disclosures are appropriate.
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Governance
Responsible Business Committee Report
I am pleased to present the Responsible Business
Committee’s report for the year, including an update on the
Board’s Voice of the Employee workforce engagement plan.
With increased stakeholder focus on environmental, social
and governance (ESG) matters, the 2030 commitments set
forth in the Group’s Journey to Tomorrow responsible business
plan continued to be a primary area of focus for the Committee
during the year. Along with review of the 2022 priorities
supporting the overall achievement of the Group’s longer-term
commitments, the Committee considered an external
assessment of emerging ESG initiatives and regulatory
developments across IHG’s key markets and a benchmarking
of the 2030 commitments against evolving stakeholder
expectations in those markets.
The broader evolution of ESG reporting was another area
of focus. The Committee considered in particular the impact
of evolving political and societal expectations in relation to
ESG issues for companies and the importance of maintaining
consistency between the Group’s commitments and its
decision-making.
The Committee remained mindful throughout its meetings and
discussions of the impact of the Group’s responsible business
agenda on stakeholders, considering for example how to utilise
the Group’s strong ESG foundation and progress against its
responsible business commitments to drive competitive
advantage with owners and guests. The Committee further
considered the feedback from the Voice of the Employee
programme, including in relation to workplace culture and
employee wellbeing, as well as the impact of DE&I and other
workplace initiatives on employees.
As the Company announced in December 2022, I will retire
from the Board with effect from 28 February 2023 and will be
succeeded as Chair of the Committee by Graham Allan.
I am proud of the role the Committee has played during my
tenure in overseeing and championing the Group’s ambitious
responsible business agenda, and would like to thank the
Committee members and management for their continued focus
on driving progress in this area, while keeping the interests
of IHG’s stakeholders at the forefront of the Group’s strategy.
Jill McDonald
Chair of the Responsible Business Committee
20 February 2023
Key duties and role of the Committee
Key objectives and summary of responsibilities
The Committee reviews and advises the Board on the Group’s
responsible business objectives and strategy, including its impact
on the environment and climate change; social, community and
human rights issues; its approach to sustainable development and
responsible procurement; and stakeholder engagement in relation
to the Group’s approach to responsible business. The Committee
is also responsible for assessing the Board’s engagement with the
workforce and the Group’s DE&I agenda.
The Committee’s role, responsibilities and authority delegated to
it by the Board are set out in its Terms of Reference (ToR), which
are reviewed annually and approved by the Board.
The ToR are available at www.ihgplc.com/investors under
Corporate governance.
In addition to the areas outlined above, the Committee’s key
responsibilities and focus areas over the year have been:
• assessing the 2022 strategic priorities that support the Group’s
2030 responsible business commitments and monitoring the
progress against them;
• monitoring the progress of TCFD reporting;
• reviewing the Group’s responsible procurement programme;
• reviewing the Group’s human rights programme and Modern
Slavery Statement;
• reviewing the Group’s Responsible Business Report; and
• considering the inclusion of an ESG metric in the Long Term
Incentive Plan (LTIP) for Executive Directors.
Membership and attendance at meetings
The Committee’s membership and attendance at meetings are set
out on page 91. The Chair of the Board, CEO, General Counsel and
Company Secretary, Executive Vice President, Global Corporate
Affairs and the Chief Sustainability Officer attended all meetings
held during the year.
Reporting to the Board
The Committee Chair updates the Board on all key issues raised at
Committee meetings. Papers and minutes for each meeting are also
circulated to all Board members, who are invited to request further
information where necessary.
Effectiveness of the Committee
In 2022, the Committee’s effectiveness was reviewed as part of
the internal Board evaluation process, where it was concluded that
the Committee remains effective.
Focus areas and activities
Responsible business commitments
The Committee considered and assessed the key areas of focus
for the Group’s responsible business commitments, including:
• progress in relation to increasing gender and ethnic diversity
within management at both the corporate and hotel level, and
the development of a global wellbeing programme;
• the Group’s decarbonisation and energy reduction strategy,
including the integration of Energy Conservation Measures (ECMs)
into brand standards for operating hotels, developing very low or
zero-carbon new-build hotels and future options for a renewable
energy programme; and
• the Group’s Human Rights programme, with particular focus
on identifying and addressing human rights risks specific to the
hospitality industry and the progress of the Group’s anti-human
trafficking programme.
Further information on our 10-year responsible business plan can
be found on pages 28 to 37.
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TCFD
The Committee assessed the Group’s progress in relation to 2022
TCFD reporting, noting the increased transparency in the expanded
disclosures and the inclusion of a climate transition plan, and work to
embed climate risks in the risk profiles of the Group’s business teams.
Further information on TCFD is included on pages 54 to 61.
Responsible procurement
The Committee considered the progress of key workstreams of the
Group’s responsible procurement strategy, including supply chain
risk management, sustainability and supplier diversity.
ESG metric in LTIP
The Committee worked with the Remuneration Committee to
consider the inclusion of an ESG metric in the LTIP, involving
measures relating to people and the environment.
Looking forward
During 2023, the Committee will continue to focus on assessing
the Group’s short-term strategic priorities to drive achievement
of the longer-term 2030 responsible business commitments.
Our Responsible Business Report is available at
www.ihgplc.com/responsible-business
Voice of the Employee
At the start of 2022, Duriya Farooqui was appointed as IHG’s
designated Non-Executive Director (NED) with responsibility
for workforce engagement (Voice of the Employee). Duriya has
been supported by the Group’s Global Human Resources (HR)
team to develop and execute a plan to engage directly with
members of IHG’s corporate and hotel workforces, with the
aim of collating and sharing such feedback with the Board
for consideration in its decision-making.
Role and responsibilities
The role and responsibilities of the designated Voice of the
Employee NED are to:
• support the design of the structure and content of Board
discussions on employee engagement and culture;
• evaluate employee engagement approaches and their
effectiveness;
• ensure that employee feedback and interests are factored into
the Board’s decisions and KPI setting;
• ensure that the Board, through the Executive Committee, has
effective methods of receiving feedback from employees and
communicating Board and executive decisions and priorities
throughout the organisation;
• ensure all significant business and budget proposals include
a management assessment of the impact on employees; and
• ensure Executives share employee feedback openly,
transparently and in a balanced way, including reviewing
employee engagement surveys and other employee reports,
including whistleblowing.
2022 engagement
Building off prior years’ engagement plans, in 2022, the team
continued to broaden the employee feedback groups who met
with and provided feedback to the Board to include a higher
representation of hotel colleagues in markets outside the UK
and US, as well as additional Employee Resource Groups (ERGs)
to ensure a level of diversity.
During the year, Duriya, with the assistance of several other
NEDs, undertook a programme of activities to engage with a
cross-section of employees and receive detailed feedback both
in person and through a number of virtual employee meetings/
forums. These feedback sessions included leader groups within
the US and UK hotels, reservations and corporate populations,
and ERGs across the UK, US, India, China and various
EMEAA countries.
A dozen feedback sessions were held throughout the year, and
Duriya was joined by Non-Executive Directors Daniela Barone
Soares and Jo Harlow and Chair Deanna Oppenheimer for some
of these sessions.
Discussion topics and themes in relation to the feedback received
from employees included employee wellbeing; workplace culture;
flexible/remote working particularly for the large reservations teams;
leader communications; strategy, prioritisation and collaboration;
talent attraction; onboarding and retention; personal and career
development; and agile ways of working and decision-making.
Additional engagement and activities undertaken by Duriya during
the year included:
• monitoring and reviewing the content and feedback from global
‘all employee’ CEO calls;
• reviewing employee dashboards setting forth data/metrics
relating to employees;
• reviewing employee engagement survey results; and
• engaging with the Global HR Leadership team to receive broader
cultural insights.
Insights and learnings
Duriya provided regular feedback to the Responsible Business
Committee and the Board throughout the year, with key Board
discussions taking place around the insights and action planning
arising from employee engagement survey results. Through this
feedback, the Board gained valuable insights into employee
sentiment throughout the recovery from the pandemic and the
shift to hybrid working.
Plans for 2023
Duriya will remain as the Board member with responsibility for
workforce engagement in 2023, and it is anticipated that additional
NEDs will assist with some of the Voice of the Employee activities.
A schedule of discussions and feedback sessions has been
arranged for 2023, and will continue to encompass a wide group
of employees and leaders from across all regions, including ERGs
and Lean In circles, with further inclusion in 2023 of a ‘new starters’
group to ensure a balance of tenure. Additionally, the Board will
continue to keep the functioning of the Voice of the Employee
programme under review to ensure it meets best practice and
complies with regulatory developments.
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Nomination Committee Report
Key duties and role of the Committee
Key objectives and summary of responsibilities
The Committee reviews the composition of the Board and its
Principal Committees, evaluating the balance of skills, experience,
independence, knowledge and diversity requirements before
making appropriate recommendations to the Board as to any
changes. It also ensures plans are in place for orderly succession
both for Directors and other senior executives and is responsible
for reviewing the Group’s senior leadership needs.
The Committee’s role, responsibilities and authority delegated to it
by the Board, including processes in relation to appointments, are
set out in its Terms of Reference (ToR), which are reviewed annually
and approved by the Board. The ToR state that the Committee is
responsible for considering potential candidates for appointment
to the Board based on merit, cognitive and personal strengths with
due regard for the benefits of diversity, including gender, and social,
ethnic and geographic backgrounds.
The ToR are available at www.ihgplc.com/investors under
Corporate governance.
The Committee’s key responsibilities and focus areas during the year
have been:
• assessing the Board’s and the Principal Committees’ composition
and succession planning, including consideration of gender
balance and ethnic and geographical diversity, in accordance
with the ToR and consistent with the Group’s DE&I Policy
(details of which are on page 31);
• engaging with external search consultancies and making
recommendations on appointments to the Board;
• overseeing the internal performance evaluation of the Board and
its Principal Committees as well as the evaluation of individual
Non-Executive Directors; and
• monitoring the Executive Committee and senior leadership talent
and succession planning.
Membership and attendance at meetings
The Committee’s membership and attendance at meetings are
available on page 91. All members of the Committee are Non-Executive
Directors. When the Committee considers matters relating to my
position, the Senior Independent Non-Executive Director (SID) acts
as Committee Chair.
Reporting to the Board
The Committee makes recommendations to the Board for all Board
appointments. Minutes are circulated to and reviewed by Committee
members, and I report back to the Board on the activities of the
Committee following each meeting.
Effectiveness of the Committee
During the year, the Committee’s effectiveness was reviewed as part
of the internal Board evaluation process. It was concluded that the
Committee remains effective.
I am pleased to present the Nomination Committee’s
report for the year.
Following the announcement of my appointment as Chair
Designate in January 2022, the Committee’s agenda has been
dominated by Board composition and succession planning,
particularly in respect of Non-Executive Directors approaching
the completion of nine-year tenures.
The Committee led Board succession plans with the
recommendations to appoint Byron Grote as Non-Executive
Director and Audit Committee Chair Designate, and Graham
Allan as Responsible Business Committee Chair. The Committee
also oversaw a refreshment of the composition of the Audit
Committee and the Remuneration Committee.
I am pleased to report that the Committee also approved the
promotion and appointment of Michael Glover as Executive
Director and Chief Financial Officer, with effect from 20 March
2023, evidencing the strength of the Company’s succession
planning at the senior management level.
Additionally, as at 31 December 2022, our Board composition
exceeds the 40% target for the proportion of women on boards
and meets other applicable recommendations set out in the
FTSE Women Leaders Review. Our Board also continues to
exceed the Parker Review’s recommendation on ethnic
diversity on boards.
Given the commencement of my tenure as Chair in September,
and recognising the value in obtaining external feedback in
relation to the effectiveness of the Board, the Committee
oversaw the completion of internal Board and Committee
effectiveness assessments in 2022. A full external performance
evaluation will be conducted in 2023.
In a year of significant change in relation to the Board’s
composition, the Committee’s approach to succession planning
continues to ensure that the Board maintains the right mix
of skills and experience to assist the Group in building talent,
delivering on its strategic objectives and maintaining the
Group’s strong, inclusive culture.
Deanna Oppenheimer
Chair of the Nomination Committee
20 February 2023
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Executive Committee talent and succession
Subsequent to the announcement in October 2022 of the
upcoming departure of Executive Director and Chief Financial
Officer Paul Edgecliffe-Johnson, the Committee oversaw the process
to appoint a successor. Spencer Stuart supported the process, which
included a broad desktop review of external candidates and an
interview and assessment process for the internal candidate search,
with a particular focus on the appropriate competencies, function
experience and understanding of IHG’s Global Finance organisation,
as well as cultural characteristics and leadership competencies.
Spencer Stuart has no other connection with the Company or
individual Directors.
Following discussion and consideration, the Committee
recommended to the Board the appointment of Michael Glover as
Executive Director and Chief Financial Officer from 20 March 2023.
Throughout the year, the Committee also received updates on talent
and succession planning at Executive Committee and senior
leadership levels, noting in particular progress against DE&I objectives.
Information on the gender balance of senior management as well
as the Board is included on page 32.
Looking forward
In 2023, the Committee will continue its focus on Board succession
planning and competencies as well as continuing to ensure that our
Executive and senior talent pipeline combines an appropriate blend
of skills, experience, knowledge and diversity.
Focus areas and activities
Board and Principal Committee composition
and succession planning
The Committee focused in particular on succession planning for
the Audit Committee Chair and the Responsible Business Committee
Chair roles, in light of the completion of 9-year terms by Ian Dyson
and Jill McDonald respectively.
The Committee engaged Egon Zehnder to assist with the search
for suitable candidates for the Audit Committee Chair role and
an internal search was conducted for the Responsible Business
Committee Chair role. In both cases, a candidate selection,
assessment and interview process was conducted as relevant,
with particular focus on the appropriate competencies, functional
experience, cultural characteristics and consideration of candidates’
other commitments in line with the provisions of the UK Corporate
Governance Code. Egon Zehnder has no other connection with the
Company or individual Directors.
Following the completion of satisfactory background and reference
checks by Egon Zehnder, the Committee recommended to the
Board the appointment of Byron Grote as Non-Executive Director
with effect from 1 July 2022, to assume the role of Audit Committee
Chair from 1 March 2023. Byron’s biography is included on page 93
and details of his induction plan can be found on page 103.
With Byron’s appointment, the Audit Committee Chair will continue
to have recent and relevant financial experience, as required by the
UK Corporate Governance Code.
After due consideration, the Committee also recommended to
the Board that Graham Allan be appointed as Responsible Business
Committee Chair with effect from 1 March 2023.
During the year, the Committee also considered the Principal
Committees’ composition in the context of the changes outlined
above, the balance of skills and experience across the Principal
Committees and cross-committee assignments. The Committee
determined that it would be appropriate to recommend to the
Board the appointment of Arthur de Haast to the Audit Committee,
with a view to him stepping down from the Remuneration
Committee, and my appointment to the Remuneration Committee
(I did not participate in the discussion on this). The Board approved
these changes to take place with effect from 1 January 2023.
Performance evaluations
Given I formally started as Chair in September 2022, the Committee
recommended to the Board that an internal evaluation exercise be
carried out following my appointment, on the basis that an external
evaluation process conducted during 2023 would provide more
meaningful and productive insight. Further information on the
internal performance evaluation is included on pages 103 and 104.
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Directors’ Remuneration Report
Remuneration Committee Chair’s statement
We were pleased to see overall employee engagement scores
remain resilient at 86%, exceeding external benchmarks by 8%.
Perceptions of pay also remained strong, exceeding external
benchmarks across our hotel, reservations and general manager
populations (see page 126).
Overview of 2022 remuneration outcomes
The key highlights of Executive Director incentive plan awards for
2022 are presented below, and a detailed explanation and rationale
for the Committee’s decisions are set out in this report:
• The formulaic achievement on Annual Performance Plan (APP)
metrics (operating profit from reportable segments, room
openings and room signings) resulted in awards for Executive
Directors of 95.7% of maximum reflecting the outstanding
performance of the business in 2022.
• The performance measures for the 2020/22 Long Term Incentive
Plan (LTIP) cycle were relative Total Shareholder Return (TSR),
relative net system size growth (NSSG), cash flow and Total Gross
Revenue (TGR). When assessing performance for the 2020/22
award, the impact of the pandemic was considered in relation
to the two absolute measures, cash flow and TGR:
– The TGR target for that cycle was set later in the year, reflecting
guidance from investor bodies at the time of the outbreak of
Covid-19 that awards could be granted at the usual time with
performance targets set up to six months later. The Committee
was therefore able to set a TGR target that was reflective of
performance expectations after the initial impact of the pandemic
became evident. TGR performance was above maximum for the
cycle, resulting in full vesting of this element.
– However, the cash flow target was set in February 2020 and
communicated in the 2019 Directors’ Remuneration Report.
Following the outbreak of Covid-19, the original cash flow target
was seen as unachievable. However, the Committee determined
not to adjust the targets for the in-flight awards. In October 2020,
the Committee began tracking a ‘shadow’ cash flow target for
2020/22 that had been formulated to drive the cash management
actions during this period. The original cash flow target was not
adjusted and this shadow target did not replace it. However, as
disclosed in our 2021 Directors’ Remuneration Report, it was
intended to be a highly relevant reference point when assessing
the performance of the 2020/22 LTIP.
– The Committee decided to utilise the maximum of the shadow
target, $1.09 billion, as the threshold for the cash flow LTIP
measure, reflecting the exceptional performance on cash
management during the pandemic.
Assessment of windfall gains
As part of a range of actions taken on pay, as a result of the impact
of Covid-19 during 2020, the 2020/22 LTIP award was granted at
a maximum of 205% of salary, which is 40% below the Directors’
Remuneration Policy approved level of 350% for the CEO and 25%
below the policy approved level of 275% for the other Executive
Directors. This was part of a wider range of cost-saving measures in
response to the pandemic, but also mitigated against the potential
for windfall gains on LTIP outcomes, given that the share price
had fallen at the time of grant. We are pleased that over the period
from May 2020, the share price has performed well, recovering
to pre-Covid-19 levels. Before agreeing the vesting levels for the
2020/22 award, the Committee analysed the share price performance
to consider the extent of any windfall gain. The analysis showed that
the reduction in maximum grant value in 2020 significantly more
than outweighed any gain as a result of the share price recovery over
the three years, particularly for the CEO1. The Committee, therefore,
considered that sufficient actions had been taken to mitigate against
the potential for windfall gains and no adjustments were made to
vesting levels in this regard.
1 Further details are on page 130.
“ Management has delivered strongly against its
objectives, having positioned the business well
for recovery and for future growth and returns.”
Table of contents
114 Directors’ Remuneration Report
(subject to an advisory vote at the 2023 AGM)
114 Remuneration Committee Chair’s statement
120 At a glance
122 Our approach to remuneration
127
Annual Report on Directors’ Remuneration
As Chair of the Remuneration Committee and on behalf of the
Board, I am pleased to present the Directors’ Remuneration Report
for the year ended 31 December 2022.
2022 business performance context
Demand recovered strongly across most of our markets in 2022.
We passed the milestone of 6,000 open hotels in delivering
adjusted net system size growth of 4.3% for the year, excluding
the impact of ceasing operations in Russia, with room openings
and room signings up 12.5% and 16.7% respectively. Operating profit
from reportable segments, at $828 million, was up 55% on 2021.
Fee margin has recovered to pre-pandemic levels following the
recovery in revenue, combined with our disciplined approach to
cost management. From a shareholder perspective, the Board has
proposed a final dividend of 94.5¢, an increase of 10% on 2021,
and resulting in a total dividend for the year of 138.4¢. Additionally,
as a result of our strong cash management, we completed a share
buyback programme to return $500 million of surplus capital in
January 2023, and a further $750 million is due to be launched
in 2023.
Wider workforce remuneration and employee engagement
The Committee is extremely mindful of the current cost-of-living
challenge and its impact on the financial and emotional wellbeing
of our employees. In 2022, salary increases for the UK and US
corporate populations were in line with those for Executive Directors.
The overall budget for 2023 increases is around 4.5% for UK and US
corporate employees and 3% for the CEO.
For the UK leased hotel estate, in agreement with the owner, pay
rates for front-line staff were increased in 2022, at least in line
with the real living wage, and healthcare benefits were extended.
Budgeted 2023 salary increases range from 5% to 8%, with higher
increases applicable for front-line employees, and one-off payments
made to employees who had worked for at least the final three
months of 2022. Details of our approach to remuneration across
the wider workforce in general and throughout the year are outlined
on pages 123 to 124.
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2020/22 LTIP award
Using our formal discretion framework
(see opposite), the Committee considered
whether to adjust the formulaic outcome for
the cash flow target, given management’s
exceptional performance in maintaining
such a strong cash position during a
challenging period for the Company and the
resulting outperformance of the maximum
shadow cash flow target. Following this
assessment, we determined that the result
under the formulaic outcome was not
reflective of the performance of the business
and that discretion should be exercised to the
vesting level under the cash flow element.
The detailed rationale of the Committee is
set out over the following pages:
Committee determination
Framework for consideration of discretion
In line with the UK Corporate Governance Code, the Committee has adopted a formal
framework which it will use to determine whether to exercise discretion. Some of the
key factors the Committee considers are shown below.
Performance relative to competitors
Historic performance outcomes
Impact of adjustments
Wider Company financial and strategic performance
Consistency between APP and LTIP outcomes
Stakeholder experience: shareholders, employees, owners & guests
Historic use of discretion
Possible use
of discretion
Measure and
weighting
Cash flow
(20%)
Weighted
formulaic
outcome
Weighted
discretionary
outcome
Rationale
7.3%
14.5%
(see page 129)
• The Committee has reviewed performance on this measure against both the original and shadow targets set
in 2020 as well as from a number of different perspectives, particularly from a wider company financial and
strategic viewpoint.
• Management’s use of a shadow target, which was appropriate for the new Covid-19 impacted environment, was
fundamental to the strong cash flow performance. The basis for this target could be cascaded into the business
as, although it was stretching, it was recognised that with the right management action plans around cost
efficiencies, tight cash management and working capital focus, it could be achievable.
In terms of demonstrating the stretch inherent in the shadow cash flow target, set in October 2020:
• the target was set in the environment known at the time, predating the Delta and Omicron Covid-19 variants,
• across the three years it is consistent with the cash flows upon which debt covenants were based, and
• across the final two years of the cycle, $277 million higher cash flow generation was targeted than the internal
budget approved in February 2021.
The Committee has looked at the Executive Directors’ performance in the key area of cash flow and liquidity
management, balancing the need to protect the business while continuing to invest in future growth, including:
• managing through the impact of Covid-19 without the need to raise new equity and maintaining an investment
grade credit rating, which has returned to the pre-pandemic level;
• securing interest cover and leverage ratio covenant waivers on existing debt agreements;
• accessing increased liquidity through:
– £600 million drawn down from the UK Covid Corporate Financing Facility (CCFF), which was repaid
in March 2021; and
– issue of two new bonds in October 2020 and a tender on 2022 bonds, raising around net £600 million
to provide longer-term liquidity to the business.
• protecting cash flow by prudent use of capital and reducing costs of which $75 million has been sustained
into 2022; and
• strong performance on working capital, targeted approaches to cash collections and management
of expenditure.
In 2022, as a result of this strong focus on cash generation:
• positive adjusted free cash flow of $565 million was generated ($29 million in 2020 and $571 million in 2021);
• IHG’s credit rating, which remained at investment grade levels throughout the pandemic, returned
to pre-pandemic levels;
• the $1.35 billion revolving credit facility was refinanced on favourable terms; and
• the rapid deleveraging of the business has led to ordinary dividend payments being reinstated for 2021 and
additional shareholder returns in the form of a $500 million share buyback announced in 2022. In total, over
$700 million has been returned to shareholders in 2022, with a further $750 million share buyback announced
to be completed in 2023.
• The Committee believes that management has done all it could to preserve IHG’s resilience and strategic
capability for strong future growth, justifying additional vesting in the cash flow element of the LTIP for this cycle.
• Given the significant outperformance against the shadow target, the Committee exercised its discretion to
determine that vesting for the cycle should be based on a range between the maximum of the shadow target
and the maximum of the original target (see page 129 for the disclosure of the original and new range). This has
resulted in performance of 72.4% of target, giving a weighted vesting outcome of 14.5% for the cash flow measure.
Net system
size growth
(NSSG)
(30%)
17.6%
17.6%
• This was a relative target based on performance against a set of our largest peers.
• The Committee reviewed NSSG performance in detail, from a number of different perspectives, and used its
judgement within the framework of the target to determine whether to include certain bulk transactions undertaken
by IHG and our competitors during the LTIP performance period (see page 129), but otherwise concluded that
it did not consider it appropriate to adjust the formulaic outcome of this relative measure.
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Remuneration Committee Chair’s statement continued
Committee determination
Measure and
weighting
Total Gross
Revenue
(TGR) (20%)
Total
Shareholder
Return (TSR)
(30%)
Weighted
formulaic
outcome
Weighted
discretionary
outcome
Rationale
20%
20%
• This absolute target was set in October 2020, at the same time as the shadow cash flow target, once the
immediate impact of the pandemic was known but before subsequent developments, such as the Delta and
Omicron variants.
• Based on analysis of the data and context, the Committee did not consider it appropriate to adjust the formulaic
outcome of this absolute measure.
0%
0%
• The IHG share price has remained resilient through the latter part of 2020 and through to the end of the LTIP cycle
after recovering from an initial reduction in the first half of 2020.
• IHG’s TSR was significantly ahead of all European peers in the comparator group.
• However, the share price performance of some comparator group companies based primarily in the fast-recovering
US market, with a weighting towards the economy segment, and with their shares listed on US stock markets,
which have performed better than the FTSE over this period, has resulted in IHG being below the threshold level
for vesting on this relative measure.
• Based on analysis of the data and context, the Committee did not consider it appropriate to adjust the formulaic
outcome of this measure.
Total
44.9%
52.1%
The relative NSSG measure is subject to the achievement of a Return on Capital Employed (ROCE) underpin. The underpin was introduced
before the pandemic and was intended to ensure that the ROCE impact was considered in strategic decision making, such as M&A activity.
The Committee considered the underpin for the 2020/22 cycle and noted that, whilst ROCE was below the underpin level for the first two
years due to the impact of Covid-19, it was above the underpin for 2022. The Committee therefore decided not to adjust the vesting levels
in relation to the underpin.
No other discretion was exercised in respect of the other LTIP measures, meaning the overall vesting was 52.1% of maximum for all three
Executive Directors. Details of the awards vesting are provided on page 130.
2022 APP award
Alongside operating profit from reportable segments, the 2022 strategic openings and signings measures were designed to provide in-year
focus on rooms growth in a competitive market, in order to complement the longer-term three-year LTIP focus on overall net system size growth.
The formulaic achievement against the APP measures resulted in an award of 166.4% of target, or 191.4% of salary. The Committee feels the
formulaic APP award is justified, given its view on the strong performance of the business in 2022 on both an absolute and relative basis:
Measure and
weighting
Weighted
outcome
Consideration of discretion
Operating
profit from
reportable
segments
(70%)
135.8%
• The targets were appropriately set, with a narrower range around the target outcome than in 2021 but still wider than in
pre-pandemic years, resulting in greater stretch required on the upside and reflecting the context at the time; acknowledging
the limited forward visibility of the shape and pace of recovery through 2022.
• Management delivered strong results against the key financial metrics which contribute to operating profit, while continuing
to invest in growth opportunities, such as the long-term commercial agreement with Iberostar Hotels & Resorts, infrastructure
to support Luxury & Lifestyle and enhancing our HR systems.
• The Committee has reviewed the quality of underlying performance, including whether adjustments should be made and
concluded no adjustments were necessary. The Committee also reviewed a number of factors which were not budgeted for
at the time of setting targets, including the exit of operations in Russia, and used its judgement to adjust for those where it was
deemed appropriate, as outlined on page 128.
• On this basis, the Committee found no rationale for applying negative discretion.
Signings
(15%)
15.4%
• Targets were set reflecting the typical nature of the pace at which the drivers of signings and openings respond during periods
of recovery, and containing significant stretch to achieve outperformance.
• As noted above, in respect of operating profit from reportable segments, the Committee used its judgement to adjust for the exit
of operations in Russia in the signings and openings performance as outlined on page 128.
• The Committee also assessed performance against our largest competitors, with IHG remaining broadly in line year-on-year.
The Committee is satisfied that performance relative to our peers was competitive.
• See under ‘Openings’ below regarding the Committee’s assessment against Global Metrics performance.
• On this basis, the Committee found no rationale for applying negative discretion.
Openings
(15%)
15.2%
• Performance was ahead of target on this measure.
• The Committee assessed performance relative to competitors and is satisfied that performance relative to our peers was competitive.
• The signings and openings measures are subject to the Committee assessing performance against the Company’s Global Metrics.
The majority of metrics, seven of nine, tracked above target or prior year performance. Of those with formal targets, six of seven
exceeded target.
• On this basis, the Committee found no rationale for applying negative discretion.
Overall, having also considered broader stakeholder perspectives (see page 117), the Committee found no rationale for applying
negative discretion to the formulaic outcome of the 2022 APP.
Total
166.4%
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Total 2022 variable incentive outcome
In addition to reviewing the individual LTIP and APP components, as outlined on page 116, and the wider stakeholder position, as outlined
below, the Committee took a holistic view of variable incentive outcomes and considered the overall outcome for 2022. In total, the 2022
APP and LTIP awards for Executive Directors represent 73.6% of the maximum potential value. This is reflective of strong performance and,
although not a determining factor, in line with historic overall reward outcomes, as outlined on page 132, in respect of the CEO, which have
averaged at 63.8% in the previous 10 years, excluding 2020. The Committee considers the combined 2022 LTIP and APP awards appropriate
in this context.
Broader stakeholder perspectives
In considering the use of discretion, the Committee has taken into account the experience and views of wider stakeholders:
Wider
workforce
• The APP measures of operating profit from reportable segments, openings and signings apply to the whole corporate employee population,
along with a personal performance element below the Executive Committee (EC) level, with target bonus amounts determined by grade.
The strong formulaic performance under the corporate measures will apply to and benefit this whole population. In addition, in view of the
strong performance in 2022, an additional 6% is being added to the amount budgeted for the personal performance element to increase
awards for those employees who performed the strongest during 2022.
• All LTIP award holders, around 43 of our senior management population, most of whom also receive Restricted Stock Unit (RSU) awards,
will benefit from the additional discretionary vesting under the cash flow measure in recognition of the exceptional teamwork and effort
required during the cycle and resulting strong performance as the recovery continues.
• In January 2023, the second matched share vesting took place under our employee share plan, as a result of which 1,893 employees
received free shares matched on a 1:1 basis.
• The overall employee engagement score of 86% exceeded that of external benchmarks by 8% and views on pay and benefits, in particular,
remained consistently above external benchmarks (see page 126).
• As explained on page 124, the employing entities for a number of UK leased hotels are part of the IHG group. With the support of the hotels’
owner, all roles at these hotels are paid above the living wage and zero-hour contracts have been eliminated across this estate. From April 2022,
all employees in these hotels were paid at, or above, the real living wage, with the majority paid above. Salary increases of between 5% and
8% will be made in 2023 for employees at these hotels as they continue to meet the real living wage changes announced by the Real Living
Wage Foundation in September 2022. Additionally, a one-off payment of £650 (pro-rated for part-time employees) was made in January 2023
to front-line employees who had worked at these hotels from 1 October to 31 December 2022.
• Further considerations included under ‘Remuneration at IHG – the wider context’ on pages 123 to 124.
Owners
• Favourable credit terms provided to assist with the impact of the pandemic.
• Agreement with owners to manage cash flow through utilisation of maintenance reserves.
• Expanded hotel procurement solutions to combat supply chain challenges and rising costs.
• Launched new hiring tools and support to recruit and retain talent.
• Continued review and evolution of brand standards to improve operational efficiency.
• Government advocacy carried out on behalf of owners.
• Launched the Demand Sensing Forecast model to help owners maximise revenue opportunities using data and analytics.
• Invested in IHG One Rewards, with loyalty contribution increasing following the launch and returning to pre-pandemic levels.
Guests
• Flexible cancellation policy operated, and waiver of cancellation fees.
• Continued execution of IHG® Way of Clean and IHG® Clean Promise in our hotels.
• Launched a transformed loyalty offer in 2022 with IHG One Rewards providing more ways to earn and redeem points alongside more
tailored experiences and enhanced food and beverage offering in our hotels.
• IHG One Rewards membership status protection provided.
Shareholders
• IHG share price has remained resilient, ending 2022 at around the average of the closing price for the full year and 100% up on the lows
of March 2020; and made a strong start through January 2023, ending 19% up for the month.
• An interim dividend of 43.9¢ was paid on 6 October 2022 and the Board is proposing a final dividend of 94.5¢ in respect of 2022.
• Commencing in August 2022, the Company announced a return of $500 million to shareholders through a buyback programme, and has
announced a further $750 million buyback programme for 2023.
• There is continued momentum in future growth with the brands that we have added since 2017 already contributing 10% of our pipeline,
and our Luxury & Lifestyle portfolio representing 20% of our pipeline as we increase our exposure to higher fee income segments.
• Having consulted with shareholders on the potential use of discretion for the 2020/22 LTIP cycle, we received positive and constructive feedback.
Certain KPIs and Non-GAAP measures are used throughout the Directors’ Remuneration Report. See pages 85 to 88 for additional detail.
Use of Non-GAAP measures: in addition to performance measures directly observable in the Group Financial Statements (IFRS measures),
additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess
performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these
measures can be found on pages 85 to 88 and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.
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Remuneration Committee Chair’s statement continued
Implementation of Directors’ Remuneration Policy (DR Policy) in 2023
The Committee commenced its review of the current DR Policy in 2022, which included an extensive internal and external consultation
process to understand those elements that were working well and those where change may be required. This included stakeholder
interviews with the Executive and Non-Executive Directors, a wholesale review of market practice and two rounds of consultation with
our shareholders. A number of key challenges were identified:
• The need to prepare for the future – our Executive Directors have been in role for a number of years and the Committee recognised
the likelihood of having to attract successors during the life of the next policy. Succession risk has been realised with the resignation
of Paul Edgecliffe-Johnson, Chief Financial Officer and Group Head of Strategy (see below for further details). While we continue to have
robust succession planning in place, our packages need to be attractive enough to recruit external executives in the global market with
the appropriate skills, experience and US and international expertise.
• US talent market – we have previously highlighted that IHG is a global business in a global industry driven by US-based global competitors.
The US represents around 65% of revenue and profit. US experience is essential for executive director roles and to sustain an effective
succession plan. We are increasingly competing for talent in the US, where remuneration opportunities are much higher primarily due
to the significant long-term variable pay potential. Where we have necessarily made increases at senior levels below the Board to enable
us to remain competitive within the US market, this has led to pay compression with more senior roles, impacting our ability to recruit the
right calibre of leaders to key positions. We have also continued to see increased turnover of key roles at senior management levels as
external offers are more attractive than executive director succession at IHG. The Committee recognises that as a UK company, we are
not able to pay at levels commensurate with our US peers; however, our packages are not sufficiently competitive in structure and quantum
to attract talent from the US market, creating a risk to our ability to preserve shareholder value in the future.
• Disconnect between Company performance, strategy and pay outcomes – IHG continues to be a high-performing Company. However,
volatility in LTIP measures, particularly TSR, undermines our strong ‘pay for performance’ ethos. We expect the volatility in the TSR measure
to continue in the coming years as US listed companies benefit from capital flows and the US stock markets.
The Committee has been considering a range of approaches to address the above concerns. This has included extensive consultation with
shareholders to understand their views. We carried out an initial consultation in September 2022, primarily on the structure of our incentives
but also on the governance features in place and the performance measures. We received helpful feedback which enabled us to refine our
proposals, and we began a second round of consultation in early 2023. This second phase of the consultation is ongoing, and we therefore
determined that it would be beneficial to delay the publication of the new policy, to allow time for further discussion with as wide a range
of shareholders as possible. For that reason, the new policy is not included in this report and it is currently intended that it will instead be
published in our 2023 Notice of AGM.
Pending the outcome of shareholder consultations, details of the implementation of the policy for 2023 will also be set out in the Notice of
AGM (other than 2023 salary levels, which are described on page 136, and retirement benefits, which are described below). It is anticipated
that the APP will continue to be measured on operating profit from reportable segments, signings and opening targets, and that the LTIP
measures will include a new Environmental, Social and Governance (ESG) measure, with targets related to decarbonisation actions as well
as some of our diversity, equity and inclusion commitments.
Retirement benefits for incumbent UK Executive Directors were aligned with the maximum company contribution available to all other
participants in the UK pension plan at the end of 2022. As stated in last year’s report, and in line with our approved DR Policy, US retirement
benefit arrangements, in which the CEO, Americas, participates, differ in a number of respects from UK pension arrangements, as explained
on page 124. They are comprised of a 401(k) plan under which all corporate employees benefit from maximum employer contributions of
a consistent 6% of salary, and a Deferred Compensation Plan for around 100 eligible senior employees under which all participants, including
the CEO, Americas, can receive supplementary contributions of up to 16% of salary. These are common retirement benefit plans in the US
market and, given the parity of treatment for all participants in each of these plans, as well as the importance of the CEO, Americas role to
the business and the market competitiveness concerns over Executive Director pay, the Committee intends to maintain the arrangements
as they relate to the CEO, Americas.
Board changes
During the year, Patrick Cescau stepped down as Chair of the Board and was replaced by Deanna Oppenheimer. Byron Grote was appointed
as a Non-Executive Director. The remuneration arrangements in respect of all changes were in line with the approved DR Policy and are
covered on page 134.
As announced on 21 October 2022, Paul Edgecliffe-Johnson will step down from the role of Chief Financial Officer and Group Head of
Strategy, and from the Board, in 2023. His leaving date will be 19 March 2023 and his remuneration arrangements on departure are as follows:
• Salary, pension and benefits will be paid up until 19 March 2023. In line with our previous commitment, his pension has been reduced
to the rate of all other IHG UK pension plan participants, which is 12% of salary, from 1 January 2023.
• No further payments in respect of these elements will be paid beyond 19 March 2023, given he will be taking up new employment.
• He remained eligible to receive an APP award in respect of the full 2022 performance year. As noted above, the outcome for the APP was
95.7% of maximum. In line with our termination policy, the cash element will be paid in the usual way but the deferred shares portion will
be forfeited upon his termination date.
• His LTIP awards for the 2020/22 cycle were assessed in the same way as for the other Executive Directors as outlined above; the vesting
outcome was 52.1% of maximum. This award will vest on 22 February 2023 and will be subject to a two-year holding period thereafter.
• He will not be eligible to receive an APP or LTIP award in respect of 2023.
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• All outstanding APP shares and LTIP awards that have not vested on 19 March 2023 will be forfeited. The post-employment shareholding
policy will be applied. He will be required to hold shares equivalent to his minimum shareholding requirement of 300% of salary as at the
date of leaving for six months post cessation and 50% of the minimum shareholding requirement for a further six months.
• No other payments will be made in connection with his leaving.
Michael Glover will replace Paul Edgecliffe-Johnson as Chief Financial Officer on 20 March 2023 and further details of his remuneration can
be found on page 136.
About this report
As always, we strive to make this report as easy to read as possible. Following this statement, there is a reminder of the approved DR Policy
applicable in 2022 and its alignment with the UK Corporate Governance Code principles. As such, this report should be read in conjunction
with the 2023 Notice of AGM, once published, and this report and the 2023 Notice of AGM taken together comprise the annual Directors’
Remuneration Report. There is an ‘At a glance’ section on pages 120 to 121 providing an illustration of 2022 remuneration outcomes and, over
the following pages, there is a summary of how executive remuneration aligns to company strategy; a summary of remuneration across the
wider workforce; and, on pages 125 to 126, further background on the Remuneration Committee.
This Annual Report on Directors’ Remuneration Report (pages 114 to 136) will be put to an advisory vote by shareholders at the May 2023
Annual General Meeting.
Jo Harlow
Chair of the Remuneration Committee
20 February 2023
Directors’ Remuneration Report
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Governance
Directors’ Remuneration Report continued
At a glance
How to use this report
Within the Directors’ Remuneration
Report we have used colour coding
to denote different elements of
remuneration. The colours used and
the corresponding remuneration
elements are:
Salary
Benefits
Pension benefit
Annual Performance Plan (APP)
50% cash and 50% deferred shares
Long Term Incentive Plan (LTIP)
Shareholding
AUDITED
Audited information
Content contained within a tinted
panel highlighted with an ‘Audited’
tab indicates that all the information
within the panel is audited.
Table of contents
120 At a glance
122 Our approach to remuneration – link to strategy
123 Remuneration at IHG – the wider context
125 Remuneration Committee details
Over the following pages of the report, we give an overview of how our remuneration arrangements are aligned to our purpose, ambition and
strategic priorities. We have included a summary of our approved DR Policy, as applicable for 2022, on page 122, together with a reminder
of how the Committee has addressed Provision 40 of the 2018 UK Corporate Governance Code in respect of remuneration policy and practice
throughout 2022. Alignment of pay structures throughout the organisation and the implementation of remuneration policy across the wider
workforce is covered on pages 123 to 124. Pages 125 to 126 contain a summary of Committee actions during the year.
Executive Director remuneration
2022 actual remuneration vs potential remuneration
The charts below show the 2022 potential remuneration opportunity and actual achievement compared to the 2021 actual achievement.
The relevant figures for each of the elements that make up the single total figure of remuneration, as shown below for the Executive Directors,
can be found in the table on page 127. See above for the key to individual elements of actual remuneration for 2021 and 2022.
Keith Barr, Chief Executive Officer
Value (£000)
2022
potential
2022
actual
2021
actual
4,073
3,199
Key for potential
Minimum = Fixed pay
5,254
Target = Fixed pay and on-target award for APP
(115%) and 50% of maximum LTIP vesting
Maximum = Fixed pay and maximum award
under APP and LTIP
0
1,000
2,000
3,000
4,000
5,000
6,000
Paul Edgecliffe-Johnson, Chief Financial Officer
Value (£000)
2022
potential
2022
actual
2021
actual
3,852
2,984
2,342
1,000
2,000
3,000
4,000
5,000
6,000
Elie Maalouf, Chief Executive Officer, Americas
Value (£000)
2022
potential
2022
actual
2021
actual
4,115
3,190
2,266
1,000
2,000
3,000
4,000
5,000
6,000
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How we performed in 2022
Strong performance against target across all measures meant that the formulaic 2022 APP achievement was 166.4% of target, resulting in
awards for Executive Directors of 191.4% of salary. Under the LTIP, solid net system size growth performance relative to our largest competitors
and strong Total Gross Revenue performance, together with exceptional management of cash flow through the pandemic and into recovery,
resulted in a formulaic outcome of 44.9% of maximum, which was increased to 52.1% of maximum following the exercise of discretion by
the Committee (see pages 115 and 116 for the Committee’s consideration of discretion).
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Measures used for APP
15%
15%
Operating profit from reportable segments ($m)
Threshold
629.0
Actual
846.0
70%
Target
740.0
Maximum
851.0
Operating profit from reportable segments
Room signings
Room openings
Room signings (k rooms)
Threshold
72.6
Actual
80.9
Target
80.7
Maximum
88.7
Room openings (k rooms)
Threshold
44.9
Actual
49.9
Target
49.8
Maximum
54.8
Measures used for LTIP
20%
30%
30%
20%
Total Shareholder Return
Total Gross Revenue
Net system size growth
Cash flow
Before discretion
Relative Total Shareholder Return (%)
Actual
-1.3
Maximum
43.8
After discretion
Relative Total Shareholder Return (%)
No discretion applied
Threshold
28.0
Total Gross Revenue ($bn)
Threshold
19.04
Actual
26.55
Total Gross Revenue (%)
No discretion applied
Maximum
22.40
Relative net system size growth (%)
Threshold
0.5
Maximum
5.2
Relative net system size growth (%)
No discretion applied
Cash flow (shadow target) $bn
Cash flow (original target) $bn
Cash flow (final range) $bn
Threshold
0.82
Actual (100% vesting)
2.04
Threshold
1.91
Maximum
2.54
Threshold
1.09
Maximum
2.54
Actual
2.8
Maximum
1.09
Actual (36.5% vesting)
2.04
Actual (72.4% vesting)
2.04
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Governance
Directors’ Remuneration Report continued
Our approach to remuneration
Summary of approved Directors’ Remuneration Policy (DR Policy)
The DR policy framework below, and its alignment with Provision 40 of the Corporate Governance Code, relates to 2022 remuneration.
The future DR Policy is subject to ongoing shareholder consultation at the time of writing this report.
Element
Fixed
Base salary
Benefits
Pension/
Retirement
benefit
Variable
Annual
Performance
Plan (cash)
Annual
Performance
Plan (deferred
shares)
Long Term
Incentive Plan
(LTIP)
2022
2023
2024
2025
2026
Framework
Purpose
Increases are generally in line with the
range applying to the corporate population.
Reviewed annually and fixed for 12 months
from 1 April.
To recognise the value and impact
of the role and the individual’s skills,
performance and experience.
Relevant benefits are aligned to the
typical level for the role/location.
To be competitive and consistent with
role/location; to help recruit and retain.
A Defined Contribution or cash in lieu
amount for UK Directors. Employee
contributions with matching company
contributions. Salary is the only part
of pay that is pensionable. See further
details regarding UK and US pension
benefit on page 124.
To be competitive and consistent with
role/location; to help recruit and retain.
Maximum opportunity is 200% of salary;
70% based on operating profit measure
and 30% on key strategic objectives;
50% of the award is deferred into shares
for three years.
To reward the achievement of stretching
targets that support the Company’s
annual financial and strategic goals.
For 2022, the key strategic
objectives were:
The maximum potential LTIP quantum
is 350% of salary for the CEO and 275%
of salary for other Executive Directors;
a two-year post-vest holding
period applies.
• room signings (15% weighting); and
• room openings (15% weighting).
A focus on industry-leading growth in
our scale is at the heart of our strategy.
Together with TSR and cash flow,
there is a strong alignment between
Executive Director remuneration and
shareholder interests.
Cash
Deferral
Performance
Deferral
A copy of the approved DR Policy is available on IHG’s website at www.ihgplc.com/investors under Corporate Governance.
The Committee has considered the remuneration policy and practices in the context of Provision 40 of the UK Corporate Governance Code,
as follows:
Principle
Clarity
IHG’s approach
We always seek to set and report our performance-related measures, targets and outcomes in a clear, transparent and balanced
way, with relevant and timely communication with all of our stakeholders. Our reward policies drive engagement throughout the
workforce with an aligned approach to performance-related reward. Through the combination of short- and long-term incentive
plan measures, the DR Policy is structured to support financial objectives and the strategic priorities of the business which deliver
shareholder returns and long-term value creation. Further alignment with shareholder interests is driven by the significant
proportion of share-based incentives and Executive Director shareholding requirements.
Simplicity
Our remuneration structure comprises straightforward and well-understood components. The purpose, structure and strategic
alignment of each element is clearly laid out in the remuneration policy summary table:
Predictability
Risk
• fixed pay: base salary, pension and benefits that are consistent with role and location;
• short-term incentive: annual performance-related bonus which incentivises and rewards the delivery of financial and
non-financial strategic objectives;
• long-term incentive: a share-based award which incentivises performance over a three-year period and is based on measures
which drive long-term sustainable growth.
The range of possible values of rewards for Executive Directors is clearly disclosed in graphical form both at the time of approving
the policy and in the annual implementation report.
Our DR Policy contains a number of elements to ensure that it drives the right behaviours to incentivise the Executive Directors
to deliver long-term sustainable growth and shareholder returns and to reward them appropriately:
• the maximum short- and long-term incentive awards are capped as a % of salary;
• the Committee has clear discretion policies, linked to specific measures where necessary, to override formulaic outcomes;
• Executive Directors agree to clear and comprehensive malus and clawback provisions; and
• significant shareholding requirements apply for Executive Directors.
Proportionality
Individual rewards are aligned to the delivery of strategic business objectives. The Committee sets robust and stretching targets
to ensure that there is a clear link between the performance of the Group and the awards made to Executive Directors and others.
Alignment to culture
IHG has a clear purpose and well-established values and behaviours. The alignment between remuneration incentives and our
strategy for high-quality growth, and the KPIs which underpin the delivery of our strategy, is outlined on page 123. Other elements
of reward, such as salary reviews and, across the wider workforce, the short-term incentive plan and our global recognition scheme,
reward employees for performance and actions which demonstrate our values and behaviours.
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Aligning variable elements of remuneration to strategy
Variable elements of remuneration are linked to our strategy through our four strategic priorities, our purpose and our ambition, as shown
below in respect of the 2022 APP and 2022/24 LTIP cycle granted in 2022.
Our purpose
Our ambition
Our strategic priorities
True
Hospitality
for Good
To deliver industry-leading growth
in our scale, enterprise platform and
performance, doing so sustainably
for all stakeholders, including our
hotel owners, guests and society
as a whole.
Build loved and
trusted brands
Create digital
advantage
Customer
centric in all
we do
Care for our people,
communities
and planet
Element
Measures
Link to strategy
Explanation
Annual Performance
Plan (APP)
Operating profit
Room signings
Room openings
Global Metrics
• The strength and breadth of our portfolio, tailored services
and solutions, as well as our technology and platforms drive
consumer preference, owner returns and rooms growth;
all contributing to our revenues and profit.
• Openings and signings are two of our key drivers of system
size and central to our ambition to deliver industry-leading
rooms growth in our scale.
• Aligned to our people, communities and planet strategy, the
Remuneration Committee will review performance on Global
Metrics, including key ESG measures (Employee engagement,
Guest Love, Responsible Business), in considering the potential
application of discretion to formulaic outcomes on APP
strategic objective measures.
Relative Total Shareholder Return
• Our growth ambition is intended to deliver value and return
Long Term Incentive
Plan (LTIP)
Relative net system size growth
Cash flow
Remuneration at IHG – the wider context
Our reward philosophy
for our stakeholders, including competitive total
shareholder returns.
• Our ambition is to deliver high-quality, industry-leading net
rooms growth in our scale, so it is important that this forms
a key element of our management team’s Long Term
Incentive Plan.
• Enhancing our customer and owner offer and developing our
brands at scale in high-value markets drives sustained growth
in cash flows and profits over the long term, which can be
reinvested in our business and returned to shareholders.
Our reward arrangements are competitive, drive creation of value for stakeholders and make us think
and act as one team.
How our reward practices are aligned across all levels of the organisation
Our approach to fairness in reward is an important aspect of our overall reward philosophy and is designed to attract and retain the best
talent, with a focus on championing a diverse and inclusive culture where employees can thrive. The reward philosophy is supported by
a robust governance approach aimed at having fair and consistent reward and recognition practices across our employee population,
regardless of gender and other aspects of diversity, as well as an alignment between the wider direct workforce and executive remuneration.
We regularly review our approach externally, ensuring we meet the needs of employees by offering market-driven reward packages.
Employee engagement on pay
The 2022 employee engagement scores for participating hotel and reservations employees and general managers on the questions relating
to reward and recognition exceeded our survey provider’s top quartile benchmark. See page 126 for details.
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Governance
Directors’ Remuneration Report continued
Our approach to remuneration continued
Examples of alignment and implementation of wider workforce reward strategy in 2022
Elements of reward
Participants
Commentary
Fixed
Salary
All
Benefits
All
In the 2022 base salary review process, we continued to put managers at the heart of the process, allowing them to
use their discretion in pay decisions, and included an additional 33% on top of the standard merit budget in order to
address equity and talent recognition. We improved our external benchmarking capability and provided additional line
manager support with improved analysis of market data and guidance. This allowed the merit budget to be targeted on
areas where it would have the most impact. We continued to provide managers with our diversity, equity and inclusion
statement on making fair reward decisions consistent with our Code of Conduct to ensure all employees are rewarded
fairly and according to their contribution, skills and experience with tips on avoiding any conscious and unconscious
bias. For 2023, additional merit budget will again be made available to address individual equity and talent recognition.
For 2022, we enhanced the UK healthcare offering to include cover for IVF and infertility treatment. Additionally, we
introduced cover for gender dysphoria investigations and related mental health therapy, surgery and follow-up. We also
extended the eligibility for health assessments to all of our UK corporate employees. The levels of healthcare cover on
offer in the UK continue to align across all UK corporate colleagues.
Pension benefit
All
Pension and retirement benefits are provided in the UK and US in line with market practice.
UK: the contribution rate for corporate and eligible hotel employees in the IHG UK pension plan is aligned across the
eligible population with a 2:1 matching ratio up to a maximum of 6% of salary from employees and 12% from the Company.
During 2022, the trustee of the plan carried out a detailed assessment of our UK pension plan in line with regulatory
guidance and confirmed that it continues to provide good value for members.
US: US retirement saving plans are made up of a 401(k) plan which has a 1:1 matching contribution ratio up to a
maximum of 6% of salary for eligible corporate employees and a Deferred Compensation Plan (DCP) which provides for
supplementary company contributions of up to 16% provided at senior levels (a historic grandfathered rate of 20% applies
for a small number of employees who were already receiving this rate when it was removed effective 1 January 2017).
All corporate employees share the same corporate performance metrics with the Executive Committee and Executive
Directors. For senior management (generally at Executive Committee level and their direct reports), a proportion of bonus
is deferred into shares for a three-year period. The weightings of metrics for all corporate employees below Executive
Committee level are aligned and a greater portion of an award can be achieved through an employee’s individual
performance and contribution to the Company. In addition, in view of the strong performance in 2022, an additional
6% is being added to the amount budgeted for the personal performance element to increase awards for those
employees who performed the strongest during 2022.
Senior/mid-management and certain specialist roles are eligible to participate in a Long Term Incentive Plan (LTIP).
Performance-based LTIP awards largely apply at the level of Executive Committee and their direct reports; Restricted
Stock Units typically apply for eligible employees below this level (see below).
In line with typical market practice, particularly in the US, and due to line-of-sight over performance measures, a gradually
greater proportion of the LTIP award is made as RSUs (which are not subject to performance conditions but still align
employee interests with those of shareholders) for eligible roles from Executive Committee level down. In 2022, we
increased the number of employees eligible to receive RSUs below Executive Committee level and also increased the
quantum available to the same employees. This provided additional scope to attract and retain key talent, reward more
employees for their contribution to the Company and further align with market practice.
IHG matches the number of shares purchased by employees, up to a value of USD 1,000 per year, on a 1-for-1 basis.
Our employee share plan is available to approximately 96% of our corporate employees below the senior/mid-
management level (who receive LTIP and/or RSU awards). Our highest participation level was achieved in 2022, with
53% of eligible employees having enrolled in the Plan. The Colleague Share Plan was introduced from 2020 and the
first cycle’s matching shares vested in January 2022 with over 32,000 shares vesting; the second cycle’s matching
share award vested in January 2023 with over 26,200 shares vesting between 1,893 employees.
In 2022, we reintroduced our Bravo recognition scheme. Colleagues who are below senior leader level can be nominated
for a cash award for going above and beyond in their jobs whilst displaying exceptional IHG behaviours. All of the
corporate workforce, including Executive Directors, are eligible to receive a Long-Term Service Award, of varying value,
once the employee reaches certain service milestones.
Variable
Annual
Performance
Plan (APP)
All
Long Term
Incentive Plan
(LTIP)
Restricted Stock
Units (RSUs)
Executive
Directors
and senior
management
Excludes
Executive
Directors
Colleague
Share Plan
Wider
workforce
only
Recognition
schemes
All
UK leased hotel employees
As previously reported, following the acquisition of a number of UK hotels in 2019, employing entities for the estate’s hotels were transferred
to IHG. Employment terms, including remuneration and benefits, largely remained in place on their pre-acquisition basis. As with the model
for leased hotels generally, IHG provides hotel management support to the owners of these UK leased hotels and makes recommendations
on matters, including pay, based on market insight and experience. Decisions on implementing pay changes are ultimately determined by
the hotel estate owner in the context of their own commercial position and equities across the wider portfolio.
• The Real Living Wage will be applied as a minimum for all staff in line with the Real Living Wage Foundation level from April 2023, and
zero-hour contracts are not utilised in the UK leased estate.
• The reward offering was enhanced for some management roles to provide all senior management with an employee bi-annual health
assessment and supplementary healthcare for the employee and their immediate family. The hotel performance management plan has
been extended to all Heads of Department managers.
• Hotel colleagues receive similar benefits to corporate employees including enrolment into a workplace pension, employee room rates,
employee assistance programme, Bravo recognition programme, retail discount vouchers, the myWellbeing programme and refer-a-friend
bonus. Front-line colleagues can also receive incentives and performance-driven bonuses.
• In January 2023, one-off payments were made to those front-line colleagues and managers who were not otherwise eligible for an annual
bonus (pro-rated for part-time colleagues based on their hours worked). This payment applied to all colleagues who worked between
1 October and 31 December 2022.
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Remuneration Committee details
2022 focus areas
• Review and approval of 2021 remuneration outcomes and 2022 incentive plan structures and targets
• In-year performance and relative performance tracking
• Wider workforce remuneration matters
• ESG in incentives and IHG Green Engage progress
• Consideration of discretion relating to 2022 remuneration outcomes
• DR Policy review including 2023+ structures and targets
Key objectives and summary of responsibilities
The Remuneration Committee agrees, on behalf of the Board,
all aspects of remuneration of the Executive Directors and the
Executive Committee, and agrees the strategy, direction and policy
for the remuneration of the senior executives who have a significant
influence over the Group’s ability to meet its strategic objectives.
Additionally, the Committee reviews wider workforce pay policies
and practice to ensure alignment with strategy, values and
behaviours and takes this into account when setting Executive
Director remuneration. The Committee’s role and responsibilities
are set out in its Terms of Reference (ToR) which are reviewed
annually and approved by the Board.
The ToR are available on IHG’s website at www.ihgplc.com/investors
under Corporate governance.
Membership and attendance at meetings
Details of the Committee membership and attendance at meetings
are set out on page 91.
During 2023, the Committee was supported internally by the
Company Chair, the Group’s CEO and CFO, and the heads of Human
Resources and Reward as necessary. All attend by invitation to
provide further background information and context to assist the
Committee in its duties. They are not present for any discussions
that relate directly to their own remuneration or where their
attendance would not be appropriate.
Reporting to the Board
The Committee Chair updates the Board on all key issues raised at
Committee meetings. Papers and minutes for each meeting are also
circulated to all Board members for review and comment.
Non-Executive Directors’ letters of appointment
and notice periods
Non-Executive Directors have letters of appointment, which are
available upon request from the Company Secretary’s office.
Deanna Oppenheimer, Non-Executive Chair, is subject to 12 months’
notice and is in compliance with Provision 19 of the UK Corporate
Governance Code. No other Non-Executive Directors are subject to
notice periods; all Non-Executive Directors are subject to an annual
re-election by shareholders at the AGM.
Effectiveness of the Committee
The effectiveness of the Committee is monitored and assessed
regularly by the Chair of the Committee and the Chair of the Board.
Remuneration advisers
In 2019, the Committee undertook a competitive tender process
and IHG appointed Deloitte LLP to act as independent adviser to
the Committee; they commenced work in October 2019. Deloitte
is a member of the Remuneration Consultants Group and, as such,
operates under the code of conduct in relation to executive
remuneration consulting in the UK. The Committee is satisfied that
the advice received is objective and independent. Fees of £249,425
were paid to Deloitte in respect of advice provided to the Committee
in 2022, which included significant input into the review of the
Directors’ Remuneration Policy during the year. This was in the form
of an agreed fee for support in preparation of papers and attendance
at meetings, with work on additional items charged at hourly rates.
The terms of engagement for Deloitte are available from the Company
Secretary’s office upon request. Separately, other parts of Deloitte
LLP also advised the Company in relation to corporation tax, mobility
and consulting services.
Board changes
During the year, Patrick Cescau stepped down from the Board and
Deanna Oppenheimer was appointed to the Board as a temporary
Non-Executive Director prior to her appointment as Chair of the Board;
Byron Grote was also appointed to the Board as a Non-Executive
Director. The remuneration arrangements in respect of all changes
were in line with the approved DR Policy and are covered on
page 134.
Approach to target setting
Targets are set by the Committee and senior management, taking
into account IHG’s growth ambitions and long-range business plan,
market expectations, and the circumstances and relative performance
at the time, with the aim of setting stretching achievement targets
for senior executives which will reflect successful outcomes for the
business based on its strategic and financial objectives for the period.
Absolute targets may be set relative to budget and/or by reference
to prior results, generally containing a performance range with
additional stretch to incentivise outperformance as well as minimum
performance levels for payout. Relative targets are set against an
appropriate comparator group of companies for the relevant measure,
for example, relative NSSG in the LTIP was set against our six largest
competitors with over 500k rooms to reflect our industry-leading
growth ambition.
Shareholder engagement
The Committee recognises that there exists a range of views across
the shareholder base in relation to the pay of Executive Directors and
therefore engages in regular shareholder consultation. We consulted
with shareholders and proxy agencies prior to the 2022 AGM on
the implementation of remuneration policies for the prior year and
matters relating to in-flight LTIPs. At the 2022 AGM, we were pleased
to receive a vote of 90.01% in favour of the 2021 Directors’
Remuneration Report.
Shareholder experience and the views of shareholders are
fundamental aspects of the Committee’s framework for the
consideration of the use of discretion in relation to incentive
plan outcomes. As such, we carried out consultations with leading
shareholders and a proxy agency again in late 2022 and early 2023.
We discussed the performance of management which, in the
Committee’s view, had delivered strong results and a more resilient
company coming out of the pandemic. This performance is
sustainable and has not been at the expense of stakeholders, as
outlined on page 117. However, forecast results showed that the
formulaic outcomes of the original cash flow LTIP target would likely
not reflect this extraordinary effort.
Directors’ Remuneration Report
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Governance
Directors’ Remuneration Report continued
Our approach to remuneration continued
Valuable and constructive feedback was provided and, overall,
shareholders were generally receptive to the potential use of
discretion to increase the LTIP outcome, so long as there was
sufficient and robust justification. The Committee’s decision and
detailed rationale is outlined on pages 114 to 117.
These shareholder consultations also covered matters relating to the
Directors’ Remuneration Policy review and progress on the inclusion
of ESG in executive remuneration. Views expressed by shareholders
will be taken into consideration ahead of putting the policy to
shareholder vote.
Wider workforce remuneration and employee engagement
As outlined on pages 123 to 124, IHG operates an aligned approach
to remuneration throughout the organisation. During the year, the
Committee reviewed aspects of the Company’s wider workforce
remuneration approach as part of its regular meeting agenda.
The Company engaged with the workforce through its employee
engagement survey, which covers a number of areas, including pay
and benefits competitiveness, wellness and inclusion. Our overall
employee engagement increased to 86% (+1% on 2021), placing
IHG as a Global Best Employer by Kincentric.
In 2022, as part of the ‘Voice of the Employee’ engagement agenda,
the Committee Chair hosted meetings with representative employee
groups from the UK to discuss a wide range of topics. No concerns
were raised regarding Executive Director remuneration or how it
aligns with the wider IHG remuneration principles. The Board is
committed to providing adequate employee forums for transparent
two-way dialogue. We will continue to develop our approach to
employee engagement on Executive pay and ensure attendees of
such future meetings are aware that the broad scope of topics they
can raise extends to Executive pay and how it aligns with the wider
pay policy. For more information on ‘Voice of the Employee’
workforce engagement see page 111.
As noted on page 114, perceptions of reward and recognition
gained strong results across our hotel, reservations and general
manager populations:
Paid fairly
Benefit plan meets needs
81%
84%
82%
83%
85%
85%
64%
71%
Appropriate recognition
Performance impacts pay
84%
88%
89%
82%
88%
85%
70%
66%
Hotels
Reservations
GMs
Top quartile scores
The Company’s approach to wider workforce engagement under the
UK Corporate Governance Code is set out on page 111.
Voting at the Company’s AGMs
The current DR Policy was subject to a vote at the 2020 AGM. The outcome of the votes in respect of the DR Policy and Report for 2020 to 2022
are shown below:
AGM
2022
2021
2020
Jo Harlow
Chair of the Remuneration Committee
20 February 2023
Directors’ Remuneration Policy (binding vote)
Directors’ Remuneration Report (advisory vote)
Votes for
Votes against
Abstentions
Votes for
Votes against
Abstentions
–
–
–
–
–
–
112,098,213
(77.14%)
33,210,269
(22.86%)
3,308,499
120,588,496
(90.01%)
137,628,120
(92.43%)
143,279,761
(96.49%)
13,388,131
(9.99%)
11,277,368
(7.57%)
5,212,375
(3.51%)
3,384,681
106,271
124,844
126
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Annual Report on Directors’ Remuneration
The Annual Report on Directors’ Remuneration explains how
the Directors’ Remuneration Policy (DR Policy) was implemented
in 2022 and the resulting payments each of the Executive
Directors received.
This report is subject to an advisory vote by shareholders at the
2023 AGM. The notes to the single figure table provide further detail,
where relevant, for each of the elements that make up the total
single figure of remuneration for each of the Executive Directors.
G
o
v
e
r
n
a
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c
e
AUDITED
Single total figure of remuneration – Executive Directors
Executive Directors
Keith Barr
Paul Edgecliffe-Johnson
Elie Maaloufb
Salary
£000
Benefits
£000
Pension
benefit
£000
889
857
654
630
700
606
43
41
21
19
66
53
222
214
163
158
136
118
Year
2022
2021
2022
2021
2022
2021
Fixed pay
Subtotal
£000
1,154
1,112
838
807
902
777
Variable pay
Subtotal
£000
2,919
2,087
2,146
1,535
2,288
1,489
LTIP
£000a
1,200
360
882
265
939
268
Total
£000
4,073
3,199
2,984
2,342
3,190
2,266
APP
£000
1,719
1,727
1,264
1,270
1,349
1,221
a LTIP figures for 2021 relate to the 2019/21 LTIP cycle and have been restated using actual share price on date of vesting. Figures for 2022 relate to the value of shares for the
2020/22 cycle.
b Elie Maalouf is paid in USD and the sterling equivalent is calculated using an exchange rate of $1 = £0.81 in 2022 and $1 = £0.73 in 2021 (page 169).
As outlined in last year’s report, Elie’s retirement benefit is in line
with other senior US employees and comprises a 6% of salary
matched contribution (subject to IRS limits in respect of 401(k)
contributions) and a 16% of salary supplemental employer
DCP contribution.
Variable pay
APP (cash and deferred shares)
Operation
Award levels are determined based on salary at 31 December 2022
and are based on achievement vs target under each measure.
For operating profit from reportable segments, the 2022 award
was set on the basis of a payout range of +/-10% of target payout
for performance of +/-$40m of target performance. Outside of this
range, payout would be on a straight-line basis between threshold
and -$40m and between +$40m and maximum. For room
openings and room signings, the award was set on a straight-line
basis between threshold and target, and target and maximum:
• threshold is the minimum level that must be achieved for there
to be an award in relation to that measure; subject to Committee
discretion, no award is made for achievement below threshold;
• target is the target level of achievement and results in a target
award for that measure; and
• maximum is the level of achievement at which a maximum
award for that measure is received (capped at 200% of salary).
The Committee formally reviews performance against IHG’s
Global Metrics as part of the APP structure in considering whether
to apply discretion to adjust outcomes on the strategic measures.
Notes to single figure table
Fixed pay
Salary: salary paid for the year. Salary increases in 2022 were in
line with the budget for the wider UK and US corporate workforce.
Benefits: for Executive Directors, this includes, but is not
limited to, taxable benefits such as company car or allowance
and healthcare. The 2022 figure for the non-US based Director,
Elie Maalouf, includes higher travel and associated costs met
by the Company than the comparable costs in 2021.
Pension benefit: for current Executive Directors, in line with the
DR Policy, includes the value of IHG contributions and any cash
allowances paid in lieu of pension contributions.
Keith Barr and Paul Edgecliffe-Johnson did not participate in any
IHG pension plan in 2022 and instead received cash allowances
of 25% of base salary; this has reduced to the maximum level
available to all other participants in the UK pension plan from
1 January 2023, currently 12% of base salary.
Life assurance cover is provided for both Keith Barr and
Paul Edgecliffe-Johnson at four times base salary.
Elie Maalouf participated in the US 401(k) Plan and the US
Deferred Compensation Plan (DCP). The US 401(k) Plan is a
tax-qualified plan providing benefits on a defined contribution
basis, with the member and company both contributing.
Contributions made by, and in respect of, Elie Maalouf in these
plans for the year ended 31 December 2022 were:
Director’s contributions to US Deferred
Compensation Plan
Director’s contributions to US 401(k) Plan
Company contributions to US Deferred
Compensation Plan
Company contributions to US 401(k) Plan
Age of Director at 31 December 2022
£a
413,850
21,989
125,680
10,001
58
a Sterling values have been calculated using an exchange rate of $1 = £0.81.
Directors’ Remuneration Report
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Directors’ Remuneration Report continued
Annual Report on Directors’ Remuneration continued
AUDITED
APP outcome for 2022
The performance measures for the 2022 APP were determined
in accordance with the DR Policy and were:
• operating profit from reportable segments (70%);
time of setting targets. In respect of this, 550 room signings,
450 room openings and $4.6 million of operating profit from
reportable segments are included in the figures opposite. A further
$3.8 million relates to other adjustments agreed by the Committee.
• room signings (15%); and
• room openings (15%).
Target award was 115% of salary and maximum was up to 200%
of target for each measure, subject to an overall cap on the award
of 200% of salary. The tables below show threshold, target and
maximum opportunity, as well as weighting and actual
2022 achievement.
Operating profit from reportable segments
(at actual exchange rates) (see page 169)
Difference due to exchange rates
Difference for Russia exit and other adjustments
Operating profit from reportable segments
(at 2022 budget exchange rates)
LTIP 2020/22 (granted in 2020)
$828m
$10m
$8m
$846m
APP measures – % of target award
Threshold
35
7.57.5
50
Target
70
15 15
100
Actual
Maximum
135.8
140
15.4 15.2
166.4
30
30
200
0
50
100
150
200
Operating profit from reportable segments
Room signings
Room openings
Performance
Achievement
Weighting
Weighted
achievement
Operating profit from reportable segments: performance relative to target
70%
135.8%
Awards are made annually and eligible executives will receive
shares at the end of the cycle, subject to achievement of the
performance conditions. These conditions and weightings are
described on page 129.
TSR measures the return to shareholders by investing in IHG relative
to a comparator group containing the following major globally
branded competitors: Accor S.A., Choice Hotels International Inc.,
Hilton Worldwide Holdings Inc., Hyatt Hotels Corporation, Marriott
International Inc., Melia Hotels International S.A., NH Hotels
Group, and Wyndham Hotels & Resorts Inc., as per data provided
by our corporate bankers sourced from Refinitiv Datastream.
Maximum payout is for upper quartile relative performance and
threshold is median of the comparator group.
The share price in respect of the 2019/21 LTIP cycle has been
restated using the volume weighted average price of 5,189p for all
Executive Directors on the date of actual vesting on 23 February
2022. The corresponding values shown in the 2021 report (prior to
the actual vesting) were an estimate calculated using an average
share price over the final quarter of 2021 of 4,858p.
LTIP outcome for 2020/22 cycle
The performance measures for the 2020/22 three-year LTIP cycle
were determined in accordance with the DR Policy and were:
• Total Shareholder Return (30%);
15%
15.4%
• net system size growth (30%);
• Total Gross Revenue (20%); and
• cash flow (20%).
15%
15.2%
The following tables show threshold and maximum opportunity,
as well as weighting and actual achievement, based on the
formulaic outcomes against the three-year targets set in 2020,
and following the application of Committee discretion, for each
performance measure.
Threshold
Target
Actual
Maximum
$629m
$740m
$846m
$851m
Room signings (k rooms)
Threshold
Target
Actual
Maximum
72.6
80.7
80.9
88.7
Room openings (k rooms)
Threshold
Target
Actual
Maximum
44.9
49.8
49.9
54.8
50%
100%
194%
200%
50%
100%
103%
200%
50%
100%
101%
200%
Total weighted achievement
166.4%
Operating profit from reportable segments is a Non-GAAP measure
and excludes certain items from operating profit. Additionally, in
determining operating profit from reportable segments for APP
purposes, budgeted exchange rates for the year are used to ensure
like-for-like comparison with the APP target set at the start of
the year.
In June 2022, IHG announced the decision to cease all operations
in Russia consistent with evolving UK, US and EU sanction regimes
and the ongoing and increasing challenges of operating there.
This situation was not foreseen at the time of setting incentive plan
targets and was not a strategic choice. As such, the Committee
has determined the treatment for impacted incentive plan measures.
For the APP, operating profit from reportable segments, room
openings and room signings results assume Russia performance
for the full year was in line with budgeted performance at the
LTIP measures – % of maximum opportunity
Threshold
6 6 4 4
20
Actual
17.6
20
14.5
52.1
Maximum
30
30
20
20
100
0
20
40
60
80
100
Total Shareholder Return
Net system size growth
Total Gross Revenue
Cash flow
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G
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AUDITED
Performance measure and weighting
Total Shareholder Return:
Three-year growth relative to average
of competitors
30%
Total Gross Revenue:
Based on IHG’s performance against
an absolute Total Gross Revenue target
20%
Net system size growth:
Three-year growth relative to competitors
30%
Performance targets
Target
% Vesting
Result
Achievement
(% of maximum)
Weighted
achievement
Maximum 43.8
Maximum 100%
Threshold 28.0
Threshold 20%
Maximum $22.4bn
Maximum 100%
Threshold $19.04bn
Threshold 20%
Maximum 5.2%
Maximum 100%
Threshold 0.5%
Threshold 20%
Outcome -1.3%
Below threshold
0%
Outcome
$26.55bn
100%
20%
Outcome 2.8%
58.8%
17.6%
Cash flow (original target):
Based on IHG’s performance against an
absolute cash flow target set at the start
of the plan cycle before the impact
of Covid-19
Cash flow (shadow target):
Set in October 2020 based on assumptions
of a full recovery over time and management
focus on maintaining sustainable savings
and disciplined cash management
Cash flow (discretionary outcome):
See page 115 for further details on the
Committee’s consideration of discretion
relating to the cash flow target
20%
Total % of maximum opportunity vested
Maximum $2.54bn
Threshold $1.91bn
Maximum $1.09bn
Threshold $0.82bn
Maximum $2.54bn
Threshold $1.09bn
Adjustments to cash flow outcome
Over the performance period of the 2020/22 LTIP award, there
have been events that have impacted IHG’s cash flow that were
unquantified or unforeseen when the original targets were set.
In line with the adjustments reported in the 2019 to 2021 Annual
Reports, the table opposite shows the reconciliation between
reported cash flow and the outcome for the 2020/22 LTIP.
This includes adjustments agreed by the Committee to exclude
the impact of the exit from Russia, as described on page 128,
as well as adjustments relating to the SVC portfolio exit and the
Holiday Inn and Crowne Plaza estate review (consistent with the
approach taken in relation to the NSSG measure, as noted below).
Maximum 100%
Threshold 20%
Reported outcome
$1.97bn
Adjusted outcome
$2.04bn
Reconciliation
Reported cash flow from operations
Net cash from investing activities
Reported outcome per definition
Other adjustments (see text opposite)
Adjusted outcome
Formulaic
achievement
36.5%
Formulaic
achievement
100%
Formulaic
achievement
72.4%
–
–
Weighted
discretionary
outcome
14.5%
52.1%
Cash flow
$bn
2.12
(0.15)
1.97
0.07
2.04
Adjustment to other measures
In line with the approach taken for the APP as described on page 128, the Total Gross Revenue outcome has been adjusted to assume
performance from Russia was as budgeted at the time the target was set; net system size growth performance for IHG and all companies
in the peer set for this relative measure has been adjusted to remove the Russia system size from all companies for all years.
The formulaic NSSG LTIP outcome above includes the same adjustment reported for the 2018/20 and 2019/21 cycles to exclude the
removal from IHG brands of rooms associated with the SVC portfolio towards the end of 2020 due to the SVC management agreement
termination. The formulaic outcome also includes an adjustment to exclude room removals incremental to our normal level due to the
Holiday Inn and Crowne Plaza estate review in 2021.
These events were not budgeted for at the time of setting the 2020/22 targets and the Committee, in its judgement, considered it was
appropriate to adjust for them on the basis of its view that LTIP participants should not have been disincentivised from making these
decisions in the long-term interest of shareholders.
The Committee considered performance against the ROCE underpin, as outlined on page 116, and determined not to adjust the NSSG
vesting level in respect of this.
Directors’ Remuneration Report
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Directors’ Remuneration Report continued
Annual Report on Directors’ Remuneration continued
AUDITED
As outlined in the Chair’s Statement on pages 114 to 119, the Remuneration Committee has exercised its discretion to adjust the formulaic
outcome of the 2020/22 LTIP. This cycle will vest on 22 February 2023 and Executive Directors are subject to a two-year post-vest
holding period. The individual outcomes for this cycle are shown below.
The share price of 4,687p used to calculate the 2020/22 LTIP cycle value shown in the single figure table is the average over the final
quarter of 2022.
Executive Director
Keith Barr
Paul Edgecliffe-Johnson
Elie Maalouf
Award cycle
LTIP 2020/22
LTIP 2020/22
LTIP 2020/22
Maximum
opportunity at grant
(number of shares)
% of maximum
opportunity
vested
Outcome
(number of shares
awarded at vest)
Total value
of award
£000
Value of award
attributable to share
price appreciationa
49,153
36,140
38,463
52.1%
52.1%
52.1%
25,608
18,828
20,039
1,200
882
939
305
224
239
a If the 2020/22 LTIP awards had been granted at the approved DR Policy levels of 350% of salary for the CEO and 275% of salary for other Executive Directors, the corresponding
total award values would have been £2,049k for Keith Barr (so the actual award represents a £849k reduction in value compared to a £305k increase due to share price appreciation;
£1,184k for Paul Edgecliffe-Johnson (so the actual award represents a £302k reduction in value compared to a £224k increase due to share price appreciation); and £1,260k for
Elie Maalouf (so the actual award represents a £321k reduction in value compared to a £239k increase due to share price appreciation). See page 114 for further details on the
windfall gains assessment.
Other outstanding awards
Scheme interests awarded during 2021 and 2022
During 2021 and 2022, awards were granted under the LTIP cycle and made to each Executive Director over shares with a maximum
value of 350% for the CEO and 275% for all other Executive Directors using an average of the closing mid-market share price for the
five days prior to grant, as in the table below. These are in the form of conditional awards over Company shares and do not carry
the right to dividends or dividend equivalents during the vesting period.
The vesting date for the 2021/23 LTIP award is the day after the announcement of our financial year 2023 Preliminary Results in
February 2024. These awards will vest to the extent performance targets are met and will then be held in a nominee account for
a further two years, transferring to the award-holder in February 2026.
The vesting date for the 2022/24 LTIP award is the day after the announcement of our financial year 2024 Preliminary Results in
February 2025. These awards will vest to the extent performance targets are met and will then be held in a nominee account for
a further two years, transferring to the award-holder in February 2027.
Executive Director
2022/24 cycle
Keith Barr
Paul Edgecliffe-Johnsona
Elie Maalouf
2021/23 cycle
Keith Barr
Paul Edgecliffe-Johnsona
Elie Maalouf
Award date
Maximum
shares awarded
Market price
per share at grant
£
Face value of
award at grant
£000
Number of shares
received if minimum
performance achieved
13 May 2022
13 May 2022
13 May 2022
10 May 2021
10 May 2021
10 May 2021
64,903
37,495
40,101
59,385
34,310
32,525
48.42
48.42
48.42
50.88
50.88
50.88
3,143
1,816
1,942
3,022
1,746
1,655
12,981
7,499
8,020
11,877
6,862
6,505
a Paul Edgecliffe-Johnson will step down from the role of Chief Financial Officer and Group Head of Strategy, and from the Board, on 19 March 2023 and the treatment of his
unvested awards is described on pages 118 to 119.
Performance measures and consideration of discretion
The performance measures for both the 2021/23 cycle and the 2022/24 cycle are as outlined in the 2021 Annual Report: Relative TSR
(30%), NSSG (40%) and cash flow (30%) for the three years ending 31 December 2023 and 31 December 2024, respectively. NSSG is
a relative measure and is measured to 30 September rather than 31 December due to the timing of the publication of competitor data.
The minimum performance is equal to 20% of the maximum award.
The targets for the 2021/23 cycle can be found on page 109 of the 2020 Annual Report and targets for the 2022/24 cycle can be found
on page 125 of the 2021 Annual Report.
As noted in the 2020 Directors’ Remuneration Report, TGR was removed from the LTIP measures for these cycles and the weightings
for both relative NSSG and absolute cash flow were increased, maintaining a similar balance between absolute and relative measures
as in the previous cycle. TGR is heavily impacted by the pace and shape of market RevPAR recovery, which is outside management’s
control and remained unpredictable at the time of setting targets.
Relative NSSG for both cycles will be subject to the achievement of a ROCE underpin of 20%, below which the Committee has the
discretion to reduce the outcome for the measure. The underpin was introduced to ensure IHG’s high returns on capital were prioritised
in strategic decision-making (e.g. M&A activity) as opposed to simply reflecting trading performance.
Any use of discretion, including the factors influencing the decision, will be clearly communicated in the Directors’ Remuneration
Report for the year in which the decision is made.
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AUDITED
Executive Directors’ shareholdings and share interests
The Committee believes that share ownership by Executive
Directors and senior executives strengthens the link between
the individuals’ personal interests and those of shareholders.
Guideline Executive Director shareholding requirement
Executive Directors are required to hold shares equal to 500%
of salary for the Chief Executive Officer and 300% for any other
Executive Director. Executive Directors are expected to hold all
net shares earned until the previous guideline shareholding
requirement is achieved (300% for the CEO and 200% for other
Executive Directors) and at least 50% of all subsequent net
shares earned until the current guideline shareholding is met.
The number of shares held outright includes all Directors’
beneficial interests and those held by their spouses and other
connected persons. It also includes the net value of unvested
shares that are not subject to any further performance conditions.
Percentages are calculated using the 30 December 2022 share
price of 4,744p.
The full guideline minimum shareholding requirement continues
for six months after cessation of employment and 50% of the
requirement continues for an additional six months. As a part
of this requirement, since 2019, shares have been granted and
all unvested awards held in a nominee account with Executive
Directors are required to electronically sign an agreement
to the terms of the grant, including the post-employment
shareholding requirement.
Shares and awards held by Executive Directors
at 31 December 2022: % of salary
Keith Barr
574
1,563
Paul Edgecliffe-Johnson
562
1,410
Elie Maalouf
640
1,452
0
200
400
600
800
1,000
1,200
1,400
1,600
Shares held outright and net value of shares subject
to holding/deferral period as a % of base salary
Total number of shares and awards as a % of salary
Guideline shareholding
Percentages have been calculated using base salary in GBP at 31 December 2022.
Elie Maalouf is paid in USD and the sterling equivalent is calculated using an exchange
rate of $1 = £0.81. A combined tax and social security rate of 47% is used for Keith Barr
and Paul Edgecliffe-Johnson and a rate of 45.1% is used for Elie Maalouf.
Current Directors’ shareholdings
The APP deferred share awards are not subject to additional performance conditions. Details on the performance conditions to which
the unvested LTIP awards are still subject can be found on page 130. There have been no changes in the shareholding interests of any
of the Directors since the end of the financial year up to the publication of this report.
Shares and awards held by Executive Directors at 31 December 2022: number of shares
Number of shares held outright,
including those subject to
post-vest holding
APP deferred share awards
LTIP share awards (unvested)
Total number of
shares and awards held
Keith Barr
Paul Edgecliffe-Johnson
Elie Maalouf
2022
93,263
66,869
83,340
2021
81,830
58,723
74,698
2022
29,090
21,389
21,308
2021
26,696
19,137
19,625
2022
173,441
107,945
111,089
2021
143,231
95,959
96,790
2022
295,794
196,203
215,737
2021
251,757
173,819
191,113
Other information relating to Directors’ remuneration
Dividends paid to Executive Directors
A final dividend for 2021 of 67.50p per ordinary share (85.9¢ per ADR)
was paid on 17 May 2022 to shareholders on the Register of members
at the close of business on 1 April 2022.
An interim dividend of 37.8p per ordinary share (43.9¢ per ADR) was
paid on 6 October 2022 to shareholders on the Register of members
at the close of business on 2 September 2022.
Dividends are payable on vested shares held outright, including those
subject to a post-vest holding period, and deferred APP shares.
AUDITED
Payments for loss of office
There were no payments for loss of office in 2022.
Pension entitlements
No Executive Director is entitled to any Defined Benefit pension
or related benefit from IHG.
Consideration of discretion
The Committee’s consideration of discretion in respect of 2022
remuneration outcomes is covered in detail on pages 114 to 117.
Payments to past Directors – benefits
Sir Ian Prosser
Sir Ian Prosser, who retired as Director on 31 December 2003,
had an ongoing healthcare benefit of £1,552.63 during the year.
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Annual Report on Directors’ Remuneration continued
Relative performance graph
InterContinental Hotels Group PLC is a member of the FTSE 100 share index, and the graph below shows the Company’s Total Shareholder
Return (TSR) performance from 31 December 2012 to 31 December 2022, assuming dividends are reinvested, compared with the TSR
performance achieved by the FTSE 100.
400
300
200
100
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
IHG PLC
FTSE 100 Index
Chief Executive Officer’s remuneration
The table below shows the Chief Executive Officer’s single figure of total remuneration for the 10 years to 31 December 2022.
Single figure
CEO
2013
2014
2015
2016
Keith Barr
2017
2,161
2018
3,143a
2019
3,376
2020
1,484
2021
3,199
2022
4,073
Richard Solomons
3,131
6,611b
3,197
3,662
2,207c
Keith Barr
Richard Solomons
74.0
74.0
75.0
63.9
Keith Barr
Richard Solomons
59.0
56.1
50.0
49.4
69.7
66.8
46.1
46.1
84.1
58.7
0
100.0
95.7
45.4
78.9
30.6
20.0
52.1
Single figure
of remuneration
(£000)
Annual incentive
received
(% of maximum)
Shares received
under the LTIP
(% of maximum)
a For Keith Barr, the 2018 figure includes a one-off cash payment for relocation costs in lieu of benefits received while on international assignment prior to CEO position, fully explained
in the 2017 report.
b For Richard Solomons, the 2014 figure includes a one-off cash payment in respect of pension entitlements which was fully explained in the 2014 report.
c In respect of period 1 January to 30 June 2017.
Growth of Company vs growth of CEO pay
As an additional point of reference, the chart below shows CEO single figure table remuneration over the past 10 years as disclosed above,
excluding the 2014 one-off cash payment to Richard Solomons in respect of pension entitlements, and the Company’s net system size growth,
a key metric in our Long Term Incentive Plan, and in our Annual Performance Plan in recent years, and aligned to our ambition. Subject to
performance achievements, increased LTIP grant levels made since 2021 under the approved 2020 Directors’ Remuneration Policy should
in due course contribute towards bridging the gap between the growth in pay of the CEO and the growth of the Company.
40
20
0
-20
-40
-60
-80
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
NSSG
CEO
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CEO pay ratio
As we have noted in previous Annual Reports, pay ratios will differ
significantly between companies, even within the same industry,
depending on demographics and business models. The Group’s
UK employee demographic, which primarily consisted of largely
professional, management and senior corporate roles, changed
in 2019 with the addition of a number of hotel employing entities,
comprising the UK leased estate, which includes a large proportion
of part-time and flexible-working support and service roles. As per
our past disclosures, we show the ratio both including and excluding
the UK hotel employing entities.
Year
Method
25th Median
75th
25th Median
75th
Full population
Population excluding hotel
employing entities
Financial
year ended
31 December
2022
Financial
year ended
31 December
2021
Financial
year ended
31 December
2020
Financial
year ended
31 December
2019
Financial
year ended
31 December
2018
Option
C
Option
C
Option
C
Option
C
Option
C
170:1
109:1
53:1
68:1
51:1
34:1
163:1
65:1
41:1
59:1
42:1
27:1
89:1
44:1
25:1
35:1
26:1
18:1
180:1
122:1
59:1
71:1
49:1
32:1
–
–
–
72:1
48:1
29:1
The 2018, 2019, 2020 and 2021 figures have been restated to reflect the value of the CEO’s
LTIP awards on the date of actual vesting rather than the estimated vesting levels used in
the respective years’ Annual Reports.
What drives the difference in pay between our CEO
and other employees?
Pay ratios reflect how remuneration arrangements differ as
responsibility increases for more senior roles within the organisation,
for example:
• while a strong APP outcome increased outcomes for both the
CEO and wider corporate population, a greater proportion of
performance-related variable pay and share-based incentives
apply for the more senior executives, including Executive
Directors, who will have a greater degree of influence over
performance outcomes;
• role-specific specialist plans apply in certain areas such as
Calculation methodology and supporting information
Option C has been selected for the identification of the percentile
employees. IHG prefer to use this method as we are able to produce
the most accurate total remuneration figure for all UK employees
on a basis comparable with the statutory reporting for Executive
Directors using the most recently available data at the time of
producing the Annual Report. Specifically, this involves:
• compiling all monthly payroll data for all UK employees from
1 January to 31 December 2022 detailing complete variable and
fixed remuneration, including pension and taxable benefits such
as company car or allowance and healthcare; and
• valuing APP for the corporate workforce based on actual 2022
company performance metrics but only target for the personal
performance metric, as actual outcomes for this element of the
award are not known at the time of writing this report, so that it
reflects as much of the same input as for the CEO data as possible
at the time of calculation. In practice, personal performance
outcomes are subject to manager discretion and can be flexed
between 0-200% of target.
Option C requires three UK employees to be identified as the
equivalent of the 25th, 50th and 75th percentile. Having identified
these employees, the 2022 remuneration is calculated on the same
basis as the CEO single total figure of remuneration.
The pay arrangements for the six employees, three from the full
population and three from the population excluding hotel employing
entities, were reviewed alongside those for the employees ranked
immediately above and below them to confirm that they were
representative of pay levels at these quartiles.
The 2022 salary and total pay for the individuals identified at the
lower, median and upper quartiles are set out below.
Year
Financial year ended
31 December 2022
– Full population
Financial year ended
31 December 2022
– Excluding hotel
employing entities
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
Salary £
21,184
28,429
60,312
Total
remuneration £
23,957
37,521
77,183
Salary £
46,750
60,854
83,003
Total
remuneration £
60,271
79,857
121,127
Relative importance of spend on pay
The chart below sets out the actual expenditure of the Group
in 2022 and 2021, showing the differences between those years.
Further information, including where 2021 figures have been restated,
can be found in the Group Financial Statements starting on page 139
and the accompanying notes.
corporate reservations, sales, hotel development and General
Managers of IHG managed, owned, leased and managed lease
hotels. The target and maximum amounts that can be earned
under these plans are typically a higher percentage of base salary
for more senior employees, which in turn affect the pay ratio; and
$m
2,000
1,500
• incentive plans for other corporate employees are typically based
on a combination of individual performance and the Group’s
operating profit from reportable segments.
1,000
828
The increase in ratio since 2020, reflects the strong recovery of the
business since the main impact of the pandemic and the resulting
increases in variable pay outcomes. Overall, on this basis, the
Company believes the median pay ratio for the relevant financial year
is consistent with the pay, reward and progression for the Company’s
UK employees taken as a whole, as outlined on pages 123 to 124.
500
0
+4%
+100%
+23%
1,776
1,444
715
534
0
2022
2021
2022
2021
2022
2021
Reportable
segments’
operating profit
Distributions to
shareholders by
way of dividend
and share buyback
Staff costs
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Directors’ Remuneration Report continued
Annual Report on Directors’ Remuneration continued
AUDITED
Single total figure of remuneration: Non-Executive Directors
Non-Executive Director
Patrick Cescau
Deanna Oppenheimer
Graham Allan
Daniela Barone Soares
Arthur de Haast
Ian Dyson
Duriya Farooqui
Byron Grote
Jo Harlow
Jill McDonald
Sharon Rothstein
Committee
appointments
Date of
original
appointment
N
N
A N R
R RB
R RB
A N R
A RB
A R
N R
A N RB
A RB
01/01/13
01/06/22
01/09/20
01/03/21
01/01/20
01/09/13
07/12/20
01/07/22
01/09/14
01/06/13
01/06/20
2022
308
174
116
81
81
108
81
41
108
95
81
See page 91 for Board and Committee membership key and attendance.
Fees
£000
2021
444
–
78
65
78
104
78
–
104
92
78
Taxable benefits
£000
2022
2021
27
10
2
4
5
5
14
1
5
6
9
1
–
0
0
0
0
0
–
0
0
0
Total
£000
2021
445
–
78
65
78
104
78
–
104
92
78
2022
335
184
118
85
86
113
95
42
113
101
90
Fees: Fees are paid in line with the DR Policy. Patrick Cescau stepped down from the Board on 31 August 2022 so all fees and taxable
benefits for this Director ceased on this date. Deanna Oppenheimer joined the Board on 1 June 2022 in a Non-Executive Director role
before she replaced Patrick Cescau as Chair of the Board on 1 September 2022, and Byron Grote joined the Board on 1 July 2022, so all
fees and taxable benefits for these Directors began on their appointment dates.
Benefits: For Non-Executive Directors, benefits include taxable travel and accommodation expenses to attend Board meetings away
from the designated home location. Under UK income tax legislation, the non-UK based Non-Executive Directors are not subject to
tax on some travel expenses; this is reflected in the taxable benefits for Deanna Oppenheimer, Duriya Farooqui and Sharon Rothstein.
Due to global restrictions on travel during 2021 as a result of the pandemic, there were no Board meetings held in person throughout
2021, so taxable travel and accommodation expenses are lower in this year in comparison to 2022, when Board meetings were held
in person.
Other: Non-Executive Directors are not eligible for any incentive awards or for any pension contributions or benefit.
Shares held by Non-Executive Directors at 31 December 2022:
The Non-Executive Directors who held shares are listed in the table below:
Non-Executive Director
Daniela Barone Soares
Ian Dyson
Byron Grotea
Arthur de Haast
Jo Harlowa
a Shares held in the form of American Depositary Receipts.
2022
316
1,500
2,800
1,000
950
2021
316
1,500
0
1,000
950
There have been no changes in the shareholding interests of any of the Directors since the end of the financial year up to the publication
of this report.
Fees: Non-Executive Directors
The fees for Non-Executive Directors are reviewed and agreed annually in line with the DR Policy; 2023 increases are lower than the budget
for the wider UK and US corporate workforce, whereas 2022 increases were in line with the budget for the wider UK and US corporate
workforce. The basis for setting fee levels for 2023 will be as follows, each element independently rounded to the nearest £000:
2023
Base fee £000
2023
Role supplement £000
475
84
84
84
84
84
–
36
28
28
15
–
2023
£000
475
120
111
111
98
84
Total annual fee
2022
£000
461
116
108
108
95
81
Role
Chair of the Board
Current incumbent
Non-Executive Director
Deanna Oppenheimer
Senior Independent Director
Graham Allan
Chair of Audit Committee
Chair of Remuneration Committee
Ian Dyson
Jo Harlow
Chair of Responsible Business Committee
Jill McDonald
Non-Executive Director
Daniela Barone Soares
Arthur de Haast
Duriya Farooqui
Byron Grote
Sharon Rothstein
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Annual percentage change in remuneration of Directors compared to employees
The table below shows the percentage change in all Directors’ remuneration compared to that of an average employee between the
financial years ended 31 December 2019 to 31 December 2022.
The 2022 remuneration figures for the Directors are taken from the data used to compile the single figure tables of remuneration shown
on pages 127 and 134, excluding any rounding up or down. No employees are directly employed by the Group’s Parent Company, so the
average employee data for this year’s report is based on the same UK corporate employee population as that on which the CEO pay ratio
is calculated. Elie Maalouf’s salary is paid in USD but reported in the single figure table in GBP. We have previously reported his year-on-year
change using the sterling equivalents; however, we have noticed the exchange rate differences have been having a higher impact on his
percentage changes between years. We therefore made the decision to strip out the impact of the currency conversion for Elie Maalouf
by using his USD values to provide a more meaningful indication of his year-on-year remuneration changes. To ensure the table reflects
a like-for-like comparison between years, we have also recalculated and restated the percentage change figures for Elie Maalouf for 2021
vs 2020 and 2020 vs 2019.
All corporate employees share the same corporate performance metrics with the Executive Directors; however, the weightings of these
metrics for corporate employees below Executive Committee level include an individual performance portion, the results of which are not
available at the time of reporting, so for average employee data, we assume that target performance is achieved. Non-Executive Directors
are not eligible for a bonus.
Taxable benefits for Non-Executive Directors largely comprise travel expenses, which returned to pre-pandemic levels in 2022 following
a significant reduction in 2020 and 2021 due to travel restrictions. Executive Director and average employee taxable benefits typically
comprise elements of their reward package such as company car or allowance and healthcare benefits.
Executive Directors
Keith Barr
Paul Edgecliffe-Johnson
Elie Maalouf
Non-Executive Directors
Deanna Oppenheimer
Graham Allan
Daniela Barone Soares
Arthur de Haast
Ian Dyson
Duriya Farooqui
Byron Grote
Jo Harlow
Jill McDonald
Sharon Rothstein
Average employee
Year-on-year change 2022 vs 2021
Year-on-year change 2021 vs 2020
Year-on-year change 2020 vs 2019
Salary
Bonus
4%
4%
4%
–
49%
–
4%
4%
4%
–
4%
4%
4%
-0.47%
-0.47%
-0.47%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Taxable
benefit
5%
9%
12%
–
684%a
–
1,706%a
100%a
100%a
–
1,970%a
2,108%a
100%a
14%
-6.01%
5%
Salary
Bonus
Taxable
benefit
Salary
Bonus
20%
20%
22%
–
–
–
18%
18%
–
–
18%
18%
–
3%
100%
100%
100%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100%
-9%
-8%
91%
–
–
–
-1%
-100%
–
–
100%
-1%
–
-11%
-14%
-13%
-15%
–
–
–
–
-13%
–
–
-13%
-13%
–
-6%
-100%
-100%
-100%
N/A
N/A
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-100%
Taxable
benefit
25%
-14%
-9%
–
–
–
–
-90%
–
–
-94%
-87%
–
-9%
a Please see notes below for further details on these percentage change anomalies.
Notes to the annual percentage change in remuneration of Directors compared to employees table
• No data has been reported for Daniela Barone Soares as she joined the Board in 2021 and therefore only part-year data is available, which
does not enable a comparison with 2022. Similarly, Deanna Oppenheimer and Byron Grote both joined the Board during 2022, so there will
be no full-year data comparisons for them in 2022 and 2023. Graham Allan was appointed a Senior Non-Executive Director from 1 January
2022, so his salary percentage change increase incorporates the base fee increase and the addition of his role supplement.
• As confirmed on page 127, the 2022 taxable benefits figure for the non-UK based Executive Director, Elie Maalouf, includes higher travel
and associated costs met by the Company than the comparable costs in 2021. As noted above, we have changed the method in which
we calculate Elie Maalouf’s percentage change for 2022; we believe that removing the impact of currency will provide a more meaningful
picture of how his pay is moving year-on-year and aligns further with the intentions of this disclosure.
• In 2022, we saw the reintroduction of in-person Board meetings, in comparison to 2021 where just one Board dinner was held. Graham Allan
incurred only £257.21 in expenses in 2021 but incurred £2,016.61 in 2022, hence the percentage change increase for 2022 vs 2021 is 684%.
Similarly, Arthur de Haast, Jo Harlow and Jill McDonald also incurred only £257.21 in expenses in 2021 but incurred £4,645.40, £5,323.09
and £5,678.58 respectively, hence their percentage change increases of over 1,000%. Ian Dyson, Duriya Farooqui and Sharon Rothstein
did not incur any expenses in 2021 but did incur expenses in 2022, hence the percentage change for 2022 vs 2021 is 100%. We expect to
see these extreme fluctuations shown in percentage change since we began reporting these in the 2020 Directors’ Remuneration Report
reduce in future, on the assumption of reduced impact on business-related travel due to the pandemic.
• Any significant percentage changes in the previous year-on-year changes (2021 vs 2020 and 2020 vs 2019) are explained in the relevant
year’s Directors’ Remuneration Report.
• The average bonus outcome for the average employee is reduced by a greater extent than the Executive Directors because the
Executive Director outcomes were capped in the prior year. The average employee salary percentage change shows a higher increase,
as an additional 33% was available on top of the standard merit budget for employees below Executive Committee level, and an
increase in benefits includes the reintroduction of Bravo and the vesting of the first Colleague Share Plan matching award.
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Annual Report on Directors’ Remuneration continued
Implementation of Directors’ Remuneration Policy in 2023
This section explains how certain elements of the DR Policy will be applied in 2023.
Salary: Executive Directors
Directors’ salaries are agreed annually in line with the DR Policy.
The following salaries will apply from 1 April 2023.
Executive Director
Keith Barr
Elie Maaloufa
Increase
%
3
4
£
924,900
2023
$
905,000
£
897,900
2022
$
870,100
a Elie Maalouf is paid in USD and his annual base salary for 2021 and 2022 is shown in USD. The sterling equivalent values calculated using an exchange rate of $1 = £0.81 in 2023
and $1 = £0.73 in 2022 are: 2023 £733,050 and 2022 £635,173.
Paul Edgecliffe-Johnson is not eligible for a merit increase in 2023 as he is leaving IHG on 19 March 2023. Further details regarding his
departure can be found on pages 118 to 119.
Michael Glover will be replacing Paul Edgecliffe-Johnson as Chief Financial Officer effective 20 March 2023 and will not be eligible for a merit
increase until April 2024. His remuneration details are as follows: base salary from 20 March 2023: £620,000; pension and other benefits as
well as APP and LTIP levels will be in line with the DR Policy. A series of one-off payments to cover relocation and associated costs will apply
for the first three years: £150,000 payments both on appointment and on the first anniversary of appointment and £100,000 on the second
anniversary of appointment. Michael will be relocating from his current CFO, Americas, role based out of the Atlanta office to the CFO role
in the UK head office and these relocation payments are in line with how we treat other international moves.
The increases for all other Executive Directors are shown above and are lower than the budget for the wider UK and US corporate workforce.
For Executive Director merit increases, we use a range of considerations including wider workforce merit increases, market data and external
benchmarking. In addition to FTSE 100 data and other hotel comparators, we use the following US comparator group for CEO salary and overall
pay benchmarking: Choice Hotels International Inc.; Hilton Worldwide Holdings Inc.; Hyatt Hotels Corporation; Marriott International Inc.;
and Wyndham Hotels & Resorts Inc..
APP and LTIP performance measures and targets
The measures and targets for the 2023 APP and 2023/25 LTIP cycle are subject to ongoing shareholder consultation, along with the
remaining aspects of the future DR Policy, at the time of writing this report. As noted on page 118, it is currently anticipated that the APP
measures and weightings will remain as operating profit from reportable segments (70%), openings and signings (15% each); and that the
LTIP will contain a new ESG measure incorporating targets related to decarbonisation actions as well as some of our diversity, equity and
inclusion commitments.
Jo Harlow
Chair of the Remuneration Committee
20 February 2023
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Statement of compliance
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Our Statement of compliance summarises how the Group has applied
the principles of the 2018 UK Corporate Governance Code (available
at www.frc.org.uk/directors under UK Corporate Governance Code)
as published in July 2018 (the Code) and comments on compliance
with the Code’s provisions.
The Board considers that the Group has complied in all material
respects with the Code’s provisions for the year ended 31 December
2022, save as noted below in section 3 L (Annual evaluation) in
respect of provision 21, and section 5 P (Remuneration policies
and practices) in respect of provision 38.
This should be read in conjunction with the Strategic Report on
pages 2 to 88, and Governance, including the Directors’ Remuneration
Report, on pages 89 to 136, as a whole.
1. Board Leadership and Company Purpose
E. Workforce policies and practices
A. The role of the Board
The Board continues to lead the Group’s strategic direction and
long-term objectives. Further responsibilities of the Board are set
out on page 98.
The Board met eight times during 2022 and all Directors continue
to act in what they consider to be the best interests of the Company,
consistent with their statutory duties. Further details of 2022 Board
meetings, including information on matters discussed and decisions
taken by the Board, are set out on pages 99 to 101; attendance
information is on page 91; and skills and experience and biographical
information is on pages 92 to 94.
A description of IHG’s business model is set out on pages 10 to 13.
An assessment of the principal risks facing the Group is included
on pages 44 to 51.
Potential conflicts of interest are reviewed annually and powers of
authorisation are exercised in accordance with the Companies Act
and the Company’s Articles of Association.
During the year, if any Director has unresolved concerns about the
operation of the Board or the management of the Company, these
would be recorded in the minutes of the meeting.
B. The Company’s purpose, values and strategy
Our purpose is to provide True Hospitality for Good. A description of
our culture, including an overview of our values and information on
how the Board ensures alignment between our purpose, values and
strategy and our culture, is included on pages 40 to 42. A summary
of the Board’s activities in relation to the Voice of the Employee is
included on page 111. Information on the Group’s approach to
rewarding its workforce is contained on pages 30, 123 and 124.
C. Resources
The Board delegates oversight of the allocation of day-to-day
resources to management (principally through the Executive
Committee).
Information on the Group’s key performance indicators, including
the measures used to monitor them, is included on pages 62 to 65.
A summary of the procedures for identifying and discussing
emerging risks is set out on pages 44 to 51.
D. Shareholders and stakeholders
The Board engaged actively throughout 2022 with shareholders and
other stakeholders. The Chair held a number of meetings with major
institutional shareholders to discuss the role of the Board and other
general governance issues, following which the Chair ensured that
their views were communicated to the Board as a whole. Further
details are on page 38.
Information on the Board’s consideration of and engagement with
other stakeholders, including employees, suppliers, hotel owners
and guests, is included on pages 38 and 39.
The Board has overarching responsibility for the Group’s workforce
policies and practices and delegates day-to-day responsibility
to the CEO and Chief Human Resources Officer to ensure that
they are consistent with the Company’s values and support its
long-term success.
Employees are able to report matters of concern confidentially
through our Confidential Disclosure Channel. The Board routinely
reviews reports generated from the disclosures and ensures that
arrangements are in place for investigation and follow-up action
as appropriate.
2. Division of Responsibilities
F. The Chair
Deanna Oppenheimer leads the operation and governance of the
Board and its Committees. The Chair has been in post since
September 2022 and was independent on appointment.
G. Board composition
The size and composition of the Board and its Committees are kept
under review by the Nomination Committee to ensure the appropriate
combination of Executive and Non-Executive Directors. Details of the
composition of the Board and Committees are available on pages 91
to 94.
At least half of the Board, excluding the Chair, are Independent
Non-Executive Directors. Provision 10 of the Code considers the
independence of Non-Executive Directors and circumstances that
might impair their independence, including holding office for over
nine years. Jill McDonald and Ian Dyson reached a nine-year tenure
in June 2022 and September 2022 respectively. The Company has
announced both Jill and Ian’s retirement from the Board effective
28 February 2023. As Jill and Ian have served as Chair of the
Responsible Business Committee and Chair of the Audit Committee
respectively, the Board considered a slight extension to their
nine-year tenure as appropriate to facilitate an orderly transition
to their successors.
In light of their extended tenure, the Board carefully considered both
Jill and Ian’s contributions and commitments and concluded that
they remain independent.
H. Non-Executives
Non-Executive Director terms of appointment outline IHG’s time
commitment expectations required to fulfil their role.
The commitments of each Director are included in the Directors’
biographical details on pages 92 to 94. Details of Non-Executive
Director appointment terms are set out on page 125.
The Chair annually reviews the time each Non-Executive Director
dedicates to IHG as part of the internal performance evaluation of
Directors (see page 104) and is satisfied that their other duties and
time commitments do not conflict with those as Directors.
Graham Allan was appointed Senior Independent Non-Executive
Director (SID) from 1 January 2022. The SID provides a sounding
board for the Chair and serves as an intermediary for the other
Directors and shareholders. Graham also led the annual
performance review of the Chair (see page 104).
After each Board meeting, Non-Executive Directors and the Chair
meet without Executive Directors being present (see page 98).
Statement of compliance
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Governance
Statement of compliance continued
I. Policies, processes, information and resources
N. Assessment of the Company’s position and prospects
The Chair and Company Secretary ensure that the Board and its
Committees have the necessary policies and processes in place and
that they receive timely, accurate and clear information. The Board
and its Committees also have access to the Company Secretary,
independent advice and other necessary resources, at the Company’s
expense. They receive the administrative and logistical support of
a full-time executive assistant. See page 98 for more details.
3. Composition, Succession and Evaluation
J. Appointments
Appointments to the Board are led by the Nomination Committee
in accordance with its Terms of Reference (available on our website
at www.ihgplc.com/investors under Corporate governance).
The Nomination Committee also supports the Board in succession
planning for the Board and senior management. Further details of
the role of the Nomination Committee and what it did in 2022 are
in the Nomination Committee Report on pages 112 and 113.
The overall process of appointment and removal of Directors is
overseen by the Board as a whole.
All of the Directors retire and seek election or re-election at each AGM.
K. Skills
Details of the skills, experience and biographical information of the
Board are set out on pages 92 to 94.
The Chair and Company Secretary ensure that new Directors receive
a full induction and that all Directors continually update their skills
and have the requisite knowledge and familiarity with the Group
to fulfil their role (see page 103).
The length of service of Non-Executive Directors is reviewed regularly.
L. Annual evaluation
The Board undertakes either an internal or external annual Board
effectiveness evaluation. Provision 21 of the Code states that an
externally facilitated board evaluation should take place at least every
three years. The last external board evaluation was carried out in 2019.
However, as Deanna Oppenheimer started as Chair in September
2022, the Board considered it appropriate to conduct an internal
evaluation exercise following Deanna’s appointment, with a view
to undertaking an externally facilitated evaluation exercise in 2023,
which the Board considers would provide more meaningful and
productive insight.
The Statement of Directors’ Responsibilities (including the Board’s
statement confirming that it considers that the Annual Report and
Form 20-F, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group’s position, performance, business model and strategy)
is set out on page 140.
The status of IHG as a going concern is set out in the Directors’
Report on page 239. An explanation of the Group’s performance,
business model, strategy and the risks and uncertainties relating
to IHG’s prospects, including the viability of the Group, is set out
in the Strategic Report on pages 2 to 88.
O. Risk management
The Board determines the nature and extent of the principal risks
the organisation is willing to take to achieve its strategic objectives.
An assessment of the principal and emerging risks facing the Group
was carried out during the year, including those risks that would
threaten the Group’s business model, future performance, solvency
or liquidity and reputation (see pages 44 to 51 for further details of
the principal risks). The Board and Audit Committee monitor the
Group’s risk management and internal controls systems and conduct
an annual review of their effectiveness. Throughout the year, the
Board has directly, and through delegated authority to the Executive
Committee and the Audit Committee, overseen and reviewed all
material controls, including financial, operational and compliance
controls. See pages 44 to 51 and 105 to 109.
5. Remuneration
P. Remuneration policies and practices
The Remuneration Committee is responsible for developing policy
on executive remuneration and determining remuneration packages
of Directors and senior management. The Directors’ Remuneration
Report is set out on pages 114 to 136. Details of the Remuneration
Committee’s focus areas during 2022 are set out on pages 125
and 126 and its membership details are on page 91.
Provision 38 of the Code states that pension contribution rates for
executive Directors should be aligned with those available to the
workforce. As explained in the Annual Report and Form 20-F 2019,
this is the case for new UK appointments and existing UK Executive
Directors from January 2023. US retirement benefit arrangements
differ in a number of ways from the UK and include a Deferred
Compensation Plan for senior employees.
Performance evaluations of Directors, including the Chair, are also
carried out on an annual basis. Directors’ biographies are set out on
pages 92 to 94, and details of performance evaluations carried out
in 2022 are on page 104.
Given the importance of the CEO, Americas’ role to the business
and the market competitiveness concerns over Executive Director
pay, the arrangements as they relate to the CEO, Americas are to
be maintained. Further details can be found on page 118.
4. Audit, Risk and Internal Control
M. Audit functions
The Audit Committee is comprised entirely of Independent
Non-Executive Directors (see page 91 for membership details).
Ian Dyson, the Chair of the Committee, and Byron Grote, the
Committee’s Chair Designate, have recent and relevant financial
experience, and the Committee as a whole has competence relevant
to the sector in which we operate. Details of the Committee’s role,
responsibilities and activities are set out on pages 105 to 109.
The Audit Committee reviewed the effectiveness of the Group’s
Internal Audit function and also assessed PricewaterhouseCoopers
LLP’s performance during 2022, including its independence,
effectiveness and objectivity. Details of these reviews are set out
in the Audit Committee Report on pages 105 to 109.
Q. Procedure for developing policy on executive remuneration
Details of how the Directors’ Remuneration Policy (DR Policy) was
implemented in 2022 are set out on pages 127 to 135. As explained
on page 118, the new DR Policy remains subject to consultation with
shareholders. It is intended that the consultation will be completed
in time for the proposed 2023 DR Policy to be published in the
Company’s Notice of 2023 Annual General Meeting.
During 2022, no individual Director was involved in deciding his
or her own remuneration outcome.
R.
Independent judgement and discretion
The Remuneration Committee has formal discretions in place in
relation to outcomes under the APP and LTIP, and these are disclosed
as part of the DR Policy. When determining outcomes under these
plans, the Committee considers whether it is appropriate to adjust
outcomes under these discretions, taking account of the Group’s
performance, relative performance against competitors, and other
relevant factors. Information on the Remuneration Committee’s
consideration of the use of discretion during 2022 is set out on
pages 115 to 117.
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150 Group Financial Statements
157 Accounting policies
169 Notes to the Group Financial Statements
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Hotel Indigo Inuyama Urakuen Garden, China
a Independent Auditors’ Reports comprise reports from PricewaterhouseCoopers
LLP (PCAOB ID: 876) and Ernst & Young LLP (PCAOB ID: 1438)
Group Financial Statements
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Group Financial Statements
Statement of Directors’ Responsibilities
Financial Statements and accounting records
The Directors are required to prepare the Annual Report and Form
20-F and the Financial Statements for the Company and the Group
at the end of each financial year in accordance with applicable law
and regulations. Under company law directors must not approve the
Financial Statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Company and the Group
and the profit or loss of the Group for that period. The Directors
have prepared the Consolidated Financial Statements in accordance
with UK-adopted international accounting standards and the Company
Financial Statements in accordance with UK accounting standards,
comprising FRS 101 ‘Reduced Disclosure Framework’, and applicable
law. The Directors have also prepared the Consolidated Financial
Statements in accordance with International Financial Reporting
Standards (‘IFRSs’) issued by the International Accounting
Standards Board (‘IASB’).
In preparing these Financial Statements, IHG Directors are required to:
• Select suitable accounting policies and apply them consistently;
• Make judgements and accounting estimates that are reasonable;
• State whether the Consolidated Financial Statements have
been prepared in accordance with UK-adopted international
accounting standards;
• State for the Company Financial Statements whether applicable
UK accounting standards, comprising FRS 101, have been
followed; and
• Prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The Directors have responsibility for ensuring that the Company
and the Group keep adequate accounting records sufficient to
show and explain the Company’s and the Group’s transactions and
which disclose with reasonable accuracy the financial position of the
Company and the Group to enable them to ensure that the Financial
Statements and the Directors’ Remuneration Report comply with the
Companies Act 2006.
The Directors are also responsible for the system of internal control,
for safeguarding the assets of the Company and the Group, and
taking reasonable steps to prevent and detect fraud and other
irregularities.
Disclosure Guidance and Transparency Rules
The Board confirms that to the best of its knowledge:
• The Consolidated Financial Statements have been prepared in
accordance with UK-adopted international accounting standards,
and IFRSs as issued by the IASB, and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group
taken as a whole;
• The Company Financial Statements have been prepared in
accordance with UK accounting standards, comprising FRS 101,
and give a true and fair view of the assets, liabilities and financial
position of the Company; and
• The Annual Report, including the Strategic Report, includes a
fair review of the development and performance of the business
and the position of the Company and the Group taken as a whole,
together with a description of the principal risks and uncertainties
that it faces.
UK Corporate Governance Code
Having taken advice from the Audit Committee, the Board considers
that this Annual Report and Form 20-F, taken as a whole, is fair,
balanced and understandable and that it provides the information
necessary for shareholders to assess the Company’s and the
Group’s position and performance, business model and strategy.
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Disclosure of information to Auditor
The Directors who held office as at the date of approval of this
report confirm that they have taken steps to make themselves aware
of relevant audit information (as defined by Section 418(3) of the
Companies Act 2006). None of the Directors are aware of any
relevant audit information which has not been disclosed to the
Company’s and Group’s Auditor.
Management’s report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Group, as defined in
Rule 13a–15(f) and 15d–15(f) under the Securities Exchange Act of
1934 as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with IFRSs.
The Group’s internal control over financial reporting includes
policies and procedures that:
• Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the Group’s transactions and
dispositions of assets;
• Are designed to provide reasonable assurance that transactions
are recorded as necessary to permit the preparation of the
Consolidated Financial Statements in accordance with UK-adopted
international accounting standards and IFRSs as issued by the
IASB, and that receipts and expenditure are being made only in
accordance with authorisation of management and the Directors
of the Company; and
• Provide reasonable assurance regarding prevention or timely
detection of unauthorised acquisition, use or disposition of the
Group’s assets that could have a material effect on the
Consolidated Financial Statements.
Any internal control framework has inherent limitations and
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or the degree of
compliance with the policies or procedures may deteriorate.
Management has undertaken an assessment of the effectiveness
of the Group’s internal control over financial reporting at
31 December 2022 based on criteria established in the Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 Framework).
Based on this assessment, management has concluded that as
at 31 December 2022 the Group’s internal control over financial
reporting was effective.
During the period covered by this document there were no changes
in the Group’s internal control over financial reporting that have
materially affected or are reasonably likely to materially affect the
effectiveness of the internal controls over financial reporting.
The Group’s internal control over financial reporting at 31 December
2022, together with the Group’s Consolidated Financial Statements,
were audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm. Their auditor’s report can be
found on page 147.
For and on behalf of the Board
Keith Barr
Chief Executive Officer
20 February 2023
Paul Edgecliffe-Johnson
Chief Financial Officer
20 February 2023
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Our audit approach
Overview
Audit scope
• PwC component audit teams were engaged to perform a full
scope audit in the US and specified procedures over transactions
processed at the Group’s Global Business Service Centre in India.
The Group audit team carried out audit procedures over the
consolidation and material balances and transactions processed
centrally. The territories where we conducted audit procedures,
together with work performed at corporate functions and at the
Group level, accounted for approximately: 87% of the Group’s
revenue; 81% of the Group’s statutory profit before tax; and 75%
of the Group’s profit before tax adjusted for exceptional items and
the System Fund.
• The Group audit team performed substantive procedures over all
of the material balances and transactions of the Parent Company.
Key audit matters
• Breakage assumption used to estimate IHG One Rewards deferred
revenue (Group)
• Allocation of expenses to the System Fund (Group)
• Recognition of the UK deferred tax asset (Group and Parent Company)
Materiality
• Overall Group materiality: $37.0 million (2021: $25.0 million) based
on approximately 5% of profit before tax adjusted for exceptional
items and the System Fund.
• Overall Parent Company materiality: £14.8 million
(2021: £13.3 million) based on approximately 1% of net assets.
• Performance materiality: $27.7 million (2021: $18.7 million) (Group)
and £11.1 million (2021: £9.9 million) (Parent Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the Financial Statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional
judgement, were of most significance in the audit of the Financial
Statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) identified by the auditors, including those which had the
greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of
our procedures thereon, were addressed in the context of our audit
of the Financial Statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Independent auditors’ report to the members
of InterContinental Hotels Group PLC
Report on the audit of the Financial Statements
Opinion
In our opinion:
• InterContinental Hotels Group PLC’s Group Financial Statements
and Parent Company Financial Statements (the ‘Financial
Statements’) give a true and fair view of the state of the Group’s
and of the Parent Company’s affairs at 31 December 2022 and
of the Group’s profit and cash flows for the year then ended;
• the Group Financial Statements have been properly prepared in
accordance with UK-adopted international accounting standards
as applied in accordance with the provisions of the Companies
Act 2006;
• the Parent Company Financial Statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’, and
applicable law); and
• the Financial Statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the Financial Statements, included within the
Annual Report and Form 20-F (the ‘Annual Report’), which comprise:
the Group and Parent Company statements of financial position at
31 December 2022; the Group income statement, Group statement
of comprehensive income, Group statement of cash flows and
Group and Parent Company statements of changes in equity for
the year then ended; the Accounting policies; and the notes to the
Financial Statements.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in the Accounting policies, the Group, in addition to
applying UK-adopted international accounting standards, has also
applied international financial reporting standards (‘IFRSs’) as issued
by the International Accounting Standards Board (‘IASB’).
In our opinion, the Group Financial Statements have been properly
prepared in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the Financial
Statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5 to the Group Financial
Statements, we have provided no non-audit services to the Parent
Company or its controlled undertakings in the period under audit.
Independent Auditor’s UK Report
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Independent Auditor’s UK Report continued
Expected credit losses, which was a key audit matter last year, is no longer included because of a decrease in the assessed level of audit
risk as a result of improved cash collections following the Covid-19 pandemic and further refinements to the Group’s expected credit
losses methodology. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Breakage assumption used to estimate IHG One Rewards
deferred revenue (Group)
We evaluated and tested the design and operation of key controls in place
over management’s determination of the breakage assumption.
At 31 December 2022, the deferred revenue balance relating to the IHG One
Rewards loyalty programme was $1,411m (2021: $1,292m).
The hotel loyalty programme, IHG One Rewards, enables members to earn
points, funded through hotel assessments, during each qualifying stay at
an IHG branded hotel and to consume points at a later date in exchange for
accommodation or other benefits. The Group recognises deferred revenue in
an amount that reflects the Group’s unsatisfied performance obligations, valued
at the stand-alone selling price of the future benefit to the member. On an
annual basis, the Group engages an external actuary who uses statistical
formulae to assist in the estimate of the number of points that will never be
consumed (‘breakage’). The amount of revenue recognised and deferred
is impacted by the estimate of breakage.
Significant estimation uncertainty exists in projecting members’ future
consumption activity and how this may have been impacted by Covid-19.
A small change in the breakage assumption would result in a material
difference in the deferred revenue balance at 31 December 2022 and
therefore in the revenue recognised in the year.
Refer to the Estimates section of the Accounting policies and to note 3
to the Group Financial Statements for management’s disclosures.
Allocation of expenses to the System Fund (Group)
The Group operates a System Fund to collect and administer cash assessments
from hotel owners for the specific purpose of use in marketing, the Guest
Reservation System and hotel loyalty programme. Costs are incurred and
allocated to the System Fund in accordance with the principles agreed with
the IHG Owners Association. For the year ended 31 December 2022, the
Group recorded System Fund expenses of $1,322m (2021: $939m).
System Fund expenses are excluded from the Group result to determine
operating profit from reportable segments, a key metric used by the Group.
There is judgement involved in developing the Group’s internal policies in order
to apply the principles agreed with the IHG Owners Association to expenses
incurred and there is complexity in subsequently evaluating whether
expenses are appropriately allocated to the System Fund in line with these
internal policies.
Refer to the Accounting policies and to note 32 to the Group Financial
Statements for management’s disclosures.
Recognition of the UK deferred tax asset (Group and parent)
At 31 December 2022, the Group recognised a deferred tax asset of $109m
(2021: $127m) related to the UK tax group. The Parent Company, which is part
of the UK tax group, recognised a deferred tax asset of £40m (2021: £29m).
The assets largely represent brought forward revenue tax losses. The asset
recognised by the Group also includes future tax deductions for amortisation.
Judgement is used when assessing the extent to which deferred tax assets,
particularly in respect of tax losses, should be recognised. Deferred tax assets
are only recognised to the extent that it is regarded as probable that there will
be sufficient and suitable taxable profits or deferred tax liabilities in the relevant
legal entity or tax group against which such assets can be utilised in the future.
For this purpose, forecasts of future profits are considered by assessing
estimated future cash flows. Tax assumptions are overlaid to these profit
forecasts to estimate future taxable profits. This process has demonstrated
that the UK deferred tax assets should reverse over a seven to ten year period,
with the lower end of the range based on the Group’s base case forecast and
the upper end of the range based on the Group’s severe downside case
forecast. The losses do not expire, although they can only be offset against
50% of annual UK taxable profits. The Group’s TCFD disclosures describe how
physical and transitional climate risks present both risks and opportunities for
the Group. The potential downside risks have been considered in the context
of the UK deferred tax asset recoverability assessment, without taking
account of opportunities or mitigating actions.
Refer to note 8 to the Group Financial Statements and note 5 to the Parent
Company Financial Statements for management’s disclosures.
We tested a sample of data used by management’s external actuary in deriving
the breakage assumption to underlying records. We assessed the competence
and objectivity of management’s actuary and understood the methods and
assumptions adopted by it in determining breakage. We deployed actuarial
experts to calculate an independent expectation of a reasonably possible
range for deferred revenue based on independently determined breakage
assumptions. We compared the deferred revenue balance, which reflected
management’s assumptions about the ongoing impact of Covid-19 on points
consumption, with our independently calculated range.
We assessed the appropriateness of the related disclosures including
sensitivity analysis in the Estimates section of the Accounting policies and
in note 3 to the Group Financial Statements.
Based on the procedures performed, we noted no material issues arising
from our work.
We evaluated and tested the design and operation of key controls over the
allocation of expenses to the System Fund.
We understood and assessed the internal policies and governance structure
that the Group has put in place in order to apply the principles agreed
with the IHG Owners Association to expenses incurred. We inspected
correspondence and minutes of meetings with the IHG Owners Association
to identify whether allocations have been challenged or disputed. For a sample
of cost centres, we validated the basis for any changes in the proportion of
costs allocated to the System Fund compared to the prior year. We tested
a sample of expenses that had been allocated to the System Fund to assess
whether they were accurately calculated, in compliance with the Group’s
internal policies and consistent with historical practice.
We checked whether there were any manual journal entries that transferred
expenses to or from the System Fund to evaluate whether there was an
appropriate rationale for any such journals and we determined whether the
resulting classification of expenses was in line with the principles agreed with
the IHG Owners Association.
Based on the procedures performed, we noted no material issues arising from
our work.
We evaluated and tested the design and operation of key controls in place
over the recognition of deferred tax assets and over the Group’s
forecasting process.
We evaluated the appropriateness of the assumptions reflected in the UK
forecasts, including assessing the reasonableness of growth projections
compared to historical experience and industry data. As part of this assessment,
we benchmarked management’s estimates to third-party sources, including
consideration of how climate risk has been incorporated.
We deployed tax specialists to assess the appropriateness of tax overlay
adjustments applied to the forecasts by reference to the requirements of
tax principles, including the restriction of losses to 50% of annual UK taxable
profits, and to assess whether the UK deferred tax assets met the recognition
criteria of IAS 12.
We challenged the appropriateness of the recovery period of seven to ten years.
We assessed the appropriateness of the related disclosures in note 8 to the
Group Financial Statements and note 5 to the Parent Company
Financial Statements.
Based on the procedures performed, we noted no material issues arising from
our work.
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the Financial
Statements as a whole, taking into account the structure of the
Group and the Parent Company, the accounting processes and
controls and the industry in which they operate.
The Group Financial Statements are a consolidation of over 600
reporting units. The Group operates a Global Business Service
Centre (‘BSC’) in India which processes transactions for the majority
of the Group’s reporting units. We identified one aggregation of
components in the US which required a full scope audit due to its
size and because this aggregated component holds the IHG One
Rewards loyalty programme and System Fund. We engaged a PwC
component audit team in the US to carry out this audit. We also
instructed our US component team to undertake specified
procedures over certain balances and transactions in certain other
US reporting units. We engaged a second PwC component audit
team in India to undertake testing of transactions processed by the
BSC encompassing all reporting units within the BSC’s scope.
Where work was performed by component auditors, we determined
the appropriate level of involvement we needed to have in that audit
work to ensure that we could conclude that sufficient appropriate
audit evidence had been obtained for the Group Financial Statements
as a whole. In addition to instructing and reviewing the reporting
from our component audit teams, we conducted file reviews and
participated in key meetings with local management. We made
one site visit to the US and three site visits to India to meet with
our component teams and local management in person and we
supplemented these site visits with regular dialogue with component
teams throughout the year.
The Group consolidation, financial statement disclosures and certain
balances and transactions processed centrally by management in
the UK, including certain Parent Company balances and transactions
that were included in Group audit scope, were audited by the Group
audit team. This included taxation, treasury, impairment reviews and
elements of expected credit losses on trade receivables. Taken
together, the audit procedures carried out by the Group and
component audit teams provided coverage of 87% of the Group’s
revenue, 81% of the Group’s statutory profit before tax and 75% of
the Group’s profit before tax adjusted for exceptional items and the
System Fund. This provided the evidence we needed for our opinion
on the Group Financial Statements taken as a whole. This was before
considering the contribution to our audit evidence from performing
audit work at the Group level, including disaggregated analytical
review procedures, which covered certain of the Group’s smaller
and lower risk components that were not directly included in our
Group audit scope.
Our audit of the Parent Company Financial Statements was
undertaken by the Group audit team and included substantive
procedures over all material balances and transactions.
The impact of climate risk on our audit
As part of our audit, we made enquiries of management to understand
the process that management adopted, with input from its third party
expert on climate change, to assess the extent of the potential impact
of climate risk on the Group’s Financial Statements and to support
the disclosures made within the Climate change section of the
Accounting policies. Using our knowledge of the business and with
assistance from our own climate change experts, we challenged
the completeness of management’s risk assessment. This included
reading Carbon Disclosure Project submissions made by the Group
and its competitors to ensure appropriate consistency with the
judgements and disclosures reflected in the Financial Statements.
Management considers that there are no climate-related estimates
or assumptions that have a material impact on the Financial Statements.
We assessed that the key areas in the Financial Statements which
are more likely to be materially impacted by climate change are
impairment of non-financial assets, recognition of deferred tax assets
and going concern. We tailored our audit approach to respond to
the audit risks identified in these areas. In particular, we:
• Challenged management on how the Group’s commitment to
reduce emissions from its hotel estate by 46% by 2030 from a 2019
baseline will impact the assumptions within the discounted cash
flows prepared by management that are used in the Group’s
impairment analysis, for assessing the recognition of deferred tax
assets and for going concern purposes;
• Evaluated whether the impact of both physical and transition risks
arising due to climate risk had been appropriately reflected by
management in the estimates of the recoverable value of the
Group’s non-financial assets; and
• Checked whether the impact of climate risk in the Directors’
assessments and disclosures related to going concern and viability
were consistent with management’s climate impact assessment.
We also considered the consistency of the disclosures in relation
to climate change (including the disclosures in the Task Force on
Climate-related Financial Disclosures (TCFD) section) in the Annual
Report with the Financial Statements and with our knowledge
obtained from our audit.
Our procedures did not identify any material impact in the context
of our audit of the Financial Statements as a whole or on our key
audit matters for the year ended 31 December 2022.
Materiality
The scope of our audit was influenced by our application of materiality.
We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures
on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in
aggregate on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality
for the Financial Statements as a whole as follows:
How we
determined it
Rationale for
benchmark
applied
Group Financial Statements
Overall materiality
$37.0 million (2021: $25.0 million)
Approximately 5% of profit before tax adjusted for exceptional items and the
System Fund
Parent Company Financial Statements
£14.8 million (2021: £13.3 million)
Approximately 1% of net assets
The Group’s principal measure of performance is operating profit from reportable
segments, which excludes exceptional items and the System Fund result, in order
to present results from operating activities on a consistent basis and to exclude the
impact of the System Fund, which is not managed to generate a profit or loss for the
Group over the longer term. We took this measure into account in determining our
materiality as it is the metric against which the performance of the Group is most
commonly assessed by management and reported to shareholders. From operating
profit from reportable segments, we deducted net finance costs and fair value gains
on contingent purchase consideration to arrive at adjusted profit before tax.
InterContinental Hotels Group PLC is the
ultimate parent company which holds the
Group’s investments and bonds. The strength
of the balance sheet is the key measure
of financial health that is important to
shareholders since the primary concern for the
Parent Company is the payment of dividends.
We therefore considered net assets to be an
appropriate benchmark.
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In auditing the Financial Statements, we have concluded that
the directors’ use of the going concern basis of accounting in the
preparation of the Financial Statements is appropriate.
However, because not all future events or conditions can be predicted,
this conclusion is not a guarantee as to the Group’s and the Parent
Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the Financial
Statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the Financial Statements and our
auditors’ report thereon. The directors are responsible for the other
information, which includes reporting based on the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations.
Our opinion on the Financial Statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except to the extent otherwise explicitly stated in this report,
any form of assurance thereon.
In connection with our audit of the Financial Statements, our
responsibility is to read the other information and, in doing so,
to consider whether the other information is materially inconsistent
with the Financial Statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we identify
an apparent material inconsistency or material misstatement, we
are required to perform procedures to conclude whether there is
a material misstatement of the Financial Statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 December 2022 is consistent with the
Financial Statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and
Parent Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic
Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was approximately
$2.7 million to $35.1 million.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2021: 75%) of
overall materiality, amounting to $27.7 million (2021: $18.7 million) for
the Group Financial Statements and £11.1 million (2021: £9.9 million)
for the Parent Company Financial Statements.
In determining the performance materiality, we considered a
number of factors, including the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls
and we concluded that an amount at the upper end of our normal
range was appropriate.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above $1.8 million (Group
audit) (2021: $1.2 million) and £0.7 million (Parent Company audit)
(2021: £0.6 million) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the
Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
• Evaluation and testing of key controls over the Group’s budgeting
process and the assessment of going concern;
• Evaluation of management’s Base Case, Downside Case and
Severe Downside Case scenarios and reverse stress testing
calculations, understanding and evaluating the key assumptions,
including assumptions related to RevPAR growth;
• Validation that the cash flow forecasts used to support
management’s impairment, deferred tax asset recoverability,
going concern and viability assessments were consistent and
in line with the Group’s Board approved plan;
• Assessment of the historical accuracy and reasonableness
of management’s forecasting;
• Identification of RevPAR as the key assumption inherent in
management’s cash flow forecasts and validation of this
assumption to industry sources;
• Consideration of the Group’s available financing and debt maturity
profile and evaluation of the reasonableness of management’s
assumption that bank facilities will remain undrawn over the period
of the going concern assessment;
• Testing of the mathematical integrity of management’s models
and liquidity headroom, covenant compliance, sensitivity and
reverse stress testing calculations;
• Assessment of the reasonableness of management’s planned
or potential mitigating actions;
• Consideration of whether climate change is expected to have
any significant impact during the period of the going concern
assessment; and
• Review of the related disclosures in the Annual Report.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s
and the Parent Company’s ability to continue as a going concern for
a period of at least twelve months from when the Financial
Statements are authorised for issue.
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Corporate governance statement
The Listing Rules require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Parent Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with
respect to the corporate governance statement as other information
are described in the Reporting on other information section of
this report.
Responsibilities for the Financial Statements and the audit
Responsibilities of the directors for the Financial Statements
As explained more fully in the Statement of Directors’ Responsibilities,
the directors are responsible for the preparation of the Financial
Statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is
necessary to enable the preparation of Financial Statements that
are free from material misstatement, whether due to fraud or error.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement included within the Statement of compliance
is materially consistent with the Financial Statements and our
knowledge obtained during the audit and we have nothing material
to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;
• The directors’ statement in the Financial Statements about whether
they considered it appropriate to adopt the going concern basis
of accounting in preparing them and their identification of any
material uncertainties to the Group’s and Parent Company’s ability
to continue to do so over a period of at least twelve months from
the date of approval of the Financial Statements;
• The directors’ explanation as to their assessment of the Group’s
and Parent Company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable
expectation that the Parent Company will be able to continue in
operation and meet its liabilities as they fall due over the period of
its assessment, including any related disclosures drawing attention
to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the Group and Parent Company was substantially less
in scope than an audit and only consisted of making inquiries
and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the Financial Statements
and our knowledge and understanding of the Group and Parent
Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the corporate
governance statement is materially consistent with the Financial
Statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for the members to assess
the Group’s and Parent Company’s position, performance,
business model and strategy;
• The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the
Audit Committee.
We have nothing to report in respect of our responsibility to report
when the directors’ statement relating to the Parent Company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
In preparing the Financial Statements, the directors are responsible
for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group
or the Parent Company or to cease operations or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the
Financial Statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken
on the basis of these Financial Statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the Group and industry in which it
operates, we identified that the principal risks of non-compliance
with laws and regulations related to the failure to comply with the
Listing Rules, UK and overseas tax legislation, employment laws and
regulations and health and safety legislation and we considered the
extent to which non-compliance might have a material effect on the
Financial Statements. We also considered those laws and regulations
that have a direct impact on the Financial Statements such as the
Companies Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the Financial Statements
(including the risk of override of controls) and we determined that
the principal risks were related to posting inappropriate journal
entries and management bias in allocating expenses to the System
Fund and in accounting for key estimates. The Group audit team
shared this risk assessment with the component auditors so that
they could include appropriate audit procedures in response to such
risks in their work. Audit procedures performed by the Group audit
team and/or component auditors included:
• Inquiries of management, internal audit and the Group’s legal
counsel, including considerations of known or suspected instances
of non-compliance with laws and regulations and fraud;
• Review of correspondence received from regulators and
consideration of the impact, if any, on our audit and the disclosures
made in the Financial Statements;
• Evaluation and testing of the effectiveness of management’s
controls designed to prevent and detect irregularities;
• Assessment of matters reported on the Group’s whistleblowing
helpline and the results of management’s investigation of
such matters;
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Independent Auditor’s UK Report continued
• Identification and testing of significant manual journal entries,
in particular any journal entries posted with unusual account
combinations which resulted in an impact on revenue or the
System Fund; and
• Challenging assumptions and judgements made by management
in making significant accounting estimates.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the Financial Statements.
Also, the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations or through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on
their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for the audit of
the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only
for the Parent Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
• We have not obtained all the information and explanations we
require for our audit; or
• Adequate accounting records have not been kept by the Parent
Company or returns adequate for our audit have not been received
from branches not visited by us; or
• Certain disclosures of directors’ remuneration specified by law are
not made; or
• The Parent Company Financial Statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were
appointed by the members at the Annual General Meeting on
7 May 2021 to audit the Financial Statements for the year ended
31 December 2021 and subsequent financial periods. The period
of total uninterrupted engagement is two years, covering the years
ended 31 December 2021 to 31 December 2022.
Other matters
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these Financial
Statements will form part of the ESEF-prepared annual financial
report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical
Standard (‘ESEF RTS’). This auditors’ report provides no assurance
over whether the annual financial report will be prepared using the
single electronic format specified in the ESEF RTS.
Giles Hannam (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 February 2023
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Definition and Limitations of Internal Control
over Financial Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles and
that receipts and expenditures of the company are being made only
in accordance with authorisations of management and directors
of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use or
disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or
procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising
from the current period audit of the Group Financial Statements
that were communicated or required to be communicated to the
audit committee and that (i) relate to accounts or disclosures that
are material to the Group Financial Statements and (ii) involved
our especially challenging, subjective or complex judgements.
The communication of critical audit matters does not alter in any
way our opinion on the Group Financial Statements, taken as a
whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or
on the accounts or disclosures to which they relate.
Breakage assumption used to estimate IHG One Rewards
loyalty programme deferred revenue
As described in the Estimates section of the Accounting policies
and in note 3 to the Group Financial Statements, deferred revenue
relating to the IHG One Rewards loyalty programme was $1,411m at
31 December 2022. The hotel loyalty programme, IHG One Rewards,
enables members to earn points, funded through hotel assessments,
during each qualifying stay at an IHG branded hotel and consume
points at a later date for free or reduced accommodation or other
benefits. The Group recognises deferred revenue in an amount that
reflects the Group’s unsatisfied performance obligations, valued
at the stand-alone selling price of the future benefit to the member.
On an annual basis, the Group engages an external actuary who
uses statistical formulae to assist in the estimate of the number
of points that will never be consumed (‘breakage’). The amount
of revenue recognised and deferred is impacted by the estimate
of breakage. Significant estimation uncertainty exists in projecting
members’ future consumption activity and how this may have been
impacted by Covid-19.
Report of Independent Registered Public
Accounting Firm
To the Board of directors and Shareholders of InterContinental
Hotels Group PLC
Opinions on the Financial Statements and Internal Control
over Financial Reporting
We have audited the accompanying Group statement of financial
position of InterContinental Hotels Group PLC and its subsidiaries
(the ‘Group’) at 31 December 2022 and 31 December 2021 and
the related Group income statement and Group statements of
comprehensive income, changes in equity and cash flows for
each of the two years in the period ended 31 December 2022,
the Accounting policies and the related notes (collectively referred
to as the ‘Group Financial Statements’). We also have audited the
Group’s internal control over financial reporting at 31 December
2022, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the Group Financial Statements referred to above
present fairly, in all material respects, the financial position of the
Group at 31 December 2022 and 31 December 2021 and the results
of its operations and its cash flows for each of the two years in the
period ended 31 December 2022 in accordance with (i) International
Financial Reporting Standards as issued by the International
Accounting Standards Board and (ii) UK-adopted International
Accounting Standards. Also in our opinion, the Group maintained,
in all material respects, effective internal control over financial
reporting at 31 December 2022, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Group’s management is responsible for the Group Financial
Statements, for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in Management’s report on
internal control over financial reporting on page 140. Our responsibility
is to express opinions on the Group Financial Statements and on the
Group’s internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Group in accordance with the
U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the Group
Financial Statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over
financial reporting was maintained in all material respects.
Our audits of the Group Financial Statements included performing
procedures to assess the risks of material misstatement of the Group
Financial Statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and
disclosures in the Group Financial Statements. Our audits also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the Group Financial Statements. Our audit of internal
control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a
material weakness exists and testing and evaluating the design and
operating effectiveness of internal control based on the assessed
risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
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The principal considerations for our determination that performing
procedures relating to the breakage assumption used to estimate
IHG One Rewards loyalty programme deferred revenue is a critical
audit matter are the significant estimation uncertainty in projecting
members’ future consumption of points and how this may have
been impacted by Covid-19. This in turn led to a high degree of
auditor judgement, subjectivity, complexity and effort in performing
procedures to evaluate the breakage assumption and the related
audit evidence. The audit effort involved the use of professionals
with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating
audit evidence in connection with forming our overall opinion on
the Group Financial Statements. These procedures included testing
the effectiveness of controls relating to management’s determination
of the breakage assumption. These procedures also included, among
others, (i) testing a sample of data used by management’s external
actuary in deriving the breakage assumption to underlying records;
(ii) assessing the competence and objectivity of management’s
actuary and understanding the methods and assumptions adopted
by it in determining breakage; (iii) developing an independent
expectation of a reasonably possible range for deferred revenue
based on independently determined breakage assumptions;
(iv) comparing the deferred revenue balance, which reflected
management’s assumptions about the ongoing impact of Covid-19
on points consumption, with our independently calculated range;
and (v) assessing the appropriateness of the related disclosures
including sensitivity analysis in the Group Financial Statements.
Professionals with specialised skill and knowledge were used to
assist in the evaluation of the breakage assumption.
(v) checking whether there were any manual journal entries that
transferred expenses to or from the System Fund to evaluate whether
there was an appropriate rationale for any such journals and to
determine whether the resulting classification of the expenses was
in line with the principles agreed with the IHG Owners Association.
Recognition of the UK deferred tax asset
As described in the Taxes section of the Accounting policies and
in note 8 to the Group Financial Statements, a deferred tax asset of
$109m was recognised related to the UK tax group at 31 December
2022. Judgement is used when assessing the extent to which
deferred tax assets, particularly in respect of tax losses, should be
recognised. Deferred tax assets are only recognised to the extent
that it is regarded as probable that there will be sufficient and suitable
taxable profits or deferred tax liabilities in the relevant legal entity
or tax group against which such assets can be utilised in the future.
For this purpose, forecasts of future profits are considered by
assessing estimated future cash flows. Tax assumptions are overlaid
to these profit forecasts to estimate future taxable profits. This
process has demonstrated that the UK deferred tax asset should
reverse over a seven to ten year period, with the lower end of the
range based on the Group’s base case forecast and the upper end
of the range based on the Group’s severe downside case forecast.
The losses do not expire, although they can only be offset against
50% of annual UK taxable profits. The Group’s TCFD disclosures
describe how physical and transitional climate risks present both
risks and opportunities for IHG. The potential downside risks have
been considered in the context of the UK deferred tax asset
recoverability assessment, without taking account of opportunities
or mitigating actions.
Allocation of expenses to the System Fund
As described in the System Fund and other co-brand revenues
section of the Accounting policies and in note 32 to the Group
Financial Statements, the Group recorded System Fund expenses of
$1,322m for the year ended 31 December 2022. The Group operates
a System Fund to collect and administer cash assessments from
hotel owners for the specific purpose of use in marketing, the Guest
Reservation System and hotel loyalty programme. Costs are incurred
and allocated to the System Fund in accordance with the principles
agreed with the IHG Owners Association.
The principal considerations for our determination that performing
procedures relating to recognition of the UK deferred tax asset is
a critical audit matter are the significant estimation uncertainty
involved in determining the future taxable profits of the UK tax group
including the impact of climate risk. This in turn led to a high degree
of auditor judgement, subjectivity and effort in evaluating audit
evidence and in determining the reasonableness of the forecast
seven to ten year period to recover this asset. In addition, the audit
effort involved the use of professionals with specialised skill
and knowledge.
The principal considerations for our determination that performing
procedures relating to the allocation of expenses to the System Fund
is a critical audit matter are the judgement involved in developing
the Group’s internal policies in order to apply the principles agreed
with the IHG Owners Association to expenses incurred and the
complexity in subsequently evaluating whether expenses are
appropriately allocated to the System Fund in line with these internal
policies. This in turn led to a high degree of auditor judgement,
subjectivity and effort in performing procedures to evaluate
management’s classification of expenses.
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our overall
opinion on the Group Financial Statements. These procedures
included testing the effectiveness of controls relating to allocation
of expenses to the System Fund. These procedures also included,
among others, (i) understanding and assessing the internal policies
that the Group has put in place in order to apply the principles
agreed with the IHG Owners Association to expenses incurred;
(ii) inspecting correspondence and minutes of meetings with the
IHG Owners Association to identify whether allocations have been
challenged or disputed; (iii) validating for a sample of cost centres
the basis for any changes in the proportion of costs allocated to
the System Fund compared to the prior year; (iv) testing expenses
that had been allocated to the System Fund to assess whether
they were accurately calculated, in compliance with the Group’s
internal policies and consistent with historical practice; and
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our overall
opinion on the Group Financial Statements. These procedures
included testing the effectiveness of controls relating to the
recognition of deferred tax assets and the Group’s forecasting
process. These procedures also included, among others,
(i) evaluating the appropriateness of the assumptions reflected in
the UK forecasts, including assessing the reasonableness of growth
predictions compared to historical experience and industry data
and benchmarking management’s estimates to third-party sources,
including consideration of how climate risk has been incorporated;
(ii) assessing the appropriateness of tax overlay adjustments applied
to the forecasts by reference to the requirements of tax principles,
including the restriction of losses to 50% of annual UK taxable
profits; (iii) assessing whether the UK deferred tax asset meets the
recognition criteria of IAS 12; (iv) assessing the appropriateness of
the forecast recovery period of seven to ten years; and (v) assessing
the appropriateness of the related disclosures in the Group Financial
Statements. Professionals with specialised skills and knowledge
were used to assist in the evaluation of recognition of the UK
deferred tax asset.
/s/PricewaterhouseCoopers LLP
London, United Kingdom
20 February 2023
We have served as the Group’s auditor since 2021.
148
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2020 Independent Auditor’s US Report
G
r
o
u
p
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
Report of Independent Registered Public
Accounting Firm
To the Shareholders and the Board of Directors of InterContinental
Hotels Group PLC
Opinion on the Financial Statements
We have audited the accompanying statements of income,
comprehensive income, changes in equity and cash flows of
InterContinental Hotels Group PLC (the ‘Group’) for the year ended
31 December 2020, and the related notes (collectively referred
to as the ‘Group Financial Statements’). In our opinion, the Group
Financial Statements present fairly, in all material respects, the
results of the Group’s operations and the Group’s cash flows for
the year ended 31 December 2020, in conformity with International
Financial Reporting Standards as issued by the International
Accounting Standards Board.
Basis for Opinion
These Group Financial Statements are the responsibility of the
Group’s management. Our responsibility is to express an opinion
on the Group’s Financial Statements based on our audit. We are a
public accounting firm registered with the PCAOB and are required
to be independent with respect to the Group in accordance with the
U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Group Financial
Statements are free of material misstatement, whether due to error
or fraud. Our audit included performing procedures to assess the
risks of material misstatement of the Group Financial Statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in
the Group Financial Statements. Our audit also included evaluating
the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
Group Financial Statements. We believe that our audit provides
a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We served as auditors from the Group’s listing in 2003 to 2021
and of the Group’s predecessor businesses from 1988.
London, England
22 February 2021
Note that the report set out above is included for the purposes of
InterContinental Hotels Group PLC’s Annual Report on Form 20-F
for 2022 only and does not form part of InterContinental Hotels
Group PLC’s Annual Report and Accounts for 2022.
2020 Independent Auditor’s US Report
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Group Financial Statements
Group Financial Statements
Group income statement
For the year ended 31 December 2022
Revenue from fee business
Revenue from owned, leased and managed lease hotels
System Fund revenues
Reimbursement of costs
Total revenue
Cost of sales
System Fund expenses
Reimbursed costs
Administrative expenses
Share of losses of associates and joint ventures
Other operating income
Depreciation and amortisation
Impairment loss on financial assets
Other net impairment reversals/(charges)
Operating profit/(loss)
Operating profit/(loss) analysed as:
Operating profit before System Fund and exceptional items
System Fund
Operating exceptional items
Financial income
Financial expenses
Fair value gains on contingent purchase consideration
Profit/(loss) before tax
Tax
Profit/(loss) for the year from continuing operations
Attributable to:
Equity holders of the parent
Non-controlling interest
Earnings/(loss) per ordinary share
Basic
Diluted
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
Note
3
3
2
2, 6
2
6
2
6
7
7
24
8
10
2022
$m
1,449
394
1,217
832
3,892
(648)
(1,322)
(832)
(364)
(59)
29
(68)
(5)
5
628
828
(105)
(95)
628
22
(118)
8
540
(164)
376
375
1
376
2021
$m
1,153
237
928
589
2020
$m
823
169
765
637
2,907
2,394
(486)
(939)
(589)
(300)
(8)
11
(98)
–
(4)
494
534
(11)
(29)
494
8
(147)
6
361
(96)
265
266
(1)
265
(354)
(867)
(637)
(267)
(14)
16
(110)
(88)
(226)
(153)
219
(102)
(270)
(153)
4
(144)
13
(280)
20
(260)
(260)
–
(260)
207.2¢
206.0¢
145.4¢
144.6¢
(142.9)¢
(142.9)¢
150
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Group statement of comprehensive income
For the year ended 31 December 2022
Profit/(loss) for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Gains/(losses) on cash flow hedges, including related tax credit of $2m (2021: $7m charge, 2020: $4m credit)
Costs of hedging
Hedging (gains)/losses reclassified to financial expenses
Exchange gains/(losses) on retranslation of foreign operations, including related tax credit of $5m
(2021: $4m charge, 2020: $4m credit)
Items that will not be reclassified to profit or loss:
Gains/(losses) on equity instruments classified as fair value through other comprehensive income, including
related tax credit of $2m (2021: $1m charge, 2020: $4m credit)
Re-measurement gains/(losses) on defined benefit plans, net of related tax charge of $6m
(2021: $nil, 2020: $1m credit)
Tax related to pension contributions
Total other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interest
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
G
r
o
u
p
F
n
a
n
c
a
i
i
2022
$m
376
35
3
(43)
181
176
1
15
–
16
192
568
568
–
568
2021
$m
265
(69)
2
96
18
47
14
7
1
22
69
334
335
(1)
334
l
S
t
a
t
e
m
e
n
t
s
2020
$m
(260)
3
(6)
(13)
(85)
(101)
(43)
(7)
1
(49)
(150)
(410)
(410)
–
(410)
Group Financial Statements
IHG | Annual Report and Form 20-F 2022
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Group Financial Statements
Group Financial Statements continued
Group statement of changes in equity
Equity
share
capital
$m
Capital
redemption
reserve
$m
Shares
held by
employee
share trusts
$m
Other
reserves
$m
Fair value
reserve
$m
Cash flow
hedge
reserves
$m
Currency
translation
reserve
$m
Retained
earnings
$m
IHG share-
holders’
equity
$m
Non-
controlling
interest
$m
25
–
5
–
316
–
904
375
(1,481)
375
At 1 January 2022
Profit for the year
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss:
Gains on cash flow hedges
Costs of hedging
Hedging gains reclassified
to financial expenses
Exchange gains on retranslation
of foreign operations
Items that will not be reclassified
to profit or loss:
Gains on equity instruments
classified as fair value through
other comprehensive income
Re-measurement gains
on defined benefit plans
Total other comprehensive
income for the year
Total comprehensive income
for the year
Repurchase of shares, including
transaction costs
Purchase of own shares by
employee share trusts
Transfer of treasury shares
to employee share trusts
Release of own shares by
employee share trusts
Equity-settled share-based cost
Tax related to share schemes
Equity dividends paid
Exchange adjustments
At 31 December 2022
154
–
10
–
–
–
–
–
–
–
–
–
–
–
(1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
–
(16)
137
(1)
10
(22)
(2,873)
–
–
–
–
–
–
–
–
–
–
–
–
(1)
(26)
12
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17
Total
equity
$m
(1,474)
376
35
3
(43)
181
176
1
15
16
7
1
–
–
–
(1)
(1)
–
–
–
–
–
–
182
182
–
–
–
182
–
–
–
–
–
–
15
15
15
35
3
(43)
182
177
1
15
16
193
(1)
192
182
390
568
–
–
–
–
–
–
–
–
(513)
(513)
–
26
(12)
44
1
(1)
–
–
44
1
(233)
(233)
–
–
498
607
(1,615)
–
–
–
–
–
–
–
–
–
7
568
(513)
(1)
–
–
44
1
(233)
–
(1,608)
–
–
–
–
–
1
–
1
1
1
–
–
–
–
–
–
–
–
35
3
(43)
–
(5)
–
–
–
(5)
(5)
–
–
–
–
–
–
–
–
–
(37)
(2,856)
26
All items within total comprehensive income are shown net of tax.
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
152
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G
r
o
u
p
F
n
a
n
c
a
i
i
l
S
t
a
t
e
m
e
n
t
s
Total
equity
$m
(1,849)
265
Equity share
capital
$m
Capital
redemption
reserve
$m
Shares
held by
employee
share trusts
$m
156
–
10
–
(1)
–
Other
reserves
$m
Fair value
reserve
$m
Cash flow
hedge
reserves
$m
Currency
translation
reserve
$m
Retained
earnings
$m
IHG share-
holders’
equity
$m
Non-
controlling
interest
$m
(24)
–
298
–
568
266
(1,857)
266
8
(1)
At 1 January 2021
Profit for the year
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss:
Losses on cash flow hedges
Costs of hedging
Hedging losses reclassified
to financial expenses
Exchange gains on retranslation
of foreign operations
Items that will not be reclassified
to profit or loss:
Gains on equity instruments
classified as fair value through
other comprehensive income
Re-measurement gains
on defined benefit plans
Tax related to pension
contributions
Total other comprehensive
income for the year
Total comprehensive income
for the year
Transfer of treasury shares
to employee share trusts
Release of own shares by
employee share trusts
Equity-settled share-based cost
Tax related to share schemes
Exchange adjustments
At 31 December 2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2)
154
(2,875)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
11
–
–
–
–
–
–
14
–
–
14
14
14
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(34)
13
–
–
–
(69)
2
96
–
29
–
–
–
–
29
29
–
–
–
–
–
5
–
–
–
18
18
–
–
–
–
18
18
–
–
–
–
–
–
–
–
–
–
–
7
1
8
8
(69)
2
96
18
47
14
7
1
22
69
–
–
–
–
–
–
–
–
–
–
(69)
2
96
18
47
14
7
1
22
69
274
335
(1)
334
34
(13)
39
2
–
–
–
39
2
–
–
–
–
–
–
7
–
–
39
2
–
(1,474)
10
(22)
(2,873)
25
316
904
(1,481)
All items within total comprehensive income are shown net of tax.
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
Group Financial Statements
IHG | Annual Report and Form 20-F 2022
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Group Financial Statements
Group Financial Statements continued
Group statement of changes in equity continued
At 1 January 2020
Loss for the year
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss:
Losses on cash flow hedges
Costs of hedging
Hedging gains reclassified
to financial expenses
Exchange losses on retranslation
of foreign operations
Items that will not be reclassified
to profit or loss:
Losses on equity instruments
classified as fair value through
other comprehensive income
Gains on equity instruments
transferred to retained earnings
on disposal
Re-measurement losses
on defined benefit plans
Tax related to pension
contributions
Total other comprehensive loss
for the year
Total comprehensive loss
for the year
Transfer of treasury shares
to employee share trusts
Release of own shares by
employee share trusts
Equity-settled share-based cost,
net of $3m reclassification to
cash-settled awards
Tax related to share schemes
Exchange adjustments
At 31 December 2020
Equity
share
capital
$m
Capital
redemption
reserve
$m
Shares
held by
employee
share trusts
$m
Other
reserves
$m
Fair value
reserve
$m
Cash flow
hedge
reserves
$m
Currency
translation
reserve
$m
Retained
earnings
$m
IHG share-
holders’
equity
$m
Non-
controlling
interest
$m
151
–
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
(2,870)
–
–
–
–
–
–
–
–
–
–
–
–
–
(14)
18
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
156
10
(1)
(2,875)
57
–
(6)
–
381
–
809
(260)
(1,473)
(260)
–
–
–
–
–
(43)
(3)
–
–
(46)
(46)
(46)
–
–
–
–
–
11
3
(6)
(13)
(2)
(18)
–
–
–
–
–
(18)
(18)
–
–
–
–
–
–
–
–
(83)
(83)
–
–
–
–
–
(83)
–
–
–
–
–
–
3
(7)
1
(3)
(3)
3
(6)
(13)
(85)
(101)
(43)
–
(7)
1
(49)
(150)
(83)
(263)
(410)
–
–
–
–
–
14
(18)
27
(1)
–
–
–
27
(1)
–
(24)
298
568
(1,857)
8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
Total
equity
$m
(1,465)
(260)
3
(6)
(13)
(85)
(101)
(43)
–
(7)
1
(49)
(150)
(410)
–
–
27
(1)
–
(1,849)
All items within total comprehensive loss are shown net of tax.
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
154
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Group statement of financial position
31 December 2022
ASSETS
Goodwill and other intangible assets
Property, plant and equipment
Right-of-use assets
Investment in associates
Retirement benefit assets
Other financial assets
Derivative financial instruments
Deferred compensation plan investments
Non-current other receivables
Deferred tax assets
Contract costs
Contract assets
Total non-current assets
Inventories
Trade and other receivables
Current tax receivable
Other financial assets
Cash and cash equivalents
Contract costs
Contract assets
Total current assets
Total assets
LIABILITIES
Loans and other borrowings
Lease liabilities
Trade and other payables
Deferred revenue
Provisions
Current tax payable
Total current liabilities
Loans and other borrowings
Lease liabilities
Derivative financial instruments
Retirement benefit obligations
Deferred compensation plan liabilities
Trade and other payables
Deferred revenue
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net liabilities
EQUITY
IHG shareholders’ equity
Non-controlling interest
Total equity
Signed on behalf of the Board,
Paul Edgecliffe-Johnson
20 February 2023
G
r
o
u
p
F
n
a
n
c
a
i
i
Note
2022
$m
2021
$m
l
S
t
a
t
e
m
e
n
t
s
12
13
14
15
26
16
23
8
3
3
17
16
18
3
3
21
14
19
3
20
21
14
23
26
19
3
20
8
1,144
1,195
157
280
36
2
156
7
216
3
126
75
336
137
274
77
2
173
–
256
1
147
72
316
2,538
2,650
4
646
16
–
976
5
31
1,678
4,216
(55)
(26)
(697)
(681)
(53)
(32)
(1,544)
(2,341)
(401)
(11)
(66)
(216)
(81)
(1,043)
(43)
(78)
(4,280)
(5,824)
(1,608)
4
574
1
2
1,450
5
30
2,066
4,716
(292)
(35)
(579)
(617)
(49)
(52)
(1,624)
(2,553)
(384)
(62)
(92)
(256)
(89)
(996)
(41)
(93)
(4,566)
(6,190)
(1,474)
(1,615)
(1,481)
7
7
(1,608)
(1,474)
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
Group Financial Statements
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Group Financial Statements continued
Group statement of cash flows
For the year ended 31 December 2022
Profit/(loss) for the year
Adjustments reconciling profit/(loss) for the year to cash flow from operations
Cash flow from operations
Interest paid
Interest received
Tax paid
Net cash from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Investment in associates
Investment in other financial assets
Deferred purchase consideration paid
Capitalised interest paid
Lease incentives received
Distributions from associates and joint ventures
Disposal of property, plant and equipment
Disposal of hotel assets, net of costs and cash disposed
Repayments of other financial assets
Disposal of equity securities
Net cash from investing activities
Cash flow from financing activities
Repurchase of shares, including transaction costs
Purchase of own shares by employee share trusts
Dividends paid to shareholders
Issue of long-term bonds, including effect of currency swaps
(Repayment)/issue of commercial paper
Repayment of long-term bonds
Principal element of lease payments
Decrease in other borrowings
Proceeds from currency swaps
Net cash from financing activities
Net movement in cash and cash equivalents in the year
Cash and cash equivalents at beginning of the year
Exchange rate effects
Cash and cash equivalents at end of the year
Notes on pages 157 to 216 form an integral part of these Group Financial Statements.
Note
25
8
24
7
11
28
9
22
22
22
18
18
2022
$m
376
585
961
(126)
22
(211)
646
(54)
(45)
(1)
–
–
–
6
–
3
–
13
–
(78)
(482)
(1)
(233)
–
–
(209)
(36)
–
–
2021
$m
265
583
848
(134)
8
(86)
636
(17)
(35)
–
(5)
(13)
–
–
–
–
44
14
–
(12)
–
–
–
–
(828)
–
(32)
–
–
2020
$m
(260)
568
308
(132)
2
(41)
137
(26)
(50)
(2)
(5)
–
(1)
–
5
–
1
13
4
(61)
–
–
–
1,093
738
(290)
(65)
(125)
3
(961)
(860)
1,354
(393)
1,391
(77)
921
(236)
1,624
3
1,391
1,430
108
86
1,624
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Accounting policies
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General information
The Consolidated Financial Statements of InterContinental Hotels
Group PLC (the ‘Group’ or ‘IHG’) for the year ended 31 December 2022
were authorised for issue in accordance with a resolution of the
Directors on 20 February 2023. InterContinental Hotels Group PLC
(the ‘Company’) is incorporated and registered in England and Wales.
Basis of preparation
The Consolidated Financial Statements of IHG have been prepared
on a going concern basis (see below) and under the historical cost
convention, except for assets and liabilities measured at fair value
under relevant accounting standards. The Consolidated Financial
Statements have been prepared in accordance with UK-adopted
international accounting standards and with applicable law and
regulations and with International Financial Reporting Standards
(‘IFRSs’) as issued by the International Accounting Standards Board
(‘IASB’). UK-adopted international accounting standards differ in
certain respects from IFRSs as issued by the IASB. However, the
differences have no impact on the Consolidated Financial
Statements for the years presented.
Going concern
A period of 18 months has been used, from 1 January 2023 to
30 June 2024, to complete the going concern assessment.
In adopting the going concern basis for preparing the Consolidated
Financial Statements, the Directors have considered a ‘Base Case’
scenario which assumes global RevPAR in 2023 around pre-pandemic
levels boosted by resilient leisure travel and continued recovery in
corporate and group demand. The assumptions applied in the Base
Case scenario are consistent with those used for Group planning
purposes, for impairment testing (impairment tests adjusted for
factors specific to individual properties or portfolios) and for
assessing recoverability of deferred tax assets.
The Directors have also reviewed a ‘Downside Case’ based on a
recession scenario which assumes no RevPAR growth in 2023, with
the recovery profile delayed by one year, and a ‘Severe Downside
Case’ which is based on a severe but plausible scenario equivalent
to the market conditions experienced through the 2008/2009
global financial crisis. This assumes that the performance during
2023 starts to worsen and then RevPAR decreases significantly by
17% in 2024.
A large number of the Group’s principal risks would result in an
impact on RevPAR which is one of the sensitivities assessed against
the headroom available in the Base Case, Downside Case and Severe
Downside Case scenarios. Climate risks are not considered to have
a significant impact over the 18-month period of assessment.
Other principal risks that could result in a large one-off incident that
has a material impact on cash flow have also been considered, for
example a cybersecurity event.
The Group’s bank facilities were refinanced in April 2022 with a new
revolving credit facility of $1,350m maturing in 2027 which increased
the Group’s key covenant of net debt:EBITDA to 4.0x. See note 23 for
additional information. There are no debt maturities in the period
under consideration.
Under the Base Case, Downside Case and Severe Downside Case
covenants are not breached. Under the Severe Downside Case,
there is limited headroom to the bank covenants at 30 June 2024
to absorb multiple additional risks and uncertainties. However, the
Directors reviewed a number of actions to reduce discretionary
spend, creating substantial additional headroom. After these actions
are taken, there is significant headroom to the bank covenants to
absorb the principal risks and uncertainties which could be applicable.
In this scenario the Group also has substantial levels of existing cash
reserves available after additional actions are taken (over $1.4bn
at 30 June 2024) and is not expected to draw on the bank facility.
The Directors reviewed a reverse stress test scenario to determine
what decrease in RevPAR would create a breach of the covenants,
and the cash reserves that would be available to the Group at that
time. The Directors concluded that the outcome of this reverse
stress test showed that it was very unlikely the bank facility would
need to be drawn.
The leverage and interest cover covenant tests up to 30 June 2024
(the last day of the assessment period), have been considered as
part of the Base Case, Downside Case and Severe Downside Case
scenarios. However, as the bank facility is unlikely to be drawn even
in a scenario significantly worse than the Severe Downside Case
scenario, the Group does not need to rely on the additional liquidity
provided by the bank facility to remain a going concern. This means
that in the event the covenant test was failed, the bank facility could
be cancelled by the lenders but it would not trigger a repayment
demand or create a cross-default risk. As a result, a covenant breach
would not have any impact on the Group’s going concern conclusion.
In the event that a covenant amendment was required, the Directors
believe it is reasonable to expect that such an amendment could
be obtained based on prior experience in negotiating the 2020
amendments, however the going concern conclusion is not
dependent on this expectation. The Group also has alternative
options to manage this risk including raising additional funding
in the capital markets.
Having reviewed these scenarios, the Directors have a reasonable
expectation that the Group has sufficient resources to continue
operating until at least 30 June 2024. Accordingly, they continue to
adopt the going concern basis in preparing the Financial Statements.
Presentational currency
The Consolidated Financial Statements are presented in millions
of US dollars reflecting the profile of the Group’s revenue and
operating profit which are primarily generated in US dollars or
US dollar-linked currencies.
In the Consolidated Financial Statements, equity share capital,
the capital redemption reserve and shares held by employee share
trusts are translated into US dollars at the relevant rate of exchange
on the last day of the period; the resultant exchange differences
are recorded in other reserves.
The functional currency of the Company is sterling since this is a
non-trading holding company located in the United Kingdom that
has sterling denominated share capital and whose primary activity
is the payment and receipt of sterling dividends and of interest on
sterling denominated external borrowings and intercompany balances.
Accounting policies
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Accounting policies continued
Critical accounting policies and the use of judgements,
estimates and assumptions
In determining and applying the Group’s accounting policies,
management are required to make judgements, estimates and
assumptions. An accounting policy is considered to be critical if its
selection or application could materially affect the reported amounts
of assets and liabilities at the date of the Consolidated Financial
Statements, or the reported amounts of revenues and expenses
during the reporting period, or could do so within the next
financial year.
Judgements
System Fund
The Group operates a System Fund (the ‘Fund’) to collect and
administer cash assessments from hotel owners for the specific
purpose of use in marketing, the Guest Reservation System and
hotel loyalty programme. Assessments are generally levied as
a percentage of hotel revenues.
Significant estimation uncertainty exists in projecting members’
future consumption activity and how this may be impacted by Covid-19.
Management’s expectation is that member behaviour will ultimately
return to pre-pandemic levels over the longer term. In 2022 and 2021,
the breakage estimate was formed using pre-Covid-19 behaviour
patterns as a base, but giving some weight to activity since 2020
and incorporating the impact of 2022 programme changes.
However, if future member behaviour deviates significantly from
expectations, breakage estimates could increase or decrease.
At 31 December 2022, deferred revenue relating to the loyalty
programme was $1,411m (2021: $1,292m, 2020: $1,245m). Based on
the conditions existing at the balance sheet date, a one percentage
point decrease/increase in the breakage estimate relating to earned
points would increase/reduce this liability by $63m.
Actuarial gains and losses would correspondingly adjust the amount
of System Fund revenues recognised and deferred revenue in the
Group statement of financial position.
The Fund is not managed to generate a surplus or deficit for IHG over
the longer term, but is managed for the benefit of the IHG System
with the objective of driving revenues for the hotels in the System.
Changes to the IHG One Rewards programme in the year, which
allow members to earn Milestone Rewards in addition to points,
do not result in any additional significant estimation uncertainty.
In relation to marketing and reservation services, the Group’s
performance obligation under IFRS 15 ‘Revenue from Contracts with
Customers’ is determined to be the continuous performance of the
services rather than the spending of the assessments received.
Accordingly, assessment fees are recognised as hotel revenues
occur, Fund expenses are charged to the Group income statement
as incurred and no constructive obligation is deemed to exist under
IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.
Accordingly, no liability is recognised relating to the balance of
unspent funds.
No other critical judgements have been made in applying the Group’s
accounting policies.
Estimates
Management consider that significant estimates and assumptions
are used as described below. Estimates and assumptions are
evaluated by management using historical experience and other
factors believed to be reasonable based on current circumstances.
In the prior year, expected credit losses were disclosed as a
significant estimate. In the current year, the estimate is not
considered to have a significant risk of a material adjustment
in the next financial year.
Loyalty programme
The hotel loyalty programme, IHG One Rewards, enables members
to earn points, funded through hotel assessments, during each
qualifying stay at an IHG branded hotel and consume points at a
later date for free or reduced accommodation or other benefits.
The Group recognises deferred revenue in an amount that reflects
IHG’s unsatisfied performance obligations, valued at the stand-alone
selling price of the future benefit to the member. The amount
of revenue recognised and deferred is impacted by ‘breakage’.
On an annual basis the Group engages an external actuary who uses
statistical formulae to assist in the estimate of the number of points
that will never be consumed (‘breakage’).
Significant accounting policies
Basis of consolidation
The Consolidated Financial Statements comprise the financial
statements of the Parent Company and entities controlled by
the Group. Control exists when the Group has:
• Power over an investee (i.e., existing rights that give it the current
ability to direct the relevant activities of the investee);
• Exposure, or rights, to variable returns from its involvement with
the investee; and
• The ability to use its power over the investee to affect its returns.
All intra-group balances and transactions are eliminated on
consolidation.
The assets, liabilities and results of those businesses acquired or
disposed of are consolidated for the period during which they were
under the Group’s control.
Foreign currencies
Within the Group’s subsidiaries, transactions in foreign currencies are
translated to the subsidiary’s functional currency at the exchange
rates ruling on the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are retranslated to the
subsidiary’s functional currency at the relevant rates of exchange
ruling on the last day of the period. On consolidation:
• The assets and liabilities of foreign operations of the Group’s
subsidiaries with a functional currency other than US dollars are
translated into US dollars at the relevant rates of exchange ruling
on the last day of the period. The revenues and expenses of foreign
operations are translated into US dollars at average rates of exchange
for each month of the reporting period. The Group treats specific
intercompany loan balances, which are not intended to be repaid
in the foreseeable future, as part of its net investment. The exchange
differences arising on retranslation are taken to the currency
translation reserve; and
• Exchange differences arising from the translation of borrowings
that are designated as a hedge against a net investment in a
foreign operation are taken to the currency translation reserve.
On disposal of a foreign operation, the cumulative amount
recognised in the currency translation reserve relating to that
particular foreign operation is recycled as part of the gain or
loss on disposal.
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Revenue recognition
Revenue is recognised at an amount that reflects the consideration
to which the Group expects to be entitled in exchange for transferring
goods or services to a customer.
Fee business revenue
Under franchise agreements, the Group’s performance obligation
is to provide a licence to use IHG’s trademarks and other intellectual
property. Franchise royalty fees are typically charged as a percentage
of hotel gross rooms revenues and are treated as variable
consideration, recognised as the underlying hotel revenues occur.
Under management agreements, the Group’s performance
obligation is to provide hotel management services and a licence
to use IHG’s trademarks and other intellectual property. Base and
incentive management fees are typically charged. Base management
fees are typically a percentage of total hotel revenues and incentive
management fees are generally based on the hotel’s profitability or
cash flows. Both are treated as variable consideration. Like franchise
fees, base management fees are recognised as the underlying hotel
revenues occur. Incentive management fees are recognised over
time when it is considered highly probable that the related
performance criteria for each annual period will be met, provided
there is no expectation of a subsequent reversal of the revenue.
Application and re-licensing fees are not considered to be distinct
from the franchise performance obligation and are recognised over
the life of the related agreement.
Franchise and management agreements also contain a promise
to provide technology support and network services to hotels.
A monthly technology fee, based on either gross rooms revenues
or the number of rooms in the hotel, is charged and recognised
over time as these services are delivered. Technology fee income
is included in Central revenue.
Technical service fees are received in relation to design and
engineering support provided prior to the opening of certain hotel
properties. These services are a distinct performance obligation
and the fees are recognised as revenue over the pre-opening period
in line with the Group’s assessment of the stage of completion of the
project, based on the latest expectation of hotel opening date and
its knowledge and experience of the pattern of work performed on
comparable projects.
IHG’s global insurance programme provides coverage to managed
hotels for certain risks. Premiums are payable by the hotels to the
third-party insurance provider. Some of the risk is reinsured by the
Group’s captive insurance company (the ‘Captive’), SCH Insurance
Company; reinsurance premiums paid from the third-party insurance
provider to the Captive are recognised within Central revenue as
earned. This insurance revenue is outside the scope of IFRS 15.
The Group has applied the practical expedient in IFRS 15 not to
disclose the aggregate amount of the transaction price allocated to
performance obligations that are unsatisfied or partially unsatisfied
as at the end of the reporting period for all amounts where the
Group has a right to consideration in an amount that corresponds
directly with the value to the customer of the Group’s performance
completed to date (including franchise and management fees).
Contract assets
Amounts paid to hotel owners to secure management and franchise
agreements (‘key money’) are treated as consideration payable to
a customer. A contract asset is recorded which is recognised as
a deduction to revenue over the initial term of the agreement.
In limited cases loans can be provided to an owner, in such cases
the initial credit risk will be low. The difference, if any, between the
face and market value of the loan on inception is recognised as
a contract asset.
In limited cases, the Group may provide performance guarantees
to third-party hotel owners. The expected value of payments under
performance guarantees reduces the overall transaction price and is
recognised as a deduction to revenue over the term of the agreement.
Typically, contract assets are not financial assets as they represent
amounts paid by the Group at the beginning of a contract, and so
are tested for impairment based on value in use rather than with
reference to expected credit losses. Contract assets are reviewed
for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable. If carrying values
exceed the recoverable amount, determined by reference to
estimated future cash flows discounted to their present value using
a pre-tax discount rate, the contract assets are written down to the
recoverable amount.
Deferred revenue
Deferred revenue is recognised when payment is received before
the related performance obligation is satisfied.
Revenue is also deferred when key money is committed and is highly
likely to be paid. The annual revenue deferral is equal to the reduction
to revenue that would arise if the key money were paid at inception
of the contract. When payment is made, a net contract asset is
recorded which is amortised over the remaining initial term of
the agreement.
Contract costs
Certain costs incurred to secure management and franchise
agreements, typically developer commissions, are capitalised and
amortised as an expense over the initial term of the related agreement.
These costs are presented as contract costs in the Group statement
of financial position.
Contract costs are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not
be recoverable with reference to the future expected cash flows
from the contract.
Revenue from owned, leased and managed lease hotels
At its owned, leased and managed lease hotels, the Group’s
performance obligation is to provide accommodation and other
goods and services to guests. Revenue includes rooms revenue and
food and beverage sales, which are recognised when the rooms are
occupied and food and beverages are sold. Guest deposits received
in advance of hotel stays are recorded as deferred revenue in the
Group statement of financial position. They are recognised as revenue
along with any balancing payment from the guest when the associated
stay occurs, or are returned to the customer in the event of
a cancellation.
Accounting policies
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Accounting policies continued
Cost reimbursements
In a managed property, the Group typically acts as employer of the
general manager and, in some cases, other employees at the hotel
and is entitled to reimbursement of these costs. The performance
obligation is satisfied over time as the employees perform their
duties, consistent with when reimbursement is received.
Reimbursements for these services are shown as revenue with an
equal matching employee cost, with no profit impact. Certain other
costs relating to both managed and franchised hotels are also
contractually reimbursable to IHG and, where IHG is deemed to
be acting as principal in the provision of the related services, the
revenue and cost are shown on a gross basis.
System Fund and other co-brand revenues
The Group operates the Fund to collect and administer cash
assessments from hotel owners for the specific purpose of use in
marketing, the Guest Reservation System and hotel loyalty programme.
The Fund also benefits from proceeds from the sale of loyalty points
under third-party co-branding arrangements. The Fund is not
managed to generate a surplus or deficit for IHG over the longer
term, but is managed for the benefit of the IHG System with the
objective of driving revenues for the hotels in the System.
The growth in the IHG One Rewards programme means that,
although assessments are received from hotels up front when a
member earns points, more revenue is deferred each year than is
recognised in the System Fund. This can lead to accounting losses
in the System Fund each year as the deferred revenue balance grows.
Under both franchise and management agreements, the Group is
required to provide marketing and reservations services, as well as
other centrally managed programmes. These services are provided
by the Fund and are funded by assessment fees. Costs are incurred
and allocated to the Fund in accordance with the principles agreed
with the IHG Owners Association. The Group acts as principal in the
provision of the services as the related expenses primarily comprise
payroll and marketing expenses under contracts entered into by the
Group. The assessment fees from hotel owners are generally levied
as a percentage of hotel revenues and are recognised as those hotel
revenues occur.
Certain travel agency commission revenues within the Fund are
recognised on a net basis, where it has been determined that IHG
is acting as agent.
In respect of the loyalty programme, IHG One Rewards, the
performance obligations are to arrange for the provision of future
benefits to members on consumption of previously earned reward
points and Milestone Rewards (following changes to the programme
structure in the year). Points are exchanged for reward nights at an
IHG hotel or other goods or services provided by third parties.
Milestone Rewards comprise points or other benefits such as
upgrades and food and beverage vouchers.
Under its franchise and management agreements, IHG receives
assessment fees based on total qualifying hotel revenue from IHG
One Rewards members’ hotel stays.
The Group’s performance obligation is not satisfied in full until the
member has consumed the relevant benefits. Accordingly, loyalty
assessments are allocated between points and Milestone Rewards
and deferred in an amount that reflects the stand-alone selling price
of the future benefit to the member. Revenue is impacted by a
‘breakage’ estimate of the benefits that will never be consumed.
On an annual basis, the Group engages an external actuary who
uses statistical formulae to assist in formulating this estimate, which
is adjusted to reflect actual experience up to the reporting date.
As materially all of the awards will be either consumed at IHG
managed or franchised hotels owned by third parties, or exchanged
for awards provided by third parties, IHG is deemed to be acting as
agent on consumption and therefore recognises the related revenue
net of the cost of reimbursing the hotel or third party that is
providing the benefit.
Performance obligations under the Group’s co-brand credit card
agreements comprise:
a) Arranging for the provision of future benefits to members who
have earned points or free night certificates;
b) Marketing services; and
c) Providing the co-brand partner with the right to access the
loyalty programme.
Revenue from a) and b) are reported within System Fund revenues
and revenue from c) is reported within fee business revenue.
Fees from these agreements comprise fixed amounts normally
payable at the beginning of the contract, and variable amounts
paid on a monthly basis. Variable amounts are typically based on
the number of points and free night certificates issued to members
and the marketing services performed by the Group. Total fees are
allocated to the performance obligations based on their estimated
stand-alone selling prices. Revenue allocated to marketing and
licensing obligations is recognised on a monthly basis as the
obligations are satisfied. Revenue relating to points and free night
certificates is recognised when the member has consumed the
points or certificates at a participating hotel or has selected a reward
from a third party, net of the cost of reimbursing the hotel or third
party that is providing the benefit.
Judgement is required in estimating the stand-alone selling prices
which are based upon generally accepted valuation methodologies
regarding the value of the licence provided and the number of points
and certificates expected to be issued. However, the value of revenue
recognised and the deferred revenue balance at the end of the year
is not materially sensitive to changes in these assumptions.
Segmental information
The Group has four reportable segments reflecting its geographical
regions (Americas, EMEAA, Greater China) and its Central functions.
Central functions include technology, sales and marketing, finance,
human resources and corporate services; Central revenue arises
principally from technology fee income.
No operating segments are aggregated to form these
reportable segments.
Management monitors the operating results of these reportable
segments for the purpose of making decisions about resource
allocation and performance assessment. Each of the geographical
regions is led by its own Chief Executive Officer who reports to the
Group Chief Executive Officer.
As the System Fund is not managed to generate a profit or loss for
IHG over the longer term, its results are not regularly reviewed by the
Chief Operating Decision Maker (‘CODM’) and it does not constitute
an operating segment under IFRS 8 ‘Operating Segments’. Similarly,
reimbursements of costs are not reported to the CODM and so are
not included within the reportable segments.
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Segmental performance is evaluated based on operating profit or
loss and is measured consistently with operating profit or loss in the
Group Financial Statements, excluding System Fund and exceptional
items. Group financing activities, fair value gains or losses on
contingent purchase consideration and income taxes are managed
on a Group basis and are not allocated to reportable segments.
Government grants
The Group receives government support income relating to the
Group’s corporate office presence in certain countries and, as a
result of Covid-19, has received support at certain of the Group’s
leased hotels.
Earnings per share
Basic earnings or loss per ordinary share is calculated by dividing
the profit or loss for the year available for IHG equity holders by the
weighted average number of ordinary shares, excluding investment
in own shares, in issue during the year.
Diluted earnings or loss per ordinary share is calculated by adjusting
basic earnings or loss per ordinary share to reflect the notional
exercise of the weighted average number of dilutive ordinary share
awards outstanding during the year. Where the effect of the notional
exercise of outstanding ordinary share awards is anti-dilutive, these
are excluded from the diluted earnings per share calculation.
Where grants are intended to compensate payroll costs they are
recognised as an offset within staff costs; those which are unrelated
to specific costs are presented within other operating income.
As grants are recognised only where there is reasonable assurance
that the grant will be received and all attached conditions will be
complied with, the grants may be recognised in subsequent years.
Business combinations and goodwill
On the acquisition of a business, identifiable assets acquired
and liabilities assumed are measured at their fair value. Contingent
liabilities assumed are measured at fair value unless this cannot
be measured reliably, in which case they are not recognised but
are disclosed in the same manner as other contingent liabilities.
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Receiving support at leased hotels may result in additional variable
rent; these amounts are not offset in the Group income statement.
Financial income and expenses
Financial income and expenses include income and charges
on the Group’s financial assets and liabilities and related hedging
instruments, and foreign exchange gains/losses primarily related
to the Group’s internal funding structure.
Finance charges relating to bank and other borrowings, including
transaction costs and any discount or premium on issue, are
recognised in the Group income statement using the effective
interest rate method.
Borrowing costs attributable to the acquisition or development of
assets that necessarily take a substantial period of time to prepare
for their intended use are capitalised as part of the asset cost.
In the Group statement of cash flows, interest paid and received is
presented within cash from operating activities, including any fees
and discounts on issuance or settlement of borrowings. Capitalised
interest paid is presented within investing activities.
Exceptional items
The Group discloses certain financial information both including
and excluding exceptional items. The presentation of information
excluding exceptional items allows a better understanding of the
underlying trading performance and trends of the Group and its
reportable segments; and provides consistency with the Group’s
internal management reporting.
In determining whether an event or transaction is exceptional,
quantitative and qualitative factors are considered. Exceptional
items are identified by virtue of their size, nature, or incidence, with
consideration given to consistency of treatment with prior years and
between gains and losses.
The tax effect of exceptional items is also presented as exceptional.
Examples of exceptional items include, but are not restricted to,
gains and losses on the disposal of assets, impairment charges
and reversals, the costs of individually significant legal cases or
commercial disputes and reorganisation costs. All exceptional items
are subject to review by the Audit Committee.
The measurement of deferred tax assets and liabilities arising on
acquisition is as described in the general principles detailed within
the ‘Taxes’ accounting policy note on page 166 with the exception
that no deferred tax is provided on taxable temporary differences
in connection with the initial recognition of goodwill.
The cost of an acquisition is measured as the aggregate of the
fair value of the consideration transferred. Contingent purchase
consideration is measured at fair value on the date of acquisition
and is re-measured at fair value at each reporting date with changes
in fair value recognised on the face of the Group income statement
below operating profit. Deferred purchase consideration is measured
at amortised cost and the effect of unwinding the discount is
recorded in financial expenses.
Payments of contingent and deferred purchase consideration
reduce the respective liabilities. In respect of contingent purchase
consideration, the portion of each payment relating to its original
estimate of fair value on acquisition is reported within cash flow
from investing activities in the Group statement of cash flows and
the portion of each payment relating to the increase or decrease
in the liability since the acquisition date is reported within cash
flow from operating activities. In respect of deferred purchase
consideration, the cash paid in excess of the initial fair value is
reported within interest paid, and the remainder is reported within
cash flows from investing activities.
Goodwill is recorded at cost, being the difference between the fair
value of the consideration and the fair value of net assets acquired.
Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses and is not amortised.
Transaction costs are expensed and are not included in the cost
of acquisition.
Accounting policies
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Accounting policies continued
Intangible assets
Brands
Externally acquired brands are initially recorded at cost if separately
acquired or fair value if acquired as part of a business combination,
provided the brands are controlled through contractual or other
legal rights, or are separable from the rest of the business.
Brands are tested for impairment at least annually if determined
to have indefinite lives.
Leases
The Group as lessee
On inception of a contract, the Group assesses whether it contains
a lease. A contract contains a lease when it conveys the right to
control the use of an identified asset for a period of time in exchange
for consideration. The right to use the asset and the obligation under
the lease to make payments are recognised in the Group statement
of financial position as a right-of-use asset and a lease liability.
The costs of developing internally generated brands are expensed
as incurred.
Management agreements
Management agreements acquired as part of a business combination
are initially recognised at the fair value attributed to those contracts
on acquisition and are subsequently amortised on a straight-line
basis over the term of the agreements, including any extension
periods at the Group’s option.
Software
Substantially all software is internally generated; amounts capitalised
include internal and third-party labour and consultancy costs.
Internally generated development costs are capitalised when all
of the following can be demonstrated:
• The ability and intention to complete the project;
• That the completed software will generate probable future
economic benefits;
• The availability of adequate technical, financial and other resources
to complete the project; and
• The ability to measure the expenditure.
Following initial recognition, the asset is carried at cost less any
accumulated amortisation and impairment losses. Costs are
generally amortised over estimated useful lives of three to five years
on a straight-line basis with the exception of the Guest Reservation
System which is amortised over seven to 10 years (see page 186).
Costs incurred in the research phase are expensed. In addition,
configuration and customisation costs relating to cloud computing
arrangements are expensed.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation
and any accumulated impairment.
Repairs and maintenance costs are expensed as incurred.
Land is not depreciated. All other property, plant and equipment
are depreciated to a residual value over their estimated useful
lives, namely:
• Buildings – over a maximum of 50 years; and
• Fixtures, fittings and equipment – three to 25 years.
All depreciation is charged on a straight-line basis. Residual value
is reassessed annually.
Where the Group holds land or other property which it intends
to occupy and provide hotel services, either as owner or manager,
it is classified as property, plant and equipment.
Lease contracts may contain both lease and non-lease components.
The Group allocates payments in the contract to the lease and
non-lease components based on their relative stand-alone prices
and applies the lease accounting model only to lease components.
The right-of-use asset recognised at lease commencement includes
the amount of lease liability recognised, initial direct costs incurred
and lease payments made at or before the commencement date,
less any lease incentives received. Right-of-use assets are
depreciated to a residual value over the shorter of the asset’s
estimated useful life and the lease term. Right-of-use assets are also
adjusted for any re-measurement of lease liabilities and are subject
to impairment testing. Residual value is reassessed annually.
A lease liability is recorded when the leased asset is available for use
by the Group and is initially measured at the present value of the
lease payments to be made over the lease term. The lease payments
include fixed payments (including ‘in-substance fixed’ payments)
and variable lease payments that depend on an index or a rate
(initially measured using the index or rate at commencement), less
any lease incentives receivable. ‘In-substance fixed’ payments are
payments that may, in form, contain variability but that, in substance,
are unavoidable. In calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not
readily determinable.
The lease term includes periods subject to extension options which
the Group is reasonably certain to exercise and excludes the effect
of early termination options where the Group is reasonably certain
that it will not exercise the option. Minimum lease payments include
the cost of a purchase option if the Group is reasonably certain it will
purchase the underlying asset after the lease term.
After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for lease
payments made. The carrying amount of lease liabilities is
re-measured if there is a modification, a change in the lease term,
a change in the ‘in-substance fixed’ lease payments or as a result
of a rent review or change in the relevant index or rate.
Variable lease payments are payable under certain of the Group’s
hotel leases and arise where the Group is committed to making
lease payments that are contingent on the performance of these
hotels. Such lease payments that do not depend on an index or
a rate are recognised as an expense in the period over which the
event or condition that triggers the payment occurs.
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The Group has opted not to apply the lease accounting model to
intangible assets, leases of low-value assets or leases which have
a term of less than 12 months. Costs associated with these leases
are recognised as an expense on a straight-line basis over the
lease term.
Payments and receipts are presented as follows in the Group
statement of cash flows:
• Short-term lease payments, payments for leases of low-value
assets and variable lease payments that are not included in the
measurement of the lease liabilities are presented within cash
flows from operating activities;
• Payments for the interest element of recognised lease liabilities are
included in interest paid within cash flows from operating activities;
• Payments for the principal element of recognised lease liabilities
are presented within cash flows from financing activities; and
• Lease incentives received are presented within cash flows from
investing activities where they represent a reimbursement of initial
fit-out costs.
The Group as lessor
Leases, including subleases, for which the Group is a lessor are
classified as finance or operating leases. Whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to
the lessee, the lease is classified as a finance lease. All other leases
are classified as operating leases. Where a leased property earns
rentals under an operating sublease outside of the normal course
of business, the Group’s interest in the lease is classified as an
investment property within right-of-use assets; these are subsequently
measured under the cost model.
When the lease is classified as an operating lease, rental income
arising is accounted for on a straight-line basis in the Group
income statement.
When the lease is classified as a finance lease, the Group’s interest
in the lease is derecognised and is replaced by a finance lease
receivable. Any difference between those amounts is recognised
in the Group income statement. Finance lease receivables are
presented within other receivables and are initially measured at the
present value of lease payments receivable under the sublease plus
any initial direct costs. Finance lease interest is recognised within
financial income in the Group income statement.
Receipts are presented as follows in the Group statement of
cash flows:
• Receipts from operating leases and investment properties are
presented within cash flows from operating activities; and
• Receipts from finance leases are presented within cash flows
from investing activities.
Associates and joint ventures
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the entity, but is not
control or joint control over those policies. A joint venture exists
when two or more parties have joint control over, and rights to the
net assets of, the venture. Joint control is the contractually agreed
sharing of control which only exists when decisions about the
relevant activities require the unanimous consent of the parties
sharing control.
In determining the extent of power or significant influence,
consideration is given to other agreements between the Group,
the investee entity, and the investing partners. This includes any
related management or franchise agreements and the existence
of any performance guarantees.
Associates and joint ventures are accounted for using the equity
method unless the associate or joint venture is classified as held for
sale. Under the equity method, the Group’s investment is recorded
at cost adjusted by the Group’s share of post-acquisition profits and
losses, and other movements in the investee’s reserves, applying
consistent accounting policies. When the Group’s share of losses
exceeds its interest in an associate or joint venture, the Group’s
carrying amount is reduced to $nil and recognition of further losses
is discontinued except to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of
an associate or joint venture.
If there is objective evidence that an associate or joint venture is
impaired, an impairment charge is recognised if the carrying amount
of the investment exceeds its recoverable amount.
Upon loss of significant influence over an associate or joint control
of a joint venture, any retained investment is measured at fair value
with any difference to carrying value recognised in the Group
income statement.
Impairment of non-financial assets
Non-financial assets are tested for impairment when events or
changes in circumstances indicate that the carrying value may
not be recoverable and, in the case of goodwill and brands with
indefinite lives, at least annually.
Assets that do not generate independent cash inflows are allocated
to the cash-generating unit (‘CGU’), or group of CGUs, to which they
belong. For impairment testing of hotel properties, each hotel is
deemed to be a CGU.
If carrying values exceed their estimated recoverable amount,
the assets or CGUs are written down to the recoverable amount.
Recoverable amount is the greater of fair value less costs of disposal
and value in use. Value in use is assessed based on estimated future
cash flows, including the effect of inflation, discounted to their
present value using a pre-tax nominal discount rate that reflects
current market assessments of the time value of money and the
risks specific to the asset.
Accounting policies
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Accounting policies continued
With the exception of goodwill, an assessment is made at each
reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have
decreased. A previously recognised impairment loss is reversed
only if there has been a significant change in the assumptions used
to determine the asset’s recoverable amount since the impairment
loss was recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined,
net of depreciation or amortisation, had no impairment loss been
recognised for the asset in prior years.
Impairment losses, and any subsequent reversals, are recognised
in the Group income statement.
Financial assets
On initial recognition, the Group classifies its financial assets as
being subsequently measured at amortised cost, fair value through
other comprehensive income (‘FVOCI’) or fair value through profit
or loss (‘FVTPL’).
Financial assets which are held to collect contractual cash flows
and give rise to cash flows that are solely payments of principal and
interest are subsequently measured at amortised cost. Interest on
these assets is calculated using the effective interest rate method
and is recognised in the Group income statement as financial
income. The Group recognises a provision for expected credit losses
for financial assets held at amortised cost. With the exception of
trade receivables (see below), where there has not been a significant
increase in credit risk since initial recognition, provision is made for
defaults that are possible within the next 12 months, and where there
has been a significant increase in credit risk since initial recognition,
for example trade deposits and loans where the borrower is in
financial difficulty or has not met repayments as they fall due,
provision is made for credit losses expected over the remaining life
of the asset.
The Group has elected to irrevocably designate equity investments
as FVOCI as they mainly comprise strategic investments in entities
that own hotels which the Group manages. Changes in their value
are recognised within gains or losses on equity instruments
classified as FVOCI in the Group statement of comprehensive
income and are never recycled to the Group income statement.
On disposal, any related balance within the fair value reserve is
reclassified to retained earnings. Dividends from equity investments
classified as FVOCI are recognised in the Group income statement
as other operating income when the dividend has been declared,
when receipt of the funds is probable and when the dividend is not
a return of invested capital. Equity instruments classified as FVOCI
are not subject to impairment assessment.
Financial assets not meeting the above criteria are measured at
FVTPL. These include money market funds, investments which do
not meet the definition of equity and other financial assets, including
those which do not have a fixed date of repayment.
Trade receivables
A trade receivable is recorded when the Group has an unconditional
right to receive payment. In respect of franchise fees, base and
incentive management fees, Central revenue and revenues from
owned, leased and managed lease hotels, the invoice is typically
issued as the related performance obligations are satisfied, as
described on page 159. Trade receivables typically do not bear
interest and are generally on payment terms of up to 30 days.
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost. A provision for impairment is made for
lifetime expected credit losses. The Group has established a provision
matrix that is based on its historical credit loss experience by region
and number of days past due. Where the historical experience is not
relevant to defined owner groups, for example those in financial
distress, the lifetime expected credit losses are calculated by
reference to other sources of data.
Trade receivables are written off once determined to be uncollectable.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits.
Cash and cash equivalents comprise short-term deposits, money
market funds and repurchase agreements that are readily convertible
to a known amount of cash and are subject to an insignificant risk of
changes in value. They generally have an original maturity of three
months or less.
Cash and cash equivalents may include amounts which are subject
to regulatory or other contractual restrictions and are not available
for general use by the Group.
Cash balances are classified as other financial assets when the
Group is not able to freely access the funds and they are subject to
a specific charge or contractually ring-fenced for a specific purpose.
Money market funds
Money market funds are held at FVTPL, with distributions recognised
in financial income.
Bank and other borrowings
Bank and other borrowings are initially recognised at the fair value
of the consideration received less directly attributable transaction
costs. They are subsequently measured at amortised cost.
Borrowings are classified as non-current when the repayment date
is more than 12 months from the period-end date or where they are
drawn on a facility with more than 12 months to expiry.
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Derivative financial instruments and hedging
Derivatives are initially recognised and subsequently measured at
fair value. The subsequent accounting treatment depends on whether
the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged.
Changes in the fair value of derivatives which have either not been
designated as hedging instruments or relate to the ineffective portion
of hedges are recognised immediately in the Group income statement.
Documentation outlining the measurement and effectiveness of
any hedging arrangement is maintained throughout the life of the
hedge relationship.
Interest arising from currency derivatives and interest rate swaps
is recorded in either financial income or expenses over the term
of the agreement, unless the accounting treatment for the hedging
relationship requires the interest to be taken to reserves.
Within the Group statement of cash flows, interest paid includes
interest paid on the Group’s bonds and the related derivative
financial instruments.
Cash flow hedges
Financial instruments are designated as cash flow hedges when
they hedge exposure to variability in cash flows that are attributable
to either a highly probable forecast transaction or a particular risk
associated with a recognised asset or liability.
Changes in the fair value are recorded in other comprehensive
income and cash flow hedge reserves to the extent that the hedges
are effective. When the hedged item is recognised, the cumulative
gains and losses on the related hedging instrument are reclassified
to the Group income statement, within financial expenses.
Net investment hedges
Financial instruments are designated as net investment hedges
when they hedge the Group’s net investment in foreign operations.
Changes in the fair value are recorded in other comprehensive
income and the currency translation reserve to the extent that the
hedges are effective. The cumulative gains and losses remain in
equity until the relevant foreign operation is sold, at which point they
are reclassified to the Group income statement as part of the gain
or loss on disposal.
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Fair value measurement
The Group measures each of the following at fair value
on a recurring basis:
• Financial assets and liabilities at FVTPL;
• Financial assets measured at FVOCI; and
• Derivative financial instruments.
Other assets are measured at fair value when impaired or
re-measured on classification as held for sale by reference to fair
value less costs of disposal.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants. Fair value is measured by reference to the principal
market for the asset or liability assuming that market participants
act in their economic best interests.
The fair value of a non-financial asset assumes the asset is used
in its highest and best use, either through continuing ownership
or by selling it.
The Group uses valuation techniques that maximise the use of
relevant observable inputs using the following valuation hierarchy:
Level 1: Quoted (unadjusted) prices in active markets for identical
assets or liabilities.
Level 2: Other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: Techniques which use inputs which have a significant effect
on the recorded fair value that are not based on observable
market data.
For assets and liabilities measured at fair value on a recurring basis,
the Group determines whether transfers have occurred between
levels in the hierarchy by reassessing categorisation (based on the
lowest level input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
Further disclosures on the particular valuation techniques used by
the Group are provided in note 24.
Where significant assets, such as property, are valued by reference
to fair value less costs of disposal, an external valuation will normally
be obtained using professional valuers who have appropriate market
knowledge, reputation and independence.
Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount
is reported in the Group statement of financial position if there is
a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis or to realise the assets
and settle the liabilities simultaneously. To meet these criteria, the
right of set-off must not be contingent on a future event and must be
legally enforceable in all of the following circumstances: the normal
course of business; the event of default; and the event of insolvency
or bankruptcy of the Group and all of the counterparties.
Accounting policies
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Accounting policies continued
Taxes
Current tax
Current income tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered
from, or paid to, the tax authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively
enacted at the end of the reporting period.
The calculation of the Group’s current tax charge involves
consideration of applicable tax laws and regulations in many
jurisdictions throughout the world. From time to time, the Group
is subject to tax audits and uncertainties in these jurisdictions.
The issues involved can be complex and audits may take a number
of years to conclude. Where the interpretation of local tax law is not
clear, management relies on judgement and accounting estimates
to ensure all uncertain tax positions are adequately provided for
in the Group Financial Statements, in accordance with IFRIC 23
‘Uncertainty over Income Tax Treatments’, representing the Group’s
view of the most likely outcome or, where multiple issues are
considered likely to be settled together, the probability weighted
amounts of the range of possible outcomes.
This may involve consideration of some or all of the following factors:
• strength of technical argument, impact of case law and clarity
of legislation;
• professional advice;
• experience of interactions, and precedents set, with the particular
taxing authority; and
• agreements previously reached in other jurisdictions on
comparable issues.
Retirement benefits
Defined contribution plans
Payments to defined contribution plans are charged to the Group
income statement as they fall due.
Defined benefit plans
Plan assets are measured at fair value and plan liabilities are
measured on an actuarial basis using the projected unit credit
method, discounted at an interest rate equivalent to the current rate
of return on a high-quality corporate bond of equivalent currency
and term to the plan liabilities. The difference between the value
of plan assets and liabilities at the period-end date is the amount
of surplus or deficit recorded in the Group statement of financial
position as an asset or liability. An asset is recognised when the
employer has an unconditional right to use the surplus at some point
during the life of the plan or on its wind-up.
The service cost of providing pension benefits to employees,
together with the net interest expense or income for the year,
is charged to the Group income statement within administrative
expenses. Net interest is calculated by applying the discount rate
to the net defined benefit asset or liability, after any asset restriction.
Re-measurements comprise actuarial gains and losses, the return
on plan assets and changes in the amount of any asset restrictions.
Actuarial gains and losses may result from differences between
the actuarial assumptions underlying the plan liabilities and actual
experience during the year or changes in the actuarial assumptions
used in the valuation of the plan liabilities. Re-measurement gains
and losses, and taxation thereon, are recognised in other
comprehensive income and are not reclassified to profit or loss
in subsequent periods.
Deferred tax
Deferred tax assets and liabilities arise and are generally recognised
in respect of temporary differences between the tax base and
carrying value of assets and liabilities.
Actuarial valuations are carried out on a regular basis and are
updated for material transactions and other material changes in
circumstances (including changes in market prices and interest
rates) up to the end of the reporting period.
Deferred tax is calculated at the tax rates that are expected to apply
in the periods in which the asset is released or the liability will be
settled, based on tax rates and laws enacted or substantively
enacted at the end of the reporting period.
Judgement is used when assessing the extent to which deferred tax
assets, particularly in respect of tax losses, should be recognised.
Deferred tax assets are only recognised to the extent that it is
regarded as probable that there will be sufficient and suitable
taxable profits or deferred tax liabilities in the relevant legal entity
or tax group against which such assets can be utilised in the future.
For this purpose, forecasts of future profits are considered by
assessing estimated future cash flows, consistent with those
disclosed on page 157 within ‘Going concern’. Tax assumptions
are overlaid to these profit forecasts to estimate the future
taxable profits.
Deferred tax is not provided on temporary differences arising on
investments in subsidiaries where the Group is able to control the
timing of the reversal and it is probable that the temporary
difference will not reverse in the foreseeable future.
Where deferred tax assets and liabilities arise in the same entity, or
group of entities, and there would be a legal right to offset the assets
and liabilities were they to reverse, the assets and liabilities are also
offset in the Group statement of financial position.
Deferred compensation plan
The Group operates a deferred compensation plan in the US which
allows certain employees to make additional provision for retirement
through the deferral of salary with matching company contributions
within a dedicated trust. The related assets and liabilities are
recognised in the Group statement of financial position. The Group’s
obligation to employees under the plan is limited to the fair value of
assets held by the plan and so the assets and liabilities are valued at
the same amount, with no net impact on profit or loss.
Share-based payments
The cost of equity-settled share-based payment transactions with
employees is measured by reference to fair value at the date at
which the right to the shares is granted. Fair value is determined
by an external valuer using option pricing models.
The cost of equity-settled share-based payment transactions is
recognised, together with a corresponding increase in equity,
over the period in which any performance or service conditions
are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (vesting date).
The Group income statement charge represents the movement in
cumulative expense recognised at the beginning and end of that
year. No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market
or non-vesting condition, which are treated as vesting irrespective
of whether or not the market or non-vesting condition is satisfied,
provided that all other performance and/or service conditions
are satisfied.
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Equity share capital and reserves
Equity share capital
Equity share capital includes the total net proceeds (both nominal
value and share premium) on issue of the Company’s equity share
capital. Share premium represents the amount of proceeds received
for shares in excess of their nominal value.
Capital redemption reserve
The capital redemption reserve maintains the nominal value of the
equity share capital of the Company when shares are repurchased
and cancelled.
Shares held by employee share trusts
Shares held by employee share trusts comprise ordinary shares
held by employee share trusts.
Other reserves
Other reserves comprise the merger and revaluation reserves
previously recognised under UK GAAP, together with the reserve
arising as a consequence of the Group’s capital reorganisation in
June 2005. The revaluation reserve relates to the previous revaluations
of property, plant and equipment which were included at deemed
cost on adoption of IFRS. Following the change in presentational
currency to US dollars in 2008, this reserve also includes exchange
differences arising on retranslation to period-end exchange rates of
equity share capital, the capital redemption reserve and shares held
by employee share trusts.
Fair value reserve
The fair value reserve comprises movements in the value of financial
assets measured at fair value through other comprehensive income.
Cash flow hedge reserves
The cash flow hedge reserves comprise:
• Cash flow hedge reserve: the effective portion of the cumulative
net change in the fair value of hedging instruments used in cash
flow hedges pending subsequent recognition in profit or loss; and
• Cost of hedging reserve: the gain or loss which is excluded from
the designated hedging instrument relating to the foreign currency
basis spread of currency swaps.
Currency translation reserve
The currency translation reserve comprises the movement in
exchange differences arising from the translation of foreign operations
and exchange differences on foreign currency borrowings and
derivative financial instruments that provide a hedge against net
investments in foreign operations. On adoption of IFRS, cumulative
exchange differences were deemed to be $nil.
Non-controlling interest
A non-controlling interest is equity in a subsidiary of the Group not
attributable, directly or indirectly, to the Group.
Provisions
Provisions are recognised when the Group has a present obligation
as a result of a past event, it is probable that a payment will be made
and a reliable estimate of the amount payable can be made. If the
effect of the time value of money is material, the provision is
discounted using a current pre-tax discount rate that reflects the
risks specific to the liability. No amounts are currently discounted.
Commercial litigation and disputes
A provision is made when management consider it probable that
payment may occur and the amount can be reliably estimated even
though the defence of the related claim may still be ongoing through
the court process.
Insurance reserves
The Group holds insurance policies with third-party insurers against
certain risks relating to its corporate operations and owned and
leased properties. An element of these risks are reinsured through
the Captive.
In addition, the Group’s managed hotels obtain insurance from
third-party insurers. The Group has agreements in place with the
third-party insurers to reinsure certain risks through the Captive.
Both of these arrangements have the effect of reducing the cost
of insurance.
In addition to the Captive obtaining regulatory approval, each line
of insurance is subject to review and approval by the Insurance
Executive Sub-Committee. The level of retained risk and expected
loss is reviewed annually to balance the level of risk against external
risk transfer costs.
Insurance reserves are held principally in the Captive, and are
established using independent actuarial assessments, which reflects
current expectations of the future economic outlook, or are based
on past claims experience provided by third parties.
Amounts utilised are principally paid to third-party insurers or
dedicated claims handlers for subsequent settlement with the
claimant. In order to protect the third-party insurer against the
solvency risk of the Captive, the Group has outstanding letters
of credit (see note 30).
Contingent liabilities
In limited cases, the Group may guarantee part of mortgage
loans made to facilitate third-party ownership of hotels under
IHG management or franchise agreements. These guarantee
arrangements are accounted for as insurance contracts as IHG is
insuring the bank against default by the hotel, with a liability only
being recognised in the event that a payout becomes probable.
Disposal of non-current assets
The Group recognises sales proceeds and any related gain or loss on
disposal on completion of the sales process. In determining whether
the gain or loss should be recorded, the Group considers whether it:
• Has a continuing managerial involvement to the degree associated
with asset ownership;
• Has transferred the significant risks and rewards associated with
asset ownership; and
• Can reliably measure and will actually receive the proceeds.
Accounting policies
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Group Financial Statements
Accounting policies continued
Climate change
In preparing the Consolidated Financial Statements, the potential
impacts of climate change have been considered. There are no
climate-related estimates and assumptions that have a material
impact. In particular, the following have been considered:
IFRS 17 ‘Insurance contracts’
From 1 January 2023, the Group will apply IFRS 17. The standard
replaces IFRS 4 ‘Insurance Contracts’ and introduces a new
measurement and disclosure model for insurance
contract arrangements.
• In the case of goodwill, the number of years of Base Case forecasts
required to recover the carrying value.
• The useful economic lives of assets and in the case of hotel assets
(within property, plant and equipment, right-of-use assets,
associates or other financial assets) whether they are sensitive to
the impact of transitional risks or are susceptible to physical risks.
• In the case of the InterContinental Boston, for which the lease
expires in 2105, current estimates of fair value less costs of disposal
could withstand a 1.75ppt increase in pre-tax discount rate and
terminal capitalisation rate before the asset would be impaired.
• The period of coverage of performance guarantees and owner
loan guarantees.
• In the case of the recoverability of the UK deferred tax asset, the
impact of the potential downside risk on the Group’s forecasts.
Additionally, increasing operating costs over a medium term, for
example energy, are not expected to have a material impact on any
of the Group’s assets.
While there is currently no material medium-term impact expected
from climate change, the risks attached to climate change continue
to evolve and these will continue to be assessed against the Group’s
judgements and estimates.
New accounting standards
Adoption of new accounting standards
The Group has applied the following amendments:
• IAS 37 – Onerous Contracts: Costs of Fulfilling a Contract;
• IAS 16 – Property, Plant and Equipment: Proceeds before
Intended Use; and
• Other existing standards arising from the Annual Improvements
to IFRS 2018-2020 cycle.
There was no material impact on the Group’s reported financial
performance or position.
New standards issued but not yet effective
From 1 January 2023, the Group will apply the amendments to:
Policies;
• IAS 8 – Definition of Accounting Estimates; and
• IAS 12 – Deferred Tax related to Assets and Liabilities arising
from a Single Transaction.
From 1 January 2024, the Group will apply the amendments to:
• IAS 1 – Classification of Liabilities as Current or Non-Current;
• IAS 1 – Non-current Liabilities with Covenants; and
• IFRS 16 – Lease Liability in a Sale and Leaseback.
There is no anticipated material impact from these amendments
on the Group’s reported financial performance or position.
The Group has assessed its performance guarantees provided to
third-party hotel owners and concluded that current arrangements
do not include significant insurance risk. They remain within the scope
of the Group’s existing revenue recognition accounting policies.
Under the transitional provisions of IFRS 17, the Group will no longer
account for issued financial guarantee contracts as insurance
contracts and will instead apply the requirements of IFRS 9 ‘Financial
Instruments’ to these arrangements. The fair value of financial
guarantee liabilities under IFRS 9 is immaterial as at 1 January and
31 December 2022.
The Group’s insurance obligations relating to managed hotels,
currently included within provisions, will be included in the Group
statement of financial position as a new line item ‘Insurance liabilities’.
As at 1 January 2022, this re-presentation totals $25m. The impact
of discounting is immaterial.
IAS 1 ‘Presentation of Financial Statements’ requires separate
presentation of insurance revenue and expense. The impact of this
change in presentation is shown below.
Year ended 31 December 2022
Revenue from fee business
Insurance revenue
Total revenue
Administrative expenses
Insurance expenses
Operating profit
$m
(15)
15
–
11
(11)
–
The estimated impact on the Group statement of financial position
would have been as follows:
31 December 2022
Current liabilities
Provisions
Insurance liabilities
Non-current liabilities
Insurance liabilities
Net assets
$m
9
(9)
23
(23)
–
These estimates are subject to finalisation.
Other presentational changes
Restricted funds of $12m (2021: $7m) previously presented within
other financial assets have been re-presented within cash and
cash equivalents reflecting that although there are contractual or
regulatory restrictions as to how these amounts are used the nature
of the deposits are unchanged. The prior year impact was immaterial,
accordingly the Group statement of financial position has not
been restated.
• IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting
Provisions
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Notes to the Group Financial Statements
G
r
o
u
p
F
n
a
n
c
a
i
i
1. Exchange rates
$1 equivalent
Sterling
Euro
2. Segmental information
Revenue
Year ended 31 December
Americas
EMEAA
Greater China
Central
Revenue from reportable segments
System Fund revenues
Reimbursement of costs
Total revenue
Profit/(loss)
Year ended 31 December
Americas
EMEAA
Greater China
Central
Operating profit from reportable segments
System Fund
Operating exceptional items (note 6)
Operating profit/(loss)
Net financial expenses
Fair value gains on contingent purchase consideration
Profit/(loss) before tax
Tax
Profit/(loss) for the year
2022
2021
2020
Average
Closing
Average
Closing
Average
Closing
£0.81
£0.83
£0.73
£0.74
€0.95
€0.94
€0.85
€0.88
£0.78
€0.88
£0.73
€0.81
l
S
t
a
t
e
m
e
n
t
s
2022
$m
1,005
552
87
199
1,843
1,217
832
3,892
2022
$m
761
152
23
(108)
828
(105)
(95)
628
(96)
8
540
(164)
376
2021
$m
774
303
116
197
1,390
928
589
2020
$m
512
221
77
182
992
765
637
2,907
2,394
2021
$m
559
5
58
(88)
534
(11)
(29)
494
(139)
6
361
(96)
265
2020
$m
296
(50)
35
(62)
219
(102)
(270)
(153)
(140)
13
(280)
20
(260)
Operating profit from reportable segments includes the following, which are included within other operating income in the Group
income statement:
• In 2022, $6m relating to business insurance claims principally in the Americas region (see note 30) and $16m government support income
relating to the EMEAA region. The net impact of government support income on operating profit from reportable segments is $6m after
deducting additional variable rent of $10m which became payable as a direct result of the support received;
• In 2021, $5m government support income relating to the EMEAA region; and
• In 2020, $4m business interruption insurance proceeds and $4m favourable litigation settlement, both in the Americas region, and $3m
gain on disposal of hotel assets in the EMEAA region.
In support of the Iberostar agreement signed in 2022, $5m of costs were incurred within Central functions. The costs are presented within
administrative expenses in the Group income statement.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
2. Segmental information continued
Non-cash items included within operating profit from reportable segments
Year ended 31 December 2022
Depreciation and amortisationa
Equity-settled share-based payments cost
Share of profit of associates (excluding exceptional items)
Year ended 31 December 2021
Depreciation and amortisationa
Equity-settled share-based payments cost
Share of losses of associates
Year ended 31 December 2020
Depreciation and amortisationa
Equity-settled share-based payments cost
Share of losses of associates and joint ventures
Americas
$m
EMEAA
$m
23
8
(1)
13
4
–
Americas
$m
EMEAA
$m
30
8
7
18
4
1
Americas
$m
EMEAA
$m
41
7
14
21
3
–
Greater
China
$m
4
2
–
Greater
China
$m
6
3
–
Greater
China
$m
6
2
–
Central
$m
Group
$m
28
14
–
68
28
(1)
Central
$m
Group
$m
44
11
–
Central
$m
42
7
–
98
26
8
Group
$m
110
19
14
a Includes $15m (2021: $20m, 2020: $29m) relating to cost of sales in owned, leased and managed lease hotels, and $53m (2021: $78m, 2020: $81m) relating to other assets.
A further $86m (2021: $94m, 2020: $62m) was recorded within System Fund expenses.
Capital expenditure
Year ended 31 December 2022
Capital expenditure per management reporting
Contract acquisition costs, net of repayments
Lease incentives received
Timing differences and other adjustments
Additions per the Group Financial Statements
Comprising additions to:
Goodwill and other intangible assets
Property, plant and equipment
Investment in associates
Year ended 31 December 2021
Capital expenditure per management reporting
Contract acquisition costs, net of repayments
Timing differences and other adjustments
Additions per the Group Financial Statements
Comprising additions to:
Goodwill and other intangible assets
Property, plant and equipment
Investment in associates
Other financial assets
Americas
$m
EMEAA
$m
Greater
China
$m
Central
$m
Group
$m
71
(47)
–
–
24
–
23
1
24
21
(16)
–
–
5
–
5
–
5
2
(1)
–
(1)
–
–
–
–
–
67
–
6
2
75
46
29
–
75
161
(64)
6
1
104
46
57
1
104
Americas
$m
EMEAA
$m
Greater
China
$m
Central
$m
Group
$m
35
(32)
3
6
1
1
4
–
6
25
(10)
(5)
10
–
5
–
5
10
1
(1)
–
–
–
–
–
–
–
39
–
4
43
32
11
–
–
43
100
(43)
2
59
33
17
4
5
59
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G
r
o
u
p
F
n
a
n
c
a
i
i
2. Segmental information continued
Geographical information
Year ended 31 December
Revenue
United Kingdom
United States
Rest of World
System Fund revenues (note 32)
l
S
t
a
t
e
m
e
n
t
s
2022
$m
2021
$m
2020
$m
243
1,659
773
2,675
1,217
3,892
142
1,263
574
1,979
928
2,907
77
1,067
485
1,629
765
2,394
For the purposes of the above table, fee business, owned, leased and managed lease and reimbursable revenues are determined according
to the location of the hotel and other revenue is attributed to the country of origin. In addition to the United Kingdom, revenue relating to an
individual country is separately disclosed when it represents 10% or more of total revenue. System Fund revenues are not included in the
geographical analysis as the Group does not monitor the Fund’s revenue by location of the hotel, or in the case of the loyalty programme,
according to the location where members consume their rewards.
31 December
Non-current assets
United Kingdom
United States
Rest of World
2022
$m
102
1,308
621
2,031
2021
$m
64
1,346
661
2,071
For the purposes of the above table, non-current assets comprise goodwill and other intangible assets, property, plant and equipment,
right-of-use assets, investments in associates, non-current other receivables, non-current contract costs and non-current contract assets.
In addition to the United Kingdom, non-current assets relating to an individual country are separately disclosed when they represent 10%
or more of total non-current assets, as defined above.
3. Revenue
Disaggregation of revenue
Year ended 31 December 2022
Franchise and base management fees
Incentive management fees
Central revenue
Revenue from fee business
Revenue from owned, leased and managed lease hotels
System Fund revenues (note 32)
Reimbursement of costs
Total revenue
Year ended 31 December 2021
Franchise and base management fees
Incentive management fees
Central revenue
Revenue from fee business
Revenue from owned, leased and managed lease hotels
System Fund revenues (note 32)
Reimbursement of costs
Total revenue
Americas
$m
EMEAA
$m
Greater
China
$m
Central
$m
861
18
–
879
126
1,005
215
69
–
284
268
552
71
16
–
87
–
87
–
–
199
199
–
199
Americas
$m
EMEAA
$m
Greater
China
$m
Central
$m
683
8
–
691
83
774
120
29
–
149
154
303
91
25
–
116
–
116
–
–
197
197
–
197
Group
$m
1,147
103
199
1,449
394
1,843
1,217
832
3,892
Group
$m
894
62
197
1,153
237
1,390
928
589
2,907
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
3. Revenue continued
Year ended 31 December 2020
Franchise and base management fees
Incentive management fees
Central revenue
Revenue from fee business
Revenue from owned, leased and managed lease hotels
System Fund revenues (note 32)
Reimbursement of costs
Total revenue
Contract balances
Trade receivables (note 17)
Contract assets
Deferred revenue
Contract assets
At 1 January
Additions
Recognised as a deduction to revenue
Impairment charges (note 6)
Impairment reversals (note 6)
Repayments
Exchange and other adjustments
At 31 December
Analysed as:
Current
Non-current
Americas
$m
452
5
–
457
55
512
EMEAA
$m
Greater
China
$m
Central
$m
93
14
–
107
114
221
61
16
–
77
–
77
–
–
182
182
–
182
2022
$m
493
367
Group
$m
606
35
182
823
169
992
765
637
2,394
2021
$m
399
346
(1,724)
(1,613)
2022
$m
346
70
(32)
(5)
3
(3)
(12)
367
31
336
367
2021
$m
336
45
(35)
–
–
(1)
1
346
30
316
346
The Group also has future commitments for key money payments which are contingent upon future events and may reverse.
At 31 December 2022, the maximum exposure remaining under performance guarantees was $75m (2021: $85m).
172
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G
r
o
u
p
F
n
a
n
c
a
i
i
3. Revenue continued
Deferred revenue
At 1 January 2021
Increase in deferred revenue
Recognised as revenue
Exchange and other adjustments
At 31 December 2021
Increase in deferred revenue
Recognised as revenue
Exchange and other adjustments
At 31 December 2022
Analysed as:
Current
Non-current
At 31 December 2021:
Current
Non-current
l
S
t
a
t
e
m
e
n
t
s
Loyalty
programme
$m
Other
co-brand
fees
$m
Application &
re-licensing
fees
$m
1,245
384
(337)
–
1,292
532
(413)
–
1,411
584
827
1,411
535
757
1,292
55
–
(11)
–
44
–
(11)
–
33
11
22
33
11
33
44
166
19
(22)
–
163
27
(23)
–
167
23
144
167
21
142
163
Other
$m
103
45
(35)
1
114
44
(44)
(1)
113
63
50
113
50
64
114
Total
$m
1,569
448
(405)
1
1,613
603
(491)
(1)
1,724
681
1,043
1,724
617
996
1,613
This table does not include amounts which were received and recognised as revenue in the same year. Amounts recognised as revenue
were included in deferred revenue at the beginning of the year.
Loyalty programme revenues, shown gross in the table above, are presented net of the corresponding redemption cost in the Group
income statement.
Other deferred revenue includes technical service fees and guest deposits received by owned, leased and managed lease hotels.
Transaction price allocated to remaining performance obligations
The expected timing of recognition of amounts received and not yet recognised relating to performance obligations that were unsatisfied
at the year end are as follows:
Less than one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
More than five years
Contract costs
At 1 January
Costs incurred
Charged to income statement
Exchange and other adjustments
At 31 December
Analysed as:
Current
Non-current
Loyalty and
co-brand
$m
Other
$m
595
339
199
114
70
127
86
46
32
27
22
67
2022
Total
$m
681
385
231
141
92
194
Loyalty and
co-brand
$m
Other
$m
546
406
155
98
53
78
71
45
33
25
22
81
2021
Total
$m
617
451
188
123
75
159
1,444
280
1,724
1,336
277
1,613
2022
$m
2021
$m
77
13
(8)
(2)
80
5
75
80
75
11
(9)
–
77
5
72
77
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
4. Staff costs and Directors’ remuneration
Staff costs and average number of employees
Staff costs
Wages and salaries
Social security costs
Pension and other post-retirement benefits:
Defined benefit plans (note 26)
Defined contribution plans
Analysed as:
Costs borne by IHGa
Costs borne by the System Fundb
Costs reimbursed
2022
$m
1,604
117
2
53
2021
$m
1,315
86
2
41
2020
$m
1,233
86
3
36
1,776
1,444
1,358
646
341
789
569
304
571
500
242
616
1,776
1,444
1,358
a In 2022, includes $1m classified as exceptional relating to the costs of ceasing operations in Russia. In 2020, included $27m classified as exceptional relating to reorganisation programmes.
b In 2020, included $20m relating to the 2020 corporate reorganisation programme.
Staff costs are presented net of government support income of $5m (2021: $23m, 2020: $36m). $nil (2021: $12m, 2020: $28m) relates
principally to employee costs at certain of the Group’s leased hotels and $5m (2021: $11m, 2020: $8m) relates to support received in the
form of tax credits which relate to the Group’s corporate office presence in certain countries. There are no unfulfilled conditions or other
contingencies attached to these grants.
Monthly average number of employees, including part-time employees
2022
2021
2020
Employees whose costs are borne by IHG:
Americas
EMEAA
Greater China
Central
Employees whose costs are borne by the System Fund
Employees whose costs are reimbursed
Directors’ remuneration
Base salaries, fees, annual performance payments and benefits
1,556
3,711
336
1,444
7,047
5,655
13,178
1,481
2,808
299
1,425
6,013
4,508
11,807
25,880
22,328
1,931
4,088
314
1,813
8,146
4,686
15,980
28,812
2022
$m
7.9
2021
$m
8.4
2020
$m
4.2
More detailed information on the remuneration including pensions, share awards and shareholdings for each Director is shown in the Directors’
Remuneration Report on pages 127 and 134. In addition, amounts received or receivable under long-term incentive schemes are shown on page 127.
5. Auditor’s remuneration
Audit of the Financial Statements
Audit of subsidiaries
Other assurance services
Under SEC regulations analysed as:
Audit
Other audit-related
2022
$m
2021
$m
2020
$m
6
2
1
9
8
1
9
4
3
1
8
7
1
8
4
3
1
8
7
1
8
In 2022 and 2021, auditor’s remuneration was paid to PricewaterhouseCoopers LLP; in 2020 auditor’s remuneration was paid
to Ernst & Young LLP.
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6. Exceptional items
Cost of sales:
Derecognition of right-of-use assets and lease liabilities
Gain on lease termination
Provision for onerous contractual expenditure
Reorganisation costs
Administrative expenses:
Costs of ceasing operations in Russia
Commercial litigation and disputes
Reorganisation costs
Integration costs
Share of losses of associate
Impairment loss on financial assets
Other net impairment reversals/(charges):
Management agreements
– charge
Property, plant and equipment – charge
– reversal
Right-of-use assets
Associates
Contract assets
– reversal
– charge
– reversal
– charge
– reversal
– charge
– reversal
Operating exceptional items
Financial expenses
Fair value gains on contingent purchase consideration
Exceptional items before tax
Tax on exceptional items
Exceptional tax
Tax
Operating exceptional items analysed as:
Americas
EMEAA
Greater China
Central
Note
(a)(k)
(b)
(k)
(c)(k)
(d)
(e)
(c)
(f)
(g)
(h)
12
12
13, (k)
(k)
13
14
15
15
(i)
(i)
(j)
(k)
(l)
(m)
G
r
o
u
p
F
n
a
n
c
a
i
i
2022
$m
2021
$m
2020
$m
l
S
t
a
t
e
m
e
n
t
s
–
–
–
–
–
(12)
(28)
–
–
–
–
–
–
–
–
(25)
–
–
(40)
(25)
(60)
–
–
12
(10)
3
(2)
2
–
2
(5)
3
5
–
–
–
–
–
–
–
–
(4)
–
–
–
22
30
(10)
(8)
34
–
(5)
(19)
(6)
(30)
–
(48)
(48)
–
(90)
–
(16)
–
(19)
–
(53)
–
(4)
(226)
(95)
(29)
(270)
–
–
–
–
(14)
21
(95)
(29)
(263)
26
–
26
(46)
(49)
–
–
3
26
29
(22)
(7)
–
–
(95)
(29)
52
–
52
(118)
(128)
(5)
(19)
(270)
The above items are defined by management as exceptional as further described on page 161.
Notes to the Group Financial Statements
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Notes to the Group Financial Statements continued
6. Exceptional items continued
(a) Derecognition of right-of-use assets and lease liabilities
Related to right-of-use assets ($49m) and lease liabilities ($71m) associated with the UK portfolio and German leases which were derecognised
following a reassessment of the leases as fully variable. The net gain of $22m was presented as exceptional due to the size of the
derecognised assets and liabilities.
(b) Gain on lease termination
Related to the termination of the InterContinental San Juan lease, which was part of the Service Properties Trust (‘SVC’) portfolio.
The right-of-use assets ($60m) and lease liabilities ($90m) associated with this hotel were derecognised, resulting in a net gain of $30m,
which was presented as exceptional due to the value of the assets and liabilities derecognised and for consistency with the impairments
of other assets related to the SVC portfolio.
(c) Reorganisation costs
Related to the UK portfolio, other owned and leased hotels and a corporate reorganisation reflecting the reassessment of near-term
priorities and the resources needed to support reduced levels of demand. An additional $20m related to the corporate restructuring was
charged to the System Fund.
These charges were presented as exceptional as they related to a significant programme carried out in response to the impacts of Covid-19
which does not reflect normal, ongoing costs of the business.
(d) Costs of ceasing operations in Russia
On 27 June 2022, the Group announced it was in the process of ceasing all operations in Russia consistent with evolving UK, US and EU
sanction regimes and the ongoing and increasing challenges of operating there. The costs associated with the cessation of corporate
operations in Moscow and long-term management and franchise contracts are presented as exceptional due to the nature of the war in
Ukraine which has driven the Group’s response.
(e) Commercial litigation and disputes
From time to time, the Group is subject to legal proceedings, the ultimate outcome of each is always subject to many uncertainties inherent
in litigation. The provision for commercial litigation and disputes as at 31 December 2022 principally relates to the EMEAA region and includes
the following uncertainties: timing of resolution, quantum of legal costs, quantum of interest and, in one case, the likelihood of the Group’s
appeal against an adverse opinion. Further information usually required by IAS 37 is not disclosed as such disclosure could prejudice
seriously the outcome.
In 2021, related to the agreed costs to settle two commercial disputes, $18m in the Americas region and $7m in the EMEAA region.
In 2020, related to the agreed cost of settlement of $14m in the EMEAA region, offset by a partial release in the Americas region.
These costs are presented as exceptional reflecting (i) quantum, (ii) the nature of the disputes, and (iii) in respect of releases, consistency
with prior years.
(f) Integration costs
Related to the integration of Six Senses into the operations of the Group. Costs were presented as exceptional reflecting the fact that the
acquisition of Six Senses is not a recurring event.
(g) Share of losses of associate
As part of an agreed settlement of the 2021 Americas commercial dispute in relation to the Barclay associate, in 2022 the Group was
allocated expenses in excess of its actual percentage share which directly reduced the Group’s current interest in the associate. This resulted
in $60m of additional expenses being allocated to the Group in 2022, with a current tax benefit of $15m and, applying equity accounting
to this additional share of expenses, reduced the Group’s investment to $nil. In addition, a liability of $18m was recognised, reflecting an
unavoidable obligation to repay this amount in certain circumstances. Should the hotel property increase in value in future periods, such
revaluation gains will be attributed first to the Group up to the amount of the additional share of expenses; this would be reflected first as
a reduction of the liability and subsequently as a trigger for impairment reversal of the associate. This charge is presented as exceptional
by reason of its size and the nature of the agreement.
(h) Impairment loss on financial assets
Comprised $33m and $15m related to SVC and other trade deposits and loans respectively. The impairment losses were presented as
exceptional as they related to the termination of a significant portfolio of over 100 management agreements and to significant changes
in credit risk on other trade deposits and loans as a result of Covid-19.
(i) Impairment charge/reversals on contract assets
In 2022, the $5m charge relates to key money pertaining to managed and franchised hotels in Russia. The $3m reversal relates to impairments
originally recorded in 2020 and arises as a result of the improved financial position of owners or performance of the related hotels.
In 2020, related primarily to deposits made to SVC of $33m. The remaining impairment of $20m related to key money and performance
guarantee payments on individual properties which were tested with reference to future franchise and management fees.
These costs are presented as exceptional consistently with (d) and (h) above and, in respect of releases, consistently with the treatment
applied in prior years.
(j) Financial expenses
In 2020, management undertook actions to strengthen liquidity and extend the maturity profile of the Group’s debt. The Group issued a
tender offer for its £400m 3.875% 2022 bonds resulting in a repayment of £227m and concurrently issued €500m 1.625% 2024 bonds and
£400m 3.375% 2028 bonds. The exceptional charge included the premium on repayment and associated write-off of fees and discount.
The charge was presented as exceptional primarily due to the size of the charge as well as the nature of the refinancing which was driven
by increased liquidity requirements resulting from Covid-19.
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6. Exceptional items continued
(k) Exceptional items relating to the UK portfolio
Included within exceptional items are the following items relating to the UK portfolio:
Cost of sales:
Derecognition of right-of-use assets and lease liabilities
Provision for onerous contractual expenditure
Reorganisation costs
Other net impairment reversals/(charges):
Property, plant and equipment
Operating exceptional items
Fair value gains on contingent purchase consideration
Exceptional items before tax
l
S
t
a
t
e
m
e
n
t
s
2022
$m
2021
$m
2020
$m
–
–
–
–
3
3
3
–
3
–
–
–
–
–
–
–
–
–
18
(10)
(4)
4
(50)
(50)
(46)
21
(25)
In 2022, the Group agreed to restructure the UK portfolio leases (see note 14) resulting in a reversal of previous impairment of property,
plant and equipment.
In 2020, the UK portfolio experienced hugely challenging trading conditions as a result of Covid-19, with all hotels within the portfolio
closing for extended periods and experiencing historically low occupancies during periods of temporary reopenings. The following
exceptional items were recorded:
• The right-of-use asset ($22m) and lease liability ($40m) relating to the UK portfolio were derecognised as a result of the re-estimation of
the ‘in-substance fixed’ rent payable under the leases, resulting in a gain of $18m; from 2020 the leases were considered to be fully variable.
• A $10m provision was recognised to the extent the costs of contractual expenditure committed under the hotel leases exceeded the
future economic benefits expected to be received under the leases.
• A total cost of $4m to restructure hotel operations in response to the impact of Covid-19 on hotel occupancy and revenues.
• Impairment of property, plant and equipment (see note 13).
• A fair value gain on contingent purchase consideration (see note 24).
(l) Tax on exceptional items
The tax impacts of the exceptional items are shown in the table below:
Derecognition of right-of-use assets and lease liabilities
Provision for onerous contractual expenditure
Reorganisation costs
Costs of ceasing operations in Russia
Commercial litigation and disputes
Integration costs
Share of losses of associate
Impairment loss on financial assets
Other net impairment reversals/(charges)
Financial expenses
Fair value gains on contingent purchase consideration
Adjustments in respect of prior yearsa
Total current and deferred tax
2022
2021
2020
Current tax
$m
Deferred tax
$m
Current tax
$m
Deferred tax
$m
Current tax
$m
Deferred tax
$m
–
–
–
3
8
–
15
–
1
–
–
6
33
–
–
–
–
(2)
–
–
–
(5)
–
–
–
(7)
26
–
–
–
–
–
–
–
–
–
–
–
(2)
(2)
–
–
–
–
4
–
–
–
1
–
–
–
5
3
–
–
3
–
–
1
–
4
6
–
–
–
14
(4)
2
2
–
–
–
–
2
37
3
(4)
–
38
52
a In 2022, relates to the release of tax contingencies no longer needed; one of these was as a result of the closure of a tax audit of the 2014 US federal income tax return. In 2021, the tax
charge related to the same audit.
Notes to the Group Financial Statements
IHG | Annual Report and Form 20-F 2022
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Notes to the Group Financial Statements continued
6. Exceptional items continued
(m) Exceptional tax
Related to the enactment of a change to the UK rate of corporate income tax from 19% to 25%, effective 1 April 2023. The change resulted in
the re-measurement of those UK deferred tax assets and liabilities which are forecast to be utilised or crystallise after this effective date, using
the higher tax rate. A further credit of $4m was recorded within the Group statement of comprehensive income in respect of movements in
deferred tax assets and liabilities originally recorded there. The value attributable to unrecognised deferred tax assets increased by $34m
as a result of the rate change; this had no impact on the reported tax charge.
7. Financial income and expenses
Financial income
Financial income on deposits and money market funds
Interest income on loans and other assets
Financial expenses
Interest expense on external borrowings
Interest expense on lease liabilities
Capitalised interest
Unwind of discount on deferred purchase consideration
Foreign exchange gains
Other charges
Analysed as:
Financial expenses before exceptional items
Exceptional financial expenses (note 6)
2022
$m
2021
$m
2020
$m
17
5
22
92
29
–
–
(10)
7
118
118
–
118
2
6
8
109
29
–
1
–
8
2
2
4
102
37
(1)
1
–
5
147
144
147
–
147
130
14
144
Financial income comprises $12m (2021: $8m, 2020: $4m) relating to financial assets held at amortised cost and $10m (2021: $nil, 2020: $nil)
relating to assets held at FVTPL.
Interest expense on external borrowings and unwind of discount on deferred purchase consideration relate to financial liabilities which are
held at amortised cost. Other charges includes bank charges and non-bank interest expense.
In 2022, $15m (2021: $1m, 2020: $3m) was payable to the IHG One Rewards loyalty programme relating to interest on the accumulated
balance of cash received in advance of the consumption of points awarded. The expense and corresponding System Fund interest income
are eliminated within financial expenses. On a net basis, financial income and expenses includes $1m (2021: $2m, 2020: $nil) of other
interest which is also attributable to the System Fund.
Net interest payable as calculated for bank covenants can be found on page 201.
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8. Tax
Tax on profit/(loss)
Current tax
Current period
Benefit of tax reliefs on which no deferred tax
previously recognised
Adjustments in respect of prior periods
Deferred tax
Origination and reversal of temporary differences
Changes in tax rates and tax laws
Adjustments to estimated recoverable deferred
tax assetsa
Reduction in deferred tax expense by previously
unrecognised tax assets
Adjustments in respect of prior periods
Income tax charge/(credit) for the year
Analysed as tax relating to:
Profit before exceptional items and foreign
exchange gainsb
Foreign exchange gains (note 7)
Exceptional items:
Tax on exceptional items (note 6)
Exceptional tax (note 6)
l
S
t
a
t
e
m
e
n
t
s
United Kingdom
Other jurisdictions
2022
$m
2021
$m
2020
$m
2022
$m
2021
$m
2020
$m
2022
$m
2021
$m
6
–
(2)
4
(1)
–
(2)
–
2
(1)
3
11
–
(8)
–
3
1
–
–
1
(7)
(25)
2
–
1
(29)
(28)
(2)
–
–
(26)
(28)
–
–
(2)
(2)
(12)
(7)
(14)
–
(1)
(34)
(36)
(24)
–
(12)
–
(36)
177
138
–
(5)
172
–
4
142
(6)
(14)
–
–
–
(5)
(11)
161
183
(4)
(18)
–
161
–
–
–
(4)
(18)
124
127
–
(3)
–
124
43
(2)
(5)
36
(23)
(1)
–
(1)
5
(20)
16
56
–
(40)
–
16
183
139
–
(7)
176
(7)
–
(2)
–
(3)
(12)
164
194
(4)
(26)
–
164
–
4
143
(21)
(25)
2
–
(3)
(47)
96
125
–
(3)
(26)
96
Total
2020
$m
43
(2)
(7)
34
(35)
(8)
(14)
(1)
4
(54)
(20)
32
–
(52)
–
(20)
a Represents a reassessment of the recovery of deferred taxes in line with the Group’s profit forecasts.
b ‘Other jurisdictions’ includes $151m (2021: $115m, 2020: $41m) in respect of US taxes.
Notes to the Group Financial Statements
IHG | Annual Report and Form 20-F 2022
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Notes to the Group Financial Statements continued
8. Tax continued
Reconciliation of tax charge
Tax at UK rate
Tax credits
System Funda
Foreign exchange gains (note 7)
Other permanent differencesb
Non-recoverable foreign taxes
Net effect of different rates of taxc
Effect of changes in UK tax rates and lawsd
Effect of changes in other tax rates and laws
Reduction in current tax expense by previously unrecognised deferred
tax assets
Items on which deferred tax arose but where no deferred tax is recognisede
Effect of adjustments to estimated recoverable deferred tax assetsf
Reduction in deferred tax expense by previously unrecognised deferred
tax assets
Adjustment to tax charge in respect of prior periods
2022
%
19.0
(0.1)
3.1
(0.9)
0.5
3.5
6.3
–
0.1
–
1.2
(0.4)
–
(1.9)
30.4
2021
%
19.0
(0.1)
0.4
–
1.4
3.5
6.8
(7.0)
–
(0.1)
2.0
0.5
–
0.2
26.6
Total
2020
%
19.0
0.5
(6.6)
–
(4.2)
(5.1)
(4.5)
2.4
0.5
0.7
(1.9)
5.1
0.3
0.9
7.1
Before exceptional items, foreign
exchange gains and System Fund
2022
%
19.0
(0.1)
(0.4)
–
0.4
2.5
5.6
–
–
–
0.4
(0.3)
–
(0.5)
26.6
2021
%
19.0
(0.1)
(0.1)
–
1.2
3.1
6.9
–
–
(0.1)
1.3
0.4
–
(0.4)
31.2
2020
%
19.0
(1.7)
(1.1)
–
12.1
16.9
18.9
(7.9)
(1.7)
(2.4)
5.1
(16.9)
–
(2.7)
37.6
a The System Fund is, in general, not subject to taxation.
b Before exceptional items, foreign exchange gains and System Fund includes (0.8) percentage points (2021: (0.6) percentage points, 2020: (1.2) percentage points) in respect of the
US Foreign-derived intangible income regime.
c Before exceptional items, foreign exchange gains and System Fund includes 5.5 percentage points (2021: 6.7 percentage points, 2020: 18.9 percentage points) driven by the relatively
high blended US rate, which includes US Federal and State taxes as well as Base Erosion and Anti-Avoidance Tax (‘BEAT’). In 2020, the lower profitability resulted in a large impact
of BEAT, and the trading results in the year led to a higher proportion of the Group’s profit being taxed in the US.
d In 2021, the UK Government enacted an increase to the UK rate of Corporation Tax from 19% to 25%. In 2020, the UK Government reversed a previously enacted drop to the UK rate
of Corporation Tax.
e Predominantly in respect of losses arising in the year.
f In 2020, the Group simplified its Group structure which led to an increase to existing deferred tax assets within the UK.
A reconciliation between total tax rate and tax rate excluding the impact of foreign exchange gains, exceptional items and System Fund
is shown below:
Group income statement
Adjust for:
Exceptional items (note 6)
Foreign exchange gains (note 7)
System Fund
Profit
before tax
$m
540
95
(10)
105
730
Tax
$m
164
26
4
–
194
2022
Rate
%
30.4
26.6
Profit
before tax
$m
361
29
–
11
401
2021
Rate
%
26.6
31.2
(Loss)/
profit
before tax
$m
(280)
263
–
102
85
Tax
$m
96
29
–
–
125
2020
Rate
%
7.1
37.6
Tax
$m
(20)
52
–
–
32
Information concerning Non-GAAP measures can be found in the Strategic Report.
Factors that may affect the future tax charge
Many factors will affect the Group’s future tax rate, the main ones being future legislative developments, future profitability of underlying
subsidiaries and tax uncertainties.
Worldwide tax reform continues, notably for the Group with the OECD’s proposals in connection with the ‘Pillar 2’ Global Anti-Base
Erosion Rules. At the balance sheet date, no country has substantively enacted legislation to fully implement Pillar 2. The Group expects
further guidance and detailed legislation to be published in 2023 and will continue to assess potential impacts.
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8. Tax continued
Tax paid
Total tax paid (net of refunds) is entirely in respect of operating activities. This comprises taxes paid directly by Group entities to taxing
authorities and taxes withheld at source in respect of fees payable to the Group. Taxes withheld at source are paid by hotel owners to their
local taxing authorities on behalf of the Group. The table below shows the territories to whom taxes are directly paid by the Group which
exceed $5m in the current or comparative periods, in addition to the UK, the Group’s headquarter jurisdiction. The year-on-year increases are
predominantly driven by corresponding increases to Group profitability and refunds received in 2020 and 2021 in respect of earlier periods.
l
S
t
a
t
e
m
e
n
t
s
Chinaa
UK
USAb
Other jurisdictions
Taxes withheld at source
Tax paid per cash flow
a Tax payments are typically based upon the previous year’s profits.
b Includes refunds in respect of earlier periods of $nil (2021: $15m, 2020: $24m).
A reconciliation of tax paid to the total current tax charge in the Group income statement is as follows:
Current tax charge in the Group income statement
Current tax (credit)/charge in the Group statement of comprehensive income
Total current tax charge
Movements to tax contingenciesa
Timing differences of cash tax paid and foreign exchange differencesb
Tax paid per cash flow
2022
$m
10
3
165
11
189
22
211
2022
$m
176
(2)
174
10
27
211
2021
$m
3
(2)
68
1
70
16
86
2021
$m
143
–
143
(4)
(53)
86
2020
$m
6
2
–
20
28
13
41
2020
$m
34
1
35
8
(2)
41
a Tax contingency movements are included within the current tax charge but do not impact cash tax paid in the year. Settlements of tax contingencies are included within cash tax
paid in the year but not recorded in the current year tax charge.
b 2021 included $20m of refunds in respect of earlier years, $12m of other receivables which have been allocated to payments that otherwise would have been due and $28m
of payments due in 2022.
Notes to the Group Financial Statements
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Notes to the Group Financial Statements continued
8. Tax continued
Deferred tax
At 1 January 2021
Group income
statement
Group statement
of comprehensive
income
Group statement
of changes in equity
Exchange and
other adjustments
At 31 December 2021
Group income
statement
Group statement
of comprehensive
income
Group statement
of changes in equity
Exchange and
other adjustments
At 31 December 2022
Property,
plant,
equipment
and
software
$m
Application
fees
$m
Deferred
gains on
loan notesa
$m
Associates
$m
Lossesb
$m
(95)
15
–
–
(1)
(81)
32
–
–
(4)
(53)
42
(2)
–
–
–
(34)
(57)
–
–
–
–
2
–
–
–
40
(34)
(55)
1
–
–
–
–
–
–
–
(4)
–
–
–
41
(34)
(59)
61
21
4
–
(2)
84
5
(1)
–
(9)
79
Employee
benefits
$m
Deferred
compensation
$m
34
42
4
–
2
(1)
39
1
(6)
1
(3)
32
6
–
–
–
48
4
–
–
–
52
Expected
credit
losses
on trade
receivables
$m
Intangible
assets
excluding
softwarec
$m
22
(1)
–
–
(1)
20
(5)
–
–
(1)
14
(4)
(12)
–
–
–
(16)
(21)
–
–
(3)
(40)
Other
short-term
temporary
differencesc,d
$m
7
14
(15)
–
3
9
(1)
8
–
–
16
Total
$m
18
47
(11)
2
(2)
54
12
1
1
(20)
48
a Expected to become due in 2025.
b Wholly in respect of revenue losses.
c The above table has been re-presented in order that no balances exceeding $20m are contained within ‘Other short-term temporary differences’.
d Primarily in respect of contract costs, right-of-use assets, lease liabilities and expenses for which tax relief has not yet been obtained.
The analysis of the deferred tax balance after considering the offset of assets and liabilities within entities where there is a legal right to do
so and an analysis of the deferred tax balance showing all territories with balances greater than $10m in either the current or prior year are
as follows:
Deferred tax assets
Deferred tax liabilities
Analysed as:
United Kingdom
United States
Other
2022
$m
126
(78)
48
109
(73)
12
48
2021
$m
147
(93)
54
127
(87)
14
54
A deferred tax asset of $107m (2021: $120m) has been recognised in legal entities which have made a loss in the current or the previous year.
Of this, $102m (2021: $114m) is within the UK tax group and predominantly represents revenue tax losses and future tax deductions
for amortisation.
Additional UK deferred tax assets of $7m (2021: $13m) are recognised in legal entities which were profitable in both the current and previous
years.
Recoverability of UK deferred tax assets
The Group has recognised UK deferred tax assets of $109m (2021: $127m), including revenue losses of $73m (2021: $73m). The deferred
tax assets have been recognised following the consideration of both positive and negative evidence in respect of the probability of future
taxable profits against which the assets could be recovered. The losses have arisen by identifiable non-recurring events, for example special
contributions into a former Group pension scheme and the impact of Covid-19, absent which, the UK tax group would have been profitable.
The losses do not expire, although they can only be offset against 50% of annual UK taxable profits. The UK deferred tax asset should reverse
over a seven- to ten-year period (2021: seven- to ten-year period), with the lower end of this range based on the Group’s Base Case forecast
(see page 157 within ‘Going concern’) and the upper end of the range based on the Group’s Severe Downside Case forecast.
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8. Tax continued
The Group’s TCFD disclosures describe how physical and transitional climate risks present both risks and opportunities for IHG. The potential
downside risk has been considered in the context of the UK deferred tax asset recoverability, without taking account of opportunities or
mitigating actions, and could be absorbed within the sensitivities disclosed above.
Unrecognised deferred tax assets
The Group does not recognise deferred tax assets if it cannot anticipate being able to offset them against existing deferred tax liabilities
or against future profits or gains.
The total unrecognised deferred tax position is as follows:
l
S
t
a
t
e
m
e
n
t
s
Revenue losses
Capital losses
Tax credits
Othera
Gross
Unrecognised deferred tax
2022
$m
430
549
979
25
31
2021
$m
458
551
1,009
10
16
1,035
1,035
2022
$m
78
138
216
25
8
249
2021
$m
87
138
225
10
3
238
a Primarily relates to costs incurred for which tax relief has not been obtained.
There is no expiry date to any of the above unrecognised assets other than for the losses and tax credits as shown in the table below:
Expiry date
2022
2023
2024
2025a
2026
2027
2028
2029
After 2029
Gross
Unrecognised deferred tax
2022
$m
–
1
4
9
18
3
–
10
18
2021
$m
10
2
4
100
13
–
6
10
2
2022
$m
2021
$m
–
–
1
1
4
–
–
10
16
3
–
1
25
2
–
2
10
1
a Following a change in law, $91m of losses will no longer expire, but they continue to remain unrecognised as the Group does not anticipate being able to offset them against
future profits.
Unprovided deferred tax liabilities
No deferred tax liability has been provided in respect of $0.5bn (2021: $0.4bn) of taxable temporary differences relating to subsidiaries
(comprising undistributed earnings and net inherent gains).
Uncertain tax positions
Current tax payable includes $9m (2021: $24m) in respect of uncertain tax positions, with the largest single item not exceeding $3m
(2021: $10m). There are no amounts recognised in relation to uncertain tax positions within deferred tax in either the current or prior year.
The Group’s most material territories for tax are the USA and the UK and the Group carries provisions of $3m (2021: $13m) in respect of US
federal and state tax uncertainties and $nil (2021: $2m) in respect of UK Corporation Tax uncertainties.
In the USA, the Internal Revenue Service (‘IRS’) has the right to commence a routine audit of a federal income tax return for up to three
years following the filing of the return. In December 2022, the Group agreed the 2014 return which will result in federal and state tax
outflows in 2023 of $5m and a further $3m in respect of interest. Surplus tax provisions related to this period of $4m have been released
within tax in the Group income statement. Following 31 December 2022, the IRS confirmed the 2015 and 2016 periods are also closed.
The Group has therefore now agreed all federal tax returns up to and including 2017.
In the UK, HM Revenue and Customs (‘HMRC’) has the right to commence a routine audit of a UK Corporation Tax return for up to 12 months
following the filing of the return. The Group has agreed all UK tax returns for periods up to and including 2015, and for 2020. The Group
received a single question from HMRC in respect of the 2016 period in 2019, to which a response was provided also in 2019. Following
31 December 2022, the Group received a request for further information but still considers the risk of material adjustment to be low.
In addition, a transfer pricing audit was initiated by HMRC in September 2019 in respect of 2017 onwards. In December 2022, the Group
reached verbal agreement with HMRC that no adjustments to the filed returns were necessary and the Group expects to receive formal
agreement of the closure of the 2017 to 2019 periods in early 2023. The Group has provisions of $nil (2021: $2m) in respect of UK
Corporation Tax uncertainties.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
9. Dividends
Paid during the year
Final (declared for previous year)
Interim
cents
per share
85.9
43.9
129.8
2022
$m
154
79
233
cents
per share
–
–
–
2021
$m
–
–
–
cents
per share
–
–
–
2020
$m
–
–
–
The final dividend in respect of 2022 of 94.5¢ per ordinary share (amounting to $165m) is proposed for approval at the AGM on 5 May 2023.
10. Earnings/(loss) per ordinary share
Basic earnings/(loss) per ordinary share
Profit/(loss) available for equity holders ($m)
Basic weighted average number of ordinary shares (millions)
Basic earnings/(loss) per ordinary share (cents)
Diluted earnings/(loss) per ordinary share
Profit/(loss) available for equity holders ($m)
Diluted weighted average number of ordinary shares (millions)
Diluted earnings/(loss) per ordinary share (cents)
Basic and diluted share denominators are calculated as follows:
Weighted average number of ordinary shares in issue
Weighted average number of treasury shares
Basic weighted average number of ordinary shares
Dilutive potential ordinary shares
Diluted weighted average number of ordinary shares
2022
375
181
2021
266
183
2020
(260)
182
207.2
145.4
(142.9)
375
182
266
184
(260)
182
206.0
144.6
(142.9)
2022
millions
2021
millions
2020
millions
187
(6)
181
1
182
187
(4)
183
1
184
187
(5)
182
–
182
On 9 August 2022, the Company announced a $500m share buyback which commenced on the same day (see note 28). This share
repurchase represents a reduction in share capital with a corresponding change in resources hence earnings per share has not been
restated for prior periods.
11. Assets and liabilities sold
In 2021, three hotels in the Americas region were sold. Total cash consideration of $46m was received with no gain or loss arising after
charging disposal costs. Net assets of $44m disposed comprised $45m property, plant and equipment and $2m right-of-use assets, less
$3m lease liabilities. The net cash inflow arising was $44m.
In 2020, the Group sold one hotel in EMEAA, the Holiday Inn Melbourne Airport. Total consideration of $2m was received with a total gain,
net of disposal costs, of $3m. The gain was included in other operating income in the Group income statement.
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12. Goodwill and other intangible assets
Goodwill
$m
Brands
$m
Software
$m
Management
agreements
$m
Other
intangibles
$m
Total
$m
l
S
t
a
t
e
m
e
n
t
s
G
r
o
u
p
F
n
a
n
c
a
i
i
Cost
At 1 January 2021
Additions
Disposals
Exchange and other adjustments
At 31 December 2021
Additions
Fully amortised assets written off
Disposals
Exchange and other adjustments
At 31 December 2022
Amortisation and impairment
At 1 January 2021
Provided
System Fund expense
Disposals
Exchange and other adjustments
At 31 December 2021
Provided
System Fund expense
Impairment reversal
Fully amortised assets written off
Disposals
Exchange and other adjustments
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 1 January 2021
537
439
–
–
(5)
532
–
–
(8)
(11)
513
(191)
–
–
–
–
(191)
–
–
–
–
8
5
(178)
335
341
346
–
–
–
439
–
–
–
–
439
–
–
–
–
–
–
–
–
–
–
–
–
–
886
32
(40)
–
878
46
(94)
–
(5)
825
(402)
(30)
(82)
28
1
(485)
(20)
(78)
–
94
–
3
122
25
2,009
–
–
–
122
–
–
–
–
1
–
–
26
–
–
–
–
33
(40)
(5)
1,997
46
(94)
(8)
(16)
122
26
1,925
(112)
(1)
–
–
–
(113)
–
–
12
–
–
–
(11)
(1)
(1)
–
–
(13)
(3)
(1)
–
–
–
1
(716)
(32)
(83)
28
1
(802)
(23)
(79)
12
94
8
9
(486)
(101)
(16)
(781)
439
439
439
339
393
484
21
9
10
10
13
14
1,144
1,195
1,293
Goodwill and brands
Brands
Brands relate to the acquisitions of Kimpton ($193m), Regent ($57m) and Six Senses ($189m). They are each considered to have an
indefinite life given their strong brand awareness and reputation, and management’s commitment to continued investment in their growth.
The brands are protected by trademarks and there are not believed to be any legal, regulatory or contractual provisions that limit the useful
lives of the brands. In the hotel industry there are a number of brands that have existed for many years and IHG has brands that are over
60 years old.
Allocation of goodwill and brands to CGUs
Americas (group of CGUs)
EMEAA (group of CGUs)
Greater China
At
1 January
2021
$m
Exchange
adjustments
$m
At
31 December
2021
$m
Exchange
adjustments
$m
At
31 December
2022
$m
Analysed as:
Goodwill
$m
Brands
$m
421
339
25
785
(2)
(2)
(1)
(5)
419
337
24
780
–
(6)
–
(6)
419
331
24
774
132
195
8
335
287
136
16
439
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
12. Goodwill and other intangible assets continued
The recoverable amounts of the CGUs, or groups of CGUs, have been determined from value in use calculations. The key assumptions
are RevPAR growth (detailed on page 157 within ‘Going concern’), terminal growth rates and pre-tax discount rates. Cash flows beyond the
five-year period are extrapolated using terminal growth rates that do not exceed the average long-term growth rates for the relevant markets.
Cash flow projections are discounted using pre-tax rates that are based on the Group’s weighted average cost of capital and incorporate
adjustments reflecting risks specific to the territory of the CGU.
The weighted average terminal growth rates and pre-tax discount rates are as follows:
Americas
EMEAA
Greater China
Terminal
growth
rate
%
1.9
2.5
2.5
2022
Pre-tax
discount
rate
%
13.7
16.2
13.8
Terminal
growth
rate
%
2.0
2.2
2.5
2021
Pre-tax
discount
rate
%
10.2
12.8
12.6
The increase in discount rates in 2022 in Americas and EMEAA was primarily driven by increased equity risk premiums and long-term
risk-free rates.
The recoverable amounts of the CGUs, or groups of CGUs, exceeded their carrying value such that no impairment has arisen.
Assumptions were sensitised, including using the Downside Case scenario (detailed on page 157 within ‘Going concern’), with no impairment
arising reflecting the number of years of Base Case forecasts required to recover the carrying value.
Software
Software includes $190m relating to the development of the next-generation Guest Reservation System with Amadeus. Internally developed
software with an original cost of $130m developed within the two phases of the project is being amortised over 10 years and seven years
respectively, with six years remaining at 31 December 2022, reflecting the Group’s experience of the long life of guest reservation systems
and the initial term over which the Group is party to a technology agreement with Amadeus. The remaining project value relates to
enhancements to existing systems as part of the project, which are amortised over five years.
In 2022 and 2021, no impairment was charged. In 2020, $4m impairment was charged to the System Fund.
A loss on disposal of software assets of $12m was recorded in 2021, relating to amounts previously capitalised in respect of costs incurred
to implement cloud computing arrangements. These losses were recorded within depreciation and amortisation ($8m) and System Fund
depreciation and amortisation ($4m) in the Group income statement.
Management agreements
Management agreements relate to contracts recognised at fair value on acquisition. The weighted average remaining amortisation period
for all management agreements is 15 years (2021: 17 years).
2022 impairment reversal
The impairment reversal of $12m relates to the Kimpton management agreement portfolio in the Americas region and arises due to strong
trading conditions in 2022 and significantly improved industry forecasts. The key assumption is RevPAR growth which is approximately in
line with the Group forecast detailed on page 157. Cash flows beyond the five-year period are extrapolated using a 1.8% long-term growth
rate that does not exceed the average long-term growth rates for the relevant market.
The portfolio was valued at value in use (which exceeded fair value less costs of disposal) using discounted cash flow techniques that measure
the present value of projected post-tax income flows. The post-tax discount rate used was 10.8% (rate used for 2020 impairment: 8.4%);
the pre-tax equivalent rate is 14.8%.
2020 impairment
Impairment of $48m related to the Kimpton ($5m), Regent ($2m) and Six Senses ($41m) management agreement portfolios acquired in
2015, 2018 and 2019 respectively. The key assumption was RevPAR growth which assumed a recovery to 2019 levels over a five-year period
from 2021.
Contracts were valued at the higher of value in use and fair value less costs of disposal, using discounted cash flow techniques. Where the
recoverable amount was measured at fair value, this was categorised as a Level 3 fair value measurement.
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r
o
u
p
F
n
a
n
c
a
i
i
13. Property, plant and equipment
Cost
At 1 January 2021
Additions
Fully depreciated assets written off
Disposals
Exchange and other adjustments
At 31 December 2021
Additions
Fully depreciated assets written off
Disposals
Exchange and other adjustments
At 31 December 2022
Depreciation and impairment
At 1 January 2021
Provided
System Fund expense
Fully depreciated assets written off
Disposals
Exchange and other adjustments
At 31 December 2021
Provided
System Fund expense
Impairment charge
Impairment reversal
Fully depreciated assets written off
Disposals
Exchange and other adjustments
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 1 January 2021
Land and
buildings
$m
Fixtures,
fittings and
equipment
$m
208
–
–
(103)
–
105
15
–
(7)
(1)
112
(115)
(4)
–
–
66
–
(53)
(3)
–
–
–
–
4
1
322
17
(7)
(29)
(4)
299
42
(30)
(5)
(14)
292
(214)
(27)
(4)
7
21
3
(214)
(17)
(4)
(10)
3
30
5
11
l
S
t
a
t
e
m
e
n
t
s
Total
$m
530
17
(7)
(132)
(4)
404
57
(30)
(12)
(15)
404
(329)
(31)
(4)
7
87
3
(267)
(20)
(4)
(10)
3
30
9
12
(51)
(196)
(247)
61
52
93
96
85
108
157
137
201
The Group’s property, plant and equipment mainly comprises buildings and leasehold improvements on 16 hotels (2021: 19 hotels), but also
offices and computer hardware, throughout the world.
Net book value by operating segment
Land and buildings
Fixtures, fittings and equipment
Americas
$m
EMEAA
$m
53
33
86
1
5
6
Greater
China
$m
–
–
–
Central
$m
7
58
65
Total
$m
61
96
157
Impairment and impairment reversals
2022 impairment
An impairment charge of $10m was recognised in the year on property, plant and equipment relating to one hotel in the EMEAA region.
A further $2m impairment of right-of-use assets was recognised in relation to the same hotel. The charge arises, and is classed as exceptional,
due to recent cost inflation which is impacting operating costs but also the projected variable rent payments. The assets were measured
at value in use, using a discounted cash flow approach which is based on the hotel’s five-year plan. Cash flows beyond the five-year period
were extrapolated using a long-term growth rate which does not exceed the long-term average growth rate for the relevant country.
Estimated future cash flows were discounted at a pre-tax rate of 9.6%. The recoverable amount was $nil and the impairment charge is not
sensitive to changes in assumptions.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
13. Property, plant and equipment continued
2022 impairment reversal
Impairment reversals of $3m were recognised in relation to the UK portfolio (EMEAA region) and arose as a result of the renegotiation
of contractual agreements, as described on page 190, enhancing the cash-generating potential of those hotels. The recoverable amount
was measured at value in use, using a discounted cash flow forecast used to assess the new deal with rentals based on the agreed
contractual terms. A pre-tax discount rate of 14.2% was applied (rate used for 2020 impairment: 10.1%).
In both impairment tests, hotel specific plans were used which use the RevPAR forecasts described on page 157 adjusted for factors specific
to the individual property (such as revenue from food and beverage facilities and the impact of renovations on occupancy and rate).
2020 impairment
Impairment of $90m was recognised and a further $5m was recognised in the System Fund, comprising:
• $50m related to the UK portfolio. The recoverable amount was measured at value in use, using a discounted cash flow approach. The key
assumptions were 2021 revenues and profits, and that the landlord would exercise a termination right such that the current leases would
end in 2022.
• $35m related to three premium-branded hotels in North America which were sold in 2021 (see note 11).
• $3m related to three land sites held by the Group in the US which were measured at fair value. The sites were appraised by a professional
external valuer using comparable sales data. Within the fair value hierarchy, this was categorised as a Level 3 measurement.
• $7m related to the US corporate headquarters. $5m of this impairment charge was borne by the System Fund.
14. Leases
Right-of-use assets
Cost
At 1 January 2021
Additions and other re-measurements
Terminations and disposals
Exchange and other adjustments
At 31 December 2021
Additions and other re-measurements
Transfers to investment property
Transfers to finance lease receivable
Terminations
Exchange and other adjustments
At 31 December 2022
Depreciation and impairment
At 1 January 2021
Provided
System Fund expense
System Fund impairment reversal
Terminations and disposals
Exchange and other adjustments
At 31 December 2021
Provided
System Fund expense
Impairment charge
Impairment reversal
Transfers to investment property
Transfers to finance lease receivable
Terminations
Exchange and other adjustments
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 1 January 2021
Land and
buildings
$m
Investment
property
$m
Other
$m
Total
$m
617
4
(9)
(5)
607
40
(50)
(5)
(9)
(12)
571
(316)
(26)
(3)
3
5
3
(334)
(24)
(3)
(2)
2
47
3
9
8
–
–
–
–
–
–
50
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
(47)
–
–
–
4
–
(1)
–
3
–
–
–
(1)
–
2
(2)
(1)
–
–
1
–
(2)
(1)
–
–
–
–
–
1
–
621
4
(10)
(5)
610
40
–
(5)
(10)
(12)
623
(318)
(27)
(3)
3
6
3
(336)
(25)
(3)
(2)
2
–
3
10
8
(294)
(47)
(2)
(343)
277
273
301
3
–
–
–
1
2
280
274
303
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r
o
u
p
F
n
a
n
c
a
i
i
14. Leases continued
The Group’s leased assets mainly comprise hotels and offices. Leases contain a wide range of different terms and conditions. The term of
property leases ranges from 1-99 years. The weighted average lease term remaining on the Group’s top eight leases (which comprise 95%
(2021: 94%) of the right-of-use asset net book value) is 56 years (2021: 56 years). The InterContinental Boston lease, expiring in 2105, has
a significant impact on this weighted average lease term; excluding this lease the weighted average lease term is 9 years (2021: 8 years).
Undiscounted cash flows on the Boston lease of $3,233m (2021: $3,252m) represent 94% (2021: 94%) of the total undiscounted cash flows
relating to lease liabilities.
Many of the Group’s property leases contain extension or early termination options, which are used for operational flexibility. The lease
agreement over the US corporate headquarters contains a material extension option which is not included in the calculation of the lease
asset and liability as the extension would not take effect before 2031 and there is no reasonable certainty the option will be exercised.
The value of the undiscounted rental payments relating to this lease and not included in the value of the lease asset and liability is $289m.
Additionally, the Group has the option to extend the term of the InterContinental Boston lease for two additional 20-year terms, the first
of which would take effect from 2105. These extension options have not been included in the calculation of the lease liability.
l
S
t
a
t
e
m
e
n
t
s
Impairment and impairment reversals
2022 impairment
Details of the $2m impairment charge are contained in note 13.
2022 impairment reversal
Impairment reversals of $2m were recognised in relation to one hotel in the EMEAA region and arose due to improved recovery forecasts
as well as strong 2022 trading. The asset was measured at value in use, using a discounted cash flow for the remaining five-year lease term.
Estimated future cash flows were discounted at a pre-tax rate of 17.6%. The recoverable amount was $9m which represents the depreciated
value of the original asset.
2021 impairment reversal
Impairment reversals of $3m were recognised in relation to the US corporate headquarters and arose as a result of contractual agreements
to sublease or surrender certain areas for the remainder of the lease term, removing uncertainty over future cash flows for those areas.
The recoverable amount was measured at value in use, using a discounted cash flow based on the agreed contractual terms. A pre-tax
discount rate of 9.5% was applied.
The impairment reversal was substantially all recognised in the System Fund in line with existing principles for cost allocation relating to this
facility.
2020 impairment
Impairment of $16m was recognised and a further $32m was recognised in the System Fund, comprising:
• $5m related to one hotel in the EMEAA region, based on value in use calculations. Trading projections reflected a five-year RevPAR
recovery period to 2019 levels.
• $43m related to the US corporate headquarters. Future sublease rentals were expected to be lower than the head lease rentals which,
together with the impact of the expected time taken and costs incurred to sublet the space, resulted in an impairment. Of the $43m,
$32m was borne by the System Fund in line with the principles for cost allocation relating to this facility with the remaining $11m recognised
in the Americas region ($5m) and Central ($6m). An additional $7m was recorded in property, plant and equipment. The recoverable
amount was measured at fair value less costs of disposal. This was equivalent to value in use given subletting the floors was considered
to represent the highest and best use of the asset and so the cash flows were the same in both scenarios.
Lease liabilities
The majority of the Group’s lease liabilities are discounted at incremental borrowing rates of up to 11%. The rate implicit in the InterContinental
Boston lease was 9.7% and was derived from a valuation of the hotel at lease inception in 2006.
Currency
US dollars
Sterling
Euros
Other
Analysed as:
Current
Non-current
2022
$m
363
31
5
28
427
26
401
427
2021
$m
374
6
5
34
419
35
384
419
The maturity analysis of lease liabilities is disclosed in note 23.
The Group’s lease liability is not materially sensitive to inflation as $348m (2021: $356m) relates to the InterContinental Boston and the
US corporate headquarters, which both include fixed payments and are not subject to inflationary adjustments.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
14. Leases continued
Amounts recognised in the Group income statement
Depreciation of right-of-use assets
System Fund depreciation of right-of-use assets
Net impairment (reversal)/charge
System Fund impairment (reversal)/charge
Derecognition of right-of-use assets and lease liabilities
Gain on lease termination
Expense relating to variable lease payments
Expense relating to short-term leases and low-value assets
Income from operating subleases of right-of-use assets
Recognised in operating profit/(loss)
Interest on lease liabilities
Total recognised in the Group income statement
2022
$m
25
3
–
–
–
–
47
1
(1)
75
29
104
2021
$m
2020
$m
27
3
–
(3)
–
–
31
1
(1)
58
29
87
35
4
16
32
(22)
(30)
7
2
(1)
43
37
80
Variable lease payments
In 2022, the Group agreed to restructure the UK portfolio leases with substantially lower rental payments. The revised portfolio comprises
nine IHG-branded hotels, with the leases of three unbranded hotels terminated in the second half of 2022.
The structure of the revised leases is similar to the previous leases which contained guarantees that the Group will fund any shortfalls in
lease payments up to an annual and cumulative cap. These caps limit the Group’s exposure to trading losses, meaning that rental payments
are reduced if insufficient cash flows are generated by the hotels. Since there is no floor to the rent reduction applicable under these leases,
they are treated as fully variable. In the event that rent reductions are not applicable, annual base rental payments stabilise at £34m over the
remaining lease term of 21 years. Additional performance-based rental payments are calculated using hotel revenues and net cash flows.
In addition, one German hotel lease is treated as fully variable. A further German hotel lease which was treated as fully variable was terminated
in early 2022 following settlement of a commercial dispute. One further German hotel lease under a similar structure is expected to commence
in 2024.
Sublease arrangements
At 31 December 2022, the Group’s largest sublease arrangements relate to the Group’s US corporate headquarters.
Operating subleases
Operating sublease payments receivable
At 31 December 2022
At 31 December 2021
Less than
1 year
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
2
2
2
2
5
5
Total
$m
9
9
At 31 December 2020, the undiscounted future cash flows receivable from subleased properties amounted to $2m.
Finance subleases
In 2022, the Group subleased a component of the US corporate headquarters for the remainder of the head lease term. No gain or loss arose.
Finance lease payments receivable
At 31 December 2022
Amounts recognised in the Group statement of cash flows
Operating activities
Investing activities
Financing activities
Net cash paid
Total
undiscounted
lease
receivable
$m
2
More than
5 years
$m
2
Unearned
finance
income
$m
–
Finance
lease
receivable
$m
2
2022
$m
72
(6)
36
102
2021
$m
55
–
32
87
2020
$m
39
–
65
104
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15. Investment in associates
Cost
At 1 January
Additions
Share of profits/(losses)a
System Fund share of losses
Dividends and distributions
Exchange and other adjustments
At 31 December
Impairment
At 1 January
Impairment reversal
At 31 December
Net book value
Analysed as:
Material associates
Other associates
l
S
t
a
t
e
m
e
n
t
s
2021
$m
136
4
(8)
(2)
–
2
132
(55)
–
(55)
77
42
35
77
2022
$m
132
1
(41)
(1)
(1)
(1)
89
(55)
2
(53)
36
–
36
36
a In 2022, comprises $42m losses presented as exceptional (note 6) and $1m share of profits from other associates. The total share of losses in the Group income statement includes
a further $18m recognised as a liability within other payables (note 19).
Barclay associate
The Group held one associate investment at 31 December 2022 which had a material impact on profit for the year, a 19.9% interest in
111 East 48th Street Holdings, LLC (the ‘Barclay associate’) which owns InterContinental New York Barclay, a hotel managed by the Group.
The investment is classified as an associate and equity accounted. While the Group has the ability to exercise significant influence through
certain decision rights, approval rights relating to the hotel’s operating and capital budgets rest solely with the 80.1% majority member.
The Group’s ability to receive cash dividends is dependent on the hotel generating sufficient income to satisfy specified owner returns.
$18m was provided in 2021 in relation to settlement of a commercial dispute regarding owner returns during the pandemic.
Due to the significant trading impact of Covid-19 and resulting restrictions in New York, the hotel was closed for most of 2020 and Spring 2021.
The closure period and the significant impact on RevPAR during the recovery period resulted in an impairment charge of $13m in 2020.
The recoverable amount of the investment was measured at fair value less costs of disposal, based on the Group’s share of the market value
of the hotel less debt in the associate. The hotel was appraised by a professional external valuer using an income capitalisation approach
which is a discounted cash flow technique that measures the present value of projected income flows (over a 10-year period) and the
property sale. Within the fair value hierarchy, this was categorised as a Level 3 fair value measurement. The external valuer assumed a return
to 2019 RevPAR levels over a three- to four-year period, based on industry data specific to the New York market and supply factors in the
luxury market located close to the InterContinental New York Barclay.
The 2020 impairment charge was presented net of a $4m fair value gain on a put option over part of the Group’s investment in the associate
given there is an interdependency between the value of the option and the fair value of the associate investment. This fair value gain
reversed in 2021.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
15. Investment in associates continued
Summarised financial information in respect of the Barclay associate is set out below:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group share of reported net assets at 19.9%
Adjustments to reflect impairment, capitalised costs, and additional rights and obligations under the shareholder agreement
Effect of specially allocated expenses (note 6)
Carrying amount
Revenue
Profit/(loss) from continuing operations and total comprehensive income/(loss) for the year
Group’s share of profit/(loss) for the yeara
a Includes specially allocated expenses and the cost of funding owner returns.
In 2020, the Group’s share of losses from the Barclay associate was $13m.
Other associates
2022
$m
472
64
(33)
(250)
253
50
(8)
(42)
–
2022
$m
106
8
(42)
2021
$m
485
38
(32)
(246)
245
49
(7)
–
42
2021
$m
42
(24)
(5)
Profits/(losses) from continuing operations and total comprehensive
income/(loss) for the year
2022
$m
2021
$m
Associates
2020
$m
2022
$m
1
(3)
(3)
–
Joint ventures
2021
$m
–
2020
$m
2
In 2022, impairment reversal of $2m relates to an associate in the Americas region and arises due to strong trading conditions in 2022 and
significantly improved industry forecasts. The recoverable amount was measured at fair value less costs of disposal, using a discounted cash
flow approach that measures the present value of projected income flows (over a 10-year period) and the property sale. The key assumptions
are RevPAR growth (which is in line with the Group forecast detailed on page 157), discount rate of 9.75% and terminal capitalisation rate
of 7.25%. The valuation is not significantly sensitive to changes in assumptions.
In 2020, impairment charges of $8m and $2m were recognised in relation to two associates in the Americas region and one associate which
was liquidated with the corresponding charge recognised within Central costs.
16. Other financial assets
Equity securities
Restricted funds:
Shortfall reserve deposita
Ring-fenced amounts to satisfy insurance claims:
Casha
Money market funds
Bank accounts pledged as security
Other
Trade deposits and loans
Analysed as:
Current
Non-current
a As described on page 168, amounts within these lines have been re-presented as cash and cash equivalents.
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$m
103
–
2
3
39
1
45
8
156
–
156
156
2021
$m
106
6
4
8
42
1
61
8
175
2
173
175
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16. Other financial assets continued
Equity securities
The methodology to calculate fair value and the sensitivities to the relevant significant unobservable inputs are detailed in note 24.
The significant investments are as follows:
l
S
t
a
t
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m
e
n
t
s
Investment in entity which owns:
InterContinental The Willard Washington DC
InterContinental San Francisco
InterContinental Grand Stanford Hong Kong
2022
Dividend
income
$m
Fair value
$m
2021
Dividend
income
$m
Fair value
$m
27
16
35
–
–
–
25
17
35
–
–
–
Restricted funds
The shortfall reserve deposit is held for the specific purpose of funding shortfalls in owner returns relating to the Barclay associate.
Any shortfalls funded are subject to potential clawback in future years. The maximum length of time for which the restricted funds will be
held is the life of the hotel management agreement. In 2021, $3m was withdrawn from the deposit to fund working capital requirements.
In 2022, the remaining balance was reclassified to cash and cash equivalents reflecting the Group’s ability to access these funds although
they are held for a defined purpose under the management agreement. The prior year amount is immaterial and has not been re-presented.
Amounts ring-fenced to satisfy insurance claims are principally held in the Group’s Captive, which is a regulated entity.
The bank accounts pledged as security (£31m) are subject to a charge in favour of the members of the UK unfunded pension arrangement
(see note 26). The amounts pledged as security may change in future years subject to the trustees’ agreement and updated actuarial valuations.
The bank accounts will continue to be pledged as security until the date at which the UK unfunded pension liabilities have been fully
discharged, unless otherwise agreed with the trustees.
Expected credit losses
Other financial assets with a total value of $50m (2021: $61m) are subject to the expected credit loss model requirements of IFRS 9.
Equity securities, money market funds and other amounts measured at fair value are excluded. With the exception of the expected credit
loss arising on trade deposits and loans (see below), expected credit losses are considered to be immaterial.
Trade deposits and loans
Amounts due with no significant increase in credit risk since initial recognition
Amounts due with significant increase in credit risk since initial recognition:
Not past due
Past due
Gross
$m
8
1
11
20
Credit loss
allowance
$m
–
(1)
(11)
(12)
2022
Net
$m
8
–
–
8
Gross
$m
6
7
10
23
Movement in the allowance for expected credit losses
At 1 January
Amounts written off
Exchange and other adjustments
At 31 December
Credit loss
allowance
$m
–
(5)
(10)
(15)
2022
$m
(15)
2
1
(12)
2021
Net
$m
6
2
–
8
2021a
$m
(15)
–
–
(15)
a In 2021, $4m was collected in respect of an asset which was measured at $nil at initial recognition as part of a business acquisition. This did not impact the allowance for expected
credit losses.
Credit risk
Restricted funds are held with bank counterparties which are rated at least A+ based on Standard and Poor’s ratings.
The maximum exposure to credit risk of other financial assets at the end of the reporting period by geographic region is as follows:
Americas
EMEAA
Greater China
2022
$m
54
62
40
156
2021
$m
66
67
42
175
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
17. Trade and other receivables
Trade receivables
Other receivables
Prepayments
2022
$m
493
49
104
646
2021
$m
399
102
73
574
In 2021, other receivables included $53m relating to the UK portfolio rent. The Group had deferred certain rent payments due since 1 April 2020
with consideration given to the UK Government and other commercial tenant protection measures which were in place up to 31 March 2022.
A rent reconciliation was finalised in 2022 as part of the restructuring of the UK portfolio leases which resulted in the settlement of outstanding
receivables and payables.
Expected credit losses
The ageing of trade receivables shown below reflects the initial terms under the invoice rather than the revised terms where payment flexibility
has been provided to owners. The net balances presented in the table below could result in additional credit losses if they are ultimately
found to be uncollectable. Expected credit losses relating to other receivables following their initial recognition are immaterial.
Not past due
Past due 1 to 30 days
Past due 31 to 90 days
Past due 91 to 180 days
Past due 181 to 360 days
Past due more than 361 days
Movement in the allowance for expected lifetime credit losses
At 1 January
Fully provided receivables reinstateda
Reclassification to other receivablesb
Impairment lossc
System Fund impairment (loss)/reversal
Amounts written off
Exchange and other adjustments
At 31 December
Gross
$m
307
76
57
46
34
90
610
Credit loss
allowance
$m
(1)
(7)
(6)
(9)
(11)
(83)
(117)
2022
Net
$m
306
69
51
37
23
7
Gross
$m
249
66
52
36
38
91
493
532
Credit loss
allowance
$m
(2)
(5)
(7)
(9)
(21)
(89)
(133)
2022
$m
(133)
–
9
(5)
(7)
17
2
2021
Net
$m
247
61
45
27
17
2
399
2021
$m
(78)
(60)
–
(4)
6
8
(5)
(117)
(133)
a In 2021, fully provided receivables were reinstated reflecting the Group’s increased focus on older receivables. There was no impact to total amounts receivable, total credit loss
provisions or the impairment loss recorded in the Group income statement.
b In 2022, net receivables of $1m relating to finance charges on overdue receivables have been reclassified to other receivables. Provisions of $9m, which includes expected credit
losses at initial recognition, associated with these receivables have been removed from the reconciliation. Expected credit losses following initial recognition are immaterial.
c In 2021, the impairment loss on financial assets disclosed on the face of the Group income statement also included a gain of $4m related to trade deposits and loans.
As a result of recent collection experience of older balances for some owner groups in Greater China the regional provision matrix has been
extended, with $4m (2021: $nil) of the net balance past due more than 361 days relating to Greater China.
If the regional provision matrix was applied to all owner groups (rather than by reference to other sources of data), the provision would reduce
by $15m, or $12m if the regional provision matrix had not been extended (2021: $16m).
Credit risk
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms
are subject to credit verification procedures. The maximum exposure to credit risk for trade and other receivables, excluding prepayments,
at the end of the reporting period by geographic region is as follows:
Americas
EMEAA
Greater China
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$m
318
152
72
542
2021
$m
275
172
54
501
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18. Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
Money market funds
Repurchase agreements
Cash and cash equivalents as recorded in the Group statement of financial position
Bank overdrafts (note 21)
Cash and cash equivalents as recorded in the Group statement of cash flows
l
S
t
a
t
e
m
e
n
t
s
2022
$m
165
421
360
30
976
(55)
921
2021
$m
124
301
1,025
–
1,450
(59)
1,391
Cash at bank and in hand includes bank balances of $86m (2021: $67m) which are matched by bank overdrafts of $55m (2021: $59m) under
the Group’s cash pooling arrangements. Under these arrangements, each pool contains a number of bank accounts with the same financial
institution and the Group pays interest on net overdraft balances within each pool. The cash pools are used for day-to-day cash management
purposes and are managed as closely as possible to a zero balance on a net basis for each pool. Overseas subsidiaries are typically in a
cash-positive position with the matching overdrafts held by the Group’s central treasury company in the UK. Accordingly, bank overdrafts
are included within cash and cash equivalents for the purposes of the cash flow statement.
Cash and cash equivalents with restrictions on use
Countries with restrictions on repatriation
Capital expenditure under lease agreements
Other restrictions
Details of the credit risk on cash and cash equivalents is included in note 23.
19. Trade and other payables
Current
Trade payables
Other tax and social security payable
Other payables
Accruals
Non-current
Other payables
Deferred purchase consideration
Contingent purchase consideration (note 24)
2022
$m
24
11
12
47
2022
$m
152
37
173
335
697
4
12
65
81
2021
$m
77
9
–
86
2021
$m
109
29
119
322
579
4
12
73
89
In 2022, current other payables includes $29m and current accruals includes $2m relating to the outstanding portion of the share
repurchase programme. Of the total, $20m relates to the unavoidable contractual cost of shares to be repurchased and $11m to the associated
performance fee. Current other payables also includes $18m relating to obligations created by the special allocation of expenses from an
associate investment (note 6).
In 2021, other payables included $29m relating to the UK portfolio rent (see note 17).
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
20. Provisions
At 31 December 2021
Provided, of which $28m is recorded within exceptional items (note 6)
Utilised
Released
Exchange and other adjustments
At 31 December 2022
Analysed as:
Current
Non-current
Commercial
litigation and
disputes
$m
Insurance
reserves
$m
Onerous
contractual
expenditure
$m
Dilapidations
and other
$m
37
28
(31)
(1)
–
33
32
1
33
39
18
(7)
–
–
50
15
35
50
8
2
(7)
–
(2)
1
1
–
1
6
6
–
–
–
12
5
7
12
Total
$m
90
54
(45)
(1)
(2)
96
53
43
96
Commercial litigation and disputes
The utilisation of the provision principally reflects the settlement of commercial litigation and disputes in the Americas and EMEAA regions
which were fully provided for in the prior year. The remaining balance includes $4m relating to management’s best estimate of settlements
required in respect of lawsuits filed against the Group in the Americas region. Settlement terms have been agreed and, in addition to payments
in 2022, final amounts are expected to be paid in 2023. There are certain amounts that the Group will pursue in relation to these matters,
$1m has been recognised within administrative expenses in 2022 reflecting those amounts which are virtually certain.
Insurance reserves
Corporate operations and owned and leased properties
Managed hotels
a Includes unallocated loss expenses.
Incurred but not reported
claims (‘IBNR’)a
Reported but not yet
settled claims
2022
$m
11
25
36
2021
$m
11
19
30
2022
$m
7
7
14
2021
$m
3
6
9
2022
$m
18
32
50
Total
2021
$m
14
25
39
Of the total reserves, $19m relates to international general liability principally for managed hotels. The utilisation of IBNR reserves is dependent
on the timing of claims being reported and ultimately being settled; based on historical experience this is expected to be approximately five
years. The maximum liabilities of the last five policy years is $36m for corporate operations and owned and leased properties and $42m for
managed hotels, noting that actual claims did not significantly differ to estimates in 2022 or 2021.
In respect of managed hotels, the Group recognised reinsurance profits of $4m (2021: $3m, 2020: $3m).
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21. Loans and other borrowings
Current
Bank overdrafts (note 18)
£173m 3.875% bonds 2022
Non‑current
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Total loans and other borrowings
Denominated in the following currencies:
Sterling
US dollars
Euros
Other
l
S
t
a
t
e
m
e
n
t
s
Maturity
date
Discount
at issue
%
n/a
28 November 2022
8 October 2024
14 August 2025
24 August 2026
15 May 2027
8 October 2028
n/a
1.213
0.437
0.986
0.550
0.470
1.034
2022
$m
55
–
55
534
365
423
539
480
2021
$m
59
233
292
565
408
473
570
537
2,341
2,396
2,553
2,845
1,269
53
1,073
1
1,652
57
1,135
1
2,396
2,845
Bonds
Interest is payable annually on the dates in the table, at the rates stated.
Revolving Credit Facility
There were no amounts drawn as at 31 December 2022 or 31 December 2021.
In April 2022, the Group’s $1,275m revolving syndicated bank facility and $75m revolving bilateral facility were refinanced with a $1,350m
Revolving Credit Facility (‘RCF’). The facility matures in 2027, with options to extend for a further two years. A variable rate of interest is
payable on amounts drawn. No amounts were drawn throughout 2022 (2021: both facilities were undrawn).
In addition to the RCF, the Group has access to $30m of uncommitted facilities (2021: $50m) which were also undrawn at 31 December 2022
and 31 December 2021.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
22. Net debt
Cash and cash equivalents
Loans and other borrowings – current
– non-current
Lease liabilities
– current
– non-current
Derivative financial instruments hedging debt values (note 23)
Net debt
Movement in net debt
Net decrease in cash and cash equivalents, net of overdrafts
Add back financing cash flows in respect of other components of net debt:
Principal element of lease payments
Repayment of £600m commercial papera
Repayment of long-term bonds
(Increase)/decrease in net debt arising from cash flows
Other movements:
Lease liabilities
Increase in accrued interest
Disposals
Exchange and other adjustments
Decrease in net debt
Net debt at beginning of the year
Net debt at end of the year
a Under the UK Government’s Covid Corporate Financing Facility (‘CCFF’).
Information concerning Non-GAAP measures can be found in the Strategic Report.
Net debt as calculated for bank covenants can be found on page 201.
2022
$m
976
(55)
2021
$m
1,450
(292)
(2,341)
(2,553)
(26)
(401)
(4)
(35)
(384)
(67)
(1,851)
(1,881)
2022
$m
(393)
36
–
209
245
(148)
(48)
(1)
–
227
178
30
(1,881)
(1,851)
2021
$m
(236)
32
828
–
860
624
(7)
(1)
3
29
24
648
(2,529)
(1,881)
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22. Net debt continued
Loans and other borrowings (excluding bank overdrafts), lease liabilities and currency swaps comprise the liabilities included in the financing
activities section of the Group statement of cash flows and their movements are analysed as follows:
l
S
t
a
t
e
m
e
n
t
s
Lease liabilities
£173m 3.875% bonds 2022
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Currency swaps
Lease liabilities
£173m 3.875% bonds 2022
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Commercial paper
Currency swaps
At 1 January
2022
$m
Financing
cash flows
$m
Exchange
adjustments
$m
Disposal
$m
419
233
565
408
473
570
537
3,205
62
3,267
At 1 January
2021
$m
450
235
611
413
479
618
542
818
4,166
17
4,183
(36)
(209)
–
–
–
–
–
(245)
–
(245)
Financing
cash flows
$m
(32)
–
–
–
–
–
–
(828)
(860)
–
(860)
(4)
(24)
(32)
(45)
(50)
(32)
(57)
(244)
–
(244)
Exchange
adjustments
$m
(3)
(3)
(48)
(5)
(6)
(48)
(7)
13
(107)
–
(107)
–
–
–
–
–
–
–
–
–
–
Disposal
$m
(3)
–
–
–
–
–
–
–
(3)
–
(3)
Othera,b
$m
48
–
1
2
–
1
–
52
(58)
(6)
At 31 December
2022
$m
427
–
534
365
423
539
480
2,768
4
2,772
Otherb
$m
At 31 December
2021
$m
7
1
2
–
–
–
2
(3)
9
45
54
419
233
565
408
473
570
537
–
3,205
62
3,267
a The non-cash increase in lease liabilities principally arises from additions.
b The change in value of currency swaps represents fair value movements.
23. Financial risk management and derivative financial instruments
Overview
The Group is exposed to financial risks that arise in relation to underlying business activities. These risks include: market risk, liquidity risk,
credit risk and capital risk. There are Board approved policies in place to manage these risks. Treasury activities to manage these risks may
include money market funds, repurchase agreements, spot and forward foreign exchange instruments, currency swaps, interest rate swaps
and forward rate agreements.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises: foreign exchange risk and interest rate risk. Financial instruments affected by market risk include loans and other
borrowings, cash and cash equivalents, debt and equity investments and derivatives.
Foreign exchange risk
The US dollar is the predominant currency of the Group’s revenue and cash flows. Movements in foreign exchange rates can affect the
Group’s reported profit or loss, net liabilities and its interest cover. The most significant exposures of the Group are in currencies that are
freely convertible. The Group’s reported debt has an exposure to borrowings held in sterling and euros. After the effect of currency swaps,
the Group holds its bond debt in sterling which is the primary currency of shareholder returns. US dollars are also borrowed when required
to reflect the predominant trading currency and act as a net investment hedge of US dollar denominated assets.
The Group transacted currency swaps at the same time as the €500m 2.125% 2027 and €500m 1.625% 2024 bonds were issued in
November 2018 and October 2020 respectively in order to swap the bonds’ proceeds and interest flows into sterling (see page 200).
Interest rate risk
The Group is exposed to interest rate risk in relation to its fixed and floating rate borrowings. The Group’s policy requires a minimum of 50%
fixed rate debt over the next 12 months. With the exception of overdrafts, 100% of borrowings were fixed rate debt at 31 December 2022
(2021: 100%).
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
23. Financial risk management and derivative financial instruments continued
Derivative financial instruments
Derivatives are recorded in the Group statement of financial position at fair value (see note 24) as follows:
Derivatives
Currency swaps
Analysed as:
Non-current assets
Non-current liabilities
2022
$m
(4)
7
(11)
(4)
2021
$m
(62)
–
(62)
(62)
The carrying amount of currency swaps comprises $4m loss (2021: $67m loss) relating to exchange movements on the underlying principal,
included within net debt (see note 22), and $nil (2021: $5m gain) relating to other fair value movements.
Details of the credit risk on derivative financial instruments are included on page 202.
Cash flow hedges
Currency swaps have been transacted to swap the proceeds from the euro bonds to sterling as follows:
Date of designation
Pay leg
Interest rate Receive leg
Interest rate Maturity
Risk
Hedge type
Hedged item
November 2018
£436m 3.5%
October 2020
£454m 2.7%
€500m
€500m
2.125%
1.625%
May 2027
Foreign exchange
Cash flow
€500m 2.125% bonds 2027
October 2024 Foreign exchange
Cash flow
€500m 1.625% bonds 2024
There is an economic relationship between the hedged item and the hedging instrument as the critical terms are aligned, such that the
hedge ratio is 1:1.
The change in the fair value of hedging instruments used to measure hedge ineffectiveness in the period mirrors that of the hypothetical
derivative (hedged item) and was $48m gain (2021: $40m loss).
Hedge ineffectiveness arises where the cumulative change in the fair value of the swaps exceeds the change in fair value of the future
cash flows of the bonds, and may be due to any opening fair value of the hedging instrument, or a change in the credit risk of the Group
or counterparty. There was no cumulative ineffectiveness in 2022 or 2021.
Amounts recognised in the cash flow hedge reserves are analysed in note 28.
Net investment hedges
The Group designates the following as net investment hedges of its foreign operations, being the net assets of certain Group subsidiaries
with a US dollar functional currency:
• Borrowings under the RCF; and
• Short-dated foreign exchange swaps.
The designated risk is the spot foreign exchange risk and interest on these financial instruments is taken through financial income or expense.
Short-dated foreign exchange swaps are used when needed to manage sterling surplus cash and reduce US dollar borrowings while
maintaining operational flexibility.
There is an economic relationship between the hedged item and the hedging instrument as the net investment creates a foreign exchange
risk that will match the foreign exchange risk on the short-dated foreign exchange swaps. The Group has established a hedge ratio of 1:1
as the underlying risk of the hedging instrument is identical to the hedged risk component.
The change in value of hedging instruments recognised in the currency translation reserve through other comprehensive income was a loss
of $6m (2021: $nil). There was no ineffectiveness recognised in the Group income statement during the current or prior year.
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23. Financial risk management and derivative financial instruments continued
Interest and foreign exchange risk sensitivities
The following table shows the impact of a general strengthening in the US dollar against sterling and euro on the Group’s profit or loss before
tax and net liabilities, and the impact of a rise in US dollar, euro and sterling interest rates on the Group’s profit or loss before tax. The impact
of the strengthening in the euro against sterling on net liabilities is also shown, as this impacts the fair value of the currency swaps.
l
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a
t
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m
e
n
t
s
Increase in profit before tax
Sterling: US dollar exchange rate
Euro: US dollar exchange rate
US dollar interest rates
Sterling interest rates
Decrease in net liabilities
Sterling: US dollar exchange rate
Euro: US dollar exchange rate
Sterling: euro exchange rate
$0.05 fall
$0.05 fall
1% increase
1% increase
$0.05 fall
$0.05 fall
€0.05 fall
2022
$m
(2.9)
(0.3)
4.2
3.6
26.5
49.6
60.2
2021
$m
7.0
0.2
7.1
5.2
29.1
49.7
67.4
2020
$m
5.9
0.3
2.2
12.9
30.2
50.6
68.2
Interest rate sensitivity relates to cash balances and would only be realised to the extent deposit rates increase by 1%.
Interest rate sensitivities include the impact of hedging and are calculated based on the year-end net debt position.
Liquidity risk
Group policy ensures sufficient liquidity is maintained to meet all foreseeable medium-term cash requirements and provide headroom
against unforeseen obligations.
Cash and cash equivalents are held in short-term deposits, repurchase agreements and cash funds which allow daily withdrawals of cash.
Most of the Group’s funds are held in the UK or US, although $24m (2021: $77m) is held in countries where repatriation is restricted
(see note 18).
Medium- and long-term borrowing requirements are met through committed bank facilities and bonds as detailed in note 21.
The new RCF (see note 21) contains two financial covenants: interest cover (Covenant EBITDA: Covenant interest payable) and a leverage
ratio (Covenant net debt: Covenant EBITDA). These are tested at half year and full year on a trailing 12-month basis.
In 2021 and 2020, covenant measures were reported on a frozen GAAP basis excluding the effect of IFRS 16, an adjustment which has been
eliminated under the new facility.
Covenant test levels for RCF
Leverage
Interest cover
Liquidity
a Defined as unrestricted cash and cash equivalents (net of bank overdrafts) plus undrawn facilities with a remaining term of at least six months.
Covenant measures
Covenant EBITDA ($m)
Covenant net debt ($m)
Covenant interest payable ($m)
Leverage
Interest cover
Liquidity ($m)
31 December
2022
31 December
2020 and 2021
<4.0x
>3.5x
n/a
waived
waived
$400ma
2022
2021a
2020a
896
1,898
109
2.12
8.22
n/a
601
1,801
133
3.00
4.52
272
2,375
111
8.73
2.45
2,655
2,925
a At 31 December 2021 and 2020, the leverage and interest covenants under the previous facilities were waived and replaced with a liquidity requirement of $400m.
The interest margin payable on the RCF is linked to the Group’s credit rating and is currently 0.60%.
Notes to the Group Financial Statements
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Notes to the Group Financial Statements continued
23. Financial risk management and derivative financial instruments continued
The following are the undiscounted contractual cash flows of financial liabilities, including interest payments. Liabilities relating to the Group’s
deferred compensation plan are excluded; their settlement is funded entirely by the realisation of the related deferred compensation plan
investments and no net cash flow arises.
31 December 2022
Non-derivative financial liabilities:
Bank overdrafts
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Lease liabilities
Trade and other payables (excluding deferred and contingent purchase consideration)
Deferred and contingent purchase consideration
Derivative financial liabilities:
Currency swaps hedging €500m 1.625% bonds 2024 outflows
Currency swaps hedging €500m 1.625% bonds 2024 inflows
Currency swaps hedging €500m 2.125% bonds 2027 outflows
Currency swaps hedging €500m 2.125% bonds 2027 inflows
31 December 2021
Non-derivative financial liabilities:
Bank overdrafts
£173m 3.875% bonds 2022
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Lease liabilities
Trade and other payables (excluding deferred and contingent purchase consideration)
Deferred and contingent purchase consideration
Derivative financial liabilities:
Currency swaps hedging €500m 1.625% bonds 2024 outflows
Currency swaps hedging €500m 1.625% bonds 2024 inflows
Currency swaps hedging €500m 2.125% bonds 2027 outflows
Currency swaps hedging €500m 2.125% bonds 2027 inflows
Less than
1 year
$m
Between
1 and 2
years
$m
Between
2 and 5
years
$m
More than
5 years
$m
55
9
14
9
11
16
53
660
–
14
(9)
18
(11)
–
543
14
9
11
16
50
1
13
561
(543)
18
(11)
–
–
375
439
568
49
126
1
39
–
–
571
(568)
–
–
–
–
–
498
3,201
2
42
–
–
–
–
Less than
1 year
$m
Between
1 and 2
years
$m
Between
2 and 5
years
$m
More than
5 years
$m
59
241
9
15
10
12
18
58
550
–
16
(9)
21
(12)
–
–
9
15
10
12
18
49
2
–
16
(9)
21
(12)
–
–
575
435
502
36
55
123
1
52
628
(575)
62
(36)
–
–
–
–
–
578
575
3,212
2
42
–
–
598
(578)
Total
$m
55
552
403
457
590
579
3,430
664
94
575
(552)
607
(590)
Total
$m
59
241
593
465
522
638
666
3,442
555
94
660
(593)
702
(638)
Credit risk
Credit risk on cash and cash equivalents is minimised by operating a policy on the investment of surplus cash that generally restricts
counterparties to those with a BBB- credit rating or better or those providing adequate security. The Group uses long-term credit ratings
from Standard and Poor’s, Moody’s and Fitch Ratings as a basis for setting its counterparty limits.
In order to manage the Group’s credit risk exposure, the treasury function sets counterparty exposure limits using metrics including credit
ratings, the relative placing of credit default swap pricings, tier 1 capital and share price volatility of the relevant counterparty.
Repurchase agreements are fully collateralised investments, with a maturity of three months or less. The Group accepts only government
or supranational bonds where the lowest credit rating is AA- or better as collateral. In the event of default, ownership of these securities
would revert to the Group. The securities held as collateral are to protect against default by the counterparty.
The Group’s exposure to credit risk arises from default of the counterparty, with the maximum exposure equal to the carrying amount
of each financial asset, including derivative financial instruments. The expected credit loss on cash and cash equivalents is considered
to be immaterial.
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23. Financial risk management and derivative financial instruments continued
The table below analyses the Group’s short-term deposits, money market funds and repurchase agreement collateral classified as cash and
cash equivalents by counterparty credit rating:
31 December 2022
Short-term deposits
Money market funds
Repurchase agreement collateral
31 December 2021
Short-term deposits
Money market funds
AAA
$m
–
360
22
AAA
$m
–
1,025
AA+
$m
–
–
2
AA+
$m
–
–
AA
$m
–
–
6
AA
$m
–
–
AA‑
$m
66
–
–
AA-
$m
87
–
A+
$m
127
–
–
A+
$m
45
–
A
$m
141
–
–
A
$m
169
–
A‑
$m
50
–
–
A-
$m
–
–
BBB+ and
below
$m
37
–
–
BBB+
$m
–
–
Total
$m
421
360
30
Total
$m
301
1,025
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern. The capital structure consists of net debt, issued
share capital and reserves. The structure is managed with the objective of maintaining an investment grade credit rating, to provide ongoing
returns to shareholders and to service debt obligations, while maintaining maximum operational flexibility. A key characteristic of IHG’s
managed and franchised business model is that it is highly cash generative, with a high return on capital employed. Surplus cash is either
reinvested in the business, used to repay debt or returned to shareholders.
The Group’s debt is monitored on the basis of a cash flow leverage ratio, being net debt divided by adjusted EBITDA. The Group has a stated
aim of maintaining this ratio at 2.5x to 3.0x. The ratio at 31 December 2022 (which differs from the ratio as calculated for covenant tests) was
2.07 (2021: 2.98).
The Group currently has a senior unsecured long-term credit rating of BBB from Standard and Poor’s. In the event this rating was downgraded
below BBB- (a downgrade of two levels) there would be an additional step-up coupon of 1.25% payable on the bonds which would result in
additional interest of approximately $29m per year.
24. Classification and measurement of financial instruments
Accounting classification and fair value hierarchy
Hierarchy of
fair value
measurement
Fair valuea
$m
Amortised
cost
$m
Not
categorised
as a financial
instrument
$m
Total
$m
Fair valuea
$m
Amortised
cost
$m
Not
categorised
as a financial
instrument
$m
2022
1,3b
1
2
1
–
2
1
–
3
106
360
7
216
–
(11)
(216)
–
(83)
50
616
–
–
–
–
–
–
542
104
156
976
7
216
646
114
1,025
–
256
–
–
–
(2,396)
(658)
–
–
–
(37)
(11)
(62)
(216)
(2,396)
(778)
(256)
–
(73)
61
425
–
–
501
–
–
(2,845)
(566)
–
–
–
–
73
–
–
–
(29)
2021
Total
$m
175
1,450
–
256
574
(62)
(256)
(2,845)
(668)
Financial assets
Other financial assets
Cash and cash equivalents
Derivative financial instruments
Deferred compensation
plan investments
Trade and other receivables
Financial liabilities
Derivative financial instruments
Deferred compensation
plan liabilities
Loans and other borrowings
Trade and other payables
a With the exception of equity securities of $88m (2021: $106m) measured at fair value through other comprehensive income, all are measured at fair value through profit or loss.
Of those, the financial assets related to the deferred compensation plan investments were designated as such upon initial recognition.
b Of those measured at fair value, $3m (2021: $8m) are Level 1 and $103m (2021: $106m) are Level 3.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
24. Classification and measurement of financial instruments continued
Financial assets and liabilities measured at amortised cost whose carrying amount is not a reasonable approximation of fair value are
as follows:
£173m 3.875% bonds 2022
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Hierarchy of
fair value
measurement
Carrying value
$m
2022
Fair value
$m
Carrying value
$m
2021
Fair value
$m
1
1
1
1
1
1
–
(534)
(365)
(423)
(539)
(480)
–
(511)
(344)
(367)
(492)
(417)
(233)
(565)
(408)
(473)
(570)
(537)
(239)
(585)
(428)
(471)
(601)
(566)
Right of offset
Other than in relation to cash pooling arrangements (see note 18), there are no financial instruments with a significant fair value subject
to enforceable master netting arrangements and other similar agreements that are not offset in the Group statement of financial position.
Valuation techniques
Money market funds, deferred compensation plan investments and bonds
The fair value of money market funds, deferred compensation plan investments and bonds is based on their quoted market price.
Unquoted equity securities
Unquoted equity securities are fair valued using a discounted cash flow model, either internally or using professional external valuers.
The significant unobservable inputs used to determine the fair value of the equity securities are RevPAR growth (based on the market-
specific growth assumptions used by external valuers), pre-tax discount rate which ranged from 6.3% to 10.0% (2021: 6.3% to 9.3%),
and a non-marketability factor which ranged from 20.0% to 30.0% (2021: 20.0% to 30.0%).
Applying a one-year slower/faster RevPAR recovery period would result in a $5m/$7m (2021: $7m) (decrease)/increase in fair value
respectively. A one percentage point increase/decrease in the discount rate would result in a $8m/$9m (2021: $9m) (decrease)/increase
in fair value respectively. A five percentage point increase/decrease in the non-marketability factor would result in a $6m (2021: $6m)
(decrease)/increase in fair value.
Derivative financial instruments and other payables
Currency swaps are measured at the present value of future cash flows discounted back based on quoted forward exchange rates and
the applicable yield curves derived from quoted interest rates. Adjustments for credit risk use observable credit default swap spreads.
The put option over part of the Group’s investment in the Barclay associate was valued at $nil at 31 December 2022 and 2021. The value
is equal to the excess of the amount receivable under the option (which is based on the Group’s capital invested to date) over fair value.
The fair value of the hotel was derived from a pricing opinion provided by a professional external valuer. In 2022, the value of the put option
is also affected by specially allocated expenses which results in an obligation valued at $18m (see note 6) recorded within other payables.
For the purposes of valuing these instruments, the fair value of the hotel was derived from a pricing opinion provided by a professional
external valuer which is categorised as a Level 3 fair value measurement.
Deferred purchase consideration
Deferred purchase consideration arose in respect of the acquisition of Regent, and comprises the present value of $13m payable in 2024.
The first instalment of $13m was paid in 2021. The discount rate applied is based on observable US corporate bond rates of similar term
to the expected payment date.
Contingent purchase consideration
Regent $65m (2021: $73m)
In 2018, the Group acquired a 51% controlling interest in Regent Hospitality Worldwide, Inc (‘RHW’), with put and call options existing over
the remaining 49% shareholding exercisable in a phased manner from 2026 to 2033. The Group has a present ownership interest in the
remaining shares and the acquisition was accounted for as 100% owned with no non-controlling interest recognised and contingent
purchase consideration comprising the present value of the expected amounts payable on exercise of the options based on the annual
trailing revenue of RHW in the year preceding exercise with a floor applied.
The value of the contingent purchase consideration is subject to periodic reassessment as interest rates and RHW revenue expectations
change. At 31 December 2022, it is assumed that $39m will be paid in 2026 to acquire an additional 25% of RHW with the remaining 24%
acquired in 2028 for $42m. This assumes that the options will be exercised at the earliest permissible date which is consistent with the
assumption made on acquisition. The amount recognised is the discounted value of the total expected amount payable of $81m.
The discount rate applied is based on observable US corporate bond rates of similar term to the expected payment dates. The range
of possible outcomes remains unchanged from the date of acquisition at $81m to $261m (undiscounted).
The significant unobservable inputs used to determine the fair value of the contingent purchase consideration are the projected trailing
revenues of RHW and the date of exercising the options. If the annual trailing revenue of RHW were to exceed the floor by 10%, the amount
of the contingent purchase consideration recognised in the Group Financial Statements would increase by $6m (2021: $7m). If the date for
exercising the options is assumed to be 2033, the amount of the undiscounted contingent purchase consideration would be $86m
(2021: $86m).
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24. Classification and measurement of financial instruments continued
UK portfolio $nil (2021: $nil)
As the leases were restructured in 2022 and were subject to significant rental reductions, there is no longer any contingent purchase
consideration in relation to the UK portfolio hotels.
In relation to the leases signed on acquisition of the portfolio, the contingent purchase consideration comprised the present value of the
above-market element of the expected lease payments to the lessor. In 2020, a fair value adjustment of $21m was recognised which
reduced the value of the liability arising mainly from a reduction in expected future rentals payable.
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S
t
a
t
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m
e
n
t
s
Level 3 reconciliation
At 1 January 2021
Additions
Valuation gains recognised in other comprehensive income
Unrealised changes in fair valuea
At 31 December 2021
Valuation losses recognised in other comprehensive income
Unrealised changes in fair valueb
Exchange adjustments
At 31 December 2022
Other
financial
assets
$m
Derivative
financial
instruments
$m
Other
payables
$m
Contingent
purchase
consideration
$m
88
3
15
–
106
(1)
–
(2)
103
4
–
–
(4)
–
–
–
–
–
–
–
–
–
–
–
(18)
–
(18)
(79)
–
–
6
(73)
–
8
–
(65)
a The change in the fair value of derivative financial instruments was recognised within other net impairment charges in the Group income statement and was presented as an
exceptional item.
b The change in the fair value of other payables was recognised within share of losses from associates in the Group income statement and is presented as an exceptional item.
Notes to the Group Financial Statements
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Notes to the Group Financial Statements continued
25. Reconciliation of profit/(loss) for the year to cash flow from operations
Profit/(loss) for the year
Adjustments for:
Net financial expenses
Fair value gains on contingent purchase consideration
Income tax charge/(credit)
Operating profit adjustments:
Impairment loss on financial assets
Other net impairment (reversals)/charges
Other operating exceptional items
Depreciation and amortisation
Contract assets deduction in revenue
Share-based payments cost
Share of (profits)/losses of associates and joint ventures (before exceptional items)
System Fund adjustments:
Depreciation and amortisation
Impairment loss/(reversal) on financial assets
Other impairment (reversals)/charges
Other operating exceptional items
Share-based payments cost
Share of losses of associates
Working capital and other adjustments:
Increase in deferred revenue
Decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Other adjustments
Cash flows relating to exceptional items
Contract acquisition costs, net of repayments
Total adjustments
2022
$m
376
96
(8)
164
5
(5)
100
68
168
32
30
(1)
61
86
7
–
–
16
1
110
108
–
(132)
121
4
101
(43)
(64)
585
2021
$m
265
139
(6)
96
–
4
25
98
127
35
28
8
71
94
(6)
(3)
–
13
2
2020
$m
(260)
140
(13)
(20)
88
226
(4)
110
420
25
21
14
60
62
24
41
20
11
1
100
159
39
1
(75)
153
(8)
110
(12)
(42)
583
1
1
38
(69)
2
(27)
(87)
(64)
568
Cash flow from operations
961
848
308
26. Retirement benefits
UK
Since 2014, UK retirement and death in service benefits are provided for eligible employees by the IHG UK Defined Contribution Pension Plan.
Members are provided with defined contribution arrangements under this plan; benefits are based on each individual member’s personal
account. The plan is HM Revenue & Customs registered and governed by an independent trustee, assisted by professional advisers as and
when required. The overall operation of the plan is subject to the oversight of The Pensions Regulator.
The former defined benefit plan, the InterContinental Hotels UK Pension Plan, was wound up in 2015 following the completion of the buy-out
and transfer of the defined benefit obligations to Rothesay Life.
Residual defined benefit obligations remain in respect of additional benefits provided to members of an unfunded pension arrangement
(‘UK plan’) who were affected by lifetime or annual allowances under the former defined benefit arrangements. Accrual under this
arrangement ceased with effect from 1 July 2013 and a cash-out offer in 2014 resulted in the extinguishment of approximately 70% of the
unfunded pension obligations. The Group meets the benefit payment obligations of the remaining members as they fall due. A charge over
certain ring-fenced bank accounts totalling $39m (£31m) at 31 December 2022 (see note 16) is currently held as security on behalf of the
remaining members.
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26. Retirement benefits continued
US
During 2018, the Group completed a termination of the US funded Inter-Continental Hotels Pension Plan, which involved certain qualifying
members receiving lump-sum cash-out payments with the remaining pension obligations subject to a buy-out by Banner Life Insurance
Company, a subsidiary of Legal & General America.
The Group continues to maintain the unfunded Inter-Continental Hotels Non-qualified Pension Plans (‘US plans’) and unfunded Inter-Continental
Hotels Corporation Postretirement Medical, Dental, Vision and Death Benefit Plan (‘US post-retirement plan’), both of which are defined
benefit plans. Both plans are closed to new members. A Retirement Committee, comprising senior Group employees and assisted by
professional advisers as and when required, has responsibility for oversight of the plans.
Movement in UK and US retirement benefit obligations
Defined benefit obligation
Fair value of plan assets
Net defined benefit obligation
l
S
t
a
t
e
m
e
n
t
s
At 1 January
Recognised in profit or loss
Interest expense
Recognised in other
comprehensive income
Actuarial (gain)/loss arising from
changes in:
Demographic assumptions
Financial assumptions
Experience adjustments
Re-measurement (gain)/loss
Exchange adjustments
Other
Group contributions
Benefits paid
At 31 December
Comprising:
UK plan
US plans
US post-retirement plan
2022
$m
92
2
2
(1)
(22)
2
(21)
(2)
(23)
–
(5)
(5)
66
18
35
13
66
2021
$m
103
2
2
(3)
(3)
(1)
(7)
(1)
(8)
–
(5)
(5)
92
30
45
17
92
2020
$m
96
3
3
(3)
10
1
8
2
10
–
(6)
(6)
103
31
50
22
103
2022
$m
2021
$m
2020
$m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5)
(5)
(6)
5
–
–
–
–
–
–
5
–
–
–
–
–
–
6
–
–
–
–
–
–
2022
$m
92
2
2
(1)
(22)
2
(21)
(2)
(23)
(5)
–
(5)
66
18
35
13
66
2021
$m
103
2
2
(3)
(3)
(1)
(7)
(1)
(8)
(5)
–
(5)
92
30
45
17
92
2020
$m
96
3
3
(3)
10
1
8
2
10
(6)
–
(6)
103
31
50
22
103
Assumptions
The principal financial assumptions used by the actuaries to determine the defined benefit obligations are:
UK plan only:
Pension increases
Inflation rate
Discount rate:
UK plan
US plans
US post-retirement plan
US healthcare cost trend rate assumed for the next year:
Pre-65 (ultimate rate reached in 2032)
Post-65 (ultimate rate reached in 2032)
Ultimate rate that the cost rate trends to
2022
%
2021
%
2020
%
3.2
3.2
5.0
4.9
4.9
6.9
7.3
4.5
3.4
3.4
1.8
2.4
2.4
6.2
6.5
4.5
3.0
3.0
1.4
1.9
2.0
6.4
6.8
4.5
Mortality is the most significant demographic assumption. The current assumptions for the UK are based on the S3PA ‘light’ year of birth
tables with projected mortality improvements using the CMI_2021 model and a 1.25% per annum long-term trend and a smoothing parameter
(‘s-kappa’) of 7.5 with weightings of 95% and 88% for pensioners and 90% and 88% for non-pensioners, male and female respectively. In the
US, the current assumptions use rates from the Pri-2012 Mortality Study and Generationally Projected with Scale MP-2021 mortality tables.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
26. Retirement benefits continued
The assumptions applied to the UK plan and US plans for life expectancy at retirement age are as follows:
Current pensioners at 65a
– male
Future pensioners at 65b
– male
– female
– female
2022
years
2021
years
24
26
25
27
24
26
25
28
UK
2020
years
24
26
25
28
2022
years
2021
years
22
23
23
25
22
23
23
25
US
2020
years
22
23
23
24
a Relates to assumptions based on longevity following retirement at the end of the reporting period.
b Relates to assumptions based on longevity relating to an employee retiring in 2042.
The assumptions allow for expected increases in longevity.
Sensitivities
Changes in assumptions used for determining retirement benefit costs and obligations may have an impact on the Group income statement
and the Group statement of financial position. The key assumptions are the discount rate, the rate of inflation, the assumed mortality rate
and the healthcare costs trend rate. The sensitivity analysis below relates to the increase/(decrease) in the benefit obligation and is based
on extrapolating reasonable changes in these assumptions, using year-end conditions and assuming no interdependency between
the assumptions:
Discount rate
Inflation rate
Mortality rate
Healthcare costs trend rate
1% decrease
1% increase
0.25% decrease
0.25% increase
One-year increase
1% decrease
1% increase
a 2021 sensitivities have been re-presented to show the effect of a 1% change in discount rate, consistent with 2022.
Estimated future benefit payments
Within one year
Between one and five years
More than five years
Average duration of pension obligations
UK plan
US plans
US post-retirement plan
2022
$m
6.6
(5.4)
(0.5)
0.6
2.5
(0.8)
0.8
2022
$m
5
20
89
114
2022
years
14.0
7.6
8.0
2021a
$m
11.4
(11.2)
(1.2)
1.3
5.1
(1.2)
1.3
2021
$m
5
21
96
122
2021
years
19.0
9.0
9.4
Other pension plans
Philippines
The Group maintains a further, immaterial, pension plan for employees in the Philippines which is accounted for as a defined benefit plan.
At 31 December 2022, the net retirement benefit asset was $2m (2021: $2m) comprising plan assets of $9m (2021: $9m) and a defined
benefit obligation of $7m (2021: $7m). Plan assets comprise $6m (2021: $7m) domestic government securities, $2m (2021: $2m) domestic
equity investments and $1m (2021: $nil) money market funds.
Contributions in the year were $1m (2021: $1m); the charge to the Group income statement was $1m and all other movements were less than
$1m (2021: less than $1m).
Key assumptions used in the valuation are the discount rate of 7.0% (2021: 5.0%) and the rate of salary increases of 6.0% (2021: 7.0% after 2022).
The weighted average duration of liabilities is 11 years (2021: 13 years); estimated future benefit payments are less than $1m in all years.
Defined contribution plans
The Group also operates a number of smaller pension plans outside the UK, the most significant of which is a defined contribution plan
in the US.
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27. Share‑based payments
Annual Performance Plan
Under the IHG Annual Performance Plan (‘APP’), eligible employees (including Executive Directors) receive all or part of their bonus in
the form of deferred shares and/or receive one-off awards of shares. Deferred shares in relation to bonus plans are released on the third
anniversary of the award date. Awards under the APP are conditional on the participants remaining in the employment of a participating
company or leaving for a qualifying reason as per the plan rules. The grant of deferred shares under the APP is at the discretion of the
Remuneration Committee.
The number of shares is calculated by dividing a specific percentage of the participant’s annual performance-related award by the average
of the middle market quoted prices on the three consecutive business days following the announcement of the Group’s results for the
relevant financial year.
Long Term Incentive Plan
The Long Term Incentive Plan (‘LTIP’) allows Executive Directors and eligible employees to receive conditional share awards, which normally
have a vesting period of three years. In addition, certain awards to Executive Directors are subject to a further two-year holding period
after vesting.
Performance-related awards: Executive Directors and other eligible employees are granted share awards containing performance-based
vesting conditions set by the Remuneration Committee, which are normally measured over the vesting period.
Restricted stock units: Awards to eligible employees are granted subject to continued employment.
Awards are normally made annually and, except in exceptional circumstances, will not exceed 3.5 times salary for eligible employees under
the current plan rules.
Colleague Share Plan
The Colleague Share Plan gives eligible corporate employees the opportunity to purchase shares up to an annual limit. After the end of the
plan year, the participant will be awarded the right to receive one matching share for every purchased share (subject to continued employment).
If the participant holds the purchased shares until the second anniversary of the end of the plan year, the conditional right to matching
shares vests.
The total fair value of the Colleague Share Plan is not significant.
More detailed information on the performance measures for awards to Executive Directors is shown in the Directors’ Remuneration Report
on pages 114 to 136.
Costs relating to share‑based payment transactions
Equity‑settled
Operating profit before System Fund and exceptional items
System Fund
Cash‑settled
Operating profit before System Fund and exceptional items
2022
$m
2021
$m
2020
$m
28
16
44
2
46
26
13
39
2
41
19
11
30
2
32
LTIP
No consideration was received in respect of ordinary shares issued under option schemes during 2022, 2021 or 2020.
Option pricing models, assumptions and movements in awards outstanding
APP
Binomial valuation model
Monte Carlo Simulation, Binomial
and Finnerty valuation models
Option pricing models and assumptions
Weighted average share price (pence)
2022
2021
2020
2022
2021
2020
5,018.3
5,009.0
3,771.0
4,875.0
4,980.0
3,450.0
Expected dividend yield
Risk-free interest rate
Volatilitya
Term (years)
1.7
1.5
3.0
2.29% to 2.67%
1.29%
35% to 45%
3.0
1.11%
0.09%
43%
3.0
1.48%
0.02%
33%
3.0
a The expected volatility was determined by calculating the historical volatility of the Company’s share price corresponding to the expected life of the share award.
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
27. Share‑based payments continued
Number of share awards (thousands)
Outstanding at 1 January 2020
Granted
Vested
Lapsed or cancelled
Outstanding at 31 December 2020
Granted
Vested
Lapsed or cancelled
Outstanding at 31 December 2021
Granted
Vested
Lapsed or cancelled
Outstanding at 31 December 2022
Fair value of awards granted during the year (cents)
2022
2021
2020
Weighted average remaining contract life (years)
At 31 December 2022
At 31 December 2021
At 31 December 2020
APP
496
138
(188)
(33)
413
90
(147)
(8)
348
236
(254)
(9)
321
6,180.2
6,888.5
4,965.9
1.0
0.5
1.0
Performance‑related
awards
LTIP
Restricted stock
units
695
383
(179)
(85)
814
281
(70)
(153)
872
323
(23)
(239)
933
3,770.0
4,676.3
2,473.5
1.1
1.2
1.4
1,275
696
(413)
(137)
1,421
442
(391)
(122)
1,350
706
(391)
(90)
1,575
5,656.4
6,559.7
4,397.5
1.2
1.2
1.3
The above awards do not vest until the performance and service conditions have been met.
The weighted average share price at the date of exercise for share awards vested during the year was 4,950.5p (2021: 5,081.2p). The closing
share price on 31 December 2022 was 4,744.0p (31 December 2021: 4,781.0p) and the range during the year was 4,193.0p to 5,338.0p
(2021: 4,399.0p to 5,336.0p).
28. Equity
Equity share capital
Allotted, called up and fully paid
At 1 January 2020 (ordinary shares of 20340 ⁄399p each)
Exchange adjustments
At 31 December 2020 (ordinary shares of 20340 ⁄399p each)
Exchange adjustments
At 31 December 2021 (ordinary shares of 20340 ⁄399p each)
Repurchased and cancelled under share repurchase programme
Exchange adjustments
At 31 December 2022 (ordinary shares of 20340 ⁄399p each)
Number
of shares
millions
Nominal
value
$m
Share
premium
$m
187
–
187
–
187
(4)
–
183
52
1
53
–
53
(1)
(6)
46
99
4
103
(2)
101
–
(10)
91
Equity
share
capital
$m
151
5
156
(2)
154
(1)
(16)
137
Under the authority given to the Company by shareholders at the AGM held on 6 May 2022 to purchase its own shares, on 9 August 2022
the Company announced a $500m return of funds via a share repurchase programme. In the year ended 31 December 2022, 9.1m shares
were repurchased for total consideration of $482m including $2m transaction costs, 4.5m are held as treasury shares and 4.6m were cancelled.
The cost of treasury shares and related transaction costs have been deducted from retained earnings. A liability, reflecting outstanding
amounts payable under the repurchase plan and associated transaction costs, is recognised within current other payables (see note 19).
The share repurchase programme was completed on 31 January 2023.
When approving shareholder returns in 2022 and 2023, the Board first reviewed the Parent Company Financial Statements to confirm
availability of sufficient distributable reserves.
The authority to repurchase shares remains valid and, in February 2023, the Board approved a further $750m share buyback programme.
A resolution to renew the authority will be put to shareholders at the AGM on 5 May 2023.
The Company no longer has an authorised share capital.
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28. Equity continued
Shares held by employee share trusts
31 December 2022
31 December 2021
31 December 2020
l
S
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a
t
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m
e
n
t
s
Number of
shares
millions
Carrying
value
$m
1.1
0.9
0.1
37.0
21.7
1.4
Market
value
$m
62.8
57.3
3.1
Shares held by employee share trusts includes 0.2m shares held in a nominee account on behalf of participants.
Treasury shares
At 1 January 2020
Transferred to employee share trusts
At 31 December 2020
Transferred to employee share trusts
At 31 December 2021
Transferred to employee share trusts
Repurchased under share repurchase programme
At 31 December 2022
Cash flow hedge reserves
At 1 January 2020
Costs of hedging deferred and recognised in other comprehensive income
Change in fair value of currency swaps recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss – included in financial expenses
Deferred tax
Exchange adjustments
At 31 December 2020
Costs of hedging deferred and recognised in other comprehensive income
Change in fair value of currency swaps recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss – included in financial expenses
Deferred tax
At 31 December 2021
Costs of hedging deferred and recognised in other comprehensive income
Change in fair value of currency swaps recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss – included in financial expenses
Deferred tax
At 31 December 2022
Number of
shares
millions
Nominal
value
$m
5.7
(0.6)
5.1
(1.4)
3.7
(0.7)
4.5
7.5
Cash flow
hedge
reserve
$m
Cost of
hedging
reserve
$m
1
–
(1)
(13)
4
(2)
(11)
–
(62)
96
(7)
16
–
33
(43)
2
8
(7)
(6)
–
–
–
–
(13)
2
–
–
–
(11)
3
–
–
–
(8)
1.6
(0.2)
1.4
(0.4)
1.0
(0.2)
1.1
1.9
Total
$m
(6)
(6)
(1)
(13)
4
(2)
(24)
2
(62)
96
(7)
5
3
33
(43)
2
–
Amounts reclassified from other comprehensive income to financial expenses comprise $14m (2021: $15m, 2020: $9m) net interest payable
on the currency swaps and an exchange gain of $57m (2021: $81m loss, 2020: $22m gain) which offsets a corresponding gain or loss on the
hedged bonds.
29. Capital and other commitments
Contracts placed for expenditure not provided in the Group Financial Statements
Property, plant and equipment
Intangible assets
The Group has also committed to invest a further $6m (2021: $6m) in one of its associates.
2022
$m
2021
$m
5
1
6
13
4
17
Notes to the Group Financial Statements
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Group Financial Statements
Notes to the Group Financial Statements continued
30. Contingencies and guarantees
2022 criminal unauthorised access to technology systems
On 6 September 2022, the Group announced that parts of the Group’s technology systems had been subject to unauthorised activity
causing disruption to IHG’s booking channels and other applications. No evidence of unauthorised access to systems storing guest data
was identified and precautionary regulatory notifications were filed and have been closed.
A class action has been filed, although alleged damages have not been specified. Given the uncertainty around the timing of the legal
process and the quantum of any damages, it is not practicable to make a reliable estimate of the possible financial effect of any claims
on the Group at this time.
The Group holds third-party insurance policies in respect of cyber risks and reinsures $5m through the Captive. This is fully provided for
in the Group’s insurance reserves (see note 20). It is expected that any payment of claims above the Captive’s exposure will be recoverable
under insurance policies, subject to specific agreement with the insurance providers.
Litigation
From time to time, the Group is subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties
inherent in litigation. These legal claims and proceedings are in various stages and include disputes related to specific hotels where the
potential materiality is not yet known; such proceedings, either individually or in the aggregate, have not in the recent past and are not likely
to have a material effect on the Group’s financial position or profitability. In 2022, in the EMEAA region, one such dispute has been found
in the Group’s favour with no liability arising; a provision has been recorded against a further matter in the EMEAA region which includes
a number of uncertainties (see note 6). Other contingent liabilities previously reported have been resolved or are considered remote.
The Group has also given warranties in respect of the disposal of certain of its former subsidiaries. It is the view of the Directors that, other
than to the extent that liabilities have been provided for in these Group Financial Statements (see note 20), it is not possible to quantify any
loss to which these proceedings or claims under these warranties may give rise, however, as at the date of reporting, the Group does not
believe that the outcome of these matters will have a material effect on the Group’s financial position.
Third‑party bank loans
At 31 December 2022, there were guarantees of up to $50m in place (2021: $69m). The likelihood of a payment under any of the guarantees
is currently considered to be not probable. The largest guarantee is $21m and the underlying loan matures in 2029. Should the Group fund
any amount under the guarantee, there is a cross-indemnity that the Group would seek to pursue for the other parties’ share.
Other
At 31 December 2022, the Group had outstanding letters of credit of $55m (2021: $45m) mainly relating to the Group’s Captive. The letters
of credit do not have set expiry dates, but are reviewed and amended as required.
In 2020, the Group made business insurance claims in relation to a small number of owned, leased and managed properties relating to the
impact of Covid-19. These claims are ongoing and although $6m has been recognised in other operating income in the current year, it is not
currently possible to determine the final amounts which may ultimately be recovered.
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31. Related party disclosures
Key management personnel
Total compensation
Short-term employment benefits
Contributions to defined contribution pension plans
Equity compensation benefitsa
a As measured in accordance with IFRS 2 ‘Share-based Payment’.
l
S
t
a
t
e
m
e
n
t
s
2022
$m
18.7
0.5
13.4
32.6
2021
$m
19.3
0.5
8.1
27.9
2020
$m
10.5
0.3
2.3
13.1
There were no other transactions with key management personnel, defined as the Board and Executive Committee, during the years ended
31 December 2022, 2021 or 2020.
Associates and joint ventures
Fee revenue
Amounts receivable
Amounts payable
2022
$m
9
10
–
2021
$m
2020
$m
3
11
–
1
11
(4)
The Group has a performance guarantee with a maximum exposure remaining of $10m (2021: $10m) for one associate. In 2021, the Group
had an outstanding guarantee of $12m against the bank loan of another associate (see note 30).
The Group funds shortfalls in owner returns relating to the Barclay associate (see note 16). In addition, loans both to and from the Barclay
associate of $237m (2021: $237m) are offset in accordance with the provisions of IAS 32 ‘Financial Instruments: Presentation’ and presented
net in the Group statement of financial position. Interest payable and receivable under the loans is equivalent. The loans have an average
interest rate of 2.7% (2021: 0.9%) and interest is presented net in the Group income statement. Notes 6 and 15 contain details of other
transactions with the Barclay associate.
32. System Fund
System Fund revenues comprise:
Assessment fees and contributions received from hotels and other revenues
Loyalty programme revenues, net of the cost of point redemptions
System Fund expenses include:
Marketing
Staff costs (note 4)
Depreciation and amortisation
Impairment loss/(reversal) on trade receivables (note 17)
Other net impairment (reversals)/charges
2022
$m
989
228
1,217
2022
$m
408
341
86
7
–
2021
$m
727
201
928
2021
$m
147
304
94
(6)
(3)
2020
$m
490
275
765
2020
$m
109
242
62
24
41
Notes to the Group Financial Statements
IHG | Annual Report and Form 20-F 2022
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Group Financial Statements
Notes to the Group Financial Statements continued
33. Group companies
In accordance with Section 409 of the Companies Act 2006, a full list of entities in which the Group has an interest of greater than or equal
to 20%, the registered office and effective percentage of equity owned as at 31 December 2022 are disclosed below. Unless otherwise stated,
the ownership interest disclosed comprises either ordinary shares, certificated or un-certificated membership interests which are indirectly
held by InterContinental Hotels Group PLC.
Fully owned subsidiaries
10000 Champion Acquisition LLC (k)
24th Street Operator Sub, LLC (k)
36th Street IHG Sub, LLC (k)
426 Main Ave, LLC (k)
46 Nevins Street Associates, LLC (k)
2250 Blake Street Hotel, LLC (k)
Alpha Kimball Hotel, LLC (k)
Asia Pacific Holdings Limited (n)
Barclay Operating Corp. (cj)
BHMC Canada Inc. (o)
BHR Holdings B.V. (p)
BHR Pacific Holdings, Inc. (k)
BHTC Canada Inc. (o)
Blythswood Square Glasgow Hotel OpCo Ltd. (n)
BOC Barclay Sub, LLC (cj)
Bristol Oakbrook Tenant Company (k)
Cambridge Lodging, LLC (k)
Capital Lodging, LLC (k)
CECNY Land Holdings, LLC (k)
CF Irving Owner, LLC (k)
CF McKinney Owner, LLC (k)
Compañia Inter-Continental De Hoteles
El Salvador SA (n)
Crowne Plaza, LLC (k)
Cumberland Akers Hotel, LLC (k)
Dunwoody Operations, LLC (k)
Edinburgh George Street Hotel OpCo Ltd. (n)
Edinburgh IC Limited (cr)
EVEN Real Estate Holding, LLC (k)
General Innkeeping Acceptance Corporation (b) (l)
Grand Central Glasgow Hotel OpCo Limited (n)
Guangzhou SC Hotels Services Ltd. (t)
Hawthorne Land Holdings LLC (k)
H.I. Soaltee Management Company Ltd. (ac)
HC International Holdings, Inc. (w)
HH France Holdings SAS (x)
HH Hotels (EMEA) B.V. (p)
HH Hotels (Romania) SRL (y)
HIM (Aruba) NV (z)
Hoft Properties, LLC (k)
Holiday Hospitality Franchising, LLC (k)
Holiday Inn Mexicana S.A. de C.V. (ab)
Holiday Inns (China) Ltd. (ac)
Holiday Inns (Courtalin) Holding SAS (x)
Holiday Inns (Courtalin) SAS (x)
Holiday Inns (England) Limited (cy) (dissolved on 2
Feburary 2023)
Holiday Inns (Germany), LLC (l)
Holiday Inns (Jamaica) Inc. (l)
Holiday Inns (Middle East) Limited (ac)
Holiday Inns (Philippines), Inc. (l)
Holiday Inns (Saudi Arabia), Inc. (l)
Holiday Inns (Thailand) Limited (ac)
Holiday Inns (UK), Inc. (l)
Holiday Inns Crowne Plaza (Hong Kong), Inc. (l)
Holiday Inns Holdings (Australia) Pty Limited (aa)
Holiday Inns Inc. (k)
Holiday Inns Investment (Nepal) Limited (ac)
Holiday Inns of America (UK) Limited (cb)
Holiday Inns of Belgium N.V. (ad)
Holiday Pacific Equity Corporation (k)
Holiday Pacific, LLC (k)
Holiday Pacific Partners, LP (k)
Hotel InterContinental London (Holdings) Limited (n)
Hotel Inter-Continental London Limited (n)
Hoteles Y Turismo HIH SRL (n)
IC Hotelbetriebsführungs GmbH (ae)
IC Hotels Management (Portugal) Unipessoal, Lda (af)
IC International Hotels Limited Liability Company (ag)
IHC Arabia for Management, LLC (u)
IHC Buckhead, LLC (ci)
IHC Hopkins (Holdings) Corp. (k)
IHC Hotel Limited (n)
IHC Inter-Continental (Holdings) Corp. (k)
IHC London (Holdings) (n)
IHC May Fair (Holdings) Limited (cb)
IHC May Fair Hotel Limited (n)
IHC M-H (Holdings) Corp. (k)
IHC Overseas (U.K.) Limited (n)
IHC United States (Holdings) Corp. (b) (k)
IHC Willard (Holdings) Corp. (k)
IHG (Marseille) SAS (x)
IHG (Myanmar) Limited (ah)
IHG (Thailand) Limited (bu)
IHG Amsterdam Management BV (p)
IHG Bangkok Ltd. (v)
IHG Brasil Administracao de Hoteis e Servicos
Ltd (ak)
IHG Commissions Services SRL (co)
IHG de Argentina SA (al)
IHG ECS (Barbados) SRL (co)
IHG Franchising Brasil Ltda. (bd)
IHG Franchising DR Corporation (k)
IHG Franchising, LLC (k)
IHG Hotels (New Zealand) Limited (an)
IHG Hotels Limited (n)
IHG Hotels Management (Australia)
Pty Limited (b) (aa)
IHG Hotels Nigeria Limited (ao)
IHG Hotels South Africa (Pty) Limited (ap)
IHG International Partnership (n)
IHG Istanbul Otel Yönetim Limited Sirketi (bx)
IHG Japan (Management), LLC (ar)
IHG Japan (Osaka), LLC (ar)
IHG Management (Maryland), LLC (as)
IHG Management (Netherlands) B.V. (p)
IHG Management d.o.o. Beograd (cc)
IHG Management MD Barclay Sub, LLC (cj)
IHG Management SL d.o.o. (bo)
IHG Mexico Operaciones SA de CV (ab)
IHG Middle East Management Consultancies LLC (br)
IHG Peru SRL (cf)
IHG PS Nominees Limited (n)
IHG Sermex SA de CV (ab)
IHG Systems Pty Ltd. (b) (aa)
IHG Szalloda Budapest Szolgaltato Kft. (at)
IHG Technology Solutions, LLC (k)
InterContinental Berlin Service Company GmbH (au)
InterContinental (Branston) 1 Limited (c) (cy)
InterContinental (PB) 1 (n)
InterContinental (PB) 3 Limited (n)
Intercontinental D.C. Operating Corp. (k)
Inter-Continental Florida Investment Corp. (k)
Inter-Continental Florida Partner Corp. (k)
InterContinental Gestion Hotelera SLU (by)
Intercontinental Hospitality Corporation (k)
InterContinental Hotel Berlin GmbH (au)
Inter-Continental Hoteleira Limitada (aw)
Inter-Continental Hotels (Montreal)
Operating Corp. (ax)
Inter-Continental Hotels (Montreal) Owning Corp. (ax)
InterContinental Hotels (Puerto Rico) Inc. (az)
Inter-Continental Hotels (Singapore) Pte. Ltd. (ai)
Inter-Continental Hotels Corporation (k)
Intercontinental Hotels Corporation de
Venezuela C.A. (ba)
Intercontinental Hotels Corporation Limited (b) (m)
InterContinental Hotels Group (Asia Pacific)
Pte Ltd. (ai)
InterContinental Hotels Group (Australia)
Pty Limited (aa)
InterContinental Hotels Group (Canada) Inc. (o)
InterContinental Hotels Group (España) SAU (by)
InterContinental Hotels Group (Greater China)
Limited (ac)
InterContinental Hotels Group (India) Pvt. Ltd. (aq)
InterContinental Hotels Group (Japan) Inc. (l)
InterContinental Hotels Group (New Zealand)
Limited (an)
InterContinental Hotels Group (Shanghai) Ltd. (bb)
InterContinental Hotels Group (Vietnam) Company
Limited (q)
InterContinental Hotels Group Customer Services
Limited (n)
InterContinental Hotels Group do Brasil Limitada (bc)
InterContinental Hotels Group Healthcare Trustee
Limited (n)
InterContinental Hotels Group Operating Corp. (e) (k)
InterContinental Hotels Group Resources, LLC (b) (k)
InterContinental Hotels Group Services Company (n)
InterContinental Hotels Italia, S.r.L. (be)
InterContinental Hotels Limited (a) (n)
InterContinental Hotels Management GmbH (bf)
InterContinental Hotels Management Montenegro
d.o.o. (ce)
InterContinental Hotels Nevada Corporation (ck)
InterContinental Hotels of San Francisco Inc. (k)
Intercontinental IOHC (Mauritius) Limited (bg)
InterContinental Management AM, LLC (cm)
InterContinental Management Bulgaria EOOD (bp)
InterContinental Management France SAS (x)
InterContinental Management Poland sp. Z.o.o (cn)
InterContinental Overseas Holdings, LLC (k)
KG Benefits, LLC (aj)
KG Gift Card Inc. (aj)
KG Liability, LLC (k)
KG Technology, LLC (k)
KHRG 851, LLC (k)
KHRG Aertson, LLC (k)
KHRG Allegro, LLC (k)
KHRG Argyle, LLC (k)
KHRG Atlanta Midtown, LLC (k)
KHRG Austin Beverage Company, LLC (k)
KHRG Baltimore, LLC (k)
KHRG Born, LLC (k)
KHRG Boston Hotel, LLC (k)
KHRG Bozeman, LLC (k)
KHRG Buckhead, LLC (k)
KHRG Canary, LLC (k)
KHRG Cayman, LLC (k)
KHRG Cayman Employer Ltd. (k)
KHRG Dallas, LLC (k)
KHRG Dallas Beverage Company, LLC (k)
KHRG Employer, LLC (k)
KHRG Charlottesville LLC (k)
KHRG Goleta, LLC (k)
KHRG Gray, LLC (k)
KHRG Gray U2, LLC (k)
KHRG Huntington Beach, LLC (k)
KHRG Key West, LLC (k)
KHRG King Street, LLC (k)
KHRG La Peer, LLC (k)
KHRG Miami Beach, LLC (k)
KHRG Muse, LLC (k)
KHRG New Orleans, LLC (k)
KHRG NPC, LLC (k)
KHRG Palladian, LLC (k)
KHRG Palomar Phoenix, LLC (k)
KHRG Philly Monaco, LLC (k)
KHRG Pittsburgh, LLC (k)
KHRG Porsche Drive, LLC (k)
KHRG Reynolds, LLC (k)
214
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G
r
o
u
p
F
n
a
n
c
a
i
i
Key
(a)
Directly owned by InterContinental
Hotels Group PLC
l
S
t
a
t
e
m
e
n
t
s
(f)
(h)
(g)
(b) Ordinary shares and preference shares
(c) Ordinary A and ordinary B shares
8% cumulative preference shares
(d)
¼ vote ordinary shares and
(e)
ordinary shares
Ordinary shares, 5% cumulative
preference shares and 7% cumulative
preference shares
The entities do not have share capital
and are governed by an operating
agreement
Accounted for as associates and joint
ventures due to IHG’s decision-making
rights contained in the partnership
agreement
Accounted for as an other financial
asset due to IHG being unable to
exercise significant influence over the
financial and operating policy
decisions of the entity
Minority interest relates to one or more
individual shareholders who are
employed or were previously employed
by the entity
(j)
(i)
Sustainable Luxury Maldives Private Limited (cw)
Sustainable Luxury Mauritius Limited (cx)
Sustainable Luxury Services (BVI) Limited (v)
Sustainable Luxury Singapore Private Limited (ai)
Sustainable Luxury UK Limited (n)
The Grand Central Hotel Glasgow Limited (n)
The Met Hotel Leeds Limited (n)
The Principal Edinburgh George Street Limited (n)
The Principal London Limited (n)
The Principal Manchester Limited (n)
The Principal York Limited (n)
The Roxburghe Hotel Edinburgh Limited (s)
White Shield Company Limited (bk)
Wotton House Hotel OpCo Limited (n)
WY BLL Owner, LLC (k)
York Station Road Hotel OpCo Limited (n)
Subsidiaries where the effective interest
is less than 100%
IHG ANA Hotels Group Japan LLC (74.66%) (ar)
IHG ANA Hotels Holdings Co., Ltd. (66%) (ar)
Regent Hospitality Worldwide, Inc. (51%) (bt)
Sustainable Luxury Holding (Thailand)
Limited (49%) (c) (j) (cu)
Sustainable Luxury Hospitality (Thailand)
Limited (73.99%) (c) (j) (cu)
Sustainable Luxury Management (Thailand)
Limited (73.99%) (c) (j) (cu)
Sustainable Luxury Operations (Thailand)
Ltd. (99.99%) (j) (cu)
Universal de Hoteles SA (99.99%) (j) (bj)
World Trade Centre Montreal Hotel
Corporation (74.11%) (bl)
Associates, joint ventures and other
111 East 48th Street Holdings LLC (19.9%) (g) (h) (k)
Alkoer, Sociedad de Responsabilidad Limitada de
Capital Variable (50%) (h) (cg)
Beijing Orient Express Hotel Co., Ltd. (16.25%) (bm)
Blue Blood (Tianjin) Equity Investment
Management Co., Limited (30.05%) (bn)
Carr Clark SWW Subventure, LLC (26.67%) (g) (ca)
Carr Waterfront Hotel, LLC (11.46%) (g) (h) (ca)
China Hotel Investment Limited (30.05%) (i) (am)
Desarrollo Alkoer Irapuato S. de R.L. de C.V.
(50%) (cg)
Desarrollo Alkoer Saltillo S. de R.L. de C.V.
(50%) (cg)
Desarrollo Alkoer Silao S. de R.L. de C.V. (50%) (cg)
EDG Alpharetta EH, LLC (0%) (d) (h) (r)
Gestion Hotelera Gestel, C.A. (50%) (c) (h) (ba)
Groups360, LLC (10.60%) (h) (da)
Inter-Continental Hotels Saudi Arabia
Limited (40%) (bs)
NF III Seattle, LLC (25%) (g) (r)
NF III Seattle Op Co, LLC (25%) (g) (r)
Nuevas Fronteras S.A. (23.66%) (cd)
President Hotel & Tower Co Ltd. (30%) (bu)
Shanghai Yuhuan Industrial Development Co.,
Ltd. (1%) (da)
Sustainable Luxury Gravity Global Private
Limited (51%) (h) (bz)
SURF-Samui Pte. Ltd. (49%) (ay)
Tianjin ICBCI IHG Equity Investment Fund
Management Co., Limited (21.04%) (bv)
33. Group companies continued
Fully owned subsidiaries continued
KHRG Riverplace, LLC (k)
KHRG Sacramento, LLC (k)
KHRG Schofield, LLC (k)
KHRG SFD, LLC (k)
KHRG SF Wharf, LLC (k)
KHRG SF Wharf U2, LLC (k)
KHRG South Beach, LLC (k)
KHRG State Street, LLC (k)
KHRG Sutter, LLC (k)
KHRG Sutter Union, LLC (k)
KHRG Taconic, LLC (k)
KHRG Tariff, LLC (k)
KHRG Texas Hospitality, LLC (k)
KHRG Texas Operations, LLC (k)
KHRG Tryon, LLC (k)
KHRG Vero Beach, LLC (k)
KHRG Vintage Park, LLC (k)
KHRG VZ Austin, LLC (k)
KHRG Wabash, LLC (k)
KHRG Westwood, LLC (k)
KHRG Wilshire, LLC (k)
Kimpton Hollywood Licenses, LLC (k)
Kimpton Hotel & Restaurant Group, LLC (k)
Kimpton Hotel Frankfurt GmbH (bf)
Kimpton Phoenix Licenses Holdings, LLC (k)
Louisiana Acquisitions Corp. (k)
Luxury Resorts and Spas (France) SAS (ct)
Manchester Oxford Street Hotel OpCo Limited (n)
Mercer Fairview Holdings, LLC (k)
Met Leeds Hotel OpCo Limited (n)
MH Lodging, LLC (k)
Oxford Spires Hotel OpCo Limited (n)
Oxford Thames Hotel OpCo Limited (n)
PML Services, LLC (as)
Pollstrong Limited (n)
Powell Pine, Inc. (k)
Priscilla Holiday of Texas, Inc. (cl)
PT Regent Indonesia (bh)
PT SC Hotels & Resorts Indonesia (bh)
Raison d’Etre Holdings (BVI) Limited (v)
Raison d’Etre Services (BVI) Limited (v)
Raison d’Etre Spas, Sweden AB (db)
Regent Asia Pacific Hotel Management Ltd. (bw)
Regent Asia Pacific Management Ltd. (cp)
Regent Berlin GmbH (cq)
Regent International Hotels Ltd (bw)
Resort Services International (Cayo Largo) L.P. (ci)
Roxburghe Hotel Edinburgh OpCo Limited (n)
Russell London Hotel OpCo Limited (n)
SBS Maryland Beverage Company, LLC (as)
SC Hotels International Services, Inc. (k)
SC Leisure Group Limited (n)
SC NAS 2 Limited (n)
SC Quest Limited (n)
SC Reservations (Philippines) Inc. (l)
SCH Insurance Company (bi)
Semiramis for training of Hotel Personnel
and Hotels Management SAE (ch)
SF MH Acquisition, LLC (k)
Six Continents Holdings Limited (n)
Six Continents Hotels de Colombia SA (bj)
Six Continents Hotels International Limited (n)
Six Continents Hotels, Inc. (k)
Six Continents International Holdings B.V. (p)
Six Continents Investments Limited (f) (n)
Six Continents Limited (n)
Six Continents Overseas Holdings Limited (n)
Six Continents Restaurants Limited (cy)
SixCo North America, Inc (w)
Six Senses Americas IP, LLC (k)
Six Senses North America Management, LLC (k)
SLC Sustainable Luxury Cyprus Limited (cs)
SPHC Management Ltd. (bq)
St David’s Cardiff Hotel OpCo Limited (n)
Sustainable Luxury Holdings (BVI) Limited (v)
Sustainable Luxury Lanka Pvt. Ltd (cv)
Notes to the Group Financial Statements
IHG | Annual Report and Form 20-F 2022
215
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Group Financial Statements
Notes to the Group Financial Statements continued
33. Group companies continued
Registered addresses
(k)
3411 Silverside Road, Tatnall Building #104,
Wilmington, DE 19810, USA
205 Powell Place, 37027 Brentwood,
TN 37027, USA
Clarendon House, 2 Church Street, Hamilton
HM11, Bermuda
Broadwater Park, Denham,
Buckinghamhamshire, UB9 5RH, UK
– on 1 January 2023 all entities with this
corresponding mailing address changed
address to 1 Windsor Dials, Arthur Road,
Windsor, Berkshire, SL4 1RS, UK
333 Bay Street, Suite 400, Toronto M5H 2R2,
Ontario, Canada
Kingsfordweg 151, 1043 GR Amsterdam,
The Netherlands
Room No. 38, Floor 16, Saigon Tower
Building, No. 29 Le Duan Street, Ben Nghe
Ward, District I, Ho Chi Minh City, Vietnam
The Corporation Trust Centre, 1209 Orange
Street, Wilmington, DE 19801, USA
Caledonian Exchange, 19a Canning Street,
Edinburgh, EH3 8HE, UK
Building 4, No 13 Xiao Gang Zhong Ma Road,
Zhuhai District, Guangzhou, Guangdong,
P.R. China
Level 6, Akaria Plaza, North Wing, Gate D,
Olaya Street, PO Box 93228, Riyadh 1148,
Saudi Arabia
Flemming House, Wickhams Cay, P.O. Box
662, Road Town, Tortola VG1110, British
Virgin Islands
Wilmington Trust SP Services, Inc. 1105
North Market Street, Suite 1300, Wilmington,
DE 19801, USA
31-33 rue Mogador, 75009 Paris, France
Bucharest 011015, 1st District, 50-52 Buzesti
St, 83 module, 11 floor, Romania
230 J E Irausquin Boulevard, 11025 Palm
Beach, Aruba
Level 11, 20 Bond Street, Sydney NSW 2000,
Australia
Ontario # 1050, Col. Providencia,
Guadalajara, Jalisco CP44630, Mexico
5/F, Manulife Place, 348 Kwung Tong Road,
Kowloon, Hong Kong
Rond-Point Robert Schuman 11, 1040
Brussels, Belgium
QBC 4 – Am Belvedere 4, 1100, Vienna, Austria
Avenida da Republica, no 52 – 9, 1069 – 211,
Lisbon, Portugal
Room 60, Section 11 Floor 3 Premises I,
Building 1, House 125, Varshavskoye shosse
Str, Vn.Ter.G. Municipal District Severnoye
Chertanovo, Moscow City, 117587, Russia
No. 84, Pan Haliain Street, Unit #1, Level 8,
Uniteam Marine Office Building, Sanchuang
Township, Yangon, Myanmar
230 Victoria Street, #13-00 Bugis Junction
Towers, 188024, Singapore
4640 Admiralty Way, 5th Floor, Marina del
Rey, CA 90292, USA
Alameda Jau 536, Suite 3S-E, 01420-000
Sao Paulo, Brasil
Avenida Cordoba 1547, piso 8, oficina A,
1055 Buenos Aires, Argentina
The Phoenix Centre, George Street, Belleville
St. Michael, Barbados
Level 10, 55 Shortland Street, Auckland
Central, Auckland 1010, New Zealand
1, Murtala Muhammed Drive, Ikoyi, Lagos,
Nigeria
Central Office Park Unit 4, 257 Jean Avenue,
Centurion 0157, South Africa
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(ab)
(ac)
(ad)
(ae)
(af)
(ag)
(ah)
(ai)
(aj)
(ak)
(al)
(am)
(an)
(ao)
(ap)
(bw)
(bx)
(by)
(bz)
(ca)
(cb)
(cc)
(cd)
(ce)
(cf)
(cg)
(ch)
(ci)
(cj)
(ck)
(cl)
(cm)
(cn)
(co)
(cp)
(cq)
(cr)
(cs)
(ct)
(cu)
(cv)
(cw)
(cx)
(cy)
(cz)
(da)
14th Floor, South China Building,
1-3 Wyndham Street, Hong Kong, SAR
Eski Büyükdere Cd. Park Plaza No:14 K:4
Maslak – Sarıyer, 34398, Istanbul, Turkey
Paseo de Recoletos 37 – 41, 28004 Madrid,
Spain
B-11515 Bhikaj Cama Place, New Delhi, South
Delhi, 110066 India
Carr Hospitality, LLC, 1455 Pennsylvania
Avenue, NW, Suite 100, Washington,
DC 20004, USA
Two Snowhill, Snow Hill, Queensway,
Birmingham, B4 6GA, UK
Krunska 73, Beograd, 11000, Serbia
Moreno 809 2 Piso, C1091AAQ Buenos Aires,
Argentina
Bulevar Svetog Petra Cetinjskog 149 – 81000
Podgorica, Montenegro
Bernard Monteagudo 201, 15076, Lima, Peru
Avenida Ejercito Nacional Mexicano No. 769,
Torre B Piso 8, Granada, Miguel Hidalgo,
Ciudad de Mexico, CP 11520, Mexico
Ground Floor, Al Kamel Law Building, Plot
52-b, Banks Area, Six of October City, Egypt
2985 Gordy Parkway, 1st Floor, Marietta,
GA 30066, USA
600 Mamaroneck Avenue #400, 10528
Harrison, NY 10528, USA
8275 South Eastern Avenue #200, Las Vegas,
NV 89123, USA
5444 Westheimer #1000, Houston, TX 77056,
USA
23/6 D, Anhaght Str., Yerevan, 0069, Armenia
Generation Park Z – ul. Towarowa 28, 00-839
Warsaw, Poland
Suite 1, Ground Floor, The Financial Services
Centre, Bishops Court Hill, St. Michael,
BB14004, Barbados
Brumby Centre, Lot 42, Jalan Muhibbah,
87000 Labuan F.T., Malaysia
Charlottenstrasse 49, 10117 Berlin, Germany
C/O BDO LLP, 4 Atlantic Quay, 70 York
Street, Glasgow, G2 8JX, UK
ATS Services Limited, Capital Center,
9th Floor, 2-4 Arch, Makarios III Ave., 1065
Nicosia, Cyprus
95 Blvd. Berthier, 75017 Paris, France
57, 9th Floor, Park Ventures Ecoplex, Unit
902-904, Wireless Road, Limpini, Pathum
Wan Bangkok 103330, Thailand
Shop No. L3-6, Amity Building, No. 125,
High Level Road, Maharagama, Colombo,
Sri Lanka
Premier Chambers, M. Lux Lodge, 1st Floor,
Orchid Magu, Male, Republic of Maldives
Venture Corporate Services (Mauritius) Ltd,
Level 3, Tower 1, Nexteracom Towers,
Cybercity, Ebene, Mauritius
5 Temple Square, Temple Street, Liverpool,
L2 5RH, UK
1st Floor, No. 68, Zhupan Road, Zhuqiao
Town, Pudong New Area,
Shanghai, P.R. China
251 Little Falls Drive, Suite 400, Wilmington,
New Castle County, DE 19808, USA
(at)
(ar)
(az)
(as)
(ay)
(ax)
(aq)
(ba)
(bc)
(bh)
(bb)
(bg)
(bd)
(be)
(bf)
(au)
(av)
(aw)
11th Floor, Building No. 10, Tower C, DLF
Phase-II, DLF Cyber City, Gurgaon,
Haryana-122002, India
20th Floor, Toranomon Kotoshira Tower, 2-8,
Toranomon 1-chom, Minato-ku, 105-0001,
Tokyo, Japan
2 Wisconsin Circle #700, Chevy Chase, MD,
20815, USA
1052 Budapest, Apáczai Csere Jánus u.
12-14A, Hungary
Budapester Str. 2, 10787 Berlin, Germany
Grevgatan 13, 11453 Stockholm, Sweden
Alameda Jau 536, Suite 3S-E, 01420-000
São Paulo, Brazil
1980 Pérodeau Street, Vaudreuil-Dorion,
J7V 8P7, Quebec, Canada
168 Robinson Road, #16-01 SIF Building,
068899, Singapore
361 San Francisco Street Penthouse, San Juan,
PR 00901, Puerto Rico
Hotel Tamanaco Inter-Continental, Final Av.
Ppal, Mercedes, Caracas, Venezuela
22nd Floor, Citigroup Tower, No. 33
Huayanshiqiao Road, Pudong, 200120,
Shanghai, P.R. China
Alameda Jau 536, Suite 3S-C, 01420-000
São Paulo, Brazil
Alameda Jau 536, Suite 3S-D, 01420-000
São Paulo, Brazil
Viale Monte Nero n.84, 20135 Milano, Italy
Thurn-und-Taxis-Platz 6 – 60313 Frankfurt
am Main, Germany
Juris Tax Services Ltd. Level 12, NeX Teracom
Tower II, Ebene, Mauritius
Menara Imperium 22nd Floor, Suite D, JI.
HR. Rasuna Said Kav.1, Guntur Sub-district,
Setiabudi District, South Jakarta 12980,
Indonesia
Primmer Piper Eggleston & Cramer PC,
30 Main St., Suite 500, P.O. Box 1489,
Burlington, VT 05402-1489, USA
Calle 49, Sur 45 A 300, Oficina 1102, 055422
Envigado, Antioquia, Colombia
21 Engineer Lane, Gibraltar, GX11 1AA,
Gibraltar
Suite 2500, 1000 de La Gauchetiere St.
West, Montreal C H3B OA2, Canada
(bm) Room 311, Building 1, No. 6 East Wen Hua
Yuan Road, Beijing Economy and
Technology Development Zone, Beijing,
P.R. China
Room N306, 3rd Floor, Building 6, Binhai
Financial Street, No. 52 West Xincheng Road,
Tianjin Economy and Technology
Development Zone, Tianjin, P.R. China
Cesta v Mestni log 1, 1000 Ljubljana, Slovenia
37A Professor Fridtjof Nansen Street,
5th Floor, District Sredets, Sofia, 1142, Bulgaria
C/o Holiday Inn & Suites, Cnr Waigani Drive
& Wards Road, Port Moresby, National
Capital District, Papua New Guinea
Suite 2201, Festival Tower, Dubai Festival
City, Al Rebbat St., P.O. Box 58191, Dubai,
United Arab Emirates
Madinah Road, Jeddah, P.O Box 9456,
Post Code 21413, Jeddah, Saudi Arabia
Maples Corporate Services Ltd. – PO Box
309, Ugland House, Grand Cayman –
KY-1104, Cayman Islands
971, 973 Ploenchit Road, Lumpini,
Pathumwan, Bangkok 10330, Thailand
Room R316, 3rd Floor, Building 6, Binhai
Financial Street, No. 52 West Xincheng Road,
Tianjin Economy and Technology
Development Zone, Tianjin, P.R. China
(bo)
(bp)
(bq)
(bn)
(bu)
(bk)
(bv)
(bs)
(br)
(bt)
(bl)
(bj)
(bi)
216
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Parent Company
Financial Statements
218
220
Parent Company Financial Statements
Notes to the Parent Company Financial Statements
P
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Crowne Plaza Chaozhou Riverside, China
Parent Company Financial Statements
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Parent Company Financial Statements
Parent Company Financial Statements
Parent Company statement of financial position
31 December 2022
Fixed assets
Investments
Current assets
Debtors: due after more than one year
Debtors: due within one year
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Share-based payment reserve
Cash flow hedge reserves
Profit and loss account
Total equity
Signed on behalf of the Board,
Paul Edgecliffe-Johnson
20 February 2023
The profit after tax amounts to £751m (2021: loss of £52m).
Registered number 05134420
Note
2022
£m
2021
£m
3
4
4
7
8
10
6
3,198
3,160
46
217
(26)
237
3,435
(1,953)
1,482
38
75
8
431
–
930
1,482
28
922
(832)
118
3,278
(1,941)
1,337
39
75
7
393
3
820
1,337
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s
Parent Company statement of changes in equity
Called up
share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
At 1 January 2021
Loss for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Losses on cash flow hedges, including related tax charge
of £5m
Costs of hedging
Hedging losses reclassified to financial expenses
Total other comprehensive income for the year
Total comprehensive income/(loss) for the year
Share-based payments capital contribution
At 31 December 2021
Profit for the year
Other comprehensive loss
Items that may be subsequently reclassified to profit or loss:
Gains on cash flow hedges, including related tax credit of £1m
Costs of hedging
Hedging gains reclassified to financial expenses
Total other comprehensive loss for the year
Total comprehensive income for the year
Repurchase of shares, including transaction costs
Share-based payments capital contribution
Equity dividends paid
At 31 December 2022
39
–
–
–
–
–
–
–
39
–
–
–
–
–
–
(1)
–
–
38
75
–
–
–
–
–
–
–
75
–
–
–
–
–
–
–
–
–
75
Notes on pages 220 to 224 form an integral part of these Financial Statements.
7
–
–
–
–
–
–
–
7
–
–
–
–
–
–
1
–
–
8
Share-
based
payment
reserve
£m
364
–
Cash flow
hedge
reserves
£m
(19)
–
Profit
and loss
account
£m
872
(52)
–
–
–
–
–
29
393
–
–
–
–
–
–
–
38
–
431
(50)
2
70
22
22
–
3
–
30
2
(35)
(3)
(3)
–
–
–
–
–
–
–
–
(52)
–
820
751
–
–
–
–
751
(447)
–
(194)
930
Total
equity
£m
1,338
(52)
(50)
2
70
22
(30)
29
1,337
751
30
2
(35)
(3)
748
(447)
38
(194)
1,482
Parent Company Financial Statements
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Parent Company Financial Statements
Notes to the Parent Company
Financial Statements
1. Accounting policies
Authorisation of Financial Statements and statement
of compliance with FRS 101
The Parent Company Financial Statements of InterContinental Hotels
Group PLC (the ‘Company’) for the year ended 31 December 2022
were authorised for issue by the Board of Directors on 20 February 2023
and the Parent Company statement of financial position was signed
on the Board’s behalf by Paul Edgecliffe-Johnson. The Company is
a public limited company incorporated and registered in England
and Wales. The Company’s ordinary shares are publicly traded on
the London Stock Exchange and it is not under the control of any
single shareholder. The Company’s primary activity is acting as
a holding company for the Group’s investments.
The Directors have assessed, in the light of current and anticipated
economic conditions, the Company’s ability to continue as a going
concern. Having considered the going concern status and liquidity
of the Group (see page 157), the Directors confirm they have a
reasonable expectation that the Company has sufficient resources
to continue operating until at least 30 June 2024 and there are no
material uncertainties that may cast doubt on the Company’s going
concern status. Accordingly, they continue to adopt the going concern
basis in preparing the Parent Company Financial Statements.
The Parent Company Financial Statements are presented in sterling
and all values are rounded to the nearest million pounds (£m) except
when otherwise indicated.
No income statement is presented for the Company as permitted
by Section 408 of the Companies Act 2006.
The audit fee of £0.02m (2021: £0.02m) was borne by a subsidiary
undertaking in both years.
Basis of preparation
The Parent Company Financial Statements have been prepared
in accordance with FRS 101, as applied in accordance with the
provisions of the Companies Act 2006. FRS 101 sets out a reduced
disclosure framework for a ‘qualifying entity’ as defined in the
standard which addresses the financial reporting requirements
and disclosure exemptions in the individual financial statements
of qualifying entities that otherwise apply the recognition,
measurement and disclosure requirements of UK-adopted IFRSs.
FRS 101 sets out amendments to adopted IFRSs that are necessary to
achieve compliance with the Companies Act and related Regulations.
The following disclosures have not been provided as permitted
by FRS 101:
• A cash flow statement and related notes as required by IAS 7
‘Statement of Cash Flows’;
• A comparative period reconciliation for share capital as required
by IAS 1 ‘Presentation of Financial Statements’;
• Disclosures in respect of transactions with wholly owned
subsidiaries as required by IAS 24 ‘Related Party Disclosures’;
• Disclosures in respect of capital management as required by
paragraphs 134 to 136 of IAS 1 ‘Presentation of Financial Statements’;
• The effects of new but not yet effective IFRSs as required by
paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes
in Accounting Estimates and Errors’; and
• Disclosures in respect of the compensation of key management
personnel as required by paragraph 17 of IAS 24 ‘Related
Party Disclosures’.
Where the Consolidated Financial Statements of the Company
include the equivalent disclosures, the Company has also taken
the exemptions under FRS 101 available in respect of the
following disclosures:
• The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2
‘Share-based Payment’ in respect of group-settled share-based
payments; and
• The requirements of paragraphs 91 to 99 of IFRS 13 ‘Fair Value
Measurement’ and the disclosures required by IFRS 7 ‘Financial
Instruments: Disclosures’.
The accounting policies set out herein have, unless otherwise
stated, been applied consistently to all periods presented in these
Financial Statements.
Critical accounting policies and the use of judgements,
estimates and assumptions
There are no critical estimates or judgements which are considered
to present significant risk of a material adjustment to the Parent
Company Financial Statements in the next financial year.
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1. Accounting policies continued
Significant accounting policies
Foreign currencies
Transactions in foreign currencies are translated to the Company’s
functional currency at the exchange rates ruling on the dates of
the transactions. Monetary assets and liabilities denominated in
foreign currencies are retranslated to the functional currency at
the relevant rates of exchange ruling on the last day of the period.
Foreign exchange differences arising on translation are recognised
in the income statement.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity
securities, amounts due from and amounts due to Group undertakings
and loans and other borrowings.
Investments in equity securities
Investments in subsidiaries are carried at cost plus deemed capital
contributions arising from share-based payment transactions less
any provision for impairment. The carrying amount is reviewed
at each reporting date, including a comparison to the market
capitalisation of the Company on 31 December 2022 (£8.3bn) to
determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset
exceeds its estimated recoverable amount. Impairment losses are
recognised in the income statement.
Amounts due from and amounts due to Group undertakings
Amounts due from Group undertakings are recognised initially
at fair value and subsequently measured at amortised cost using
the effective interest rate method less provision for expected credit
losses. Allowances for expected credit losses are made based
on the risk of non-payment, taking into account ageing, previous
experience, economic conditions and forward-looking data.
Such allowances are measured as either 12-month expected credit
losses or lifetime expected credit losses depending on changes
in the credit quality of the counterparty.
Amounts due to Group undertakings are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest rate method.
Amounts due from and to Group undertakings are only offset where
the relevant facilities permit such offset under all conditions described
in the Group accounting policy for offsetting of financial assets and
financial liabilities on page 165 of the Group Financial Statements.
Loans and other borrowings
Loans and other borrowings are initially recognised at the fair value of
the consideration received less directly attributable transaction costs.
They are subsequently measured at amortised cost. Finance charges,
including transaction costs and any discount or premium on issue,
are recognised in the income statement using the effective interest
rate method.
Borrowings are classified as due after more than one year when the
repayment date is more than 12 months from the period-end date
or where they are drawn on a facility with more than 12 months
to expiry.
Derivative financial instruments and hedging
Derivatives are initially recognised and subsequently measured at
fair value. The subsequent accounting treatment depends on whether
the derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged.
Changes in the fair value of derivatives which have either not been
designated as hedging instruments or relate to the ineffective portion
of hedges are recognised immediately in the income statement.
Documentation outlining the measurement and effectiveness of
any hedging arrangement is maintained throughout the life of the
hedge relationship.
Interest arising from currency derivatives and interest rate swaps
is recorded in either financial income or expenses over the term
of the agreement, unless the accounting treatment for the hedging
relationship requires the interest to be taken to reserves.
Capital and reserves
Accounting policies relating to capital and reserves, which are also
applicable to the Company, can be found on page 167 of the Group
Financial Statements.
The share premium account represents the amount of proceeds
received for shares in excess of their nominal value.
Share-based payments
The cost of equity-settled shared-based payment transactions with
employees is measured by reference to fair value at the date at which
the right to the shares is granted. Fair value is determined by an
external valuer using option pricing models.
The cost of equity-settled share-based payment transactions is
recognised, together with a corresponding increase in equity, over
the period in which any performance or service conditions are
fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (vesting date).
The income statement charge represents the movement in
cumulative expense recognised at the beginning and end of that
year. No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market
or non-vesting condition, which are treated as vesting irrespective
of whether or not the market or non-vesting condition is satisfied,
provided that all other performance and/or service conditions
are satisfied.
Where the Company grants awards over its own shares to the
employees of its subsidiaries, it recognises an increase in the cost
of investment in its subsidiaries equivalent to the equity-settled
share-based payment charge recognised in its Consolidated
Financial Statements with the corresponding credit being
recognised directly in equity.
Notes to the Parent Company Financial Statements
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Parent Company Financial Statements
Notes to the Parent Company Financial Statements
continued
2. Directors’ remuneration
Average number of Directors
Non-Executive Directors
Executive Directors
Directors’ remuneration
Base salaries, fees, annual performance payments and benefits
2022
2021
10
3
13
2022
£m
6.4
10
3
13
2021
£m
6.1
More detailed information on the remuneration including pensions, share awards and shareholdings for each Director is shown in the Directors’ Remuneration
Report on pages 127 and 134. In addition, amounts received or receivable under long-term incentive schemes are shown on page 127.
Directors in respect of whose qualifying services shares were received or receivable under long-term incentive schemes
3. Investments
Cost and net book value
At 1 January 2022
Share-based payments capital contribution
At 31 December 2022
2022
number
3
2021
number
3
£m
3,160
38
3,198
The Company is the beneficial owner of all the equity share capital of InterContinental Hotels Limited, a company registered in England
and Wales.
A full list of subsidiary and other related undertakings is given in note 33 to the Group Financial Statements.
4. Debtors
Due after more than one year
Derivative financial assets (note 6)
Deferred tax (note 5)
Due within one year
Amounts due from Group undertakings
UK Corporation Tax
5. Deferred tax
At 1 January 2021
Income statement
Other comprehensive income
At 31 December 2021
Income statement
Other comprehensive income
At 31 December 2022
2022
£m
2021
£m
6
40
46
210
7
217
Losses
£m
Currency
swaps
£m
14
15
–
29
11
–
40
4
–
(5)
(1)
–
1
–
–
28
28
912
10
922
Total
£m
18
15
(5)
28
11
1
40
Deferred tax assets are recognised on the basis of an expectation of sufficient future taxable profits within the Group.
More detailed information on the basis for deferred tax recognition is shown within the Group accounting policies and note 8 to the Group Financial
Statements on pages 166 and 182.
222
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6. Derivative financial instruments and hedging
Currency swaps have been transacted to swap the proceeds from the euro bonds to sterling as follows:
Date of designation
Pay leg
Interest rate Receive leg
Interest rate Maturity
Hedged item
November 2018
October 2020
£436m 3.5%
£454m 2.7%
€500m
€500m
2.125%
1.625%
May 2027
€500m 2.125% bonds 2027
October 2024
€500m 1.625% bonds 2024
P
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t
a
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m
e
n
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s
Fair value
2021
£m
(16)
(31)
2022
£m
6
(9)
Hedge ineffectiveness arises where the cumulative change in the fair value of the swaps exceeds the change in fair value of the future
cash flows of the bonds. The change in value of the hedged item used as the basis for recognising hedge ineffectiveness for the period
was a £39m gain (2021: £30m loss).
The cash flow hedge reserves are analysed as follows:
Cash flow hedge reserves
At 1 January 2021
Costs of hedging deferred and recognised in other comprehensive income
Change in fair value of currency swaps recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss
Deferred tax
At 31 December 2021
Costs of hedging deferred and recognised in other comprehensive income
Change in fair value of currency swaps recognised in other comprehensive income
Reclassified from other comprehensive income to profit or loss
Deferred tax
At 31 December 2022
Cash flow
hedge
reserve
£m
(9)
–
(45)
70
(5)
11
–
29
(35)
1
6
More detailed information on derivative financial instruments and hedging is shown in note 23 to the Group Financial Statements.
7. Creditors: amounts falling due within one year
Amounts due to Group undertakings
Other payables
Accruals
Loans and other borrowings:
£173m 3.875% bonds 2022
More detailed information on other payables and loans and borrowings is shown in notes 19 and 21 to the Group Financial Statements.
8. Creditors: amounts falling due after one year
Derivative financial liabilities (note 6)
Loans and other borrowings:
€500m 1.625% bonds 2024
£300m 3.75% bonds 2025
£350m 2.125% bonds 2026
€500m 2.125% bonds 2027
£400m 3.375% bonds 2028
Cost of
hedging
reserve
£m
(10)
2
–
–
–
(8)
2
–
–
–
(6)
2022
£m
–
24
2
–
26
2022
£m
9
443
303
351
448
399
Total
£m
(19)
2
(45)
70
(5)
3
2
29
(35)
1
–
2021
£m
659
–
–
173
832
2021
£m
47
419
303
351
423
398
More detailed information on loans and other borrowings is shown in note 21 to the Group Financial Statements.
1,953
1,941
Notes to the Parent Company Financial Statements
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Parent Company Financial Statements
Notes to the Parent Company Financial Statements
continued
9. Employee benefits
Share-based payments
The Company operates the Annual Performance Plan, Long Term Incentive Plan (performance-related awards and restricted stock units)
and the Colleague Share Plan.
More detailed information on share-based payments is shown in note 27 to the Group Financial Statements.
10. Capital and reserves
Allotted, called up and fully paid
At 31 December 2021 (ordinary shares of 20340/399p each)
Repurchased and cancelled under share repurchase programme
At 31 December 2022 (ordinary shares of 20340/399p each)
Number
of shares
millions
187
(4)
183
Equity
share
capital
£m
39
(1)
38
More detailed information on shareholder returns is given in note 28 to the Group Financial Statements.
At 31 December 2022, 7,506,782 shares (2021: 3,701,408) with a nominal value of £1,565,324 (2021: £771,822) were held as treasury shares.
11. Dividends and shareholder returns
Paid during the year
Final (declared for previous year)
Interim
pence
per share
67.5
37.8
105.3
2022
£m
124
70
194
pence
per share
–
–
–
2021
£m
–
–
–
pence
per share
–
–
–
2020
£m
–
–
–
The final dividend in respect of 2022 of 94.5¢ per ordinary share (amounting to $165m) is proposed for approval at the AGM on 5 May 2023.
12. Contingencies
The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006 for the
year ended 31 December 2022:
Company name
InterContinental (PB) 1
InterContinental (PB) 3 Limited
IHC May Fair Hotel Limited
Asia Pacific Holdings Limited
Six Continents Hotels International Limited
Hotel InterContinental London (Holdings) Limited
IHG PS Nominees Limited
Six Continents Overseas Holdings Limited
Company number
06724223
06947603
02323039
03941780
00722401
06451128
07092523
02661055
The Company will guarantee all outstanding liabilities of the above UK subsidiary undertakings as at the balance sheet date in accordance
with Section 479C of the Companies Act 2006. The Company has assessed the probability of loss under the guarantees as remote.
In 2022 and 2021, there are no contingent liabilities to disclose in respect of guarantees of the liabilities of subsidiaries.
224
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Additional Information
A
d
d
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o
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m
a
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226 Other financial information
235 Directors’ Report
240 Group information
252 Shareholder information
259 Exhibits
260 Forward-looking statements
261 Form 20-F cross-reference guide
264 Glossary
266 Useful information
voco Doha West Bay Suites
Additional Information
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Additional Information
Other financial information
Use of Non-GAAP measures
In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional measures
(described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP
measures are either not defined under IFRS or are adjusted IFRS figures.
Further explanation in relation to these measures and their definitions can be found on pages 85 to 88.
Revenue and operating profit Non-GAAP reconciliations
Highlights for the year ended 31 December 2022
Reportable segments
Per Group income statement
System Fund
Reimbursement of costs
Operating exceptional items
Reportable segments
Reportable segments analysed as:
Fee business
Owned, leased and managed lease
2022
$m
3,892
(1,217)
(832)
–
2021
$m
2,907
(928)
(589)
–
1,843
1,390
Change
$m
985
(289)
(243)
–
453
1,449
394
1,843
1,153
237
1,390
296
157
453
Revenue
Change
%
33.9
31.1
41.3
–
32.6
25.7
66.2
32.6
2022
$m
628
105
–
95
828
809
19
828
Operating profit
2021
$m
494
11
–
29
534
570
(36)
534
Change
$m
134
94
–
66
294
239
55
294
Change
%
27.1
854.5
–
227.6
55.1
41.9
NMa
55.1
a Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
Underlying revenue and underlying operating profit
Reportable segments (see above)
Significant liquidated damagesb
Owned and leased asset disposalsc
Currency impact
Underlying revenue and underlying
operating profit
2022
$m
1,843
(7)
(19)
–
2021
$m
1,390
(6)
(36)
(40)
Change
$m
453
(1)
17
40
Revenue
Change
%
32.6
16.7
(47.2)
–
2022
$m
828
(7)
(2)
–
2021
$m
534
(6)
8
1
Operating profit
Change
$m
294
(1)
(10)
(1)
Change
%
55.1
16.7
NMa
–
1,817
1,308
509
38.9
819
537
282
52.5
a Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
b $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA. The $6m recognised in 2021 reflects the significant liquidated damages related
to one hotel in Greater China.
c The results of three UK Portfolio hotels and one InterContinental Hotel have been removed in 2022 (being the year of disposal) and the prior year to determine underlying growth.
The results of the hotels removed in 2021 (being the year of disposal of these hotels) have also been removed to determine underlying growth.
Underlying fee revenue and underlying fee operating profit
Reportable segments fee business (see above)
Significant liquidated damagesa
Currency impact
Underlying fee revenue and underlying fee
operating profit
2022
$m
1,449
(7)
–
2021
$m
1,153
(6)
(22)
Change
$m
296
(1)
22
Revenue
Change
%
25.7
16.7
–
2022
$m
809
(7)
–
2021
$m
570
(6)
(2)
Change
$m
239
(1)
2
1,442
1,125
317
28.2
802
562
240
Operating profit
Change
%
41.9
16.7
–
42.7
a $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA. The $6m recognised in 2021 reflects the significant liquidated damages related
to one hotel in Greater China.
226
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A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
Revenue and operating profit Non-GAAP reconciliations continued
Americas
Per Group financial statements, note 2
Reportable segments analysed asa:
Fee business
Owned, leased and managed lease
Reportable segments (see above)
Owned and leased asset disposalsc
Currency impact
Underlying revenue and underlying
operating profit
2022
$m
1,005
879
126
1,005
1,005
–
–
1,005
2021
$m
774
Change
$m
231
Revenue
Change
%
29.8
Operating profitb
2022
$m
761
2021
$m
559
Change
$m
202
Change
%
36.1
691
83
774
774
(11)
(1)
762
188
43
231
231
11
1
27.2
51.8
29.8
29.8
–
–
243
31.9
741
20
761
761
–
–
761
568
(9)
559
559
3
(1)
173
29
202
202
(3)
1
30.5
NMd
36.1
36.1
–
–
561
200
35.7
a Revenues as included in the Group Financial Statements, note 3.
b Before exceptional items.
c The results of hotels removed in 2021 (being the year of disposal or lease termination for these hotels) have also been removed to determine underlying growth.
d Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
EMEAA
Per Group financial statements, note 2
Reportable segments analysed asª:
Fee business
Owned, leased and managed lease
Reportable segments (see above)
Significant liquidated damagesc
Owned asset disposalsd
Currency impact
Underlying revenue and underlying
operating profit
2022
$m
552
284
268
552
552
(7)
(19)
–
2021
$m
303
Change
$m
249
Revenue
Change
%
82.2
Operating profitb
2022
$m
152
2021
$m
5
Change
$m
147
Change
%
NMe
149
154
303
303
–
(25)
(30)
135
114
249
249
(7)
6
30
90.6
74.0
82.2
82.2
–
(24.0)
–
153
(1)
152
152
(7)
(2)
–
32
(27)
5
5
–
5
(2)
8
121
26
147
147
(7)
(7)
2
135
378.1
(96.3)
NMe
NMe
–
NMe
NMe
NMe
526
248
278
112.1
143
a Revenues as included in the Group Financial Statements, note 3.
b Before exceptional items.
c $7m recognised in 2022 reflects the significant liquidated damages related to one hotel in EMEAA.
d The results of three UK Portfolio hotels and one InterContinental Hotel have been removed in 2022 (being the year of disposal) and the prior year to determine underlying growth.
The results of the hotels removed in 2021 (being the year of disposal of these hotels) have also been removed to determine underlying growth.
e Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
Other financial information
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Change
$m
Revenue
Change
%
(29)
(25.0)
2022
$m
23
2021
$m
58
Operating profitb
Change
$m
Change
%
(35)
(60.3)
Additional Information
Other financial information continued
Revenue and operating profit Non-GAAP reconciliations continued
Greater China
Per Group financial statements, note 2
Reportable segments analysed asª:
Fee business
Reportable segments (see above)
Significant liquidated damagesc
Currency impact
Underlying revenue and underlying
operating profit
2022
$m
87
87
87
–
–
87
2021
$m
116
116
116
(6)
(4)
(29)
(25.0)
(29)
(25.0)
6
4
–
–
106
(19)
(17.9)
a Revenues as included in the Group Financial Statements, note 3.
b Before exceptional items.
c $6m recognised in 2021 reflects the significant liquidated damages related to one property.
Highlights for the year ended 31 December 2021
Reportable segments
2021
$m
2,907
(928)
(589)
–
1,390
1,153
237
1,390
2020
$m
2,394
(765)
(637)
–
992
823
169
992
Change
$m
Revenue
Change
%
513
(163)
48
–
398
330
68
398
21.4
21.3
(7.5)
–
40.1
40.1
40.2
40.1
Per Group income statement
System Fund
Reimbursement of costs
Operating exceptional items
Reportable segments
Reportable segments analysed as:
Fee business
Owned, leased and managed lease
Underlying fee revenue
Reportable segments fee business (see above)
Significant liquidated damages
Currency impact
Underlying fee revenue
23
23
–
–
23
2021
$m
494
11
–
29
534
570
(36)
534
2021
$m
1,153
(6)
–
58
58
(6)
(2)
50
2020
$m
(153)
102
–
270
219
278
(59)
219
2020
$m
823
(1)
11
1,147
833
(35)
(60.3)
(35)
(60.3)
6
2
–
–
(27)
(54.0)
Operating profit
Change
$m
Change
%
647
(91)
–
(241)
315
292
23
315
NMa
(89.2)
–
(89.3)
143.8
105.0
39.0
143.8
Change
$m
330
(5)
(11)
314
Revenue
Change
%
40.1
500.0
–
37.7
a Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
228
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Revenue and operating profit Non-GAAP reconciliations continued
Highlights for the year ended 31 December 2020
Reportable segments
2020
$m
2,394
(765)
(637)
–
992
2019
$m
4,627
(1,373)
(1,171)
–
Change
$m
(2,233)
608
534
–
Revenue
Change
%
(48.3)
(44.3)
(45.6)
–
2,083
(1,091)
(52.4)
823
169
992
1,510
573
2,083
(687)
(404)
(1,091)
(45.5)
(70.5)
(52.4)
Per Group income statement
System Fund
Reimbursement of costs
Operating exceptional items
Reportable segments
Reportable segments analysed as:
Fee business
Owned, leased and managed lease
Underlying fee revenue
Reportable segments fee business (see above)
Significant liquidated damages
Currency impact
Underlying fee revenue
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
2020
$m
(153)
102
–
270
219
278
(59)
219
2020
$m
823
(1)
–
2019
$m
630
49
–
186
865
813
52
865
Operating profit
Change
$m
(783)
53
–
84
(646)
Change
%
NMa
108.2
–
45.2
(74.7)
(535)
(111)
(646)
(65.8)
NMa
(74.7)
2019
$m
1,510
(11)
(4)
Change
$m
(687)
10
4
Revenue
Change
%
(45.5)
(90.9)
–
822
1,495
(673)
(45.0)
a Percentage change considered not meaningful, such as where a positive balance in the latest period is comparable to a negative or zero balance in the prior period.
Fee margin reconciliation
Revenue
Reportable segments analysed as fee business (page 171)
Significant liquidated damages
Captive insurance company
Operating profit
Reportable segments analysed as fee business (pages 226 to 229)
Significant liquidated damages
Captive insurance company (note 20)
Fee margina
a Reported as a KPI on page 64.
2022
$m
2021
$m
2020
$m
2019
$m
2018
$m
1,449
1,153
(7)
(21)
(6)
(17)
1,421
1,130
809
(7)
(4)
798
570
(6)
(3)
561
823
(1)
(19)
803
278
(1)
(3)
274
1,510
1,486
(11)
(19)
(13)
(11)
1,480
1,462
813
(11)
(1)
801
793
(13)
(1)
779
56.2%
49.6%
34.1%
54.1%
53.3%
Other financial information
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Additional Information
Other financial information continued
Fee margin reconciliation continued
Fee margin is broken down by region as follows:
Year ended 31 December 2022
Revenue $m
Reportable segments analysed as fee business (see above)
Significant liquidated damages
Captive insurance company
Operating profit $m
Reportable segments analysed as fee business (see above)
Significant liquidated damages
Captive insurance company
Americas
EMEAA
Greater
China
Central
Total
879
–
–
879
741
–
–
741
284
(7)
–
277
153
(7)
–
146
87
–
–
87
23
–
–
23
199
–
(21)
178
(108)
–
(4)
(112)
1,449
(7)
(21)
1,421
809
(7)
(4)
798
Fee margin
84.3%
52.7%
26.4%
(62.9)%
56.2%
Year ended 31 December 2021
Revenue $m
Reportable segments analysed as fee business (see above)
Significant liquidated damages
Captive insurance company
Operating profit $m
Reportable segments analysed as fee business (see above)
Significant liquidated damages
Captive insurance company
Americas
EMEAA
Greater
China
Central
Total
691
–
–
691
568
–
–
568
149
–
–
149
32
–
–
32
116
(6)
–
110
58
(6)
–
52
197
–
(17)
180
(88)
–
(3)
(91)
1,153
(6)
(17)
1,130
570
(6)
(3)
561
Fee margin
82.2%
21.5%
47.3%
(50.6)%
49.6%
Net capital expenditure reconciliation
$m
Net cash from investing activities
Adjusted for:
Contract acquisition costs net of repayments
System Fund depreciation and amortisationa
Deferred purchase consideration paid
Net capital expenditure
Analysed as:
Capital expenditure: maintenance (including contract acquisition costs, net of repayments, of $64m (2021: $42m))
Capital expenditure: recyclable investments
Capital expenditure: System Fund capital investments
Net capital expenditure
a Excludes depreciation on right-of-use assets.
12 months ended
31 December
2022
$m
(78)
(64)
83
–
(59)
(108)
1
48
(59)
2021
$m
(12)
(42)
91
13
50
(75)
53
72
50
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A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
12 months ended
31 December
2022
$m
(59)
(16)
(3)
(83)
(161)
(111)
(15)
(35)
(161)
2021
$m
50
(58)
(1)
(91)
(100)
(76)
(5)
(19)
(100)
Gross capital expenditure reconciliation
$m
Net capital expenditure
Add back:
Disposal receipts
Repayments of contract acquisition costs
System Fund depreciation and amortisationa
Gross capital expenditure
Analysed as:
Capital expenditure: maintenance (including gross contract acquisition costs of $67m (2021: $43m))
Capital expenditure: recyclable investments
Capital expenditure: System Fund capital investments
Gross capital expenditure
a Excludes depreciation on right-of-use assets.
Adjusted free cash flow reconciliation
Net cash from operating activities
Adjusted for:
Payment of contingent purchase consideration
Principal element of lease payments
Purchase of shares by employee share trusts
Capital expenditure: maintenance (excluding contract acquisition costs)
Adjusted free cash flowa
a Reported as a KPI on page 64.
Adjusted interest reconciliation
Net financial expenses
Financial income
Financial expenses
Adjusted for:
Interest attributable to the System Fund
Foreign exchange gainsa
Adjusted interest
2022
$m
646
–
(36)
(1)
(44)
565
12 months ended 31 December
2021
$m
636
–
(32)
–
(33)
571
2020
$m
137
–
(65)
–
(43)
29
2019
$m
653
6
(59)
(5)
(86)
509
2018
$m
709
–
(35)
(3)
(60)
611
12 months ended
31 December
2022
$m
22
(118)
(96)
(16)
(10)
(26)
(122)
2021
$m
8
(147)
(139)
(3)
–
(3)
(142)
ª The definition of adjusted interest has been updated. The impact to the prior year is not material, and as such has not been restated.
Other financial information
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Additional Information
Other financial information continued
Adjusted earnings per ordinary share reconciliation
Profit/(loss) available for equity holders
Adjusting items:
System Fund revenues and expenses
Interest attributable to the System Fund
Operating exceptional items
Fair value gains on contingent purchase consideration
Tax on fair value gains on contingent purchase consideration
Foreign exchange gainsª
Tax on foreign exchange gainsª
Tax on exceptional items
Exceptional tax
Adjusted earnings
Basic weighted average number of ordinary shares (millions)
Adjusted earnings per ordinary share (cents)
12 months ended
31 December
2022
$m
375
105
(16)
95
(8)
–
(10)
(4)
(26)
–
511
2021
$m
266
11
(3)
29
(6)
1
–
–
(3)
(26)
269
181
282.3
183
147.0
a The definition of adjusted earnings per share has been updated. The impact to the prior year is not material, and as such has not been restated.
Revenue per available room (RevPAR), average daily rate and occupancy
RevPAR is the primary metric used by management to track hotel performance across regions and brands. RevPAR is also a commonly used
performance measure in the hotel industry. RevPAR comprises IHG system rooms revenue divided by the number of room nights available
and can be mathematically derived from occupancy rate multiplied by average daily rate (ADR). Occupancy rate is rooms occupied by hotel
guests expressed as a percentage of rooms that are available. ADR is rooms revenue divided by the number of room nights sold.
References to RevPAR, occupancy and ADR are presented on a comparable basis comprising groupings of hotels that have traded in both
the current and prior year, including the impact of hotels temporarily closed as a result of Covid-19. The principal exclusions in deriving this
measure are new hotels, hotels closed for major refurbishment and hotels sold in either of the two years. RevPAR and ADR are quoted at
a constant US$ conversion rate, in order to allow a better understanding of the comparable year-on-year trading performance excluding
distortions created by fluctuations in exchange rates.
The following tables present RevPAR statistics for the year ended 31 December 2022 and a comparison to 2021. Fee business and owned,
leased and managed lease statistics are for comparable hotels and include only those hotels in the Group’s System at 31 December 2022
and franchised, managed, owned, leased or managed lease by the Group since 1 January 2021. The comparison with 2021 is at constant
US$ exchange rates.
Americas
InterContinental
Occupancy
Average daily rate
RevPAR
Kimpton
Occupancy
Average daily rate
RevPAR
Hotel Indigo
Occupancy
Average daily rate
RevPAR
Crowne Plaza
Occupancy
Average daily rate
RevPAR
Fee business
Change vs
2021
2022
Owned, leased and
managed lease
2022
Change vs
2021
61.9%
21.0ppt
$225.40
$139.63
22.7%
85.7%
66.7%
15.5ppt
$288.11
$192.07
65.1%
$179.16
$116.64
21.9%
58.7%
9.7ppt
15.9%
36.1%
55.6%
12.3ppt
$131.97
$73.32
17.8%
51.4%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
232
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RevPAR, average daily rate and occupancy continued
EVEN Hotels
Occupancy
Average daily rate
RevPAR
Holiday Inn
Occupancy
Average daily rate
RevPAR
Holiday Inn Express
Occupancy
Average daily rate
RevPAR
avid hotels
Occupancy
Average daily rate
RevPAR
Staybridge Suites
Occupancy
Average daily rate
RevPAR
Candlewood Suites
Occupancy
Average daily rate
RevPAR
EMEAA
Six Senses
Occupancy
Average daily rate
RevPAR
Regent
Occupancy
Average daily rate
RevPAR
InterContinental
Occupancy
Average daily rate
RevPAR
Kimpton
Occupancy
Average daily rate
RevPAR
Hotel Indigo
Occupancy
Average daily rate
RevPAR
voco
Occupancy
Average daily rate
RevPAR
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
Fee business
Change vs
2021
2022
Owned, leased and
managed lease
2022
Change vs
2021
69.2%
15.4ppt
$160.15
$110.85
31.1%
68.6%
–
–
–
–
–
–
60.5%
9.0ppt
62.9%
$123.25
12.7%
$210.04
$74.51
32.3%
$132.04
7.9ppt
28.6%
47.1%
67.2%
5.2ppt
$125.29
$84.18
65.0%
$98.26
$63.83
11.8%
21.2%
7.4ppt
15.4%
30.2%
76.0%
3.5ppt
$123.47
$93.81
13.2%
18.7%
74.5%
0.4ppt
$95.83
$71.41
11.0%
11.6%
41.2%
17.9ppt
$913.47
27.1%
$376.39
124.3%
42.2%
(2.5)ppt
$235.87
$99.47
77.3%
67.5%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58.3%
19.6ppt
41.1%
22.5ppt
$229.30
$133.66
32.1%
99.1%
$281.35
$115.63
18.7%
161.7%
57.6%
29.9ppt
66.3%
37.7ppt
$207.05
68.0%
$294.94
$119.23
249.5%
$195.64
9.2%
153.1%
68.1%
30.2ppt
$161.12
$109.74
24.1%
122.8%
–
–
–
–
–
–
72.1%
18.4ppt
71.9%
28.2ppt
$136.65
$98.55
13.2%
52.0%
$186.28
$134.01
(1.8)%
61.7%
Other financial information
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Additional Information
Other financial information continued
RevPAR, average daily rate and occupancy continued
Crowne Plaza
Occupancy
Average daily rate
RevPAR
Holiday Inn
Occupancy
Average daily rate
RevPAR
Holiday Inn Express
Occupancy
Average daily rate
RevPAR
Staybridge Suites
Occupancy
Average daily rate
RevPAR
Greater China
Regent
Occupancy
Average daily rate
RevPAR
InterContinental
Occupancy
Average daily rate
RevPAR
Hotel Indigo
Occupancy
Average daily rate
RevPAR
HUALUXE
Occupancy
Average daily rate
RevPAR
Crowne Plaza
Occupancy
Average daily rate
RevPAR
Holiday Inn
Occupancy
Average daily rate
RevPAR
Holiday Inn Express
Occupancy
Average daily rate
RevPAR
Fee business
Change vs
2021
2022
61.4%
20.9ppt
$130.76
$80.22
62.4%
$105.09
$65.56
23.1%
86.5%
21.1ppt
26.0%
90.3%
67.5%
21.8ppt
$97.09
$65.57
28.9%
90.3%
78.2%
16.2ppt
$118.03
$92.28
14.4%
44.2%
45.9%
$146.56
$67.30
1.4ppt
(7.4)%
(4.6)%
41.6%
(9.1)ppt
$117.13
$48.75
(5.3)%
(22.4)%
44.5%
(4.0)ppt
$135.43
$60.24
46.2%
$68.98
$31.89
1.8%
(6.6)%
(1.1)ppt
(6.3)%
(8.5)%
42.8%
(4.8)ppt
$76.57
$32.79
(1.1)%
(11.0)%
44.7%
(2.9)ppt
$55.84
$24.98
(2.6)%
(8.7)%
43.1%
(6.9)ppt
$43.56
$18.77
2.1%
(11.9)%
Owned, leased and
managed lease
2022
Change vs
2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
234
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Directors’ Report
This Directors’ Report includes the information required to be
given in line with the Companies Act or, where provided elsewhere,
an appropriate cross reference is given. The Governance Report
approved by the Board is provided on pages 89 to 138 and
incorporated by reference herein.
shares held in treasury, which constituted 4.10% of the total issued
share capital (including treasury shares). All ordinary shares purchased
as part of the share buyback programme as at 31 December 2022
which were subject to cancellation by the Company have been
treated as such for the purposes of these calculations.
Subsidiaries, joint ventures and associated undertakings
The Group has around 380 subsidiaries, joint ventures, associates
and related undertakings (including branches outside of the
United Kingdom). A list of subsidiaries and associated undertakings
disclosed in accordance with the Companies Act is provided at
note 33 of the Group Financial Statements on pages 214 to 216.
Directors
The Directors may exercise all the powers of the Company,
subject to the Articles of Association, legislation and regulation.
This includes the ability to exercise the authority to allot or purchase
the Company’s shares pursuant to authorities granted by shareholders
at the Company’s AGM every year. Further details of the powers
of the Company’s Directors can be found on page 248.
For biographies of the current Directors see pages 92 to 94.
Directors’ and Officers’ (D&O) liability insurance and existence
of qualifying indemnity provisions
The Company maintains the Group’s D&O liability insurance policy,
which covers Directors and Officers of the Company defending civil
proceedings brought against them in their capacity as Directors or
Officers of the Company (including those who served as Directors
or Officers during the year). There were no indemnity provisions
relating to the UK pension plan for the benefit of the Directors
during 2022.
Articles of Association
A summary is provided on pages 248 and 249.
The Company’s Articles of Association may only be amended by
special resolution and are available on the Company’s website at
www.ihgplc.com/investors under Corporate governance.
Shares
Share capital
The Company’s issued share capital at 31 December 2022 consisted of
183,112,379 ordinary shares of 20 340/399 pence each, including 7,506,782
There are no special control rights or restrictions on share transfers
or limitations on the holding of any class of shares.
During 2022, 650,000 shares were transferred from treasury to the
employee share ownership trust.
As far as is known to management, IHG is not directly or indirectly
owned or controlled by another company or by any government.
The Board focuses on shareholder value creation. When it decides
to return capital to shareholders, it considers all of its options,
including share buybacks and special dividends.
Share issues and buybacks
On 31 January 2023, we completed our $500m share buyback
programme which was announced, and commenced, on
9 August 2022. As part of the buyback, 4,817,620 shares were
bought back and cancelled and 4,455,374 shares were bought
back and transferred to treasury.
The current share buyback authority remains in force until the
2023 AGM, and a resolution to renew the authority will be put to the
shareholders at that AGM. Further information on the transactions
that took place this year can be found on page 257.
Dividends
Dividends
Interim dividend
An interim dividend was paid on 6 October 2022
to shareholders on the register at the close of
business on 2 September 2022.
Final dividend
Subject to approval at the 2023 AGM, a final
dividend of 94.5¢ in respect of 2022 will be payable
on 16 May 2023 to shareholders on the register at the
close of business on 31 March 2023.
Ordinary
shares
ADRs
37.8p
43.9 ¢
94.5 ¢a
94.5 ¢
a The sterling amount of the final dividend will be announced on 26 April 2023 using
the average of the daily exchange rates for the three working days commencing
21 April 2023.
Major institutional shareholders
As at 17 February 2023, being the last practicable date, the Company had been notified of the following significant holdings in its ordinary
shares under section 5 of the UK Disclosure Guidance and Transparency Rules (DTRs).
Shareholder
BlackRock, Inc.
Boron Investments B.V.
Fiera Capital Corporation
Royal Bank of Canada
The Capital Group Companies, Inc.e
As at 17 February 2023
As at 21 February 2022
As at 22 February 2021
Ordinary
shares/ADSsa
11,247,319b
6,890,000
11,037,891
9,189,549
8,980,505
%a
6.12
3.77
6.06
5.02
5.12
Ordinary
shares/ADSsa
11,247,319b
6,890,000
11,037,891
9,189,549
9,071,574
%a
6.12
3.77
6.06
5.02
4.98
Ordinary
shares/ADSsa
10,429,827c
6,890,000
11,037,891
9,161,021d
9,071,574
%a
5.71
3.77
6.06
5.01
4.98
a The number of shares and percentage of voting rights was determined at the time of the relevant disclosures made in accordance with Rule 5 of the DTRs and doesn’t necessarily
reflect the impact of any share consolidation or any changes in shareholding subsequent to the date of notification that are not required to be notified to us under the DTRs.
b Total shown includes 2,080,427 qualifying financial instruments to which voting rights are attached.
c Total shown includes 1,431,074 qualifying financial instruments to which voting rights are attached.
d Total shown includes 123,160 qualifying financial instruments to which voting rights are attached.
e The Capital Group Companies, Inc. notified the Company on 13 January 2023 that it had increased its holding in the Company to 5.12%.
The Company’s major shareholders have the same voting rights as other shareholders. The Company does not know of any arrangements
the operation of which may result in a change in its control.
For further details on shareholder profiles see page 258.
Additional Information
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Directors’ Report continued
The Companies (Miscellaneous Reporting) Regulations 2018
Set out below is our employee engagement statement and on
page 237, our statement summarising how the Directors have had
regard to the need to foster the Company’s business relationships
with suppliers, customers and others.
Employment of disabled persons
IHG continues to focus on providing an inclusive environment, in
which employees are valued for who they are and what they bring to
the Group, and in which talented individuals are retained through all
levels of the organisation.
Details of how the Directors have had regard to the matters set
forth in Section 172(1)(a) to (f) of the Companies Act are provided
on pages 100 and 101.
Employee engagement statement
Our statement relates to IHG’s directly employed individuals and
should be read in conjunction with our people section, Section 172
statement, Voice of the Employee and wider workforce remuneration
and employee engagement disclosures on pages 29 to 33, 100 and
101, 111, 114, 117, 124 and 126.
During 2022, the main communication channels to provide
information of concern to employees included weekly newsletters,
virtual town halls, CEO and regional leadership calls, podcasts, blogs,
email broadcasts, videos and business function team meetings.
Employees have been consulted and given opportunities to express
their views and concerns through participation in the employee
engagement survey, Voice of the Employee feedback sessions,
ERGs, Next events (interactive sessions relating to IHG’s strategy
and behaviours), quarterly performance, development and
wellbeing meetings, team meetings and the Q&A session as part
of the CEO quarterly business update call.
Each December, employees are invited to join the employee share
plan. The plan is available to around 96% of our corporate employees
below the senior/mid-management level (who receive LTIP and
restricted stock units awards). Further details are on page 237.
Employees have been made aware of the financial and economic
factors affecting the performance of the Company through quarterly
business update calls with the CEO, as well as business function
team meetings, and other regional leadership calls.
The Chair and other Directors have engaged with employees through
a number of means, including direct interactions, Voice of the Employee
sessions, Next events and a series of opportunities held during the year
to meet Executive Directors via video meetings or in person.
Details of how Directors have had regard to employee interests, and
the effect of that regard, including principal decisions taken by IHG
during the year can be found on pages 100 and 101, 111, 114, 117, 124
and 126.
Employee numbers
Having a predominantly franchised and managed business model
means that many of those people who work at hotels operated
under our brands are not our employees. When the Group’s entire
estate is taken into account (including those working in our
franchised and managed hotels), approximately 345,000 people
worked globally across IHG’s brands as at 31 December 2022.
The average number of IHG employees, including part-time
employees, during 2022 were as follows:
• 7,047 people worldwide (including those in our corporate offices,
central reservations offices and owned and leased hotels
(excluding those in a category below)), whose costs were borne
by the Group;
• 5,655 people who worked directly on behalf of the System Fund
and whose costs were borne by the System Fund; and
• 13,178 General Managers and (in the US predominantly) other hotel
workers, who work in managed hotels, who have contracts or are
directly employed by IHG and whose costs are borne by those
hotel owners.
See note 4 of the Group Financial Statements on page 174.
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We look to appoint the most appropriate person for the job and are
committed to providing equality of opportunity to all employees
without discrimination. Every effort is made to ensure that applications
for employment from disabled employees are fully and fairly
considered and that disabled employees have equal opportunities
to training, career development and promotion.
See our people disclosures on pages 29 to 33.
Visit www.ihgplc.com/responsible-business for more information.
2022 share awards and grants to employees
Our current policy is to settle the majority of awards or grants under
the Company’s share plans with shares purchased in the market or
from shares held in treasury; however, the Company continues to
review this policy. The Company’s share plans incorporate the current
Investment Association’s guidelines on dilution which provide that
commitments to issue new shares or re-issue treasury shares under
executive plans should not exceed 5%, and under all plans should
not exceed 10%, of the issued ordinary share capital of the Company
(adjusted for share issuance and cancellation) in any 10-year period.
During the financial year ended 31 December 2022, the Company
transferred 650,000 treasury shares (0.35%) of the total issued
share capital to satisfy obligations under its share plans.
The estimated maximum dilution from awards made under the
Company’s share plans over the last 10 years is 4.4%.
As at 31 December 2022, there were no options outstanding.
The Company has not utilised the authority given by shareholders
at any of its AGMs to allot shares for cash without first offering such
shares to existing shareholders.
Employee share ownership trust (ESOT)
IHG operates an ESOT for the benefit of employees and former
employees. The ESOT receives treasury shares from the Company
and purchases ordinary shares in the market and releases them
to current and former employees in satisfaction of share awards.
During 2022, the ESOT released 708,078 shares and at 31 December
2022 it held 864,147 ordinary shares in the Company. The ESOT
adopts a prudent approach to purchasing shares, using funds
provided by the Group, based on expectations of future requirements.
Certain shares that have been allocated to share plan participants
under the Annual Performance Plan (APP) are held in a nominee
account on behalf of those participants by Computershares Investors
Plc (Nominee). As at 31 December 2022 the Nominee held 235,132
forfeitable shares as part of the APP. The shares held by the Nominee
have been allocated to share plan participants on terms that entitle
those participants to request or require the Nominee to exercise the
voting rights relating to those shares. The Nominee exercises those
votes in accordance with the directions of the participants. Shares
that have not been allocated to share plan participants under such
terms are held by the ESOT and although the trustee has the right to
vote or abstain from exercising their voting rights in relation to those
shares, it has a policy of not voting, which is in line with guidelines.
The trustee also has the right to accept or reject any offer relating
to the shares, in any way it sees fit.
The Nominee holds ordinary shares in the Company, in the form of
unvested share plan awards, allocated to Annual Performance Plan
share plan participants. The number of shares can be found in note
27 to the Group Financial Statements on pages 209 and 210.
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Unless otherwise requested by the Company, the trustee of the
ESOT waives all ordinary dividends on the shares held in the ESOT,
other than shares which have been allocated to participants on
terms which entitle them to the benefit of dividends, except for such
amount per share as shall, when multiplied by the number of shares
held by it on the relevant date, equal one pence or less.
Colleague Share Plan
The Company’s employee share plan, known as the Colleague Share
Plan, was first introduced in 2019 following approval by shareholders
at the Company’s 2019 AGM.
In accordance with the Colleague Share Plan Rules, participants’
contributions are used to purchase shares on a monthly basis on
behalf of the individuals (Purchased Shares) and held within the
Nominee. At the end of the Plan Year, the participants receive a
conditional right to receive one share (Matching Share) for every
one Purchased Share that they have purchased. Provided the
participants hold the Purchased Shares in the Nominee until the
second anniversary of the end of the Plan Year, the conditional right
to Matching Shares will vest.
In 2022, 73 shares vested outside of the usual timetable due to deaths
or good leavers, and in January 2023, over 26,200 shares vested as
part of the second Plan Year. As at 17 February 2023, the Nominee
held 33,255 Purchased Shares in relation to the third Plan Year.
Code of Conduct
The Code of Conduct (our Code) applies to all Directors, officers
and employees and complies with the NYSE rules as set out in
Section 406 of the US Sarbanes-Oxley Act 2002. Further details
on our Code are set out in the Strategic Report on pages 41 and 42
and the Board’s oversight of the Code is set out on page 105.
Business relationships with suppliers, customers and others
Our business relationships with our guests, hotel owners and
suppliers are fundamental to our commercial success. During the
year, the Board considered matters related to them and had regard
to the impact of decisions on them as detailed in the key matters
discussed by the Board on pages 100 and 101. These included
strategic and operational matters relating to our brand portfolio,
loyalty strategy, technology and operating regions.
The Board monitors relationships through a mixture of presentations,
reports and direct engagement. The Responsible Business
Committee specifically reviews responsible procurement processes,
targets and the Supplier Code of Conduct.
Details of how relationships have been maintained during the year
are set out in the key stakeholder engagement tables on pages 38
and 39.
The Group is party to a technology agreement with Amadeus
Hospitality Americas, Inc. (Amadeus), for the next generation central
reservation system used by the Group. The initial term of 10 years
will expire in 2028, and the Group has the right to extend this
agreement for two additional periods of up to 10 years each on the
same terms, conditions and pricing. The financial and performance
obligations in this agreement are guaranteed by Amadeus IT Group
S.A., the parent company of Amadeus.
Otherwise, there are no specific individual contracts or arrangements
considered to be essential to the business of the Group as a whole.
Future business developments of the Group
Details on these are set out in the Strategic Report on pages 2 to 88.
Finance
Political donations
The Group made no political donations under the Companies Act
during the year and proposes to maintain this policy in respect
of such donations. The Group’s wider political donations policy
continues to be kept under review.
Financial risk management
The Group’s financial risk management objectives and policies, including
its use of financial instruments, are set out in note 23 to the Group
Financial Statements on pages 199 to 203.
Significant agreements and change of control provisions
The Group is a party to the following arrangements which could be
terminated upon a change of control of the Company and which are
considered significant in terms of their potential impact on the
business of the Group as a whole:
• The $1.35 billion syndicated loan facility agreement dated 28 April
2022 and (unless extended) maturing in April 2027, under which
a change of control of the Company would entitle each lender to
cancel its commitment and declare all amounts due to it payable.
• The 10-year £300 million bond issued by the Company on
14 August 2015, under which, if the bond’s credit rating was
downgraded in connection with a change of control, the bond
holders would have the option to require the Company to redeem
or, at the Company’s option, repurchase the outstanding notes
together with interest accrued.
• The 10-year £350 million bond issued by the Company on
24 August 2016, under which, if the bond’s credit rating was
downgraded in connection with a change of control, the bond
holders would have the option to require the Company to redeem
or, at the Company’s option, repurchase the outstanding notes
together with interest accrued.
• The 8.5-year €500 million bond issued by the Company on
15 November 2018, under which, if the bond’s credit rating was
downgraded in connection with a change of control, the bond
holders would have the option to require the Company to redeem
or, at the Company’s option, repurchase the outstanding notes
together with interest accrued.
• The four-year €500 million bond issued by the Company on
8 October 2020, under which, if the bond’s credit rating was
downgraded in connection with a change of control, the bond
holders would have the option to require the Company to redeem
or, at the Company’s option, repurchase the outstanding notes
together with interest accrued.
• The eight-year £400 million bond issued by the Company on
8 October 2020, under which, if the bond’s credit rating was
downgraded in connection with a change of control, the bond
holders would have the option to require the Company to redeem
or, at the Company’s option, repurchase the outstanding notes
together with interest accrued.
Further details on material contracts are set out on page 250.
Disclosure of information to Auditor
For details, see page 140.
Greenhouse gas (GHG) emissions
By delivering more environmentally sustainable hotels, we create
value for IHG, our hotel owners and all our stakeholders. We recognise
the risks from climate change and the importance of reducing our
carbon footprint and our 2030 Science Based Target (SBT) reflects
this. Our SBT is approved by the Science Based Targets initiative
(SBTi) and aligns with the most ambitious goals of the Paris Agreement
to keep global warming within 1.5°C and requires us to reduce
Greenhouse Gas (GHG) emissions by 46% across our Scope 1 and 2
GHG emissions, as well as our Scope 3 GHG emissions covering both
our Fuel and Energy Related Activities (FERA) and Franchise estate.
During 2022, we have maintained a reduction in our absolute GHG
emissions, with our Scope 1 and 2 location-based emissions from
our owned, leased, managed, managed lease hotels and corporate
offices reducing by 7.1% from our 2019 base year. Total Scope 1, 2
and 3 GHG emissions from the whole estate fell by 3.4% from the
base year (towards a 2030 reduction target of 46%). As the industry
Additional Information
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Additional Information
Directors’ Report continued
recovers, we will continue to focus on achieving our carbon
reduction goals by delivering the actions outlined in our Transition
Plan (see pages 56 to 57 for more details) which includes driving
energy efficiency improvements across our existing estate hotels
and developing very low carbon and net-zero new-builds, as well
as implementing, where possible, renewable energy solutions.
Reporting boundary
Measure
Scope 1 and 2 GHG emissions
from operations under our
direct control – IHG managed,
owned, leased and managed
lease hotels and corporate
offices.
Scope 3 GHG Emissions
from operations outside our
direct operational control
– franchised hotels.
Scope 3 GHG Emissions from
operations outside our direct
operational control – Fuel and
Energy Related Activities
(FERA) emissions.
Emissions from all operations
– IHG franchised, managed,
owned, leased and managed
lease hotels and corporate
offices
Emissions from all operations
– IHG franchised, managed,
owned, leased and managed
lease hotels, corporate offices
and FERA
Total Energy – fuel use from
hotel operations and hotel
transport services,
purchased electricity, heat,
steam and cooling (kWh)
Energy – fuel use from hotel
operations and hotel
transport services (kWh)
Energy – purchased
electricity, heat, steam and
cooling (kWh)
Scope 1 Direct emissions
(tCO2e from fuel use
and refrigerants)
Scope 2 Indirect emissions,
Location-based (tCO2e from
purchased energy)
Scope 2 Indirect emissions,
Market-based (tCO2e from
purchased energy)
Total Scope 1 and 2
emissions, Location-based
(tCO2e)
Scope 1 and 2 intensity,
Location-based (tCO2e per
($000 revenue)*
Scope 3 Indirect emissions
from franchised hotel
operations (tCO2e)
Scope 3 Indirect emissions
from FERA (tCO2e)
Total scope 1, 2 and 3
(franchise) GHG emissions
(tCO2e)
Total scope 1, 2 and 3 (FERA
and Franchise) GHG
emissions (tCO2e)
2022
Global
UK and UK
offshore only
Global
2021
UK and UK
offshore only
2020
Global
UK and UK
offshore only
6,051,717,997 56,865,500 5,386,682,959
45,904,803 4,566,467,608
39,077,437
2,093,660,811
27,407,539 2,035,865,452
23,563,410
1,537,208,264
20,155,641
3,958,057,186
29,457,961 3,350,817,507
22,341,393 3,029,259,244
18,921,795
482,917
5,306
456,515
4,463
341,101
3,788
1,999,890
5,683
1,765,642
4,744
1,584,397
4,411
1,995,125
4,373
1,773,745
5,664
1,592,407
6,575
2,482,807
10,989
2,222,158
9,207
1,925,498
8,199
0.2742
0.0491
0.3312
0.0757
0.3603
0.1230
2,972,102
119,594
2,884,212
128,447
2,199,529
111,831
732,731
2,846
624,281
2,510
396,487
1,528
5,454,909
130,582
5,106,369
137,655
4,125,027
120,030
6,187,640
133,428
5,730,651
140,165
4,521,514
121,558
* This carbon intensity metric is calculated using total gross revenue generated by the owned, leased, managed lease and managed hotels.
GHG Scope boundaries
We report Scope 1, Scope 2 and Scope 3 emissions to the nearest
tonne (tCO2e) as defined by the GHG Protocol Corporate Accounting
and Reporting Standard methodology, under the operational
control approach:
• Scope 1 emissions are direct emissions from the burning of fuels
or from refrigerant losses from our owned, leased, managed,
managed lease hotels and corporate offices.
• Scope 2 emissions are indirect emissions generated by the energy
purchased or acquired from our owned, leased, managed,
managed lease hotels and corporate offices. A location-based and
market-based method has been used to calculate emissions as
outlined in the table above.
• Scope 3 emissions are indirect emissions that occur in a
company’s value chain. IHG report Scope 3 emissions category 3
– Fuel and Energy Related Activities (FERA) and category 14 –
Franchises, which includes the Scope 1 and 2 emissions of our
Franchise estate and their Scope 3 FERA emissions, as these
emissions are covered by IHG’s Science Based Target (SBT).
Methodology
We work with external consultants to give us a representative picture
of IHG’s carbon footprint to assess IHG’s calendar year performance
for the period 1 January to 31 December 2022, compared to previous
years and our 2019 baseline year. Our consultants have used energy
use data, as reported by hotels on IHG’s Green Engage system,
combined with reported occupancy room night data for the period
1 January 2022 to 30 September 2022. To estimate our global
energy use, outlier checks were completed, and a gap filling,
and extrapolation methodology was applied, where necessary.
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Any missing datapoints for energy use were filled using average
consumption per room night from the nearest 12-month period.
Energy use for the final three months of 2022 has been estimated
using an average consumption from the previous 12 months, applied
to a projected number of occupied room nights to ensure that all
hotels have a consumption figure corresponding to their likely
occupancy. This approach was not used for fuel where it was not
possible to determine whether data was missed or fuel was not
used, or only purchased intermittently/seasonally. The IHG system
size and number of occupied room nights used for our energy use
estimations, was based on nine months of actual data and three
months of data projections. The data projections used for quarter 4
of 2022 were based on operational forecasts and therefore do not
directly correlate to the actual system size and occupancy data
reported in the other sections of IHG’s Annual Report and
Responsible Business Report. Estimating quarter 4 enables us to
report verifiable data for the calendar year, and this aligns with our
financial reporting period, to enable analysis of both financial and
non-financial indicators for the same period. As IHG’s system size
is continually changing, 2021, 2020, and 2019 data sets have
been restated.
For more information on our restatement method and 2019 data, see our
ESG databook at www.ihgplc.com/responsible-business/reporting
To calculate our emissions, we use the GHG Protocol Corporate
Accounting and Reporting Standard methodology. Energy use (kWh)
was converted to GHG Protocol Corporate Accounting Conversions
and reported to the nearest tonne, in tCO2e, across Scope 1, 2 and 3
emissions (as defined above). The most recent published emissions
factors were used for all regions and applied to each energy data
point to give associated GHG emissions. These were combined to
produce average carbon footprints per occupied room night by
region and region-brand group. Each average was calculated from
the total carbon footprint in the group sample, divided by the total
room nights in the group sample. For 2022, after outlier checks the
sample covers 84% of UK hotels reporting energy use and 79% of
our global hotels.
Energy reduction initiatives
IHG hotels globally use the IHG Green Engage system, a
comprehensive online environmental management platform that
helps them measure, track and report their utility consumption and
carbon footprint, as well as providing over 200 ‘Green Solutions’
with detailed guidance to support hotels in reducing their energy,
water and waste impacts. To comply with the IHG Green Engage
standard, hotels are required among others to report their monthly
energy consumption and complete key energy saving actions.
In 2021, hotels were set an annual carbon reduction target to drive
continuous improvement and in 2022 we have replaced this with a
brand-new energy metric for hotels, which ensures the hotel targets
set are relatable to hotels and within their control. To incentivise
and facilitate our hotels reporting into Green Engage, IHG has been
working on a more streamlined process for collecting centralised
data. We have partnered with an energy specialist to collect data
from utility companies or hotels directly and feed data directly into
Green Engage, at no additional cost to our hotels. The information
generated provides more accurate insights into a property’s
performance and how it might save money, as well as strengthening
hotel request for proposal (RFP) responses to corporate clients.
In 2022, we updated our brand standards to integrate energy
conservation measures (ECMs); these include high-efficiency,
low-flow aerated showerheads and tap faucets, and LED lighting.
We have also been working to develop our decarbonisation roadmap
which outlines our plan to deliver our SBT, see further details of our
Transition Plan on pages 56 and 57. Further to this, the 2023-2025
cycle for Long Term Incentive Plan (LTIP) measures will include
a new ESG measure, part of which will be targets related to
decarbonisation actions.
Hotel Energy Reduction Opportunities (HERO) tool
Being part of IHG means hotel owners receive a range of support
to empower them with the knowledge and resources they need
to meet their energy reduction targets, and in 2022 we launched
the Hotel Energy Reduction Opportunities (HERO) toolkit to guide
hotels on the most effective energy conservation measures for
their specific building. This provides indicative capital costs, energy
reductions and payback periods for each one based on the hotel’s
facilities, climate and energy use. With the tool’s assessment taking
only 10 minutes to complete, we are aiming to significantly expand
its use across all our hotels in 2023, which we are facilitating through
the addition of six more languages and the development of a separate
HERO tool in Chinese for our Greater China region which includes
China-specific climate zones.
See our Responsible Business Report and ESG databook at
www.Ihgplc.com/responsible-business/reporting
Listing Rules – compliance with LR 9.8.4C
The below table sets out only those sections of LR 9.8.4C which are relevant. The remaining sections of LR 9.8.4 are not applicable.
Section
Applicable sub-paragraph within LR 9.8.4C
Location
1
4
Interest capitalised
Group Financial Statements, note 7, page 178
Details of long-term incentive schemes
Directors’ Remuneration Report, pages 114 to 136
Going concern
An overview of the business activities of IHG, including a review
of the key business risks that the Group faces, is given in the
Strategic Report on pages 2 to 88 and in the Group information
on pages 240 to 251.
As at 31 December 2022 the Group had total liquidity of $2,224m,
comprising $1,350m of undrawn bank facilities and $774m of cash
and cash equivalents (net of overdrafts and restricted cash).
There remains a wide range of possible planning scenarios over the
going concern period. The scenarios considered and assessment
made by the Directors in adopting the going concern basis for
preparing these financial statements is included on page 157.
Based on the assessment completed, the Directors have a
reasonable expectation that the Group has sufficient resources
to continue operating until at least 30 June 2024 and there are no
material uncertainties that may cast doubt on the Group’s going
concern status. Accordingly, they continue to adopt the going
concern basis in preparing the Financial Statements.
Please see the viability statement on pages 52 and 53.
By order of the Board,
Nicolette Henfrey
Company Secretary
InterContinental Hotels Group PLC
Registered in England and Wales, Company number 5134420
20 February 2023
Additional Information
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Additional Information
Group information
History and developments
The Company was incorporated and registered in England and Wales
with registered number 5134420 on 21 May 2004 as a limited company
under the Companies Act 1985 with the name Hackremco (No. 2154)
Limited. In 2004/05, as part of a scheme of arrangement to facilitate
the return of capital to shareholders, the following structural changes
were made to the Group: (i) on 24 March 2005, Hackremco (No. 2154)
Limited changed its name to New InterContinental Hotels Group
Limited; (ii) on 27 April 2005, New InterContinental Hotels Group
Limited re-registered as a public limited company and changed
its name to New InterContinental Hotels Group PLC; and (iii) on
27 June 2005, New InterContinental Hotels Group PLC changed
its name to InterContinental Hotels Group PLC and became the
holding company of the Group.
The Group disposed of its interests in the soft drinks business by
way of an initial public offering of Britvic (Britannia Soft Drinks Limited
for the period up to 18 November 2005, and thereafter, Britannia SD
Holdings Limited (renamed Britvic plc on 21 November 2005), which
became the holding company of the Britvic Group on 18 November
2005), a manufacturer and distributor of soft drinks in the UK, in
December 2005. The Group now continues as a stand-alone
hotels business.
Recent acquisitions and divestitures
The Group made no acquisitions nor disposals in 2022. In 2021, the
Group disposed of a portfolio of three EVEN Hotels in the Americas
region resulting in a net cash inflow of $44m.
The Group, formerly known as Bass, and then Six Continents,
was historically a conglomerate operating as, among other things,
a brewer, soft drinks manufacturer, hotelier, leisure operator, and
restaurant, pub and bar owner. In 1988 Bass acquired Holiday Inn
International and the remainder of the Holiday Inn brand in 1990.
The InterContinental brand was acquired by Bass in 1998 and the
Candlewood Suites brand was acquired by Six Continents in 2003.
On 15 April 2003, following shareholder and regulatory approval,
Six Continents PLC separated into two new listed groups,
InterContinental Hotels Group PLC, comprising the hotels and
soft drinks businesses, and Mitchells & Butler plc, comprising the
retail and standard commercial property developments business.
Further information is included in note 11 to the Group Financial
Statements on page 184.
Capital expenditure
• Gross capital expenditure in 2022 totalled $161 million compared
with $100 million in 2021 and $148 million in 2020, see page 231.
• At 31 December 2022, capital committed (being contracts placed
for expenditure on property, plant and equipment and intangible
assets not provided for in the Group Financial Statements) totalled
$6 million, see page 211.
Several other factors will continue to remain important to the Group’s
outlook, including those relating to operational resilience, such as
the safety and security of hotel operations; guest preferences for
branded hotel experiences and loyalty in a competitive industry
where expectations can evolve rapidly and where booking windows
remain short; and its ability to attract and retain talent and capability
where key aspects of the Group’s growth ambitions and operations
are dependent on access to experience and knowledge while salary
inflation remains volatile.
The Group also faces emerging risks where the impact and
likelihood are not yet fully understood or factors that may become
significant in the medium- to long-term. This includes uncertainty
linked to the rapidly evolving wider macroeconomic and geopolitical
factors, including government policy and how this might impact
travel patterns and business relationships.
To enable focus on the material risk factors facing the Group, the
detail below has been organised under headings corresponding to
the ordering of the principal risks outlined earlier in this document
and considers the assessment of inherent risk trend and speed of
potential impact on IHG objectives.
The principal risks are on pages 47 to 51, the cautionary statements
regarding forward-looking statements are on page 260 and financial
and forward-looking information including note 8 on pages 179 to 183,
and note 23 on pages 199 to 203.
Risk factors
The Group is subject to a variety of inherent risks that may have
an adverse impact on its business operations, financial condition,
turnover, profits, brands and reputation. This section describes the
main risks that could materially affect the Group’s business. The risks
below are not the only ones that the Group faces. Some risks are not
yet known to the Group and some risks that the Group does not
currently believe to be material could later turn out to be material.
During 2022, the Group continued to face risks relating to macro
external factors, including the impact of extended Covid-19
lockdowns in its Greater China market and then the sudden release
of restrictions, continuing challenges with labour availability in key
markets, exposure to ongoing geopolitical uncertainty and the
war in Ukraine. These factors contributed to additional political,
economic and financial market developments and uncertainties
throughout 2022, including global supply chain disruptions,
inflationary pressures, increases to the cost of borrowing due
to rising interest rates and cybersecurity.
Following the outbreak of the war in Ukraine, the Group has now
ceased all operations in Russia due to the ongoing and increasing
challenges of operating there and consistent with evolving UK,
US and EU sanction regimes. The Group continues to monitor the
impact of the war in relation to our two hotels in Ukraine, one of
which has remained open throughout the conflict.
While our strategy and ambition remains stable, the business is
moving at a high speed as the industry recovers following the easing
of Covid-19 restrictions. As a result, the Group must balance short-term
execution and long-term goals, along with resilience in an environment
of uncertainties relating to, for example, how it uses, stores, secures
and transfers data; its ability to deliver innovation at scale and speed;
owner preferences for and ability to invest in its brands; global and
local supply chain efficiency and resiliency; and legal and regulatory
complexity and litigation trends.
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1. Owner preferences for or ability to invest in our brands
The Group is exposed to a variety of risks related to identifying,
securing and retaining franchise and management agreements
The Group’s growth strategy depends on its success in identifying,
securing and retaining franchise and management agreements.
This is an inherent risk for the hotel industry and the franchising
business and management model. Competition with other hotel
companies may generally reduce the number of suitable franchise,
management and investment opportunities offered to the Group
and increase the bargaining position of property owners seeking
to become a franchisee or engage a manager. The terms of new
franchise or management agreements may not be as favourable as
current arrangements; the Group may not be able to renew existing
arrangements on similarly favourable terms, or at all.
There can also be no assurance that the Group will be able to
identify, retain or add franchisees to the IHG System, to secure
management contracts or open hotels in our development pipeline.
For example, the availability of suitable sites, market saturation,
planning and other local regulations or the availability and
affordability of finance, which has been exacerbated in 2022,
may restrict the supply of suitable hotel development opportunities
under franchise or management agreements and mean that not
every hotel in our development pipeline may develop into a new
hotel that enters our system. In connection with entering into
franchise or management agreements, the Group may be required
to make investments in, or guarantee the obligations of, third parties
or guarantee minimum income to third parties. There are also risks
that significant franchisees or groups of franchisees may have
interests that conflict, or are not aligned, with those of the Group,
including, for example, the unwillingness of franchisees to support
individual or master brand or system improvement initiatives.
This could result in franchisees prematurely terminating contracts,
which could lead to disputes, litigation, damages and other expenses
and would adversely impact the overall IHG System size and the
Group’s financial performance.
The Group is exposed to the risks of hotel industry overcapacity
The future operating results of the Group could be adversely affected
by industry overcapacity (by number of rooms) and weak demand
due, for example, to additional Covid-19 restrictions on travel and
customer confidence in business and leisure travel, whether related
to pandemics, war, or otherwise, the cyclical nature of the hotel
industry, other differences between planning assumptions and
actual operating conditions, the cost-of-living crisis and changes
in stakeholder expectations around environmental factors.
These conditions could result in reductions in room rates and
occupancy levels, which would adversely impact the financial
performance of the Group.
2. Data and information usage, storage, security and transfer
The Group is exposed to cybersecurity and data privacy risks
The Group is increasingly dependent upon the collection, usage,
retention, availability, integrity and confidentiality of information,
including, but not limited to: guest, employee and owner credit card,
financial and personal data, business performance, financial reporting
and commercial development. The information is sometimes held in
different formats, such as digital, paper, voice recordings and video,
and could be stored in many places, including cloud-based storage
and facilities managed by third-party service providers, in our
Company managed hotels, and by our independently owned and
operated hotels, that are all subject to the same or similar risks.
Cyber breaches increasingly appear to be an unfortunate reality for
most firms and risks relating to cybersecurity appear to be heightened
in light of the war in Ukraine. The threats towards the hospitality
industry and the Group’s information are dynamic, and include
cyber-attacks, fraudulent use, loss or misuse by employees and
breaches of our vendors’ security arrangements, among others.
For example, in 2022, parts of the Group’s technology systems were
subject to unauthorised activity, causing disruption to the Group’s
booking channels and other applications. A putative class action suit
has been filed by a small group of hotel owners related to the incident.
This cybersecurity breach follows additional previous cybersecurity
incidents of a different nature in 2016.
The legal and regulatory environment around data privacy and
requirements set out by the payment card industry surrounding
information security across the many jurisdictions in which the
Group operates are constantly evolving (such as the EU GDPR,
China cybersecurity law, and California privacy law). If the Group
fails to protect information and ensure relevant controls are in place
to enable the acceptable use and release of information through the
appropriate channels in a timely and accurate manner, IHG System
performance, guest experience and the reputation of the Group
may be adversely affected. This could lead to revenue losses, fines,
penalties, litigation and other additional costs.
We are also required to comply with marketing and advertising laws
relating to our direct marketing practices, including email marketing,
online advertising, and postal mailings. Further restrictions to the
content or interpretations of these laws could adversely impact
our current and planned activities and the effectiveness or viability
of our marketing strategies to maintain, extend and acquire
relationships with customers, and impact the amount and timing
of our sales of certain products.
The Group is exposed to intellectual property risks
Given the importance of brand recognition to the Group’s business,
the protection of its intellectual property poses a risk due to the
variability and changes in controls, laws and effectiveness of
enforcement globally, particularly in jurisdictions that may not have
developed levels of protection for corporate assets, such as intellectual
property, trade secret, know-how and customer information and
records. Any widespread infringement, misappropriation or weakening
of the control environment could materially harm the value of the
Group’s brands and its ability to develop the business and compete
currently or in the future. Third-party claims that we infringe their
intellectual property could lead to disputes, litigation, damages
and other expenses.
For information of incidents relating to cybersecurity and data privacy,
see pages 212 and 251.
3. Our ability to deliver technological or digital performance
or innovation (at scale, speed, etc.)
The Group is exposed to inherent risks in relation to changing
technology and systems
As the use of the internet, artificial intelligence, mobile and data
technology grows, and new and disruptive technology solutions
are developed, customer needs and expectations evolve at pace.
The Group may find that its evolving technology capability is not
sufficient and may have to make substantial additional investments
in new technologies or systems to remain competitive. Failure to
keep pace with developments in technologies or systems, and
also with regulatory, risk and ethical considerations of how these
developments are used, may put the Group at a competitive
disadvantage. In addition, the technologies or systems that the
Group chooses to deploy may not be commercially successful or
the technology or system strategy may not be sufficiently aligned
with the needs of the business. Any such failure could adversely
affect guest experiences, and the Group may lose customers, fail
to attract new customers, impact our appeal to owners, incur
substantial costs or face other losses. This could further impact the
Group’s reputation in regards to innovation. (See also “2. Data and
information usage, storage, security and transfer”.)
Group information
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Domestic and international environmental laws and
regulations may cause us to incur substantial costs or subject
us to potential liabilities
The Group is exposed to certain compliance costs and potential
liabilities under various foreign and US federal, state and local
environmental, health and safety laws and regulations. These laws
and regulations govern actions and reporting requirements relating
to matters including air emissions, the use, storage and disposal of
hazardous and toxic substances, and wastewater disposal. The Group’s
failure to comply with such laws, including any required permits or
licences, could result in substantial fines or possible revocation of
our authority to conduct some of our operations. We could also
be liable under such laws for the costs of investigation, removal
or remediation of hazardous or toxic substances at our currently
or formerly franchised, managed, owned, leased or managed lease
hotels or at third-party locations in connection with our waste disposal
operations, regardless of whether or not we knew of, or caused, the
presence or release of such substances. The Group may also be
required to remediate such substances or remove, abate or manage
asbestos, mould, radon gas, lead or other hazardous conditions at
our properties. The presence or release of such toxic or hazardous
substances could result in third-party claims for personal injury,
property or natural resource damages, business interruption or
other losses. Such claims and the need to investigate, remediate
or otherwise address hazardous, toxic or unsafe conditions could
adversely affect the Group’s operations, the value of any affected
property, or our ability to sell, lease or assign our rights in any such
property, or could otherwise harm our business or reputation.
Environmental, health and safety requirements are increasingly
stringent, and our costs may increase as a result.
The Group’s financial performance may be affected by changes
in tax laws
Many factors will affect the Group’s future tax rate, the key ones
being legislative developments, future profitability of underlying
subsidiaries and tax uncertainties. Tax liabilities or refunds may also
differ from those anticipated, in particular as a result of changes in
tax law, changes in the interpretation of tax law, or clarification of
uncertainties in the application of tax law. The Group continues to
monitor significant tax reform proposals, most notably the
development of the OECD’s ‘Pillar 2’ Global Anti-Base Erosion rules.
6. Ethical and social expectations
The Group’s reputation and the value of its brands are influenced
by the perception of various stakeholders of the Group
The reputation of the Group and the value of its brands are
influenced by a wide variety of factors, including the perception
of stakeholder groups, such as guests, owners, suppliers and
communities in which the Group operates. The social and
environmental impacts of its business are under increasing scrutiny,
and the Group is exposed to the risk of damage to its reputation if
it fails to (or fails to influence its business partners to) undertake
responsible practices and engage in ethical behaviour, or fails to
comply with relevant regulatory requirements.
Additional Information
Group information continued
Risk factors continued
The Group is exposed to competition from online travel agents
and intermediaries
A proportion of the Group’s bookings originate from large
multinational, regional and local online travel agents and
intermediaries with which the Group has contractual arrangements
and to which it pays commissions. These platforms offer a wide
range of products, often across multiple brands, have growing
booking and review capabilities, and may create the perception that
they offer the lowest prices. Some of these online travel agents and
intermediaries have strong marketing budgets and aim to create
brand awareness and brand loyalty among consumers, which may
impact the Group’s profitability, undermine the Group’s own booking
channels and value to its hotel owners.
4. Global and local supply chain efficiency and resiliency
The Group is dependent upon a wide range of external
stakeholders and business partners
The Group relies on the performance, behaviours and reputation
of a wide range of business partners and external stakeholders,
including, but not limited to, owners, contractors, lenders, suppliers,
outsourced providers, vendors, joint-venture partners, online travel
agents, third-party intermediaries and other business partners
which may have different ethical values, interests and priorities.
Further, the number and complexity of interdependencies with
stakeholders is evolving. Breakdowns in relationships, contractual
disputes, deterioration of the financial health of our partners, poor
vendor performance, sub-standard control procedures, business
continuity arrangements, insolvency, stakeholder behaviours or
adverse reputations, which may be outside of the Group’s control,
could adversely impact on the Group’s performance and
competitiveness, delivery of projects, guest experiences or the
reputation of the Group or its brands.
5. Legal and regulatory complexity or litigation trends
The Group is required to comply with existing and changing
regulations and act in accordance with societal expectations
across numerous countries, territories and jurisdictions
Government regulations affect countless aspects of the Group’s
business including corporate governance, health and safety,
the environment, social responsibility, bribery and corruption,
employment law and diversity, franchise laws and regulation,
disability access, data privacy and information protection, financial,
accounting and tax. Regulatory changes may require significant
changes in the way the business operates and may inhibit the
Group’s strategy, including the markets the Group operates in,
brand protection, and use or transmittal of personal data. If the
Group fails to comply with existing or changing regulations, the
Group may be subject to fines, prosecution, loss of licence to
operate or reputational damage.
The Group is exposed to the risk of litigation
Certain companies in the Group are the subject of various claims
and proceedings. The ultimate outcome of these matters is subject
to many uncertainties, including future events and uncertainties
inherent in litigation. In addition, the Group could be at risk of
litigation claims made by many parties, including but not limited to:
guests, customers, joint venture partners, suppliers, employees,
regulatory authorities, franchisees and/or the owners of the hotels
it manages. Claims filed may include requests for punitive damages
as well as compensatory damages. Unfavourable outcomes of claims
or proceedings could have a material adverse impact on the Group’s
results of operations, cash flow and/or financial position. Exposure
to significant litigation or fines may also affect the reputation of the
Group and its brands. (See also legal proceedings on page 251.)
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7. Guest preferences for branded hotel experiences and loyalty
The Group is subject to a competitive and changing industry
The Group operates in a competitive industry and must compete
effectively against traditional competitors such as other global
hotel chains, local hotel companies and independent hotels to
win the loyalty of guests, employees and owners. The competitive
landscape also includes other types of businesses, both global and
specific to certain markets, such as web-based booking channels
(which include online travel agents and intermediaries), and
alternative sources of accommodation such as short-term lets of
private property. Failure to compete effectively in traditional and
emerging areas of the business could impact the Group’s market
share, system size, profitability and relationships with owners and
guests. The hospitality industry has previously experienced
consolidation and further such activity may result in such
competitors having access to increased resources, capabilities
or capacity and provide advantages from scale of revenues,
marketing funds and/or cost structures.
The Group is reliant on the reputation of its existing brands
and is exposed to inherent reputation risks
Any event that materially damages the reputation of one or more of
the Group’s brands and/or fails to sustain the appeal of the Group’s
brands to its customers and owners may have an adverse impact
on the value of that brand and subsequent revenues from that brand
or business. In particular, if the Group is unable to create consistent,
valued and quality products and guest experiences across the
franchised, managed, owned, leased and managed lease hotels
or if the Group, its franchisees or business partners fail to act
responsibly, this could result in an adverse impact on its brand
reputation. In addition, the value of the Group’s brands could be
influenced by a number of external factors outside the Group’s
control, such as, but not limited to, changes in sentiments against
global brands, changes in applicable regulations related to the hotel
industry or to franchising, successful commoditisation of hotel
brands by online travel agents and intermediaries, or changes
in owners’ perceptions of the value of the Group.
The Group is exposed to inherent uncertainties associated
with brand development and expansion
In recent years the Group has launched or acquired a number
of brands, such as EVEN Hotels, HUALUXE Hotels and Resorts,
avid hotels, voco Hotels, Kimpton Hotels & Restaurants, Regent,
Six Senses, Atwell Suites and Vignette Collection and has entered
into an agreement with Iberostar. The Group also maintains
co-branded credit card relationships to support the IHG Rewards
programme and an exclusive loyalty partnership with Mr & Mrs
Smith. Since the rollout, integration and growth of these brands
(including associated loyalty programmes) is dependent on market
conditions, guest preference and owner investment, as well as
continued cooperation with third parties, there are inherent risks
that we will be unable to recover costs incurred in developing or
acquiring the brands or any new programmes or products, or those
brands, programmes, or products will not succeed as we intend.
The Group’s ongoing agenda to deliver industry-leading net rooms
growth creates risks relating to the transition of systems, new or
changed operating models, services and processes, and may result
in failures to improve commercial performance, leading to financial
loss and undermining stakeholder confidence.
8. Our ability to attract and retain talent and capability
The Group requires the right people, skills and capability
to manage growth and change
In order to remain competitive, the Group relies upon hiring and
retaining highly skilled employees with particular expertise or
leadership capability. The Group’s strategic business plans could
be undermined by failure to build and sustain a resilient corporate
culture, failure to recruit or retain key personnel, unexpected loss
of key senior employees, inadequate succession planning and
incentive plans, or failure to invest in the development of key skills.
The Group must compete against other companies inside and
outside the hospitality industry for suitably qualified or experienced
employees, up to and including Executive Directors. Some of the
markets in which the Group operates may experience economic
growth and/or low levels of unemployment, pay compression, and
there may be attractive roles and competitive rewards available
elsewhere which limit the ability to attract and retain talent.
Some emerging markets may not have the required local expertise
to operate a hotel, particularly for luxury and lifestyle brands, and
may not be able to attract the right talent. Failure to attract and
retain employees and increasing labour costs may threaten the
ability to operate hotels and our corporate support functions,
achieve business growth targets or impact the profitability of our
operations. Additionally, unless the Group maintains a sufficient
infrastructure to enable knowledge and skills to be passed on, the
Group risks losing accumulated knowledge if key employees leave.
Collective bargaining activity could disrupt operations,
increase our labour costs or interfere with the ability of our
management to focus on executing our business strategies
A significant number of the Group’s colleagues at its managed,
owned, leased and managed lease hotels in the US, Canada,
Mexico, Grand Cayman and Dutch Antilles are covered by collective
bargaining agreements and similar agreements. If relationships
with those colleagues or the unions that represent them deteriorate,
the properties we own, lease or manage could experience labour
disruptions such as strikes, lockouts, boycotts and public
demonstrations. Collective bargaining agreements representing
half of our organised colleagues in the US expired during 2022.
These agreements were successfully renegotiated and extended
to 2024. Agreements in Los Angeles are expected to be renewed
during 2023. Hotel sector union member participation continues
to increase in key markets within the Americas region, which may
require IHG to enter into new labour agreements as more employees
become unionised in the future. Labour disputes, which are generally
more likely when collective bargaining agreements are being
renegotiated, could harm our relationship with our colleagues, result
in increased regulatory inquiries and enforcement by governmental
authorities and deter guests. Further, adverse publicity related to
a labour dispute could harm our reputation and reduce customer
demand for our services.
Labour regulation and the negotiation of new or existing collective
bargaining agreements could lead to higher wage and benefit costs,
changes in work rules that raise operating expenses, legal costs and
limitations on our ability or the ability of our third-party property
owners to take cost-saving measures during economic downturns.
We do not have the ability to control the negotiations of collective
bargaining agreements covering unionised labour employed by our
third-party property owners and franchisees. Increased unionisation
of our workforce, new labour legislation or changes in regulations
could disrupt our operations, reduce our profitability or interfere
with the ability of our management to focus on executing our
business strategies.
Group information
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Additional Information
Group information continued
Risk factors continued
9. Operational resilience to incidents or disruption or control
breakdown (including safety and security, geopolitical,
health-related and fraud)
The Group is exposed to a variety of risks associated with safety,
security and crisis management
There is a constant need to protect the safety and security of
our guests, employees and assets against natural and man-made
threats. These include, but are not limited to, exceptional events,
such as extreme weather, civil or political unrest, violence and
terrorism, serious and organised crime, fraud, employee dishonesty,
cyber crime, pandemics or contagious diseases (including but not
limited to Covid-19), fire and day-to-day accidents, incidents and
petty crime, which impact the guest or employee experience,
could cause loss of life, sickness or injury and result in compensation
claims, fines from regulatory bodies, litigation and impact reputation.
Serious incidents or a combination of events could escalate into
a crisis that, if managed poorly, could further expose the Group
and its brands to significant reputational damage.
The Group is reliant upon the resilience of its reservation system
and other key technology platforms and is exposed to risks that
could disrupt their operation and/or integrity
The value of the Group is partly derived from the ability to drive
reservations through its reservation system and technology
platforms which are highly integrated with other processes and
systems and linked to multiple sales channels, including the Group’s
own websites, in-house and third-party managed call centres,
hotels, third-party intermediaries and travel agents.
The scope and complexity of our technology infrastructure,
including increasing reliance on third-party suppliers to support and
protect our systems and information, as well as the rapidly evolving
cyber threats, means that we are inherently vulnerable to physical
damage, failures, disruptions, denial of service, phishing or other
malware attacks, ransomware, cyber terrorism and fraud, as well
as human error, negligence and wilful misuse. These risks may be
heightened when these capabilities are provided off shore or in
cloud-based environments. Our franchisees and suppliers are also
inherently vulnerable to the same risks.
Lack of resilience and operational availability of these systems
provided by the Group or third-party technology providers and
inability or difficulty in updating existing or implementing new
functionality could lead to prolonged service disruption. This might
result in significant business interruption, impact the guest booking
experience, lead to loss of or theft of data, and subsequently
adversely impact Group revenues, incur financial costs to remediate
or investigate, lead to regulatory and/or contractual enforcement
actions or lawsuits, or damage the Group’s reputation and
relationships with hotel owners.
industry may fail to keep pace with overall economic improvement.
Such declines in demand for our products and services could
adversely affect room rates and/or occupancy levels and other
income-generating activities. Specifically, the Group is most
exposed to the impact of political and economic risk factors in
relation to the US market and to Greater China. The owners or
potential owners of hotels franchised or managed by the Group
face similar risks that could adversely impact their solvency and
the Group’s ability to secure and retain franchise or
management agreements.
Accordingly, the Group is particularly susceptible to adverse
changes in these economies, as well as changes in their currencies.
In addition to trading conditions, the economic outlook also affects
the financial health of current and potential owners and their ability
to access capital, which could impact existing operations, timely
payment of IHG fees and the health of the pipeline.
The Group is exposed to continued disruption and consequences
from the war in Ukraine
The Group has ceased all operations in Russia. Although these
operations were not material to consolidated financial results,
the Group continues to face uncertainty relating to the broader
consequences of this conflict on global macroeconomic conditions.
These uncertainties include the potential for governments to
impose additional sanctions or other economic or military measures.
Further expansion or escalation of military confrontations or related
geopolitical tensions, including increased restrictions on global trade,
could also result in, among other things, depressed or restricted
travel demand, declines in consumer confidence and economic
growth, an increased likelihood of cyber attacks or information
technology disruption, supply chain disruptions, increases in inflation
rates, changes to foreign currency exchange rates, constraints,
volatility or disruption in financial markets, the decreased availability
of raw materials, supplies, freight and labour, and uncertainty about
economic and global stability.
The Group may face difficulties insuring its business
Historically, the Group has maintained insurance at levels
determined to be appropriate in light of the cost of cover and the
risk profile of the business. However, the Group’s claims experience
and wider external market forces may limit the scope of coverage
the Group can obtain and the Group’s ability to obtain coverage at
reasonable rates. Other forces beyond the Group’s control, such as
terrorist attacks or natural disasters, may be uninsurable or simply
too expensive to insure. Inadequate or insufficient insurance carried
by the Group, our owners or other partners for damage, other
potential losses or liabilities to third parties involving properties
that we own, manage or franchise could expose the Group to large
claims or could result in the loss of capital invested in properties.
The Group is exposed to political and economic developments
The Group is exposed to political, economic and financial market
developments such as recession, inflation and availability and/or
cost of credit (due to rising interest rates) and currency fluctuations
that could lower revenues and reduce income. The outlook for 2023
may worsen due to continuing disruption from Covid-19 on domestic
and international travel patterns; potential disruptions in the US
economy; the impact of fluctuating commodity prices (including oil)
on economies dependent on such exports; continued unrest in parts
of the Middle East, Africa and Asia; the war in Ukraine; and barriers
to global trade, including unforeseeable changes in regulations,
imposition of tariffs or embargoes and other trade restrictions or
controls. The interconnected nature of economies suggests any of
these events, or other events, could trigger a recession that reduces
leisure and business travel as demand for our services is closely
associated with the performance of the general economy and is
sensitive to business and personal discretionary spending levels.
Decreased global or regional demand for hospitality products and
services can be especially pronounced during economic downturns
or low levels of economic growth, and the recovery period in our
The Group is exposed to risks related to executing and realising
benefits from strategic transactions, including acquisitions
and restructuring
The Group may seek to make strategic transactions, including
acquisitions, divestments or investments in the future. The Group
may not be able to identify opportunities or complete transactions
on commercially reasonable terms, or at all, and may not realise the
anticipated benefits from such transactions. Strategic transactions
come with inherent valuation, financial and commercial risks, and
regulatory and insider information risks during the execution of the
transactions. The Group may also continue to make organisational
adjustments to support delivery of our growth ambitions, including
the integration of acquisitions into the Group’s operating processes
and systems. This creates inherent risks of complexity and that any
changes made could be unsustainable or that we are unable to
achieve the return envisaged through reinvestment. In addition,
the Group may face unforeseen costs and liabilities, diversion of
management attention, as well as longer-term integration and
operational risks, which could result in a failure to realise benefits,
financial losses, lower employee morale and loss of talent.
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The Group is exposed to a variety of risks associated with its
financial stability and ability to borrow and satisfy debt covenants
While the strategy of the Group is to grow through activities that
do not involve significant amounts of its own capital, the Group
does require capital to fund some development opportunities,
technological innovations and strategic acquisitions; and to maintain
and improve owned, leased and managed lease hotels. The Group
is reliant upon having financial strength and access to borrowing
facilities to meet these expected capital requirements. The majority
of the Group’s borrowing facilities are only available if the financial
covenants in the facilities are complied with. Non-compliance with
covenants could result in the Group’s lenders demanding repayment
of the funds advanced and any undrawn facilities could be
unavailable. If the Group’s financial performance does not meet
market expectations, it may not be able to refinance existing
facilities on terms considered favourable.
The Group’s operations are dependent on maintaining sufficient
liquidity to meet all foreseeable medium-term requirements
and provide headroom against unforeseen obligations
Cash and cash equivalents is held in short-term deposits and
money market with short maturities. Most of the Group’s funds are
held in the UK or US, although $24 million (2021: $77 million) is held
in countries where repatriation is restricted as a result of foreign
exchange regulations. Medium- and long-term borrowing requirements
are met through committed bank facilities and bonds. Short-term
borrowing requirements may be met from drawings under
uncommitted overdrafts and facilities.
The Group is exposed to an impairment of the carrying value
of our brands, goodwill or other tangible and intangible assets
negatively affecting our consolidated operating results
Significant amounts of goodwill, intangible assets, right-of-use
assets, property, plant and equipment, investments and contract
assets are recognised on the Group balance sheet. We review the
value of our goodwill and indefinite-lived intangible assets for
impairment annually (or whenever events or circumstances indicate
impairment may have occurred). Changes to estimated values can
result from political, economic and financial market developments
or other shifts in the business climate, the competitive environment,
the perceived reputation of our brands (by guests or owners), or
changes in interest rates, operating cash flows, market capitalisation,
or developments in the legal or regulatory environment.
Because of the significance of our goodwill and other non-current
assets, we have incurred and may incur future impairment charges
on these assets which could have a material adverse effect on our
financial results or result in reversals of impairments not being
correctly identified and recorded.
Due to significant challenges and uncertainty in the data associated
with both risks and opportunities, the Group is not yet able to fully
quantify the potential financial impacts of climate change. The Group
continues to refine its workplan to enable quantification in the future
and is focused on ensuring the identified risks and opportunities are
integrated into our business strategy.
The Group is exposed to fluctuations in exchange rates, currency
devaluations or restructurings and to interest rate risk in relation
to its borrowings
The US dollar is the predominant currency of the Group’s revenue
and cash flows. Movements in foreign exchange rates can affect
the Group’s reported profit, net liabilities and interest cover.
The most significant exposures of the Group are in currencies that
are freely convertible. The Group’s reported debt has an exposure
to borrowings held in pounds sterling (including €1,000 million
euro bonds which have been swapped into sterling using currency
swaps). Conducting business in currencies other than US dollars
exposes us to fluctuations in exchange rates, currency devaluations,
or restructurings. This could potentially lower our reported revenues,
increase our costs, reduce our profits or disrupt our operations.
Our exposure to these factors is linked to the pace of our growth
in territories outside the US and, if the proportion of our revenues
grows, this may increase the potential sensitivity to currency
movements having an adverse impact on our results. The Group
is also exposed to interest rate risk in relation to its fixed and floating
rate borrowings and may use interest rate swaps to manage
the exposure.
The Group could be affected by credit risk on treasury transactions
The Group uses long-term credit ratings from Standard and Poor’s,
Moody’s and Fitch Ratings as a basis for setting its counterparty
limits. In order to manage the Group’s credit risk exposure, the
treasury function sets counterparty exposure limits using metrics
including credit ratings, the relative placing of credit default swap
pricings, tier 1 capital and share price volatility of the relevant
counterparty. The Group trades only with recognised, creditworthy
third parties. It is the Group’s policy that all customers who wish to
trade on credit terms are subject to credit verification procedures.
In respect of credit risk arising from financial assets, the Group’s
exposure to credit risk arises from default of the counterparty, with a
maximum exposure equal to the carrying amount of these instruments.
The carrying amount of financial assets represents the maximum
exposure to credit risk.
10. The impact of climate change on hospitality
(physical and transition risks for IHG)
The Group is exposed to the risk of events or stakeholder
expectations that adversely impact domestic or international
travel, including climate change
The room rates and occupancy levels of the Group could be
adversely impacted by events that reduce domestic or international
travel, such as actual or threatened acts of terrorism or war, political
or civil unrest, epidemics and pandemics or threats thereof,
travel-related accidents or industrial action, natural or man-made
disasters, or other local factors impacting specific countries, cities
or individual hotels, as well as increased transportation and fuel
costs. Additionally, the Group may be impacted by increasing
stakeholder and societal expectations and attitudes in relation to
factors contributing to climate change including overtravel and
overtourism, and those linked directly to hotels including waste,
water, energy, or impact on local communities. A decrease in the
demand for business and/or leisure hotel rooms as a result of such
events or attitudinal and demand shifts may have an adverse impact
on the Group’s operations or growth prospects and financial results.
In addition, inadequate planning, preparation, response or recovery
in relation to a major incident or crisis may cause loss of life, prevent
operational continuity, or result in financial loss, and consequently
impact the value of our brands and/or the reputation of the Group.
The Group is exposed to risks relating to our commitments
in relation to Climate Change
In line with our commitment to reduce our energy use and carbon
emissions in line with climate science, the Group has implemented
a 2030 science-based target to reduce absolute scope 1, 2, and
scope 3 greenhouse gas emissions from fuel and energy-related
activities and franchises by 46.2% by 2030 from a 2019 base year.
This ambition is challenging to implement and will require significant
transformation across IHG, hotel owners and supply chain partners,
including investment in physical assets and operational procedures.
If these changes, many of which are outside of IHG’s control, do not
occur, the Group may have difficulty achieving its public commitments,
which may impact the reputation of the Group.
Group information
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Additional Information
Group information continued
Directors’ and Executive Committee
members’ shareholdings
As at 17 February 2023: (i) Executive Directors had the number of beneficial interests in shares (including Directors’ share awards under
IHG’s share plans) set out in the table on page 131; (ii) Non-Executive Directors had the number of beneficial interests in shares set out in
the table on page 134; and (iii) Executive Committee members had the number of beneficial interests in shares (including members’ share
awards under IHG’s share plans) set out in the table below. These shareholdings indicate all Directors’ or Executive Committee members’
beneficial interests and those held by their spouses and other connected persons. As at 17 February 2023, no Director or Executive
Committee member held more than 1.0% of the total issued share capital. None of the Directors have a beneficial interest in the shares
of any subsidiary.
Executive
Committee
member
Keith Barr
Paul Edgecliffe-
Johnson
Number of shares held outright
APP deferred share awards
LTIP share awards (unvested)
Total number of shares held
17 Feb
2023
31 Dec
2022
31 Dec
2021
17 Feb
2023
31 Dec
2022
31 Dec
2021
17 Feb
2023
31 Dec
2022
31 Dec
2021
17 Feb
2023
31 Dec
2022
31 Dec
2021
93,263
93,263
81,830
29,090
29,090
26,696
173,441
173,441
143,231
295,794
295,794
251,757
66,869
66,869
58,723
21,389
21,389
19,137
107,945
107,945
95,959
196,203
196,203
173,819
Elie Maalouf
83,340
83,340
74,698
21,308
21,308
19,625
111,089
111,089
96,790
215,737
215,737
191,113
Claire Bennett
30,070
30,070
22,045
13,906
13,906
Jolyon Bulley
52,164
52,164
52,164
14,228
14,228
Yasmin Diamond
Nicolette
Henfrey
2,902
4,815
2,902
4,815
2,902
1,801
9,877
8,981
9,877
8,981
13,144
10,219
8,557
3,594
57,019
57,019
54,499
100,995
100,995
89,688
57,380
57,380
53,683
123,772
123,772
116,066
39,070
39,070
37,836
51,849
51,849
49,295
43,417
43,417
38,996
57,213
57,213
44,391
Wayne Hoare
5,700
5,700
2,714
9,408
9,408
1,867
48,516
48,516
38,945
63,624
63,624
43,526
Kenneth
Macpherson
24,060
24,060
24,060
14,088
14,088
13,066
55,719
55,719
54,202
93,867
93,867
91,328
George Turner
37,059
37,059
30,100
14,052
14,052
12,920
57,616
57,616
55,070
108,727
108,727
98,090
Executive Directors’ benefits upon termination of office
All current Executive Directors have a rolling service contract with a notice period from the Group of 12 months. As an alternative, the Group
may, at its discretion, pay in lieu of that notice. Neither notice nor a payment in lieu of notice will be given in the event of gross misconduct.
Payment in lieu of notice could potentially include up to 12 months’ salary and the cash equivalent of 12 months’ pension contributions, and
other contractual benefits. Where possible, the Group will seek to ensure that, where a leaver mitigates their losses by, for example, finding
new employment, there will be a corresponding reduction in compensation payable for loss of office.
Visit www.ihgplc.com/investors under Corporate governance in the Directors’ Remuneration Policy section, for further details about the determination
of termination payments in the Directors’ Remuneration Policy.
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Description of securities other than equity securities
Fees and charges payable to a depositary
Category
(as defined by SEC)
Depositary actions
Depositing or
substituting the
underlying shares
Receiving or
distributing
dividends
Selling or
exercising rights
Each person to whom ADRs are issued against deposits of shares,
including deposits and issuances in respect of:
• Share distributions, stock splits, rights, mergers
• Exchange of securities or any other transactions or event or other
distribution affecting the ADSs or the deposited securities
Distribution of stock dividends
Distribution of cash
Distribution or sale of securities, the fee being in an amount equal
to the fee for the execution and delivery of ADSs which would have
been charged as a result of the deposit of such securities
Associated fee
$5 for each 100 ADSs (or portion thereof)
$5 for each 100 ADSs (or portion thereof)
$0.05 or less per ADS (or portion thereof)
$5 for each 100 ADSs (or portion thereof)
Withdrawing an
underlying security
Acceptance of ADRs surrendered for withdrawal of deposited
securities
$5 for each 100 ADSs (or portion thereof)
Transferring,
splitting or
grouping receipts
General depositary
services, particularly
those charged on
an annual basis
Expenses of
the depositary
Transfers, combining or grouping of depositary receipts
$1.50 per ADS
$0.05 per ADS (or portion thereof) not more
than once each calendar year and payable
at the sole discretion of the ADR Depositary
by billing ADR holders or by deducting such
charge from one or more cash dividends
or other cash distributions
Expenses payable at the sole discretion of
the ADR Depositary by billing ADR holders
or by deducting charges from one or more
cash dividends or other cash distributions
are $20 per transaction
Other services performed by the depositary in administering
the ADRs
Expenses incurred on behalf of ADR holders in connection with:
• Compliance with foreign exchange control regulations or any law
or regulation relating to foreign investment
• The ADR Depositary’s or its custodian’s compliance with applicable
laws, rules or regulations
• Stock transfer or other taxes and other governmental charges
• Cable, telex, facsimile transmission/delivery
• Transfer or registration fees in connection with the deposit and
withdrawal of deposited securities
• Expenses of the ADR Depositary in connection with the conversion
of foreign currency into US dollars (which are paid out of such
foreign currency)
• Any other charge payable by the ADR Depositary or its agents
Fees and charges payable by a depositary
J.P. Morgan Chase Bank N.A. (the ADR Depositary) is the depositary for IHG’s ADR programme. The ADR Depositary’s principal executive
office is at: J.P. Morgan Depositary Receipts, 383 Madison Avenue, Floor 11, New York, NY 10179. The ADR Depositary has agreed to reimburse
certain reasonable Company expenses related to the Company’s ADR programme and incurred by the Company in connection with the
ADR programme. The Company did not receive any payments from the ADR Depositary during the year ended 31 December 2022 in respect
of legal, accounting and other fees incurred in connection with the preparation of the Annual Report and Form 20-F, ongoing SEC compliance
and listing requirements, investor relations programmes, and advertising and public relations expenditure.
Group information
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Additional Information
Group information continued
Articles of Association
The Company’s Articles of Association (the Articles) were first adopted
with effect from 27 June 2005 and were most recently amended at
the AGM held on 7 May 2020 and are available on the Company’s
website at www.ihgplc.com/investors under Corporate governance.
The following summarises material rights of holders of the Company’s
ordinary shares under the material provisions of the Articles and
English law. This summary is qualified in its entirety by reference
to the Companies Act and the Articles.
The Company’s shares may be held in certificated or uncertificated
form. No holder of the Company’s shares will be required to make
additional contributions of capital in respect of the Company’s
shares in the future.
As such, a Director has no power, in the absence of an independent
quorum, to vote on compensation to themselves, but may vote on
a resolution (and may count in the quorum of the meeting at which
it was passed) to award compensation to Directors provided those
arrangements do not confer a benefit solely on them.
The Directors are empowered to exercise all the powers of the
Company to borrow money, subject to any limitation in the Articles,
unless sanctioned by an ordinary resolution of the Company.
At the Company’s AGM on 7 May 2021, shareholders approved the
amendment of the borrowing limit in the Articles from an amount
equal to three times the share capital and consolidated reserves,
to $5 billion.
In the following description, a ‘shareholder’ is the person registered in
the Company’s register of members as the holder of the relevant share.
Under the Articles, there are no age-limit requirements relating to
a person’s qualification to hold office as a Director of the Company.
Principal objects
The Company is incorporated under the name InterContinental
Hotels Group PLC and is registered in England and Wales with
registered number 5134420. The Articles do not restrict its objects
or purposes.
Directors
Under the Articles, a Director may have an interest in certain matters
(‘Permitted Interest’) without the prior approval of the Board, provided
they have declared the nature and extent of such Permitted Interest
at a meeting of the Directors or in the manner set out in Section 184
or Section 185 of the Companies Act.
Any matter in which a Director has a material interest, and which
does not comprise a Permitted Interest, must be authorised by the
Board in accordance with the procedure and requirements contained
in the Articles. In particular, this includes the requirement that a
Director may not vote on a resolution to authorise a matter in which
they are interested, nor may they count in the quorum of the meeting
at which such business is transacted.
Further, a Director may not vote in respect of any proposal in which
they, or any person connected with them, has any material interest
other than by virtue of their interests in securities of, or otherwise in
or through, the Company, nor may they count in the quorum of the
meeting at which such business is transacted. This is subject to certain
exceptions, including in relation to proposals: (a) indemnifying
them in respect of obligations incurred on behalf of the Company;
(b) indemnifying a third party in respect of obligations of the Company
for which the Director has assumed responsibility under an indemnity
or guarantee; (c) relating to an offer of securities in which they will be
interested as an underwriter; (d) concerning another body corporate
in which the Director is beneficially interested in less than one per cent
of the issued shares of any class of shares of such a body corporate;
(e) relating to an employee benefit in which the Director will share
equally with other employees; and (f) relating to liability insurance
that the Company is empowered to purchase for the benefit of
Directors of the Company in respect of actions undertaken as
Directors (or officers) of the Company.
The Directors have authority under the Articles to set their own
remuneration (provided certain criteria are met). While an agreement
to award remuneration to a Director is an arrangement with the
Company that comprises a Permitted Interest (and therefore does not
require authorisation by the Board in that respect), it is nevertheless
a matter that would be expected to give rise to a conflict of interest
between the Director concerned and the Company, and such conflict
must be authorised by a resolution of the Board. The Director that
is interested in such a matter may neither vote on the resolution to
authorise such conflict, nor count in the quorum of the meeting at
which it was passed. Furthermore, as noted above, the interested
Director is not permitted to vote in respect of any proposal in which
they have any material interest (except in respect of the limited
exceptions outlined above) nor may they count in the quorum
of the meeting at which such business is transacted.
Directors are not required to hold any shares of the Company by way
of qualification.
The Articles require annual retirement and re-election of all Directors
at the AGM.
Rights attaching to shares
Dividend rights and rights to share in the Company’s profits
Under English law, dividends are payable on the Company’s ordinary
shares only out of profits available for distribution, as determined in
accordance with accounting principles generally accepted in the UK
and by the Companies Act. No dividend will bear interest as against
the Company.
Holders of the Company’s ordinary shares are entitled to receive
such dividends as may be declared by the shareholders in general
meeting, rateably according to the amounts paid up on such shares,
provided that the dividend cannot exceed the amount
recommended by the Directors.
The Company’s Board of Directors may declare and pay to
shareholders such interim dividends as appear to them to be justified
by the Company’s financial position. If authorised by an ordinary
resolution of the shareholders, the Board of Directors may also
direct payment of a dividend in whole or in part by the distribution
of specific assets (and in particular of paid-up shares or debentures
of any other company).
Any dividend unclaimed by a member (or by a person entitled
by virtue of transmission on death or bankruptcy or otherwise by
operation of law) after six years from the date the dividend was
declared, or became due for payment, will be forfeited and will revert
to the Company.
Voting rights
The holders of ordinary shares are entitled, in respect of their
holdings of such shares, to receive notice of general meetings and
to attend, speak and vote at such meetings in accordance with
the Articles.
Voting at any general meeting of shareholders is by a show of hands
unless a poll, which is a written vote, is duly demanded. On a show
of hands, every shareholder who is present in person or by proxy at
a general meeting has one vote regardless of the number of shares
held. Resolutions put to the members at electronic general meetings
shall be voted on by a poll, which poll votes may be cast by such
electronic means as the Board in its sole discretion deems
appropriate for the purposes of the meeting.
On a poll, every shareholder who is present in person or by proxy has
one vote for every share held by that shareholder. A poll may be
demanded by any of the following:
• the Chair of the meeting;
• at least five shareholders present in person or by proxy and entitled
to vote at the meeting;
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• any shareholder or shareholders present in person or by proxy
representing in the aggregate not less than one-tenth of the total
voting rights of all shareholders entitled to vote at the meeting; or
• any shareholder or shareholders present in person or by proxy
holding shares conferring a right to vote at the meeting and on
which there have been paid up sums in the aggregate at least
equal to one-tenth of the total sum paid up on all the shares
conferring that right.
A proxy form will be treated as giving the proxy the authority
to demand a poll, or to join others in demanding one.
The necessary quorum for a general meeting is two persons carrying
a right to vote upon the business to be transacted, whether present
in person or by proxy.
Matters are transacted at general meetings of the Company by the
proposing and passing of resolutions, of which there are two kinds:
• an ordinary resolution, which includes resolutions for the election
of Directors, the approval of financial statements, the cumulative
annual payment of dividends, the appointment of the Auditor, the
increase of share capital or the grant of authority to allot shares; and
• a special resolution, which includes resolutions amending the
Articles, disapplying statutory pre-emption rights, modifying
the rights of any class of the Company’s shares at a meeting of
the holders of such class or relating to certain matters concerning
the Company’s winding up or changing the Company’s name.
An ordinary resolution requires the affirmative vote of a majority of
the votes of those persons present and entitled to vote at a meeting
at which there is a quorum.
Special resolutions require the affirmative vote of not less than
three-quarters of the persons present and entitled to vote at
a meeting at which there is a quorum.
AGMs must be convened upon advance written notice of 21 days.
Other meetings must be convened upon advance written notice of
14 days. The days of delivery or receipt of the notice are not included.
The notice must specify the nature of the business to be transacted.
The Board of Directors may, if they choose, make arrangements
for shareholders, who are unable to attend the place of the meeting,
to participate at other places or to allow for shareholders to attend
and participate in shareholder meetings by electronic means.
Variation of rights
If, at any time, the Company’s share capital is divided into different
classes of shares, the rights attached to any class may be varied,
subject to the provisions of the Companies Act, with the consent
in writing of holders of three-quarters in nominal value of the issued
shares of that class or upon the adoption of a special resolution
passed at a separate meeting of the holders of the shares of that
class. At every such separate meeting, all of the provisions of the
Articles relating to proceedings at a general meeting apply, except
that the quorum is to be the number of persons (which must be two
or more) who hold or represent by proxy not less than one-third
in nominal value of the issued shares of that class.
Rights in a winding-up
Except as the Company’s shareholders have agreed or may
otherwise agree, upon the Company’s winding up, the balance
of assets available for distribution is to be distributed among the
holders of ordinary shares according to the amounts paid up on
the shares held by them:
• after the payment of all creditors including certain preferential
creditors, whether statutorily preferred creditors or normal
creditors; and
• subject to any special rights attaching to any class of shares.
This distribution is generally to be made in cash. A liquidator may,
however, upon the adoption of a special resolution of the shareholders,
divide among the shareholders the whole or any part of the
Company’s assets in kind.
Limitations on voting and shareholding
There are no limitations imposed by English law or the Articles
on the right of non-residents or foreign persons to hold or vote the
Company’s ordinary shares or ADSs, other than the limitations that
would generally apply to all of the Company’s shareholders.
Working Time Regulations 1998
In the UK, many employees of Group companies are covered by the
Working Time Regulations which came into force on 1 October 1998.
These regulations implemented the EU Working Time Directive and
parts of the Young Workers Directive, and lay down rights and
protections for employees in areas such as maximum working hours,
minimum rest time, minimum days off and paid leave. The Working
Time Regulations continue to apply in the UK following the UK’s
exit from the EU as retained EU law under the European Union
(Withdrawal) Act 2018, as amended.
In the UK, there is in place a national minimum wage under the
National Minimum Wage Act 1998, as amended. At 31 December 2022,
the minimum wage for individuals aged 18 to 20 was £6.83 per hour,
aged 21 to 22 was £9.18 per hour and for those aged 23 or over was
£9.50 per hour in each case, excluding apprentices aged under
19 years or, otherwise, in the first year of their apprenticeships.
This particularly impacts businesses in the hospitality and retailing
sectors. Compliance with the National Minimum Wage Act is being
monitored by the Low Pay Commission, an independent statutory
body established by the UK Government.
None of the Group’s UK employees are covered by collective
bargaining agreements with trade unions.
Continual attention is paid to the external market in order to ensure
that terms of employment are appropriate. The Group believes the
Group companies will be able to conduct their relationships with
trade unions and employees in a satisfactory manner.
Group information
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Additional Information
Group information continued
Material contracts
The following contracts have been entered into otherwise than in the
course of ordinary business by members of the Group: (i) in the two
years immediately preceding the date of this document in the case
of contracts which are or may be material; or (ii) that contain provisions
under which any Group member has any obligation or entitlement
that is material to the Group as at the date of this document. To the
extent that these agreements include representations, warranties
and indemnities, such provisions are considered standard in an
agreement of that nature, save to the extent identified below.
Notes are to be issued in series (each a Series) in bearer form.
Each Series may comprise one or more tranches (each a Tranche)
issued on different issue dates. A Tranche of Notes may be issued
on the terms and conditions set out in a base prospectus as amended
and/or supplemented by a document setting out the final terms
(Final Terms) of such Tranche or in a separate prospectus specific
to such Tranche.
Under the Trust Deed, each of the Issuer and the Guarantors has
given certain customary covenants in favour of the Trustee.
Syndicated Facility
On 28 April 2022, the Company signed a five-year $1.35 billion bank
facility agreement (Syndicated Facility) with Bank of America Europe
Designated Activity Company, Bank of China Limited, London Branch,
Barclays Bank PLC, BNP Paribas, London Branch, Commerzbank
Aktiengesellschaft, London Branch, DBS Bank Ltd, London Branch,
Mizuho Bank, Ltd., MUFG Bank, Ltd., Standard Chartered Bank, Truist
Securities, Inc., Unicredit Bank AG, U.S. Bank National Association
and Wells Fargo Bank, N.A., London Branch all acting as lenders,
mandated lead arrangers and joint bookrunners and MUFG Bank,
Ltd. as facility agent. The interest margin payable on borrowings
under the Syndicated Facility is linked to the long-term credit rating
assigned to the senior unsecured and unsubordinated debt of the
Company. The margin can vary between the applicable reference
rate + 0.50% and the applicable reference rate + 1.00% depending
on the credit rating. The Syndicated Facility was undrawn as at
31 December 2022.
£3 billion Euro Medium Term Note programme
In 2020, the Group updated its Euro Medium Term Note programme
(Programme) and issued a tranche of €500 million 1.625% notes due
8 October 2024 (2020 Euro Issuance) and a tranche of £400 million
3.375% notes due 8 October 2028 (2020 GBP Issuance).
On 14 September 2020, an amended and restated trust deed (Trust
Deed) was executed by InterContinental Hotels Group PLC as issuer
(Issuer), Six Continents Limited and InterContinental Hotels Limited
as guarantors (Guarantors) and HSBC Corporate Trustee Company
(UK) Limited as trustee (Trustee), pursuant to which the trust deed
dated 27 November 2009, as supplemented by four supplemental
trust deeds dated 7 July 2011, 9 November 2012, 16 June 2015 and
11 August 2016 between the same parties relating to the Programme,
were amended and restated. Under the Trust Deed, the Issuer may
issue notes (Notes) unconditionally and irrevocably guaranteed by
the Guarantors, up to a maximum nominal amount from time to time
outstanding of £3 billion (or its equivalent in other currencies).
The Final Terms issued under each of the 2020 Euro Issuance and
the 2020 GBP Issuance provide that the holders of the Notes have
the right to repayment if the Notes (a) become non-investment grade
within the period commencing on the date of announcement of
a change of control and ending 90 days after the change of control
(Change of Control Period) and are not subsequently, within the
Change of Control Period, reinstated to investment grade; (b) are
downgraded from a non-investment grade and are not reinstated to
its earlier credit rating or better within the Change of Control Period;
or (c) are not credit rated and do not become investment grade
credit rated by the end of the Change of Control Period.
On 14 September 2020, the Issuer and the Guarantors entered into
an amended and restated agency agreement (Agency Agreement)
with HSBC Bank plc as principal paying agent and the Trustee,
pursuant to which the Issuer and the Guarantors appointed paying
agents and calculation agents in connection with the Programme
and the Notes.
Under the Agency Agreement, each of the Issuer and the Guarantors
has given a customary indemnity in favour of the paying agents and
the calculation agents.
On 14 September 2020, the Issuer and the Guarantors entered into
an amended and restated dealer agreement (Dealer Agreement)
with HSBC Bank plc as arranger and Barclays Bank PLC, Commerzbank
Aktiengesellschaft, HSBC Bank plc, Merrill Lynch International,
MUFG Securities EMEA plc, Truist Securities, Inc. and Wells Fargo
Securities International Limited as dealers (Dealers), pursuant
to which the Dealers were appointed in connection with the
Programme and the Notes.
Under the Dealer Agreement, each of the Issuer and the Guarantors
has given customary warranties and indemnities in favour of
the Dealers.
Exchange controls and restrictions on payment of dividends
There are no restrictions on dividend payments to US citizens.
Although there are currently no UK foreign exchange control
restrictions on the export or import of capital or the payment of
dividends on the ordinary shares or the ADSs, economic sanctions
which may be in force in the UK from time to time impose restrictions
on the payment of dividends to persons resident (or treated as
so resident) in or governments of (or persons exercising public
functions in) certain countries.
Other than economic sanctions which may be in force in the UK
from time to time, there are no restrictions under the Articles of
Association or under English law that limit the right of non-resident
or foreign owners to hold or vote the ordinary shares or the ADSs.
In addition, the Articles contain certain limitations on the voting and
other rights of any holder of ordinary shares whose holding may, in
the opinion of the Directors, result in the loss or failure to secure the
reinstatement of any licence or franchise from any US governmental
agency held by Six Continents Hotels, Inc. or any subsidiary thereof.
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Legal proceedings
Group companies have extensive operations in the UK, as well as
internationally, and are involved in a number of legal claims and
proceedings incidental to those operations. These legal claims and
proceedings are in various stages and include disputes related to
specific hotels where the potential materiality is not yet known. It is
the Company’s view that such proceedings, either individually or in
the aggregate, have not in the recent past and are not likely to have
a significant effect on the Group’s financial position or profitability.
Notwithstanding the above, the Company notes the matters set out
below, which are ongoing. Litigation is inherently unpredictable and,
as of 20 February 2023, unless stated otherwise, the outcome of
these matters cannot be reasonably determined.
A claim was filed on 5 July 2016 by CPTS Hotel Lessee, LLC (CPTS)
against Holiday Hospitality Franchising, LLC (HHF). The claimant
alleges breach of the licence agreement and seeks a declaratory
judgement from the court that it has the right to terminate its licence
with HHF. HHF and InterContinental Hotels Group Resources, Inc.
filed a claim against CPTS Hotel Lessee, LLC also seeking a
declaratory judgement and alleging breach of contract and fraud.
On 1 May 2018, the court granted IHG’s motion for preliminary
injunction and ruled that the licence agreement at issue is not
terminable at will by CPTS. As of 20 February 2023, the likelihood
of a favourable or unfavourable result cannot be reasonably
determined, and it is not possible to determine whether any loss
is likely or to estimate the amount of any loss.
A claim was filed on 26 June 2017 against InterContinental Hotels
Corporation, InterContinental Hotels Group Resources, Inc., and
InterContinental Hotels Group (Canada), Inc. seeking class action
status and alleging breach of fiduciary duty, negligence, breach
of confidence, intrusion upon seclusion, breach of contract, breach
of privacy legislation, and unjust enrichment regarding an alleged
data breach. The claim was amended in March 2018 to name Six
Continents Hotels, Inc. as the sole defendant. The claimant alleges
that security failures allowed customers’ financial information to be
compromised. As of 20 February 2023, the likelihood of a favourable
or unfavourable result cannot be reasonably determined, and it is
not possible to determine whether any loss is likely or to estimate
the amount of any loss.
A claim was filed on 5 April 2019 and amended on 16 December 2019
against Kimpton seeking class action status and alleging harm
related to the compromise of personal information due to a data
security breach. The allegations relate to a breach of the reservation
system previously used by Kimpton. This matter has been resolved.
Seven claims were filed in March 2022 against Holiday Hospitality
Franchising LLC, Six Continents Hotels, Inc., and the IHG Owner’s
Association, seeking class action status on behalf of IHG franchisees.
Following dismissal of two claims and consolidation of the remaining,
an amended claim was filed against Holiday Hospitality Franchising
LLC and Six Continents Hotels, Inc., alleging claims for breach of
contract, breach of implied covenant of good faith and fair dealing,
breach of fiduciary duty, declaratory judgement, violation of the
Sherman Act and demand for accounting. The claims allege that
IHG, as franchisor, is engaged in unlawful business practices relating
to numerous programmes, products and requirements which are
purportedly part of IHG’s franchise system. As of 20 February 2023,
the likelihood of a favourable or unfavourable result cannot be
reasonably determined and it is not possible to determine whether
any loss is likely or to estimate the amount of any loss.
A claim was filed on 15 September 2022 against Holiday Hospitality
Franchising LLC, Six Continents Hotels, Inc., and IHG Technology
Solutions, Inc. seeking class action status and damages for alleged
claims for breach of contract, deceptive trade practices under state
law, negligence and unjust enrichment. The allegations relate to the
criminal, unauthorised access into IHG’s systems. As of 20 February
2023, the likelihood of a favourable or unfavourable result cannot be
reasonably determined, and it is not possible to determine whether
any loss is likely or to estimate the amount of any loss.
An arbitration was filed on December 11, 2022, alleging that Holiday
Inns Middle East Limited breached its contractual obligations by
causing delay in relation to the opening of a hotel. The claim seeks
monetary damages for various alleged losses. As of 20 February
2023, the likelihood of a favourable or unfavourable result cannot be
reasonably determined, and it is not possible to determine whether
any loss is likely or to estimate the amount of any loss.
Group information
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Additional Information
Shareholder information
Taxation
This section provides a summary of material US federal income tax
and UK tax consequences to the US holders, described below, of
owning and disposing of ordinary shares or ADSs of the Company.
This section addresses only the tax position of a US holder who
holds ordinary shares or ADSs as capital assets. This section does
not, however, discuss all of the tax considerations that may be
relevant to any particular US holder, such as the provisions of the
Internal Revenue Code of 1986, as amended (IR Code) known as
the Medicare Contribution tax or tax consequences to US holders
subject to special rules, such as:
• certain financial institutions;
• insurance companies;
• dealers and traders in securities who use a mark-to-market
method of tax accounting;
• persons holding ordinary shares or ADSs as part of a straddle,
conversion transaction, integrated transaction or wash sale,
or persons entering into a constructive sale with respect to
the ordinary shares or ADSs;
• persons whose functional currency for US federal income tax
purposes is not the US dollar;
• partnerships or other entities classified as partnerships for US
federal income tax purposes;
• persons liable for the alternative minimum tax;
• tax-exempt organisations;
• persons who acquired the Company’s ADSs or ordinary shares
pursuant to the exercise of any employee stock option or otherwise
in connection with employment; and
• persons who, directly or indirectly, own ordinary shares or ADSs
representing 10% or more of the Company’s voting power or value.
This section does not generally deal with the position of a US holder
who is resident in the UK for UK tax purposes or who is subject to UK
taxation on capital gains or income by virtue of carrying on a trade,
profession or vocation in the UK through a branch, agency or
permanent establishment to which such ADSs or ordinary shares
are attributable (‘trading in the UK’).
As used herein, a ‘US holder’ is a person who, for US federal income
tax purposes, is a beneficial owner of ordinary shares or ADSs and is:
(i) a citizen or individual resident of the US; (ii) a corporation, or other
entity taxable as a corporation, created or organised in or under the
laws of the US, any state therein or the District of Columbia; (iii) an
estate whose income is subject to US federal income tax regardless
of its source; or (iv) a trust, if a US court can exercise primary
supervision over the trust’s administration and one or more US
persons are authorised to control all substantial decisions of
the trust.
This section is based on the IR Code, its legislative history, existing
and proposed regulations, published rulings and court decisions,
and on UK tax laws and the published practice of HM Revenue and
Customs (HMRC), all as of the date hereof. These laws, and that
practice, are subject to change, possibly on a retroactive basis.
This section is further based in part upon the representations
of the ADR Depositary and assumes that each obligation in the
deposit agreement and any related agreement will be performed
in accordance with its terms. For US federal income tax purposes,
an owner of ADRs evidencing ADSs will generally be treated as the
owner of the underlying shares represented by those ADSs. For UK
tax purposes, in practice, HMRC will also regard holders of ADSs
as the beneficial owners of the ordinary shares represented by
those ADSs (although case law has cast some doubt on this).
The discussion below assumes that HMRC’s position is followed.
Generally, exchanges of ordinary shares for ADSs, and ADSs for
ordinary shares, will not be subject to US federal income tax or UK
taxation on capital gains, although UK stamp duty or stamp duty
reserve tax (SDRT) may arise as described below.
Investors should consult their own tax advisers regarding the US
federal, state and local, the UK and other tax consequences of
owning and disposing of ordinary shares or ADSs in their
particular circumstances.
The following disclosures assume that the Company is not, and will
not become, a passive foreign investment company (PFIC), except
as described below.
Taxation of dividends
UK taxation
Under current UK tax law, the Company will not be required to
withhold tax at source from dividend payments it makes.
A US holder who is not resident for UK tax purposes in the UK and
who is not trading in the UK will generally not be liable for UK taxation
on dividends received in respect of the ADSs or ordinary shares.
US federal income taxation
A US holder is generally subject to US federal income taxation on
the gross amount of any dividend paid by the Company out of its
current or accumulated earnings and profits (as determined for
US federal income tax purposes). Distributions in excess of the
Company’s current and accumulated earnings and profits, as
determined for US federal income tax purposes, will be treated as
a return of capital to the extent of the US holder’s basis in the shares
or ADSs and thereafter as capital gain. Because the Company has
not historically maintained, and does not currently maintain, books
in accordance with US tax principles, the Company does not expect
to be in a position to determine whether any distribution will be in
excess of the Company’s current and accumulated earnings and
profits as computed for US federal income tax purposes. As a result,
it is expected that amounts distributed will be reported to the
Internal Revenue Service (IRS) as dividends.
Subject to applicable limitations, dividends paid to certain
non-corporate US holders will be taxable at the preferential rates
applicable to long-term capital gain if the dividends constitute
‘qualified dividend income’. The Company expects that dividends
paid by the Company with respect to the ADSs will constitute qualified
dividend income. Non-corporate US holders should consult their
own tax advisers to determine whether they are subject to any special
rules that limit their ability to be taxed at these preferential rates.
Dividends must be included in income when the US holder, in the
case of shares, or the ADR Depositary, in the case of ADSs, actually
or constructively receives the dividend, and will not be eligible for the
dividends-received deduction generally allowed to US corporations
in respect of dividends received from other US corporations.
For foreign tax credit limitation purposes, dividends will generally
be income from sources outside the US.
The amount of any dividend paid in pounds sterling will be the
US dollar value of the sterling payments made, determined at the
spot sterling/US dollar rate on the date the dividend distribution
is includible in income, regardless of whether the payment is in
fact converted into US dollars. If the dividend is converted into US
dollars on that date, a US holder should not be required to recognise
foreign currency gain or loss in respect of the dividend income.
Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date the dividend payment
is includible in income to the date the payment is converted into
US dollars will be treated as ordinary income or loss from sources
within the US.
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Taxation of capital gains
UK taxation
A US holder who is not resident for UK tax purposes in the UK and
who is not trading in the UK will not generally be liable for UK taxation
on capital gains, or eligible for relief for allowable losses, realised
or accrued on the sale or other disposal of ADSs or ordinary shares.
A US holder of ADSs or ordinary shares who is an individual and
who, broadly, has temporarily ceased to be resident in the UK or
has become temporarily treated as non-resident for UK tax purposes
for a period of not more than five years and who disposes of ordinary
shares or ADSs during that period may, for the year of assessment
when that individual becomes resident again in the UK, be liable to
UK tax on capital gains (subject to any available exemption or relief),
notwithstanding the fact that such US holder was not treated as
resident in the UK at the time of the sale or other disposal.
US federal income taxation
A US holder who sells or otherwise disposes of ordinary shares or
ADSs will recognise a capital gain or loss for US federal income tax
purposes equal to the difference between the amount realised and
its tax basis in the ordinary shares or ADSs, each determined in US
dollars. Such capital gain or loss will be a long-term capital gain or
loss where the US holder has a holding period greater than one year.
Losses may also be treated as long-term capital losses to the extent
of certain ‘extraordinary dividends’ that qualified for the preferential
tax rates on qualified dividend income described above. The capital
gain or loss will generally be income or loss from sources within the
US for foreign tax credit limitation purposes. The deductibility of
capital losses is subject to limitations.
PFIC rules
Based on the manner in which the Group operates its business
and estimates of the value of its assets (which estimates are based,
in part, on the market value of the Company’s ADSs) the Company
believes that it was not a PFIC for US federal income tax purposes
for its 2022 taxable year. However, the Company’s PFIC status is an
annual factual determination and thus may be subject to change.
If the Company were a PFIC for any taxable year during which a US
holder owned ordinary shares or ADSs, gain realised on the sale or
other disposition of ordinary shares or ADSs would, in general, not
be treated as capital gain. Instead, gain would be treated as if the
US holder had realised such gain rateably over the holding period
for the ordinary shares or ADSs and, to the extent allocated to the
taxable year of the sale or other disposition and to any year before
the Company became a PFIC, would be taxed as ordinary income.
The amount allocated to each other taxable year would be taxed
at the highest tax rate in effect (for individuals or corporations,
as applicable) for each such year to which the gain was allocated,
together with an interest charge in respect of the tax attributable to
each such year. In addition, similar rules would apply to any ‘excess
distribution’ received on the ordinary shares or ADSs (generally, the
excess of distributions received on the ordinary shares or ADSs during
the taxable year over 125% of the average amount of distributions
received during a specified prior period). The preferential rates for
qualified dividend income described above would not apply if the
Company were a PFIC for the taxable year of the distribution or
the preceding taxable year.
Certain elections may be available (including a market-to-market
election) to US holders that would result in alternative treatments
of the ordinary shares or ADSs. If the Company were a PFIC for any
taxable year in which a US holder held ordinary shares or ADSs, a US
holder would generally be required to file IRS Form 8621 with their
annual US federal income tax returns, subject to certain exceptions.
Additional tax considerations
UK inheritance tax
An individual who is neither domiciled nor deemed domiciled in the
UK is only chargeable to UK inheritance tax to the extent the individual
owns assets situated in the UK. As a matter of UK law, it is not clear
whether the situs of an ADS for UK inheritance tax purposes is
determined by the place where the depositary is established and
records the entitlements of the deposit holders, or by the situs of
the underlying share which the ADS represents, but HMRC may take
the view that the ADSs, as well as the ordinary shares, are or represent
UK-situs assets.
However, an individual who is domiciled in the US (for the purposes
of the Estate and Gift Tax Convention (the Convention)), and is not
a UK national as defined in the Convention, will not be subject to UK
inheritance tax (to the extent UK inheritance tax applies) in respect
of the ordinary shares or ADSs on the individual’s death or on a transfer
of the ordinary shares or ADSs during their lifetime, provided that
any applicable US federal gift or estate tax is paid, unless the ordinary
shares or ADSs are part of the business property of a UK permanent
establishment or pertain to a UK fixed base of an individual used
for the performance of independent personal services. Where the
ordinary shares or ADSs have been placed in trust by a settlor, they
may be subject to UK inheritance tax unless, when the trust was
created, the settlor was domiciled in the US and was not a UK national.
If no relief is given under the Convention, inheritance tax may be
charged on death and also on the amount by which the value of an
individual’s estate is reduced as a result of any transfer made by
way of gift or other undervalue transfer, broadly within seven years
of death, and in certain other circumstances. Where the ordinary
shares or ADSs are subject to both UK inheritance tax and to US federal
gift or estate tax, the Convention generally provides for either a
credit against US federal tax liabilities for UK inheritance tax paid
or for a credit against UK inheritance tax liabilities for US federal tax
paid, as the case may be.
UK stamp duty and SDRT
Neither stamp duty nor Stamp Duty Reserve Tax (SDRT) will generally
be payable in the UK on the purchase or transfer of an ADS, provided
that the ADS and any separate instrument or written agreement
of transfer are executed and remain at all times outside the UK.
UK legislation does however provide for stamp duty (in the case of
transfers) or SDRT to be payable at the rate of 1.5% on the amount or
value of the consideration (or, in some cases, the value of the ordinary
shares) where ordinary shares are issued or transferred to a person
(or a nominee or agent of a person) whose business is or includes
issuing depositary receipts or the provision of clearance services.
In accordance with the terms of the deposit agreement, any tax or
duty payable on deposits of ordinary shares by the depositary or by
the custodian of the depositary will typically be charged to the party
to whom ADSs are delivered against such deposits.
Following litigation on the subject, HMRC has accepted that it will
no longer seek to apply the 1.5% SDRT charge when new shares are
issued to a clearance service or depositary receipt system on the
basis that the charge is not compatible with EU law. HMRC’s published
practice states that the disapplication of the 1.5% charge on the issue
of shares (and transfers integral to the raising of capital) into clearance
services or depositary receipt systems in accordance with the relevant
principles of EU law will remain the position following the UK’s exit
from the EU unless the relevant UK statutory provisions are amended.
In HMRC’s view, the 1.5% SDRT or stamp duty charge will continue
to apply to transfers of shares into a clearance service or depositary
receipt system unless they are an integral part of an issue of share
capital. Specific professional advice should be sought before paying
the 1.5% SDRT or stamp duty charge in any circumstances.
Shareholder information
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Additional Information
Shareholder information continued
Taxation continued
A transfer of the underlying ordinary shares will generally be subject
to stamp duty or SDRT, normally at the rate of 0.5% of the amount
or value of the consideration (rounded up to the next multiple of
£5 in the case of stamp duty). A transfer of ordinary shares from a
nominee to its beneficial owner, including the transfer of underlying
ordinary shares from the depositary to an ADS holder, under which
no beneficial interest passes, will not be subject to stamp duty
or SDRT.
Any UK stamp duty or SDRT imposed upon transfers of ADSs or
ordinary shares will not be creditable for US federal income tax
purposes. US Holders should consult their tax advisers regarding
whether any such UK stamp duty or SDRT may be deductible
or reduce the amount of gain (or increase the amount of loss)
recognized upon a sale or other disposition of the ADSs or
ordinary shares.
US backup withholding and information reporting
Payments of dividends and sales proceeds with respect to ADSs
and ordinary shares may be reported to the IRS and to the US holder.
Backup withholding may apply to these reportable payments if the
US holder fails to provide an accurate taxpayer identification
number or certification of exempt status or fails to report all interest
and dividends required to be shown on its US federal income tax
returns. Certain US holders (including, among others, corporations)
are not subject to information reporting and backup withholding.
The amount of any backup withholding from a payment to a US
holder will be allowed as a credit against the holder’s US federal
income tax liability and may entitle the holder to a refund, provided
that the required information is timely furnished to the IRS. US
holders should consult their tax advisers as to their qualification
for exemption from backup withholding and the procedure for
obtaining an exemption.
Certain US holders who are individuals (and certain specified entities),
may be required to report information relating to their ownership
of non-US securities unless the securities are held in accounts at
financial institutions (in which case the accounts may be reportable
if maintained by non-US financial institutions). US holders should
consult their tax advisers regarding any reporting obligations they
may have with respect to the Company’s ordinary shares or ADSs.
Disclosure controls and procedures
As of the end of the period covered by this report, the Group carried
out an evaluation under the supervision and with the participation
of the Group’s management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design
and operation of the Group’s disclosure controls and procedures
(as defined in Rules 13a–15(e) and 15d–15(e) of the Securities
Exchange Act 1934).
These are defined as those controls and procedures designed to
ensure that information required to be disclosed in reports filed
under the Securities Exchange Act 1934 is recorded, processed,
summarised and reported within the specified periods. Based on
that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Group’s disclosure controls and
procedures were effective.
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Summary of significant corporate governance
differences from NYSE listing standards
The Group’s statement of compliance with the principles and
provisions specified in the UK Corporate Governance Code issued
in July 2018 by the Financial Reporting Council (the Code) is set out
on pages 137 and 138.
The Chair of the Company is not a member of either the Remuneration
or Audit Committees. As set out on page 105, the Audit Committee
is chaired by an independent Non-Executive Director who, in the
Board’s view, has the experience and qualifications to satisfy the
criterion under US rules for an ‘audit committee financial expert’.
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Non-Executive Director meetings
NYSE rules require that non-management Directors of US companies
must meet on a regular basis without management present, and
independent Directors must meet separately at least once per year.
The Code recommends: (i) the Board Chair to hold meetings with
the Non-Executive Directors without the Executive Directors present;
and (ii) the Non-Executive Directors to meet at least annually without
the Chair present to appraise the Chair’s performance. The Company’s
Non-Executive Directors have met frequently without Executive
Directors being present, and intend to continue this practice, after
every Board meeting if possible.
Shareholder approval of equity compensation plans
The NYSE rules require that shareholders must be given the
opportunity to vote on all equity compensation plans and material
revisions to those plans. The Company complies with UK requirements
which are similar to the NYSE rules. The Board does not, however,
explicitly take into consideration the NYSE’s detailed definition of
‘material revisions’.
Code of Conduct
The NYSE requires companies to adopt a code of business conduct
and ethics, applicable to Directors, officers and employees. Any waivers
granted to Directors or officers under such a code must be promptly
disclosed. As set out on pages 41 and 42, IHG’s Code of Conduct is
applicable to all Directors, officers and employees, and is available
on the Company’s website at www.ihgplc.com/responsible-business.
No waivers have been granted under the Code of Conduct.
Compliance certification
Each chief executive of a US company must certify to the NYSE each
year that he or she is not aware of any violation by the Company of
any NYSE corporate governance listing standard. As the Company is
a foreign private issuer, the Company’s Chief Executive Officer is not
required to make this certification. However, he is required to notify
the NYSE promptly in writing after any of the Company’s executive
officers become aware of any non-compliance with those NYSE
corporate governance rules applicable to the Company.
IHG has also adopted the corporate governance requirements
of the US Sarbanes-Oxley Act and related rules and of the NYSE,
to the extent that they are applicable to it as a foreign private issuer.
As a foreign private issuer, IHG is required to disclose any significant
ways in which its corporate governance practices differ from those
followed by US companies. These are as follows:
Basis of regulation
The Code contains a series of principles and provisions. Listed
companies are required to state how they have applied the Code’s
principles and the provisions operate on a ‘comply or explain’ basis,
where any areas of non-compliance should be disclosed with an
explanation for the non-compliance.
In contrast, US companies listed on the NYSE are required to adopt
and disclose corporate governance guidelines adopted by the NYSE.
Independent Directors
The Code’s principles recommend that at least half the Board,
excluding the Chair, should consist of independent non-executive
directors. As at 20 February 2023, the Board consisted of the Chair,
independent at the time of her appointment, three Executive
Directors and nine independent Non-Executive Directors. NYSE
listing rules applicable to US companies state that companies must
have a majority of independent directors. The NYSE has set out six
bright line tests for director independence. The Board’s judgement
is that all of its Non-Executive Directors are independent. However, it
did not explicitly take into consideration the NYSE’s tests in reaching
this determination.
Chair and Chief Executive Officer
The Code recommends that the Chair and Chief Executive Officer
should not be the same individual to ensure that there is a clear
division of responsibility for the running of the Company’s business.
There is no corresponding requirement for US companies. The roles
of Chair and Chief Executive Officer were, as at 20 February 2023
and throughout 2022, fulfilled by separate individuals.
Committees
The Company has a number of Board Committees which are similar
in purpose and constitution to those required for domestic companies
under NYSE rules. The NYSE requires US companies to have audit,
remuneration and nominating/corporate governance committees
composed entirely of independent directors, as defined under the
NYSE rules. The Company’s Nomination, Audit and Remuneration
Committees consist entirely of Non-Executive Directors who are
independent under the standards of the Code, which may not
necessarily be the same as the NYSE independence standards.
The nominating/governance committee is responsible for identifying
individuals qualified to become Board members and to recommend
to the Board a set of corporate governance principles. As the Company
is subject to the Code, the Company’s Nomination Committee is
responsible for nominating, for approval by the Board, candidates
for appointment to the Board, including recommending suitable
candidates for the role of Senior Independent Non-Executive
Director. The Company’s Nomination Committee consists of the
Chair and independent Non-Executive Directors.
Shareholder information
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Additional Information
Shareholder information continued
Return of funds
Since March 2003, the Group has returned over £7 billion of funds to shareholders by way of special dividends, capital returns and share
repurchase programmes.
Timing
Total return
Returned to date
Return of funds programme
£501m special dividenda
£250m share buyback
£996m capital returna
£250m share buyback
£497m special dividenda
£250m share buyback
£709m special dividenda
£150m share buyback
$500m special dividendac
$500m share buyback
$350m special dividend
$750m special dividenda
$1,500m special dividenda
$400m special dividenda
Paid in December 2004
Completed in 2004
Paid in July 2005
Completed in 2006
Paid in June 2006
Completed in 2007
Paid in June 2007
N/Ab
Paid in October 2012
Completed in 2014
Paid in October 2013
Paid in July 2014
Paid in May 2016
Paid in May 2017
£501m
£250m
£996m
£250m
£497m
£250m
£709m
£150m
£315md
($500m)
£315md
($500m)
£229mg
($350m)
£447mi
($750m)
£1,038mk
($1,500m)
£309ml
($400m)
£389mm
($500m)
£432m
($496m)
£7,077m
£501m
£250m
£996m
£250m
£497m
£250m
£709m
£120m
£315me
($505m)
£315m
($500m)f
£228m
($355m)h
£446m
($763m)j
£1,038m
($1,500m)
£310m
($404m)
£388m
($510m)
£432m
($496m)
£7,045m
$500m special dividenda
Paid in January 2019
$500m share buyback
Completed in January 2023
Total
a Accompanied by a share consolidation.
b This programme was superseded by the share buyback programme announced on 7 August 2012.
c IHG changed the reporting currency of its Consolidated Financial Statements from sterling to US dollars effective from the Half-Year Results as at 30 June 2008.
d The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate of $1=£0.63, as set out in the circular detailing the special
dividend and share buyback programme published on 14 September 2012.
e Sterling dividend translated at $1=£0.624.
f Translated into US dollars at the average rates of exchange for the relevant years (2014 $1=£0.61; 2013 $1=£0.64; 2012 $1 = £0.63).
g The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate of $1=£0.65, as announced in the Half-Year Results
to 30 June 2013.
h Sterling dividend translated at $1=£0.644.
i The dividend was first determined in US dollars and converted to sterling immediately before announcement at the rate translated at $1=£0.597.
j Sterling dividend translated at $1=£0.5845.
k The dividend was first determined in US dollars and converted to sterling at the rate of $1 = £0.6923, as announced on 12 May 2016.
l The dividend was first determined in US dollars and converted to sterling at the rate of $1 = £0.7724, as announced on 11 May 2017.
m The dividend was first determined in US dollars and converted to sterling at the rate of £1 = $1.2860, as announced on 17 January 2019.
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Purchases of equity securities by
the Company and affiliated purchaser
The Group’s $500m share buyback programme was announced on 9 August 2022 and completed on 31 January 2023.
As at 31 December 2022, 9,060,715 shares had been repurchased at an average price of 47.1702 pence per share (approximately £427m).
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Month 1 (no purchases this month)
Month 2 (no purchases this month)
Month 3 (no purchases this month)
Month 4 (no purchases this month)
Month 5 (no purchases this month)
Month 6 (no purchases this month)
Month 7 (no purchases this month)
Month 8
Month 9
Month 10
Month 11
Month 12
Total number of shares
(or units) purchased
Average price paid
per share (or unit) (£)
Total number of shares
(or units) purchased
as part of publicly
announced plans or
programmes
Maximum number of
shares (or units) that
may be purchased
under the plans or
programmes
nil
nil
nil
nil
nil
nil
nil
553,681
3,426,985
3,315,974
1,410,242
353,833
nil
nil
nil
nil
nil
nil
nil
49.7082
45.9347
45.1271
47.4133
48.2675
nil
nil
nil
nil
nil
nil
nil
553,681
3,426,985
3,315,974
1,410,242
353,833
18,321,631a
18,321,631a
18,321,631a
18,321,631a
18,401,631b
18,401,631b
18,401,631b
18,401,631b
18,401,631b
18,401,631b
18,401,631b
18,401,631b
a Reflects the resolution passed at the Company’s AGM held on 7 May 2021.
b Reflects the resolution passed at the Company’s AGM held on 6 May 2022.
Dividend history
The table below sets forth the amounts of ordinary dividends on each ordinary share and special dividends, in respect of each financial
year indicated.
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008c
2007
2006
Interim dividend
Final dividend
Total dividend
Special dividend
pence
37.8
–
–
32.0
27.7
24.4
22.6
17.7
14.8
15.1
13.5
9.8
8.0
7.3
6.4
5.7
5.1
cents
43.9
–
–
39.9
36.3
33.0
30.0
27.5
25.0
23.0
21.0
16.0
12.8
12.2
12.2
11.5
9.6
pence
N/Aa
67.50
–
–b
60.4
50.2
49.4
40.3
33.8
28.1
27.7
24.7
22.0
18.7
20.2
14.9
13.3
cents
94.5
85.9
–
–b
78.1
71.0
64.0
57.5
52.0
47.0
43.0
39.0
35.2
29.2
29.2
29.2
25.9
pence
N/Aa
67.50
–
32.0
88.1
74.6
72.0
58.0
48.6
43.2
41.2
34.5
30.0
26.0
26.6
20.6
18.4
cents
94.5
85.9
–
39.9
114.4
104.0
94.0
85.0
77.0
70.0
64.0
55.0
48.0
41.4
41.4
40.7
35.5
pence
cents
–
–
–
–
–
–
–
–
203.8ce
262.1ce
156.4c
438.2c
–
174.9c
87.1
108.4c
–
–
–
–
200c
118c
202.5c
632.9c
–
293.0c
133.0
172.0c
–
–
–
–
–
–
a The sterling amount of the final dividend will be announced on 26 April 2023 using the average of the daily exchange rates for the three working days commencing 21 April 2023.
b The Board withdrew its recommendation of a final dividend in respect of 2019 of 85.9¢ per share.
c Accompanied by a share consolidation.
d IHG changed the reporting currency of its Consolidated Financial Statements from sterling to US dollars effective from the Half-Year Results as at 30 June 2008. Starting with the
interim dividend for 2008, all dividends have first been determined in US dollars and converted into sterling prior to payment.
e This special dividend was announced on 19 October 2018 and paid on 29 January 2019.
Shareholder information
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Additional Information
Shareholder information continued
Shareholder profiles
Shareholder profile by type as at 31 December 2022
Category of shareholder
Private individuals
Nominee companies
Limited and public limited companies
Other corporate bodies
Pension funds, insurance companies and banks
Total
Shareholder profile by size as at 31 December 2022
Range of shareholdings
1–199
200–499
500–999
1,000–4,999
5,000–9,999
10,000–49,999
50, 000–99,999
100,000–499,999
500,000–999,999
1,000,000 and above
Total
Number of
shareholders
Percentage of
total shareholders
Number of
ordinary shares
Percentage of
issued share capital
29,444
1,096
173
140
7
30,860
95.41%
3.55%
0.56%
0.45%
0.02%
100%
7,327,530
147,449,376
16,090,951
12,258,775
9,774
183,136,406
4.00%
80.51%
8.79%
6.69%
0.01%
100%
Number of
shareholders
Percentage of
total shareholders
Number of
ordinary shares
Percentage of
issued share capital
21,394
5,224
2,074
1,429
187
283
83
123
34
29
30,860
69.33%
16.93%
6.72%
4.63%
0.61%
0.92%
0.27%
0.40%
0.11%
0.09%
100%
1,254,486
1,633,004
1,436,995
2,797,081
1,309,645
6,494,922
5,817,510
27,100,941
23,510,051
111,781,771
183,136,406
Shareholder profile by geographical location as at 31 December 2022
Country/Jurisdiction
UK
Rest of Europe
US (including ADRs)
Rest of world
Total
0.69%
0.89%
0.78%
1.53%
0.72%
3.55%
3.18%
14.80%
12.84%
61.04%
100%
Percentage of
issued share capital
45.8%
21.1%
30.7%
2.4%
100%
The geographical profile presented is based on an analysis of shareholders (by manager) of 10,000 shares or above where geographical
ownership is known. This analysis only captures 92% of total issued share capital. Therefore, the known percentage distributions have been
multiplied by 100/92.4 to achieve the figures shown in the table above.
As of 17 February 2023, 9,416,733 ADRs equivalent to 9,416,733 ordinary shares, or approximately 5.3% of the total issued share capital,
were outstanding and were held by 411 holders. Since certain ordinary shares are registered in the names of nominees, the number of
shareholders on record may not be representative of the number of beneficial owners.
As of 17 February 2023, there were a total of 30,692 recorded holders of ordinary shares, of whom 243 had registered addresses in the US
and held a total of 305,114 ordinary shares (0.17% of the total issued share capital).
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Exhibits
The following exhibits are filed as part of this Annual Report on Form 20-F with the SEC, and are publicly available through the SEC’s website.
Visit www.sec.gov and search InterContinental Hotels Group PLC under Company Filings.
Exhibit 1a
Articles of Association of the Company dated 7 May 2020 (incorporated by reference to Exhibit 1 of the
InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated 4 March 2021)
Exhibit 2(d)
Description of Securities Registered Under Section 12 of the Exchange Act
Exhibit 4(a)(i)(a)a
Exhibit 4(a)(ii)
Exhibit 4(c)(i)a
Exhibit 4(c)(ii)a
Exhibit 4(c)(iii)a
Exhibit 4(c)(iv)a
Exhibit 4(c)(v)a
Exhibit 8
Exhibit 12(a)
Exhibit 12(b)
Exhibit 13(a)
Exhibit 15(a)(i)
Exhibit 15(a)(ii)
Amended and restated trust deed dated 14 September 2020 relating to a £3 billion Euro Medium Term Note
Programme, among InterContinental Hotels Group PLC, Six Continents Limited, InterContinental Hotels Limited
and HSBC Corporate Trustee Company (UK) Limited (incorporated by reference to Exhibit 4(a)(i)(a) of the
InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated 4 March 2021)
$1.35 billion bank facility agreement dated 28 April 2022, among InterContinental Hotels Group PLC and certain of
its subsidiaries, and Bank of America Europe Designated Activity Company, Bank of China Limited, London Branch,
Barclays Bank PLC, BNP Paribas, London Branch, Commerzbank Aktiengesellschaft, London Branch, DBS Bank Ltd,
London Branch, Mizuho Bank, Ltd., MUFG Bank, Ltd., Standard Chartered Bank, Truist Securities, Inc., Unicredit Bank
AG, U.S. Bank National Association and Wells Fargo Bank, N.A., London Branch
Paul Edgecliffe-Johnson’s service contract dated 6 December 2013, commencing on 1 January 2014 (incorporated
by reference to Exhibit 4(c)(i) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No.
1-10409) dated 26 February 2014)
Rules of the InterContinental Hotels Group Long Term Incentive Plan as approved by shareholders on 2 May 2014
and as amended on 14 February 2019, 4 December 2019 and 7 May 2020 (incorporated by reference to Exhibit 4(c)
(ii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated 4 March 2021)
Rules of the InterContinental Hotels Group Annual Performance Plan as amended (incorporated by reference to
Exhibit 4(c)(iii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated 4
March 2021)
Keith Barr’s service contract dated 5 May 2017, commencing on 1 July 2017 (incorporated by reference to Exhibit 4(c)
(v) of the InterContinental Hotels Group Annual Report on Form 20-F (File No.1-10409) dated 1 March 2018)
Elie Maalouf’s service contract dated 19 October 2017, commencing on 1 January 2018 (incorporated by reference to
Exhibit 4(c)(vi) of the InterContinental Hotels Group Annual Report on Form 20-F (File No.1-10409) dated 1 March 2018)
List of subsidiaries as at 31 December 2022 (can be found on pages 214 to 216)
Certification of Keith Barr filed pursuant to 17 CFR 240.13a–14(a)
Certification of Paul Edgecliffe-Johnson filed pursuant to 17 CFR 240.13a–14(a)
Certification of Keith Barr and Paul Edgecliffe-Johnson furnished pursuant to 17 CFR 240.13a–14(b) and 18 U.S.C.1350
Consent of independent registered public accounting firm, PricewaterhouseCoopers LLP
Consent of independent registered public accounting firm, Ernst & Young LLP
Exhibit 101.INS
Inline XBRL Instance Document
Exhibit 101.SCH
Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
a Incorporated by reference.
Exhibits
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Additional Information
Forward-looking statements
The Annual Report and Form 20-F 2022 contains certain forward-
looking statements as defined under US legislation (Section 21E of
the Securities Exchange Act of 1934) with respect to the financial
condition, results of operations and business of the Group and certain
plans and objectives of the Board of Directors of InterContinental
Hotels Group PLC with respect thereto. Such statements include,
but are not limited to, statements made in the Chair’s statement
and in the Chief Executive Officer’s review. These forward-looking
statements can be identified by the fact that they do not relate only
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. These statements
are based on assumptions and assessments made by the Group’s
management in light of their experience and their perception of
historical trends, current conditions, expected future developments
and other factors they believe to be appropriate.
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, including, but not limited to: the
Group’s exposure to a variety of risks related to identifying, securing
and retaining franchise and management agreements; the Group’s
exposure to the risks of hotel industry overcapacity; the Group’s
exposure to the risks related to cybersecurity and data privacy; the
Group’s exposure to risks associated with its intellectual property;
the Group’s exposure to inherent risks in relation to changing
technology and systems; the Group’s exposure to increasing
competition from online travel agents and intermediaries; the
Group’s dependence upon a wide range of external stakeholders
and business partners; the Group’s requirement to comply with
existing and changing regulations and act in accordance with
societal expectations across numerous countries, territories and
jurisdictions; the Group’s exposure to the risk of litigation; the risks
associated with domestic and international environmental laws and
regulations that may cause us to incur substantial costs or subject us
to potential liabilities; the risk that the Group’s financial performance
may be affected by changes in tax laws; the Group’s reputation and
the value of its brands being influenced by the perception of
various stakeholders of the Group; the Group being subject to a
competitive and changing industry; the Group’s reliance on the
reputation of its existing brands and exposure to inherent reputation
risks; the Group’s exposure to inherent uncertainties associated with
brand development and expansion; the Group’s requirement for
the right people, skills and capability to manage growth and change;
the risks associated with collective bargaining activity which could
disrupt operations, increase labour costs or interfere with the ability
of management to focus on executing business strategies; the
Group’s exposure to a variety of risks associated with safety, security
and crisis management; the Group’s reliance upon the resilience of
its reservation system and other key technology platforms, and the
risks that could disrupt their operation and/or integrity; the risks
of political and economic developments; the Group’s exposure to
continued disruption and consequences from the war in Ukraine;
the risks associated with insuring the Group’s business; the Group’s
exposure to risks related to executing and realising benefits from
strategic transactions, including acquisitions and restructuring; the
Group’s exposure to a variety of risks associated with its financial
stability and ability to borrow and satisfy debt covenants; the Group’s
operations being dependent on maintaining sufficient liquidity
to meet all foreseeable medium-term requirements and provide
headroom against unforeseen obligations; the Group’s exposure to
an impairment of the carrying value of its brands, goodwill or other
tangible and intangible assets negatively affecting its consolidated
operating results; the Group’s exposure to fluctuations in exchange
rates, currency devaluations or restructurings and to interest rate risk
in relation to its borrowings; the risk that the Group may be affected
by credit risk on treasury transactions; the Group’s exposure to the
risk of events or stakeholder expectations that adversely impact
domestic or international travel, including climate change; and the
Group’s exposure to risks relating to our commitments in relation
to climate change.
The main factors that could affect the business and financial results
are described in the Strategic Report of the Annual Report and
Form 20-F 2022.
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Form 20-F cross-reference guide
The table below references information in this document that will be included in the Company’s Annual Report on Form 20-F for 2022 filed
with the SEC.
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Item Form 20-F caption
Identity of Directors, senior management
and advisers
Location in this document
Not applicable
Offer statistics and expected timetable
Not applicable
Key information
3A – Selected financial data
Shareholder information: Dividend history
3B – Capitalisation and indebtedness
Not applicable
3C – Reason for the offer and use of proceeds
Not applicable
3D – Risk factors
Group information: Risk factors
4
Information on the Company
4A – History and development of the Company
Group information: History and developments
4B – Business overview
Strategic Report
Shareholder information: Return of funds
Useful information: Contacts
Group information: Working Time Regulations 1998
Group Information: Risk factors
4C – Organisational structure
Strategic Report: Our Culture
4D – Property, plant and equipment
Strategic Report: Key performance indicators
Directors’ Report: Greenhouse gas (GHG) emissions
Group Financial Statements: Note 33 – Group companies
Group Information: History and developments
Page
–
–
257
–
–
240-245
240
256
267
2-88
249
240-245
40-42
214-216
240
62-65
237-239
Group Financial Statements: Note 13 – Property, plant and equipment
187-188
4A Unresolved staff comments
None
5
Operating and financial review and prospects
5A – Operating results
Strategic Report: Key performance indicators
5B – Liquidity and capital resources
Strategic Report: Performance
Group Financial Statements: Accounting policies
Group Financial Statements: New accounting standards
Viability statement
Strategic Report: Our Business Model – Capital allocation and
dividend policy
Viability statement
Strategic Report: Performance – Sources of liquidity
Group Financial Statements: Note 18 – Cash and cash equivalents
Group Financial Statements: Note 21 – Loans and other borrowings
Group Financial Statements: Note 23 – Financial risk management
and derivative financial instruments
Group Financial Statements: Note 24 – Classification and
measurement of financial instruments
Group Financial Statements: Note 25 – Reconciliation of (loss)/profit
for the year to cash flow from operations before contract
acquisition costs
5C – Research and development;
Not applicable
intellectual property
5D – Trend information
Strategic Report: Performance
Strategic Report: Trends shaping our industry
5E – Off-balance sheet arrangements
Strategic Report: Performance – Off-balance sheet arrangements
5G – Safe harbour
Additional Information: Forward-looking statements
Non-GAAP financial measures
Strategic Report: Performance
Other financial information
Group Financial Statements: Note 6 – Exceptional items
–
62-65
67-74
157-168
168
52-53
12-13
52-53
72
195
197
199-203
203-205
206
–
67-74
14-15
72
260
67-74
226-234
175-178
Group Financial Statements: Note 10 – (Loss)/earnings per ordinary share
184
Group Financial Statements: Note 22 – Net debt
198-199
Form 20-F cross-reference guide
IHG | Annual Report and Form 20-F 2022
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Additional Information
Form 20-F cross-reference guide continued
Item Form 20-F caption
Location in this document
Page
6
Directors, senior management and employees
6A – Directors and senior management
Governance: Our Board of Directors and Our Executive Committee
92-97
6B – Compensation
Directors’ Remuneration Report
Group Financial Statements: Note 26 – Retirement benefits
114-136
206-208
Group Financial Statements: Note 31 – Related party disclosures
213
6C – Board practices
Governance structure and Board activities
Group Financial Statements: Note 27 – Share-based payments
6D – Employees
6E – Share ownership
Executive Directors’ benefits upon termination of office
Group Financial Statements: Note 4 – Staff costs and
Directors’ remuneration
Group information: Working Time Regulations 1998
Directors’ Report: Employees and Code of Conduct
236-237
Directors’ Remuneration Report: Annual Report on Directors’
remuneration – Scheme interests awarded during 2021 and 2022
Directors’ Remuneration Report: Annual Report on Directors’
remuneration – Shares and awards held by Executive Directors at
31 December 2022: number of shares
Group Financial Statements: Note 27 – Share-based payments
Group information: Directors’ and Executive Committee
members’ shareholdings
209-210
98-102
246
174
249
130
131
209-210
246
–
235
258
6F – Disclosure of a registrant’s action to recover
Not applicable
erroneously awarded compensation
7
Major shareholders and related
party transactions
7A – Major shareholders
Directors’ Report: Major institutional shareholders
Shareholder information: Shareholder profiles
7B – Related party transactions
Group Financial Statements: Note 15 – Investment in associates
191-192
Group Financial Statements: Note 31 – Related party disclosures
7C – Interests of experts and counsel
Not applicable
8
Financial Information
8A – Consolidated statements and other
Directors’ Report: Dividends
financial information
Group Financial Statements
Group information: Legal proceedings
Other financial information
8B – Significant changes
None
9
The offer and listing
9A – Offer and listing details
9B – Plan of distribution
9C – Markets
9D – Selling shareholders
9E – Dilution
9F – Expenses of the issue
10
Additional information
10A – Share capital
Useful information: Trading markets
Not applicable
Useful information: Trading markets
Not applicable
Not applicable
Not applicable
Not applicable
10B – Memorandum and articles of association
Group information: Articles of Association
10C – Material contracts
10D – Exchange controls
Group information: Rights attaching to shares
Group information: Material contracts
Group information: Exchange controls and restrictions
on payment of dividends
10E – Taxation
Shareholder information: Taxation
10F – Dividends and paying agents
10G – Statement by experts
10H – Documents on display
10I – Subsidiary information
Not applicable
Not applicable
Useful information: Investor information – Documents on display
Not applicable
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–
235
139-216
251
226-234
–
266
–
266
–
–
–
–
248-249
248-249
250
250
252-254
–
–
266
–
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Item Form 20-F caption
Location in this document
11
12
Quantitative and qualitative disclosures
about market risk
Group Financial Statements: Note 23 – Financial risk management
and derivative financial instruments
Description of securities other than
equity securities
12A – Debt securities
12B – Warrants and rights
12C – Other securities
Not applicable
Not applicable
Not applicable
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Group information: Description of securities other than equity securities 247
13
Defaults, dividend arrearages
and delinquencies
Additional Information: Investor Information
Additional Information: Contacts
Not applicable
14 Material modifications to the rights
Not applicable
of security holders and use of proceeds
15
Controls and Procedures
Shareholder information: Disclosure controls and procedures
Statement of Directors’ Responsibilities: Management’s report
on internal control over financial reporting
Independent Auditor’s US Report
16
16A – Audit committee financial expert
Governance: Audit Committee Report
16B – Code of ethics
Directors’ Report: Employees and Code of Conduct
Shareholder information: Summary of significant corporate
governance differences from NYSE listing standards – Committees
Strategic Report: Our culture
Shareholder information: Summary of significant corporate
governance differences from NYSE listing standards
16C – Principal accountant fees and services
Governance: Audit Committee Report – External auditor
Governance: Audit Committee Report – Non-audit services
Group Financial Statements: Note 5 – Auditor’s remuneration
16D – Exemptions from the listing standards
Not applicable
for audit committees
16E – Purchase of equity securities by the issuer
and affiliated purchasers
Shareholder information: Purchases of equity securities
by the Company and affiliated purchasers
16F – Change in registrant’s certifying accountant Not applicable
16G – Corporate Governance
Shareholder information: Summary of significant corporate
governance differences from NYSE listing standards
16H – Mine safety disclosure
Not applicable
16I – Disclosure regarding foreign jurisdictions
Not applicable
that prevent inspections
17
18
19
Financial statements
Financial statements
Exhibits
Not applicable
Group Financial Statements
Additional Information: Exhibits
266
267
–
–
254
140
147-149
105-109
255
236-237
40-43
255
107-108
107
174
–
257
–
255
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–
139-216
259
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Additional Information
Glossary
ADR
an American Depositary Receipt, being
a receipt evidencing title to an ADS.
ADR Depositary
J.P. Morgan Chase Bank N.A.
ADS
an American Depositary Share as evidenced
by an ADR, being a registered negotiable
security, listed on the New York Stock
Exchange, representing one ordinary share
of 20 340⁄399 pence each of the Company.
AGM
Annual General Meeting.
APP
Annual Performance Plan.
Average daily rate
rooms revenue divided by the number
of room nights sold.
Capital expenditure
purchases of property, plant and equipment,
intangible assets, associate and joint venture
investments, and other financial assets, plus
contract acquisition costs (key money).
Captive
the Group’s captive insurance company,
SCH Insurance Company.
Code
IHG’s Code of Conduct.
Colleague
individuals who work at IHG corporate
offices, reservation centres, managed,
owned, leased, managed lease and
franchised hotels collectively.
Companies Act
the UK Companies Act 2006, as amended
from time to time.
Company or Parent Company
InterContinental Hotels Group PLC.
Comparable RevPAR
a comparison for a grouping of hotels that
have traded in all months in financial years
being compared. Principally excludes new
hotels, hotels closed for major refurbishment
and hotels sold in either of the two years.
Hotels which have been temporarily closed
as a result of Covid-19 are not excluded from
comparable RevPAR.
Compound Annual Growth Rate (CAGR)
growth over a period of years expressed
as the constant rate of growth that would
produce the same growth if
compounded annually.
Constant currency
a prior-year value translated using the
current year’s average exchange rates.
Currency swap
an exchange of a deposit and a borrowing,
each denominated in a different currency,
for an agreed period of time.
Deferred Compensation Plan
a US plan that allows for the additional
provision for retirement within a dedicated
trust, either through employee deferral of
salary with matching company contributions,
deferral of APP earnings or through direct
company contribution.
Derivatives
financial instruments used to reduce risk,
the price of which is derived from an
underlying asset, index or rate.
DE&I
Diversity, equity & inclusion.
DR Policy
Directors’ Remuneration Policy.
EMEAA
Europe, Middle East, Asia and Africa
(excludes Greater China).
Employee engagement survey
our employee engagement survey, known
as the Colleague HeartBeat, completed by
IHG employees or those colleagues who
are employed at managed or managed
lease hotels.
Enterprise contribution to revenue
the percentage of room revenue booked
through IHG managed channels and
sources: direct via our websites, apps and
call centres; through our interfaces with
Global Distribution Systems (GDS) and
agreements with Online Travel Agencies
(OTAs); other distribution partners directly
connected to our reservation system; and
Global Sales Office business or IHG Reward
members that book directly at a hotel.
ERG
employee resource group.
ESG
Environmental, social and governance.
Executive officers
defined by the SEC as the president, any vice
president in charge of a principal business
unit, division or function (such as sales,
administration or finance), any officer who
performs a policy making function, or any
other person who performs similar policy
making functions.
Fee business
IHG’s franchised and managed
businesses combined.
FERA
Fuel and energy related emissions.
Franchised hotels
hotels operated under an IHG brand license
by a franchisee. IHG receives a fixed
percentage of rooms revenue and neither
owns, leases nor operates the property.
Franchisee
an owner who uses a brand under licence
from IHG.
FRC
UK Financial Reporting Council.
Group or IHG
the Company and its subsidiaries.
Guest Love
IHG’s guest satisfaction measurement tool
used to measure brand preference and
guest satisfaction.
Guest Reservation System or GRS
our global electronic guest
reservation system.
Hedging
the reduction of risk, normally in relation to
foreign currency or interest rate movements,
by making offsetting commitments.
Hotel revenue
revenue from all revenue-generating activity
undertaken by managed and owned, leased
and managed lease hotels, including room
nights, food and beverage sales.
IASB
International Accounting Standards Board.
IFRS
International Financial Reporting Standards
as issued by the IASB and adopted under
UK law.
IHG PLC
InterContinental Hotels Group PLC.
International Sustainability Standards
Board (ISSB)
formed by the IFRS to create sustainability-
related disclosure standards that provide
investors with consistent and comparable
information about companies’ sustainability-
related risks and opportunities.
Journey to Tomorrow
IHG’s responsible business plan to create
positive change by 2030.
Liquidated damages
payments received in respect of the
early termination of franchise and
management agreements.
Listing Rules
regulations subject to the oversight of the
Financial Conduct Authority, which set out
the obligations of UK listed companies.
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Task Force on Climate-related
Financial Disclosures (TCFD)
created by the Financial Stability Board
to improve and increase reporting of
climate-related financial information and to
help inform investors and others about the
risks they face related to climate change.
Technology fee income
income received from hotels under franchise
and management agreements for the use
of IHG’s Guest Reservation System.
Total Shareholder Return or TSR
the theoretical growth in value of a
shareholding over a period, by reference to
the beginning and ending share price, and
assuming that dividends, including special
dividends, are reinvested to purchase
additional units of the equity.
UK Corporate Governance Code
a Code issued in 2018 by the Financial
Reporting Council in the UK which guides
best practice for the governance of
listed companies.
US 401(k) Plan
the defined contribution retirement plan for
US employees governed by IRS Code § 401(k).
Workforce
IHG employees.
Working capital
the sum of inventories, receivables and
payables of a trading nature, excluding
financing and taxation items.
Yield
the income received from an investment,
in relation to the price paid for it, expressed
as a percentage.
For the definitions of our Key performance
measures (including Non-GAAP measures)
see pages 62 to 65.
Revenue management
the employment of pricing and segment
strategies to optimise the revenue generated
from the sale of room nights.
RevPAR or Revenue per available room
rooms revenue divided by the number
of room nights that are available (can be
mathematically derived from occupancy
rate multiplied by average daily rate).
Revolving Credit Facility or RCF
the Group’s syndicated bank revolving credit
facility.
Room count
number of rooms franchised, managed,
owned, leased or managed lease by IHG.
Room revenue
revenue generated from the sale
of room nights.
Royalties
fees, based on rooms revenue, that
a franchisee pays to the Group.
Science-based targets (SBTs)
measurable, actionable and time-bound
carbon reduction targets, based on the best
avaliable science and in line with the scale of
reductions required to keep global warming
below 2°C or 1.5°C from pre-industrial levels.
Science Based Targets initiative (SBTi)
helps businesses commit to and meet SBTs
by independently assessing and approving
any targets that are set.
SEC
US Securities and Exchange Commission.
Subsidiary
a company over which the Group
exercises control.
System
hotels/rooms operating under franchise and
management agreements together with IHG
owned, leased and managed lease hotels/
rooms, globally (the IHG System) or on a
regional basis, as the context requires.
System Fund or Fund
assessment fees and contributions collected
from hotels within the IHG System which
fund activities that drive revenue to our
hotels including marketing, the IHG
One Rewards loyalty programme and our
distribution channels.
LTIP
Long Term Incentive Plan.
Managed hotels
hotels operated by IHG under a
management agreement on behalf of the
hotel owner. IHG generates revenue through
a fixed percentage of the total hotel revenue
and a proportion of hotel profit, and neither
leases nor owns the property.
Managed lease
properties which are held through a lease
but with the same characteristics as
management agreements.
Management agreement
a contract to operate a hotel on behalf of the
hotel owner.
Market capitalisation
the value attributed to a listed company
by multiplying its share price by the number
of shares in issue.
Net rooms supply
net total number of IHG System hotel rooms.
NYSE
New York Stock Exchange.
Occupancy rate
rooms occupied by hotel guests, expressed
as a percentage of rooms that are available.
Ordinary share
ordinary shares of 20 340⁄399 pence each
in the Company.
Owned, leased and managed lease hotels
hotels operated by IHG where IHG is,
or effectively acts as, the owner, with
responsibility for assets, employees and
running costs. The entire revenue and profit
of the hotels are recorded in IHG’s
financial statements.
Owner
the owner of a hotel property.
Pipeline
hotels/rooms due to enter the IHG System
at a future date. A hotel enters the pipeline
once a contract has been signed and
appropriate fees paid.
ppt
a percentage point is the unit for the
arithmetic difference of two percentages.
Reimbursable revenues
reimbursements from managed and
franchised hotels for costs incurred by IHG,
for example the cost of IHG employees
working in managed hotels. The related
revenues and costs are presented gross
in the Group income statement and there
is no impact to profit.
Glossary
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Additional Information
Useful information
Investor information
Website and electronic communication
As part of IHG’s commitment to reduce the cost and environmental
impact of producing and distributing printed documents in large
quantities, this Annual Report and Form 20-F 2022 has been
made available to shareholders through our website at
www.ihgplc.com/investors under Annual Report.
Shareholders may electronically appoint a proxy to vote on their
behalf at the 2023 AGM. Shareholders who hold their shares through
CREST may appoint proxies through the CREST electronic proxy
appointment service, by using the procedures described in the
CREST Manual.
Shareholder hotel discount
IHG offers discounted hotel stays (subject to availability) for
registered shareholders only, through a controlled-access website.
This is not available to shareholders who hold shares through
nominee companies, ISAs or ADRs. For further details please
contact the Company Secretary’s office (see page 267).
Responsible Business Report
In line with our commitment to responsible business practices, this
year we have produced a Responsible Business Report showcasing
our approach to responsible business and progress against our
Responsible Business Targets.
Visit www.ihgplc.com/responsible-business for further information.
Registrar
For information on a range of shareholder services, including
enquiries concerning individual shareholdings, notification of a
shareholder’s change of address and amalgamation of shareholder
accounts (in order to avoid duplicate mailing of shareholder
communications), shareholders should contact the Company’s
Registrar, Equiniti, on +44 (0) 371 384 2132a.
Dividend services
Dividend Reinvestment Plan (DRIP)
The Company offers a DRIP for shareholders to purchase
additional IHG shares with their cash dividends. For further
information about the DRIP, please contact our Registrar helpline
on +44 (0) 371 384 2132a.
Visit www.shareview.co.uk/info/drip for a DRIP application form
and information booklet.
Bank mandate
We encourage shareholders to have their dividends paid directly
into their UK bank or building society accounts, to ensure efficient
payment and clearance of funds on the payment date. For further
information, please contact our Registrar (see page 267).
Overseas payment service
It is also possible for shareholders to have their dividends paid
directly to their bank accounts in a local currency. Charges are
payable for this service.
Visit www.shareview.co.uk/info/ops for further information.
Out-of-date/unclaimed dividends
If you think that you have out-of-date dividend cheques or
unclaimed dividend payments, please contact our Registrar
(see page 267).
Individual Savings Account (ISA)
Equiniti offers a Stocks and Shares ISA that can invest in IHG shares.
For further information, please contact Equiniti on
+44 (0) 345 300 0430a.
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Share-dealing services
Equiniti offers the following share-dealing facilities.
Postal dealing
+44 (0) 371 384 2132 from the UK and overseasa
Telephone dealing
For more information, call +44 (0)345 603 7037b
Internet dealing
Visit www.shareview.co.uk for more information.
Changes to the base cost of IHG shares
Details of all the changes to the base cost of IHG shares held from
April 2004 to January 2019, for UK Capital Gains Tax purposes,
may be found on our website at www.ihgplc.com/investors under
Shareholder centre in the Tax information section.
‘Gone away’ shareholders
Working with ProSearch (an asset reunification company), we
continue to look for shareholders who have not kept their contact
details up to date. We have funds waiting to be claimed and are
committed to doing what we can to pay these to their rightful
owners. Please contact ProSearch on +44 (0) 371 384 2735c
or visit www.prosearchassets.com for further details.
a Lines are open from 08:30 to 17:30 Monday to Friday, excluding UK public holidays.
b Lines are open from 08:00 to 18:00 Monday to Friday, excluding UK public holidays.
c Lines are open from 09:00 to 17:00 Monday to Friday, excluding UK public holidays.
Shareholder security
Many companies have become aware that their shareholders have
received unsolicited telephone calls or correspondence concerning
investment matters. These are typically from ‘brokers’ who target UK
shareholders, offering to sell them what often turn out to be worthless
or high-risk shares in US or UK investments. These operations are
commonly known as ‘boiler rooms’. More detailed information on this
or similar activity can be found at www.fca.org.uk/consumers on the
Financial Conduct Authority website.
Details of any share dealing facilities that the Company endorses will
be included in Company mailings.
Trading markets
The principal trading market for the Company’s ordinary shares
is the London Stock Exchange (LSE). The ordinary shares are also
listed on the NYSE, trading in the form of ADSs evidenced by ADRs.
Each ADS represents one ordinary share. The Company has
a sponsored ADR facility with J.P. Morgan Chase Bank, N.A.,
as ADR Depositary.
American Depositary Receipts (ADRs)
The Company’s shares are listed on the NYSE in the form of
American Depositary Shares, evidenced by ADRs and traded
under the symbol ‘IHG’. Each ADR represents one ordinary share.
All enquiries regarding ADR holder accounts and payment of
dividends should be directed to J.P. Morgan Chase Bank, N.A., our
ADR Depositary bank (contact details shown on the opposite page).
Documents on display
Documents referred to in this Annual Report and Form 20-F that
are filed with the SEC can be found at the SEC’s public reference
room located at 100 F Street, NE Washington, DC 20549. For further
information and copy charges please call the SEC at 1-800-SEC-0330.
The SEC maintains a website that contains reports, proxy and
information statements, and other information regarding issuers that
file electronically and the Company’s SEC filings since 22 May 2002
are also publicly available through the SEC’s website at www.sec.gov
Copies of the Company’s Articles of Association can be obtained
via the website at www.ihgplc.com/investors under Corporate
governance or from the Company’s registered office on request.
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Financial calendars
Dividends
2022 Interim dividend
Ex-dividend date
Record date
Payment date
2022 Final dividend of 94.5¢ per ordinary sharea
Ex-dividend date
Record date
Payment date
2022
1 September
2 September
6 October
2023
30 March
31 March
16 May
a The sterling amount of the final dividend will be announced on 26 April 2023 using
the average of the daily exchange rates for the three working days commencing
21 April 2023.
Other dates
Financial year end
2022
31 December
2023
Announcement of Preliminary Results for 2022
21 February
Announcement of 2023 First Quarter
Trading Update
Annual General Meeting
5 May
5 May
Announcement of Half-Year Results for 2023
8 August
Announcement of 2023 Third Quarter
Trading Update
Financial year end
20 October
31 December
2024
Announcement of Preliminary Results for 2023
February
Contacts
Registered office
IHG Hotels & Resorts, 1 Windsor Dials, Arthur Road, Windsor,
SL4 1RS, United Kingdom
Telephone:
+44 (0) 1753 972000
www.ihgplc.com
For general information about the Group’s business, please contact
the Corporate Affairs department at the above address. For all other
enquiries, please contact the Company Secretary’s office at the
above address.
Registrar
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex,
BN99 6DA, United Kingdom
Telephone:
+44 (0) 371 384 2132
www.shareview.co.uk
ADR Depositary
Shareowner Services, PO Box 64504, St. Paul, MN 55164-0504,
United States of America
Telephone:
+1 800 990 1135 (US calls) (toll-free)
+1 651 453 2128 (non-US calls)
Solicitors
Freshfields Bruckhaus Deringer LLP
Stockbrokers
BofA Securities
IHG® One Rewards
If you wish to enquire about, or join, IHG Rewards, visit
www.ihg.com/onerewards or telephone:
+800 2222 7172b (Austria, Belgium, Denmark, Finland, France,
Germany, Hungary, Ireland, Israel, Italy, Luxembourg, Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, and UK)
+44 1950 499004c (all other countries/regions in Europe and Africa)
1 888 211 9874 (US and Canada)
001 800 272 9273c (Mexico)
+1 801 975 3013c (Spanish) (Central and South America)
+1 801 975 3063c (English) (Central and South America)
+973 6 500 9 296a (Middle East)
+800 2222 7172b (Australia, Japan, Korea, Malaysia, New Zealand,
Philippines, Singapore and Thailand)
800 830 1128a or 021 20334848a (Mainland China)
800 965 222 (China Hong Kong)
Enquiries: www.shareowneronline.com under contact us
0800 728 (China Macau)
www.adr.com
Auditor
PricewaterhouseCoopers LLP
Investment bankers
BofA Securities
Goldman Sachs
00801 863 366 (China Taiwan)
+632 8857 8788c (all other countries/regions in Asia Pacific)
+ Denotes international access code. 00 or 011 in most countries.
a Toll charges apply.
b Universal international freephone number.
c International calling rates may apply.
Useful information
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Designed and produced by Superunion, London.
www.superunion.com
Printed by Park Communications, a Carbon Neutral
Company, on FSC® certified paper.
Park works to the EMAS standard and its Environmental
Management System is certified to ISO 14001.
This publication has been manufactured using 100%
offshore wind electricity sourced from UK wind.
100% of the inks used are vegetable oil based,
95% of press chemicals are recycled for further
use and, on average 99% of any waste associated
with this production will be recycled and the remaining
1% used to generate energy.
This document is printed on Revive 100 Silk,
a white triple coated sheet that is manufactured
from FSC® Recycled certified fibre derived from
100% pre- and post-consumer wastepaper containing
100% recycled fibre.
The FSC® label on this product ensures responsible
use of the world’s forest resources.
268
IHG | Annual Report and Form 20-F 2022
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IHG is proud of its people and the care
shown for the communities in which it
operates. We are pleased to feature photos
of some of our people, as well as some of
our community activities throughout this
Annual Report and Form 20-F.
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InterContinental Hotels Group PLC
1 Windsor Dials
Arthur Road
Windsor
Berkshire SL4 1RS
Switchboard +44 (0) 1753 972000
www.ihgplc.com
Make a booking at www.ihg.com
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