InterContinental Hotels Group PLC Price & Performance (IHG)

These areas of focus underpin three of our strategic pillars: Relentless focus on growth brands that guests and owners love, and leading commercial engine. We also had significant achievements related to our fourth strategic pillar, care for our people, communities and planet. Starting with our people, we continue to invest in supporting and developing colleagues at all levels of the business, including through new tools and resources for ISU University. We were delighted that Forbes once again recognized iQI as one of the world's top companies for women and to CIG rated in the top 10 of the Financial Times 2025 Diversity Leaders' Rankings of eight fifty European companies. And our employee resource groups continue to grow around the world extending to more than 5,000 members and allies across 36 chapters, helping to promote workplace inclusivity. On communities, we announced a new partnership with Action Against Hunger twenty twenty four to help support their life saving outreach program designed to spot and tackle malnutrition. As part of this, we will use our scale to help grow awareness of critical issue with our millions of guests around the globe. On carbon and energy, we continue to focus on reducing the environmental impact of our hotels including launching our low carbon pioneers program the first community of its kind in our industry designed to help us test, [indiscernible] and share findings on energy sustainability measures.

Our work to improve the efficiency of our hotel estate has reduced both emissions and energy per available room compared to a 2019 baseline. However, the need for greater clean energy infrastructure in major markets and our success growing and opening more hotels has led to total emissions increasing, meaning we're not on track to meet our original target reducing greenhouse gas emissions by 46% by 02/1930. However, we remain committed to reducing emissions and will continue many initiatives working closely with our hotel owners while the same time continuing to evaluate our approach and performance in a rapidly changing sustainability landscape. Today on our corporate website, we have released a separate presentation by Catherine Dalton, our Chief Sustainability Officer, who goes through our Carbon and Energy pillar in more detail and the progress being made. To conclude, we are very pleased with the strength of our financial performance, growth of our brands and progress made in 2024 against a clear strategy that is unlocking the full potential of our business for all stakeholders. Specifically we delivered against the growth algorithm outlined during our strategic update event this time last year. Delivering 2024 RevPAR growth of 3% net system size growth of 4.3%, 190 basis points of fee margin expansion, adjusted EPS growth of 15%, and more than $1,000,000,000 of capital return to shareholders through dividends and share buybacks.

We remain confident in our ability to continue delivering the growth algorithm over the medium to long term driven by high single digit fee revenue growth, 100 to 150 basis points of margin expansion [indiscernible] approximately 100% sustainable dividend growth, surplus capital return to shareholders while targeting financial leverage between 2.5 times and three times and ultimately delivering 12% to 15% adjusted EPS growth. And with that, we thank you for listening to our 2024 full year results presentation.

In the call. Ellie, please go ahead.

Well, thank you, and welcome to this question and answer session. I'm Eileen Malouf, Chief Executive Officer of Ice G Hotels and Resorts. Hopefully, you've all had a chance to watch the results presentation, which we made available at seven this morning. [indiscernible] It featured myself along with Michael Glover, our Chief Financial Officer who is here with me today. Before we open the line to take your first question, I will summarize our strong performance in 2024.

Our RevPAR grew by 3% with momentum improving across all regions in Q4.

We delivered gross system growth of 6.2% and net system growth of 4.3%, representing the third consecutive year of accelerating system growth. We signed 106,000 rooms across seven fourteen hotels, delivering a 34% increase in signings over 2023. We expanded our fee margin by 190 basis points, driven by 130 basis points of uplift from operating leverage and 60 basis points of uplift from new ancillary fee agreements EBIT grew 10% and adjusted EPS grew 15%. We completed our $800,000,000 share buyback program which together with ordinary dividends returned over $1,000,000,000 to shareholders.

And today, we announced the launch of a new $900,000,000 share buyback program, which together with dividend payments is expected to return over $1,100,000,000 to shareholders in 2025. And we announced the acquisition of the Ruby brand for $116,000,000 a premium urban lifestyle brand.

In summary, we made excellent progress in our strategic priorities in our confident in the strengths of our enterprise platform and the attractive long term growth outlook. And with that, let me turn it over to the operator to take the first question. Thank you very much, Ellie.

We will now open up for the Q and A session. [indiscernible] Our first question comes from Jamie Rollo with Morgan Stanley. Jamie, your line is now open. Please go ahead.

Thanks. Good morning. Three questions, please. Just starting with the key money, if I may.

You're talking about over hundred million dollars what it was over $200,000,000 last year and probably up a bit this year. That's about three times what it was in 2019. I just want to work out if that's simply the impact of Novum and the higher mix of Luxe something else in terms of the competitive environment driving that? And also, Michael, what's the sort of revenue impact from that? Because I think you deducted off your fees and we're now looking at a a CapEx figure running into the mid teens percent of your fee income. Secondly, it's a very good margin performance across the group, but just in The Americas, that down 100 basis points, you flagged certain one time costs. If you could please quantify that? And also why were the fees in The Americas in the second half only up 1%, that revenue, when NUC was up about 2% and RevPARs of around 3%. And then finally, from China, you've clarified that the removals was a bit of a one off about that 3%. But the openings and signings were also in the fourth quarter. Do you see any changes just generally to the development picture in China?

And should we still expect sort of high single digit net unit growth there this year? Thanks.

Yes, Jamie. I'll start with the key money.

When you look at key money, yes, last year we guided between 100 and and $50,000,000 and $200,000,000 and came in a little ahead of that. This year we're guiding $200,000,000 to $250,000,000 But in total, CapEx we're still within that $350,000,000 guidance we've given historically. We would still expect to come within that. And I think you have really three dynamics going on as we shift into premium and luxury and lifestyle. That's driving a significant more amount of key money. In fact, nearly 40% of our openings in the year were in premium and luxury and lifestyle. That's obviously driving it. And of course, with Novum, we don't have many deals like that where we get 17,000 rooms kind of all at once. That has driven bit of key money and that will have a little bit of an impact into next year as well. And then I think the third factor that is maybe not as clear is as you've increased as we've increased the number of conversions, those hotels don't stay in the pipeline as long as they have historically when you have a new bill. And so as you kind of move forward with that, you're seeing kind of that uptick in conversions happening in that key money accelerated in as a result of some of the conversion activity.

So in terms of competitiveness, I think we're actually still around the same amount that we give on a per on a per unit basis and we haven't really seen any creep from that perspective. So it's just really those three factors From a revenue impact of that, it's not as much you would think. I think overall next year, I would say that increase in keep money only has about a $5,000,000 to $6,000,000 impact on on fees next year because that contract as you know that key money is amortized over the life of the contract, the contract tend to be very long and therefore the impact in the individual year is not very significant. I'll go ahead and take the margin question in The Americas as well. Very comfortable with what we're doing in The Americas. We're investing in The Americas. We started like roughly 82% We were at a high, I think in 02/2004. We were at roughly 84%. We still feel like The Americas margin continue to move up. We're certainly making some impact. We're definitely making some investments there to continue growth growing. The openings tended to be a bit more back ended loaded.

So had the system size growth come in, which gives you a full year number, but the fee fees didn't have the full year impact. And so we would expect those to come in. I'll pause and take you want to take the next question?

Yes, let me just build also [indiscernible] we're confident in the outlook for our total capital guidance of $350,000,000 But within that The key money is driven by factors that Michael mentioned, luxury lifestyle conversions, not really doing more key money per key or key money per deal, but it's the mix of deals and that's good for our mix of fees, higher fees per key. And good for accelerating key accelerating fees into the business because those conversions open more more quickly. So we plan to continue that and it's part of the mix that we're growing On The Americas beyond the fee margin, I'd emphasize that we had 60% more openings. We had 13% more ground bricks. We had 9% more applications. So So our brands are really on the front foot, Garner, which we launched a little over a year ago, almost 120 hotels opened pipeline around the world. Strong signings, The Americas and it's going to now bring openings in because they're conversion openings. So we think that's going to bring fees in and clearly help the margin. Let me Let me talk about China. I was Michael and I were actually there about three weeks ago with our team spent a week there with our teams, talk about 100 owners.

I'm not getting, Jamie, literally 100 owners.

Visited our properties, talked to our development team. We had a great year of signings. In China last year. I mean, you can look at the quarter by quarter, but we had nearly 30,000 signings, record number of hotel signings, record number of hotel openings. I was just on the call with our China team yesterday for a monthly review. And they're seeing the same continue into 2025, very optimistic about it. So it was a very strong Q2. Last year. And I know sometimes the deals land where they land when you're talking about big transactions, working with our owners there. But every single one of the owners that I met with to the person is enthusiastic about growing with ISG and felt pretty good. I know that some other sectors some other industries in China aren't doing as well like residential real estate. Travel and tourism and ISG brands are doing quite well. So there's nothing really to look at in the quarter over quarter. We think '25 is going to be another strong year of signings and openings in China. Confident in the high single digit net unit growth in China for for years to come, not just given the fundamentals, but given our position in China, we inaugurated our eight hundredth hotel when I was there.

We have five fifty under development. We introduced our third essentials and sweets brand at Will Suites, which where we've already signed a few deals for 2025 and we expect more. Out of our six Essentials and Suites brands, we only had two in China.

Holiday and Holiday Express.

So there's more room for us to expand the map grow even further.

Thank you. Our next question comes from Vicky Stern with Barclays. Vicky, your line is now open. Please go ahead. [indiscernible] Just firstly, wanted to circle back on the Key Money question. Maybe stepping away from your specific guidance and the components you called out there that are driving that higher next year. Just more broadly in the industry, I think there seems to be a bit of anxiety ultimately things are getting a bit more costly, a bit more competitive when it comes to key money. Just curious about the trends you're seeing, I think Marriott was talking about even in the low end now in The U. S. There's a bit more requirement for key money. Just what are you seeing out there even if that's not specifically what's driving your key money higher next year? Second one is on fee growth. Marriott, we're also calling out one of the reasons for their lower fee growth guide next year being that lower expected IMF coming through in China. So just curious of your perspective, I guess, firstly on the RevPAR outlook for China and then your view on IMS whether those might be lower next year or 25% versus 24% for IHG.

And then just lastly on the broader RevPAR outlook, I guess your U. S. Peers are guiding between 2% to 32% to 4% Your key U. S. Peers for RevPAR and 25 what are you thinking things might land? And if you can sort of give us a bit of a geographical lens on that? Yes. Excellent. Good to hear from you, Vicki.

I was just in The U. S. A couple of weeks ago at the Atlas conference Of course, as you know, I spend a lot of time back and forth between here and there. We're not seeing that trend in our mainstream brands and our centrals and suites. Of I mentioned Garner earlier, We haven't been doing key money for Garner whatsoever. Don't see a higher incidence of it in our Suites brand. The market's always been very competitive, that's for sure. [indiscernible] I don't know that it's different. Now without really focusing on any specific companies, but if you're trying to enter a segment That you're not in or strong in Maybe the need to participate differently or to or to create different incentives, but we are well established in the segments that we compete in. [indiscernible] North America and The U. S. And And don't feel they need to do anymore and our signings made progress, our openings made progress, our Frambrakes and applications made progress without really having to commit more on key money. Where we're making not bigger commitments per key or per hotel, but it's by sector is in luxury, lifestyle and premium. And that was been part of our strategy from the beginning and we're persisting with it also in The U. S. [indiscernible] we had, let's just say, Not the same distribution of luxury lifestyle premium made great gains.

And that opening some really halo properties including Regent Santa Monica InterContinental in Seattle and so forth and so.

Those pay higher fees and pay for themselves and we're quite pleased with that. So we are not we're not seeing the same trend that others, but maybe it's because of where they're participating today and where they're seeking to participate tomorrow. In terms of China in general, and I'll turn it over to Michael about the IMFs.

We See A Progression Of Our Business In China. You've If you look at our RevPAR, in the second half of the year, versus the first half of the year, it's compared to 2019.

Point improvement in the second half of the year over the first half of the year.

And and occupancy was basically flat for us And yes, rate came down, but a lot of that rate was really influenced by the strong outbound travel to Asia Pacific and that's continued in the first half of the year. And we benefit from that frankly. Chinese New Year just concluded all the data show record travel domestically, but also even more travel to nearby Asian markets like Japan, Vietnam, South Korea, Indonesia, Thailand, etcetera. So and we benefit from those hotels there, especially the IMFs. You Saw In Our Figures Last Year. So I Said Last Year That My Sense Was That China was bottoming out, digesting the overbuilding residential real estate. That's clearly the sense we have now. So think clearly this year going to be a better year for for RevPAR in China than it was last year. But Michael, why don't you get into the IMAX particularly?

Yes. I mean, I think it kind of aligns with what Ellie is saying. If you look at where we fit in 2024, we did $178,000,000 in IMFs, obviously much smaller than the company you mentioned there. We're definitely more of a franchise business. But if you look at that outbound travel out of China, actually, and you look at those areas around the MEAA, MEAA actually was up $17,000,000 in IMFs in that in the whole region. A lot of that went into that Southeast Asia and we do have managed hotels there. Where we've been able to more than offset the decline of roughly $7,000,000 of IMFs in Greater China. And as Ellie mentioned, as we we kind of started in January, The Chinese were traveling and they were traveling really well as part of Chinese New Year. In fact, they extended Chinese New Year helped actually that outbound travel and we saw really strong RevPAR growth in January. Now we need to see how it progresses, but as Ellie said, we feel comfortable about where China is going in and where it's moving. So from an IMF perspective, we're not worried about going backwards in terms of fee growth there.

We would still see that continuing to grow.

Yes.

And Vicky, I think your last question was U. S. RevPAR compared to what's out there from others and and analysts. I think you look at the projections from STR and others, They are in the high ones for this year. For 2025. Frankly, we think five Gymbia is good in The U. S. Or better. We obviously had a very strong fourth quarter in The U. S. At 4.1 and we're we're pleased to see the acceleration. And so we don't give guidance. But if you look at the fundamentals of that drive The U. S. Travel business, got good GDP in Q4, Jobs report in January showed nearly record employment unemployment coming down, financial markets are strong. Consumer confidence is good, Supply isn't high. In going into 2025. And so the fundamentals for another good year RevPAR growth in The U. S. Are there. And Michael can touch on it in some detail, but based on January and February, what we're seeing is at or ahead of what we expected. [indiscernible] Great. Thanks very much. Thank you very much. Our next question comes from Jaina Mistry with Jefferies. Jaina, your line is now open. Please go ahead.

Good morning. Thanks for taking my questions.

Three as well, if I may. The first one is another unfortunately on key money. Mean, you've hopefully given the breakdown by chain scale and segments. Is more for U. S. [indiscernible] [indiscernible] Going forward, do you expect Key Money to remain at that 200 to two fifty level in 2026 and 2027. And second question is on the rubiac acquisition. Congratulations. Do you expect Rubia to be earnings accretive in 2025? And then just lastly on free cash flow. I wondered what your level of confidence is in achieving 100% free cash flow this year. Given that you met it last year, 2024, with the help of credit card inflow, I guess key money is expected to remain elevated in 2025 as well. Your thoughts there would be very helpful.

Okay. So in terms of where we deploy KeyMine, it's really no different than what's always been. In The U. S, [indiscernible] It's in premium luxury and lifestyle. Not really in essentials and suites where we're biggest. No different than it's been before except I'll repeat that our mix of deals and openings has purposely strategically moved further into premium luxury lifestyle. That's why we added VOCO, Vignette, Regents, Exenses. We've been growing Kimpton, And we're going to continue to do that. Which is now 50% of deals open and signed. And And that moves up key money but also moves up fees. We're happy to pay the key money earlier because hotels opening earlier versus pay three years from now on a new build, right? And there's a lower risk of, say, in completion of a project when it's a conversion versus a newbuild. We like them both, but statistically everyone will tell you there's a higher probability of opening with a conversion than there is a a new build signing because years go on and things could happen. As you move to the rest of the world, there's no different. In Europe, We've done key money before, especially when it's urban destinations or locations.

And it continues no more, no less than before. Clearly, when you get a package, like the Novum deal, 119 total properties. And by the way, we've signed another five deals with NOVUM since then.

Which shows the growth and value of that agreement. That we everybody would do an amount of key money for that and we did. As you move east from there, in The Middle East, for luxury and lifestyle, again, not for mainstream and not for essentials and suites, same thing in Southeast Asia, And in China actually, we don't do key money in any category. And haven't, just the structure of the market. So the structure of the market hasn't changed.

Actually pleased [indiscernible] we're signing more hotels and opening more hotels. Our signings are up a third year over year. Openings are up 23% year over year. And if that's coming in the categories where there is key money like premium luxury and lifestyle, well, that's fine because that's been part of our strategy. And so we've guided to 200 or more in key money for this year and for the next couple of years. I think it's going to then moderate back down as we get through the digestion of some really halo projects.

That are opening over the next couple of years, including the one that completed its opening last year, the Regent Santa Monica. And we have a few of those really halo projects that establishing our brands in key markets. But I think that the amounts are driven by strategy, They're within our total capital guidance. Don't change or affect our algorithm. In fact, when we put out our our growth algorithm and the statistics that we shared with you last year at this time, that included in our knowledge in view already where Key Money was going to be headed for the medium to long term, driven by our growth, driven by our expansion and the mix of our portfolio. On Ruby, look, we're very excited about Ruby. Just really hits a spot in an area we've been looking. You've heard me talk previously about urban micro and people ask me where would you look?

I've mentioned urban micro because we've been looking in that space and really preferring to acquire something so we can scale up much more quickly. We've launched very successfully in Essentials and Suites, as you've seen with Gardner, Av and Atwell, but In premium and above, we've generally bought and scaled very successfully. So this brand with 30 hotels open in pipeline pack 31 because just last week they signed a great property downtown Copenhagen. And there's more coming. We can see ourselves scaling this thing to one hundred and twenty five years two fifty in ten years. And our track record with other brands shows that this is this is extremely feasible. So in 2025, what we've said in our results presentation there's going to be $10,000,000 of integration costs that are within our projections. And don't expect to have a profit reported From that, brand in of itself, it doesn't really move our projections much at all given its size and scale. And then in 2026, you're going to start to see some fee accretion. But look, this is a very attractive multiple. It was an off market transaction. In 2028, when the open hotels public hotels stabilize and many of them are really new, We're in mid teens multiple on the acquisition and by 02/1930, were single digit like sub-eight multiples.

So this is an attractive acquisition at an attractive price. With a lot of growth potential for us. Thanks. And I'll just pick up the free cash flow question, Dana.

I think if you look at our free cash flow and how it moved this year, we mentioned at the half year that a large portion of the decrease at the half year was related to the spend down of the system fund surplus. And of course, we've had a bit more of key money that in 2024 come in. And then that was offset by about $100,000,000 of the signing bonus that came in in 2024 from our partners on that across various partners. Now as we look at 2025, we feel very confident confident in getting back to that 100% when we won't have the spin down of the system fund surplus to go through again. The key money is normalizing that step up is normalized. And then we also have another $37,000,000 that we received in January actually coming from the brand credit card deal across all the partners. So think we feel very comfortable as we move into the year and looking at where things sit that we would get back and get around 100% conversion as we said through our gross algorithm.

Our next question comes from Muneeba Kayani with Bank of America. Muneeba, your line is now open. Please go ahead.

Good morning. First question around net system growth, your pipeline, 33%. I think in the video you said you're targeting around 4% net system growth. How are you thinking about that And could we see that kind of increasing to a say a higher level of 5% to 6% is the first question. And then secondly, just on the cash return, the buyback is higher and you have 10% dividend growth. Your leverage is at 2.3, which is below your target range. So how should we think about that buyback number growing and that dividend growing in the medium term. And then thirdly, on Ruby, You've Talked About Your Expansion, I Think In The U. S. Asia as well. Just in terms of like the founder, what is the involvement going forward? And can you talk a bit about the incentive program you had there? Sure. Thank you, Maniva.

I'll take the first one, last one, turn over the share buyback to Michael.

I'm very pleased to learn that System Growth in 2024 and the trajectory. It's our third consecutive year of increasing signings, openings and its system growth. And we're confident in four or more in 2025. We don't give specific guidance, but we're comfortable in that or more. And so we think that the power of the brands that we've been developing, the ones that we're launching, acquiring and the strength of our signings, puts us in a position to continue to build that growth and keep reaching higher. Look, we'd love to always do more. But you've heard me also say that we want to do it thoughtfully. We want to grow profitably. We want keys with fees. And so whether we're doing partnerships or we're doing new deals, whether we're expanding into new markets, we're thinking of the whole algorithm. How does that net system growth drive RevPAR? Which drives fees, that drive margin growth, that take us down to growth in EBIT and EPS. And we're delivering on [indiscernible] delivering at the high end of our expectation in 2024. And we're confident doing that in 2025. With the system growth we got today and we think we can do better too.

Kind of leads me to Ruby. [indiscernible] it's another tool in our arsenal to grow system in a space that we we've been looking at hard, but we have not been participating. We're an urban lifestyle with Kimpton, with Indigo, with VOCO, VINET. But we wanted this urban micro premium space. We think it's just a long term structural trend across most of our markets. So yes, we're definitely take it outside of Europe. It's well established already. First, we're going to scale it up much more in Europe. And then we're going to go first to The U. S. And we said we'd be there by the end of the year. Ready for development and then start going east from there.

I'll tell you, our development teams around the world and some of our owners have been pushing us to participate in the space. They're eagerly waiting for us to bring Gruby forward and internationalize it for them. And you've seen us be successful with internationalizing brands that we acquire. And required region and successes. Since then, we've more than doubled the pipeline that we got and we've made them extremely successful globally. Kimp is now 140 hotels open and pipeline around the world and just a domestic brand when we acquired it. So we kind of know how to do this. We may not be smart at many, many things, but this is something that I think we know how to do. The founder, and is the founder and principal, but not the only investor. He's got a handful of large institutional investors from Europe that are at the table with them. They're going to remain owning the properties, but developing more properties, which is a built in engine for us of growth in Europe and they're highly committed to do it. And we we built an incentive plan for them to do it that frankly is ambitious, but the more they achieve against it, the better it is for us.

It's actually lowers the overall multiple, lowers the cost for the next property, the next room. And so it's we're confident in growing the brand ourselves. As we've done with many other brands by franchising it to other capable owners. [indiscernible] we're confident they will achieve a substantial level of growth. Not sure exactly where on that ambition they'll be, but the more, the better for us. I was actually with them Friday night after finalizing the transaction They're very good at what they do. They've had a very strong compounded growth rate since they launched their brand in 2013 in the 40 ish percent, and they've got a very good pipe Great. And on the cash return, I think Ellie and I have been very clear since we came in that we were going to return cash to shareholders $4,500,000,000 2023, we did 07/2024, dollars $800,000,000 Now we've announced a 900,000,000 buyback And so we've talked about being consistent with that and continuing to deliver that. And we plan on doing that in the future and actually if you talk about the future and you just look at where consensus sits today, consensus sits today at about $1,237,000,000 dollars We think that's a little low right now because not all analysts have put in the effect of the co brand credit card.

In fact, I was talking with some of the analysts today that are around $12.70 think that's about right, and what we think. And if you just look at kind of where that would take you based on our growth algorithm, at $1,270,000,000 dollars and if you look at the interest changes that we've talked about, all in, you're probably looking at earnings per share growth in the 17% range.

We've told you today that we feel comfortable in the cash conversion and getting back to 100%. Our net debt to EBITDA at the end of the year would be at this year was 2.3 with the Ruby acquisition and the $900,000,000 share buyback we're talking about it being at the kind of low end of our target range. So if you take all that together, I think you could surmise that it'd be another year where we would continue to do share buybacks assuming everything came in and the board decided what they wanted to do, but we feel confident in that. And if you look at that, that's actually ahead of our mid to long term growth algorithm. So I think we feel really strong for feel good about coming into this year. And what we potentially can deliver.

Thank you. Our next question comes from Jaipur Mathari Jaafar, your line is now open. Please go ahead.

Hi, good morning. I've got three, if that's okay. Firstly, on the adverse FX impact, SEK 16,000,000 for the group. Could you maybe roughly break that down by region? Tend to think of America as mostly UST, but was there a material headwind there? On the smaller currencies? And then whether it was a positive on central costs because a lot of them are still sterling, please? And then just two related questions on your brand momentum on some of the newer brands. You've made some comments about Garner, Vignette, ramping up strongly. Medium term, where do you think they stabilize? If I take VOCO, probably your most successful organic launch as a unit. Is vignette 0.3x of VOCO once it's fully ramped up? Is garner 0.5.

Percent. And just related to that, what about the slightly older the even the Qualux, the Avids, if I just look at the pipeline, it looks plateauing would that be roughly your view as well? Or do you think there's a second leg markets where you can still launch them or you can do differently to reaccelerate these brands, please? Okay. Well, thank you, Geoff. I'll leave the FX question to Michael.

I'll talk about the fun stuff. I'll talk about the brands.

We're optimistic about the growth potential of all of our brands and take them sort of in order. You're right. Garner, we said, would be 500 in ten years, 2020, I mean, we're already nearly 120 open in pipeline in about a year. So we think we're well on track. And it's when international much more quickly and broadly than I thought. It's in six and seven countries. And it's very likely to be more countries [indiscernible] hitting that trend of a desire for conversions and quality mid scale properties that want to join a strong system. And our system is increasingly proving itself to be among the best in the industry.

The when you go I mean Voca and Vignette are clearly because they're an upscale and upper upscale, they're targeted for smaller But still very good end state size and they're on track. They're both exactly on track, although they launched either before pandemic or in the pandemic. VOCO is, what, about 140 or so open under development around the world. [indiscernible] Vignette is on track between what's open on development The further up you go in the chain, the smaller the target size, as you go to upper upscale into luxury, but they're both on track to we want and they keep appearing in new markets, vignettes now in Japan. It's now in China, and we got more coming. It's not just in The U. S. And in Europe, it's vignettes in The Middle East.

And VOCO is in dozens and dozens of countries. So the map is wide for them too. Looking at WellSuite and Avid, are doing very well. Avid is over 70 open, over 140 in pipeline. And it's only one country. Now, well, I guess it's in Canada and Mexico, but only in one region. We haven't taken it to Asia, to Europe, to China.

But we took Atwell Suites at China and we think we have a long runway there and it's growing very well in The U. S. So I mean they're all on track. They have different trajectories based on where they are in the chain scale and the markets they participate in. But they're on track with the growth lines. And And so then for Ruby, we have its own track It's not going to be vastly suburban or exurban. Tertiary cities. It's really key cities and maybe the next level not so much resort, but maybe a few resorts. And therefore, the dimension that we see for it is 120 in ten years, two fifty in 2020 and We're starting with a very good base there too. So I'd say I'm excited about the the power of all of them. But as you see us broaden that portfolio and then broaden them geographically, You can see that we have many more avenues for growth. Even in 2024. We had dozens of instances where we took an existing brand but to a new market where it wasn't participating. And we still have many of those combinations done thoughtfully done where the fees are right, where the profits right, but with many more of these combinations too.

To exploit.

On the FX, yes, I mean, it definitely had an impact this year. We were 10% in operating profit [indiscernible] So really solid growth, but it could have been even more except for the FX. If you look at that impact, from The Americas, it's roughly of the $16,000,000 it was roughly $5,000,000 EMIA was $6,000,000 Greater China 1,000,000 and then across our overheads around $4,000,000 That's actually in the appendix If you want to look at the slide, that is the currency impact. I think it's Slide 60 Page 64 in the appendix. So, if you want to look at it there, it breaks all that. It also breaks it out by the revenue.

Super. Thank you.

Thank you very much. Our next question is from Jared Castle with UBS. Jared, your line is now open. Please go ahead.

Great. Thanks very much. Good morning, everyone. Maybe three Topical kind of questions. I mean, firstly, just The U. S. Situation. I mean, how do you think about [indiscernible] what's going on with removing some of the migrants, mostly? Is it potentially going to have an impact on the ability for certain hotels to function, maybe they're not IHG hotels? And then secondly, obviously, related to that also the tariffs be it on GDP or procurement, how are you thinking about that? I guess switching to Europe, Just any thoughts on on if there is peace, Ukraine, Russia, would you look to push again in Russia Just thoughts on opportunities And then lastly, you touched on ESG aspects, but can you talk a bit about how you're thinking about disruption caused by climate change specifically? I'm thinking about recent events in California and Florida parts of the Med in terms of fires in Greece and floods, etcetera. I mean, how do you see that impacting your footprint both now and going forward in terms of how you're thinking about future signing? Thanks. Thank you, Jared. No Nothing casual about your topics today. So look, on The U. S, I would say we should all just take a deep breath.

And wait and see what actually happens What are the final policy? What is the final status is the final effect? Clearly, there's a lot of noise of what will be implemented, what won't be implemented, what tariffs get applied and then they're disapplied. And so I just think we we should just take a breath and it hasn't been even two months. Actually, it hasn't even been a month. Since inauguration. That's in a couple of days. And let's just see what actually happens. Generally, we've been in The U. S. Eighty years. Almost every time there's a new President from election, it is from the opposite party. With very few exceptions, almost every time in the last seventy five years.

And so we're used to a lot of change. Our business has prospered. It actually prospered under the previous administration from 2024 It prospered under the current administration, which was the previous administration.

Between 'sixteen and 'twenty, And if I look at the fundamentals of The U. S. Economy, still pretty solid. And whether there are as many pro growth policies implemented or not, I think the underlying drivers of The U. S. Economy are less government driven than they're industry driven. I mean, the best technology in the world, highly educated population, strong infrastructure, strong financial markets, great propensity to travel, strong corporate sector, Those things have a propulsion of their own and we'll just have to wait and see what the final status of these policies. Also on migrants, Let's just really wait and see what happens. It's lot of talk, and we haven't seen any effect in our hotels yet.

And probably the wisest thing is to wait and see what actually happens, what changes in the context. There's been a lot of conversation around migrates and migration for years. It never has really affected our business. We operate with with documented workers. That's our policy in our hotels. Whether it's managed or franchised. On the EU, we hope for peace. We hope for prosperity. We hope for in the EU and in The UK. We don't have any plans to go back into Russia at this point, whatever the outcome is of [indiscernible] those discussions, but hopefully they bring a lasting piece. [indiscernible] disruptions from climate change, look, we watch it very closely. We take a very serious view on not just ESG, but climate policy. And unfortunately, there are natural disasters that occur frequently. We're in 100 countries and I have to tell you that's there's something unfortunately happening whether it's a typhoon or hurricane or a drought or an earthquake quite frequently and sadly and in our regions at all times, It has not disrupted our overall business. Yes, it may disrupt business in one part until it recovers, but then Our distribution our 100 countries that we're in, our diversification, usually carries us through and even this last year, despite the hurricanes in Florida, the fires in LA where I was just two weeks ago, typhoons in Asia, the net net was not a disruption to our business.

We're not saying that we wish for these events. We're just saying that we've got a lot of experience powering through them and let's not forget that hotels in most cases are a place of refuge and comfort. I was speaking the I got a letter from Chief Executive of a major business in Los Angeles who's very thankful that she and her colleagues could take refuge at the InterContinental Downtown LA when unfortunately their homes were damaged in Pacific Palisades. We hope that none of this we're always there for people when there are these events.

Great.

Thank you very much. As a reminder, if you would like to ask a question, please Our next question comes from Kei Zhao with Bernstein. Kate, your line is now open. Please go ahead. Great. Thank you very much for There's one question on if possible, the recently announced co lending agreement with one of the lenders in The U. S, Havana. I think the amount the announcement was that there's a total commitment of $250,000,000 in construction loans for certain U. S. Based projects. Can I please ask how much what kind of level you're expecting from the ISG side? Is it like a fifty-fifty kind of agreement or are you expecting less or a bit more? And what is the timeline for that capital you expect to be drawn upon? And certainly, do you see this as a temporary solution to the certain brands in The U. S? Or do you think this could be rolled out potentially as a recurring kind of aid to wider brands? Stay more competitive with other brands in the market.

Okay.

Let me take that and then I'll let Ellie work on that.

Or add on to whatever if I miss anything. First of all, it was something that Ellie and I were working on in The Americas. And we've been trying to work it for some time as we think it's a unique way to to help owners grow. Unfortunately, Ellie and I weren't able to do it there. And the great team there now has been able to get it done once we left. So good on them. And what I would really say to in the way to look at it is, We're partnering with them. The vast majority of capital that goes out will be Part of the Avana team and their capital. We will provide support But it would be no more than what we would do with key money for any property. And so I would treat it within that $200,000,000 to $250,000,000 of capital guidance we've given, that was where it would sit So we're very comfortable with that in that approach. It doesn't put us at any further risk because we'll be limited in our risk. But that's how we think about it in LE. Maybe you can just add on mean, as you know, going out of the pandemic and then you had inflation, you had interest rate increases, It was harder for our owners to get projects financed And we've always helped them putting together financing packages, telling the story to their lenders, describing the strength of the ICU brands and their enterprise and that's been a very important source of help.

We partner very closely with our owners on getting through all the all the processes And we thought this was an incremental thing we could do Yes, the financial markets are improving. Thawing out for new development in The U. S. We see that picking up. And I've said for now a couple of years, it's going to tick up, it's not going to soar up, it's just going to tick up and it is ticking up inflation interest rates have stabilized, maybe not gone down as much as people would have liked, but they've stabilized at least. [indiscernible] while we're sort of grinding up in new development financing, this could be a bit of an accelerator for certain properties and certain owners that that we think we can support, but we don't think we're taking any material risk here. And it's well within our guidance for capital.

That's very clear. Thank you very much. Thank you. Our next question comes from Andre Jayad, Deutsche Bank Andre, your line is now open. Please go ahead.

Thank you very much. Good morning. Three follow very short follow-up, if I may. First one on Ruby acquisition, which is which seems to be pretty attractive.

Is there a magic number in terms of brand You are now at 20. If I compare you to to Marriott, Aker, they are well above that number. But what is the idea behind that? And what is the optimized number of brands you can manage? Second question about leverage. You are mentioning that you would probably be close to 2.5x and then that's your EBITDA. At the end of twenty twenty five. You think about any change in your mid term guidance or do you still remain on the same number? And last question, if I may, about tax rate. You've been guiding on 27%. If we listen to what Donald Trump has been saying, he was thinking about lowering the tax rate in The U. S. You have an idea or quantification that we could anticipate? Or is it still early stage? Thank you. Thank you, Andre. I'll take the first question.

On the brand portfolio. I mean, look, if the mere number of brands that somebody had was the measure of success and valuations in the industry will be different than what they are. What really matters is having brands that are relevant to guests and to owners that you can scale.

In segments that are attractive. So we think we have a very powerful portfolio today and even before that addresses the main segments that we want to grow in But we also know it's a dynamic industry, right? It's not a static industry. So your strategy can't be static.

Ten years ago, we had 10 brands. But in ten years, things changed. People's travel preferences change and owners desires to invest capital in different segments change and we have to adapt with those. But going to those segments where there's an InterContinental the intersection is of where there's strong demand by travelers, and strong interest from owners to build and where there's that InterContinental want to be at that InterContinental we're not, then we want to go there.

We were not at the intersection of Uber luxury where many of our own intercontinental and Kimpton travelers sometimes wanting something even more exclusive and going. So we went in with successes in region very successfully, not because we wanted two more brands and to catch up with anybody else that was adding brands, but because there was shareholder value to create and we have. And we have a lot with expenses in with Regent. And same thing when you get to essentials and sweets, was 2024 and we hadn't launched the brand yet, We We saw a space, a desire from owners who came to us and said, they would like to join us with their products. It wasn't quite a Holland Express, but if there was a conversion solution, etcetera. So have been thinking about that for multiple years and then decided that was the right time. And it's been very successful. And so the urban, micro space is one that has developed wasn't really much of anything ten years ago, but has developed as real estate prices have increased in center cities people's propensity to travel has increased, as they've been looking for Yes, lifestyle experiences when they travel, but not necessarily just in the room.

They want a great feel that they're where they land in a city with a smart design, a buzzy dynamic public space, but not so much where it's not affordable anymore. And so this urban micro space one that's been think Ruby is the best entry point in the industry for this. But that's not because we were at 19 and wanted to be at 20. No, it's because there's a space of profitable growth for us to go. I think the industry will continue to be dynamic. I don't know that we will need anything in the near future, but I can tell you five years or whatever, the industry develops, we'll be looking at other intersections of guest demand and owner interest to participate in. And if there are non new ones, we've got a lot to grow from the brands that we have already. If there are new ones, we'll choose to participate.

Yes.

I think as we go to the net debt EBITDA question, and the change to the medium to long term algorithm, I just go back to our our uses of capital remain unchanged. We're going to invest in the business We've done that consistently whether that's launching new brands or acquiring new brands like we've just done with Ruby. We we intend to sustainably grow the ordinary dividend and then return excess cash back to shareholders. And the model is allowing us to do that and do that consistently and we'll continue to do that. As I mentioned earlier, if you look at again where is consensus and where we think it could move to and what that looks like from an earnings per share growth perspective. Certainly, the co brand credit card at $40,000,000 that we've talked about being incremental this year year and the $25,000,000 from the point sales is pushing that to the top end and above those earnings per share. Targets that we laid out in that medium to long term growth algorithm. But we think about this business for the long term. And so as you think about the medium to long term growth algorithm, we feel like that's the right place to be.

Now obviously, there'll be some ups and downs. It is a medium to long term growth algorithm. This the credit card and sales is going to push us over that. Kind of guidance. So that's a great thing and it's good for our shareholders. We're just letting that flow through. And but we feel like that that algorithm is the right place to be for us longer term. And then in terms of tax, I just certainly wouldn't put anything in yet and model anything. We've been we've shared today that we feel like modeling at [indiscernible] Let's wait and see what happens and when it gets approved and all that. Turns out. And as soon as we do, we'll let you know how to model that differently.

Maybe one follow-up on the brand portfolio. Perfectly understand that. [indiscernible] [indiscernible] Yes, sorry.

Yes, just a follow-up on the brand portfolio. I perfectly understand that 20 is not a magic number, but just wanted to to understand if You had an opportunity with Rubi on the urban segment. But with Iberostar, I think that it was quite interesting to see you moving on the resort side. Do you still feel that there is some potential some growth potential on that segment as well?

Look, we're excited about the opportunities that the Baerstar relationship has opened up and we grew it again in 2024.

Given us access to dozens and dozens of beachfront resorts that were not part of our system and our guests appreciate that now that they can earn and burn loyalty points there and book directly through our channels.

And we in our over 400 luxury and lifestyle properties are being developed around the world there are many, many of our resort properties. In North America, especially in Asia, in China, in The Middle East, there's just a collection of resorts that's been opening and that's coming and some are beachfront resorts, some are mountain resorts. I mean last year we announced Six Senses Telluride in Colorado.

We opened Region Santa Monica in the LA region. We opened the region for Quakken, Vietnam. We have a urban We opened six Senses Kyoto sort of an urban resort. I mean, Indigo in the Galapagos and Indigo in the Grand Cayman. I mean, [indiscernible] It's just a rolling thunder of great resorts that are coming and that have been coming. So in the map is very wide when you start talking resort, yes, we're excited about it and there's more we can do with our brands. And look, if we find another brand opportunity that is differentiated from what we do, We'll certainly look at it Obviously, we take a look at everything out there. As you've seen, we're pretty thoughtful about what we buy. We don't rush into anything. We try to do it where it's a differentiated offer in our portfolio. We are very careful to find things that are valuable. We don't overpay. We think that the multiple here in the mid teens going in and quickly going down to single digit. Is very attractive. So we're confident in our organic growth potential in resort and elsewhere. But always looking for what else can happen. Okay.

Thank you very much.

Thank you very much. As a reminder, We have one more question in the queue. So that's star one Our next question comes from Alex Brignal with Redburn Atlantic. Alex, your line is now open. Please go ahead.

Good morning. Thank you for taking the question. Just one on net unit growth, please. It's a general theme of the quarter so far or the full year reporting is disappointment on that unit growth from I guess across the pairs that with a lot of A lot of your peers who gave long term net unit growth guides sort of including within their guide things that they've either required, one or even included the hotel that you gave away, the Venetian within what they called Organ And if we look at your numbers and take off, Nova, which obviously paid some money for last year in terms of the deal structure, Dan, you're in the sort of mid-3s even if we includes even if we add back the Venetian, So if we look forward and given that occupancy in The U. S. Is still several hundred basis points below where it was in 2019, why does net unit growth need to get back to where it was? And do we just need to adjust to the fact that it's just going to be lower? It seems to be a sort of adjustment that lots of people are saying is temporary, but that does it seems good reason why net unit doesn't need to be as high given the the demand environment and it seems to have just pushed up by these little deals?

Thank you.

Yes. Thank you, Alex. Good to hear from you. Look, I won't speak for others. What they guided to and what they've adjusted to.

And what I'll tell you from our point of view, we're actually pretty confident in and pleased with where we're at and where we can go.

The Venetian, we discussed openly on Q3 was a legacy transaction, didn't earn the company any money. We're doing things differently today. And we're very grateful for the relationship we had with them, but we're both going in different directions and that's just fine with us. [indiscernible] we Novum as something similar to some of these other partnerships and acquisition. It was neither a partnership nor an acquisition. It was a franchise deal just happened to be 119 separate individual franchise deals And so there are 20 agreements they pay full fees, they pay full system, there are no termination rights, and it's growing even further from there. It's not a pay for performance. It's none of those things that you may or may not have excluded from the numbers of others that should lead to any disappointment. So We don't exclude it from our underlying performance or total. We do a lot of conversions. In every given year and maybe none necessarily right away of the same scale. But when you add them all up, it's still a lot of conversions that they could roll up to a big number. And I'm confident they will roll up to big number in 2025 also.

So we're confident in the guidance we've given for 2025 at four or above. And it's consistent with where we've been and always inching and moving forward. It will be our fourth year of solid net system size growth and growing. And if the others have had to change the expectations or meet them in different ways, that's not down to us. Our algorithm works. At the current net system size growth and work better as it keeps moving up. As you can see that think there have been further questions, Alex, is where the The changes in that system size growth have not led to the bottom of the algorithm outcome. In our case, that's not not the situation. We delivered 15% EPS growth and 10% EBIT growth With clean [indiscernible] net systems as growth in RevPAR were confident InterContinental on the track we do. In terms of the industry, occupancy, yes, is a point or two in The U. S. But but rate is strong, but supply is low. Supply is low and demand keeps growing. And the supply has been constrained by restrictive financing environment. And you can see that our signings keep growing and those of the industry keep growing.

There is demand from owners to build. There is demand from guests to travel. But the financing market has been falling out gently. And that's why our signings keep growing in The U. S. And our openings keep growing in The U. S. They're not a V shaped recovery, but they're growing. And that means that demand is there from travelers, demand is there from owners it's going to continue to build, I think, to be back to where it used to be at a stable stabilized basis. Fantastic. Thank you. If I could just tie back to to Key Money. Obviously, the Novum deal had an element of cash contribution in terms of the conversions and there's been several questions asked about key money, so we don't need to ask about them anymore. But just in terms of the way that these deals are being structured, we've seen some that are done with a sort of OTA style fee structure. When you look out at these deals, you've done particularly well at the ones that that you've done. Is it Is it hard to find them where you sort of are happy with the term being offered? Are you finding other people that are being sort of just taking the rooms because they just want the rooms and as you said, it then doesn't end up in fees.

Do you sort of are you just being particularly selective in the ones that you do? In a market where others maybe aren't being so selective?

Look, again, I won't comment what others are doing and why they're doing it. What I will say is, we're not interested in keys without fees, right? Interested in in growing the value of our business for our shareholders. And now there are varying fees by market, varying fees by asset class, There are certain incredible halo assets, which may have a different fee structure. But they got to be creating value for us. Otherwise, we're not going to participate. When you say the OTA type of agreements that we've made, I'm not aware that we've made any recently. [indiscernible] Okay. Well, we won't comment on what they've done. What I can tell you is What I can tell you is that we look at a lot of stuff that gets brought to us and we're very selective about what what we do and what works and it's got to contribute to our growth algorithm on the medium to long term or we don't consider it. Sometimes key money is involved, but that is only when we still feel like we're getting a substantial level of value I could and you know this Alex, we've said it before, we could go from our growth today to 7% growth to 6% net unit growth by just having done some of the deals that we would have seen in the last couple of years, I don't think it would have I know it wouldn't create any value, but it would have been a distraction.

And said we focused our people on growing in the right way, in the right markets, and on doing the transactions. Like Ruby, like Novum that are long term, that are accretive, that pay fees, that are at a good value that I think builds great shareholder value or launching Garner. Where for very little capital, we're now at nearly 120 hotels open and pipeline in six to seven countries. And I think we're just getting started. Like we I only have so much Michael, I only have so much time in the day and And when we're allocating it to the higher value opportunities, I think it pays off for everybody.

We currently have no more questions registered So I will hand back over to Andy for any closing remarks. Well, thank you everyone. It's been really great to connect with you today. Update you on our 2024 full year results and strategic priorities. We're very proud of what our teams accomplished in the past year. And we remain very confident in our ability to continue delivering on our strategy and driving shareholder value going forward. Our next market communication will be our first quarter trading update on Thursday, August.

For being today's speakers.

Thank you everyone for joining. We appreciate everyone participation. You may now disconnect your lines.