Assignment homework 2

Page 1 of 17

Case Study

The InterContinental Hotel Group

The Intercontinental Hotel Group (IHG), is the very recent face of a long history of corporate mergers,

acquisitions and takeovers. The roots of IHG go as far back as 1777 with the founding of Bass Brewery

in Burton Upon Trent by William Bass. Bass who had originally ran a dray operators’ business,

transporting beer from breweries to public houses through the early 1770’s, discovered that the

natural spring waters in Burton Upon Trent, were ideal for producing pale ales. On selling his dray

business to the Pickford family, William Bass found that the pale ale he brewed was becoming popular.

So popular that within a short period of time he was exporting the pale ale all over the world. In 1888,

William Bass patented the famous red triangle trademark which is credited as one of the world’s first

registered trade-mark.

By 1877 Bass Breweries were brewing over 1,000,000 barrels of beer

annually, transporting their beer throughout the British Empire and beyond.

Throughout the early 20th century, Bass continued to expand and grow its

empire, purchasing breweries across the United Kingdom. In 1996, Bass

merged with Charrington United Breweries to become Bass Charrington, the

biggest brewing company in the UK and one of the largest breweries in the

world.

The Beers Orders.

By the end of the 1980’s, the UK beer brewing and retail distribution industry was dominated by six

companies; Bass, along with Whitbread, Grand Metropolitan, Courage, Scottish and Newcastle and

Allied Breweries. A Competition Commission enquiry was initiated to investigate complaints of price

fixing and anti-competitive practices amongst the breweries that controlled their own public house

outlets; or tied houses. The commission found that the vertical integration adopted by large breweries

was indeed anti-competitive and unfairly limited consumer choice by restricting market entry to new

breweries. As a result, legislation, otherwise known as the Beer Orders, limited brewery-public house

ownership to a maximum of 2000 public houses per brewery and allowed tied public houses to offer

beers and other alcoholic drinks brewed by third party organisations.

Page 2 of 17

Holiday Inn

In 1988, in an attempt to diversify its business and reduce the impact of the Beer Orders on

shareholders, Bass Breweries bought the American owned Holiday Inns organisation. The Holiday Inn

company was founded in the US state of Tennessee by Kemmon Wilson, a native of Tennessee who

believed that the roadside motel segment of the accommodation industry could be improved with a

standardised management and operations structure. Established in 1952 with the aim of providing

clean, family friendly and easily accessible accommodation, Holiday Inn grew rapidly from its humble

beginnings of 1 hotel in 1952 to over 1,000 Holiday Inns’ by 1968.

In the late 1960’s Holiday Inn began franchising its business model and

expanding into healthcare and nursing home accommodations, TV shows

and theme park accommodation. The 1980s saw Holiday Inn as a

profitable organisation with its brands, Embassy Suites, Crowne Plaza,

Homewood Suites, Hampton Inns and the casino hotels Harrah’s

Entertainment with over 2000 properties.

While Holiday Inn brands; Embassy Suites, Homewood Suites and Hampton Inns were retained by the

original shareholders, Bass added to the Holiday Inn portfolio with the brands Holiday Inn Staybridge

and Holiday Inn Express.

Pan American Airlines and InterContinental Hotel Group.

Juan Trippe, an American entrepreneur who founded Pan American Airlines in 1927 as an international

passenger airline company, developed the Intercontinental Hotel Group in 1947 with the opening of

the luxury Belem Hotel in Brazil. Trippe saw the hotel brand as a means of providing accommodation

for airline passengers in many of its national and international destinations. At that time, airline travel

was afforded by business travellers and the wealthier classes’, so the InterContinental brand was

positioned as a luxury hotel experience.

Throughout the 1950’s and 1960’s Trippe canvassed the Civil Aeronautics Board, who regulated US

domestic airline routes, to allow Pan Am to access and compete for internal routes, but was

continually blocked by American Airlines, United Airlines and other domestic operators. Following the

oil crisis of the early 1970s, Pan Am struggled with the increasing cost of operating. This was

compounded by the de-regulation of the US and Global Airline Industry in 1978, with Pan Am finding

itself having to compete for its international routes against other American airline companies. With

an accumulated 10-year loss of $350 million and debts approaching $1 billion, the then Pan Am

President William T. Seawell, a former American Airlines Vice President, sold the Intercontinental

Hotels holding company to Grand Metropolitan, for $450m in an effort to restructure and turnaround

the company.

Grand Metropolitan, a UK based brewing, gaming and hotel conglomerate, on later merging with

Guinness (and forming Diageo), sold IHG to a Japanese finance company Saison who retained the hotel

head office in London. On implementing a portfolio restructuring exercise in 1997, Saison placed the

IHG group up for sale again. Despite a heavily contested bidding, by Marriott group and Ladbrooks

plc and Hilton Hotels consortium, IHG’s 215 hotels (a combination of owned, leased and operated in

partnership), sold the hotel group to Bass Breweries in 1998 for $2.5bn.

Six Continents.

In 2000, Bass sold off the remainder of its brewing properties and the rights to its trade name and

marque to the Belgium brewer, Interbrew, now Anheuser-Busch InBev, while retaining its hotel brand

Page 3 of 17

and the remaining pub holdings owned in the UK and the USA. In 2001, Bass changed its name to Six

Continents.

In 2001, Six Continents continued to focus on aggressive expansion. That same year, Six Continents

bought the Posthouse Hotels Group, comprising 79 hotels, from the UK based contract catering giant,

Compass Catering for £810m; rebranding those hotels to Holiday Inn. In 2003, Six Continents de-

merged its public house business into Mitchell and Butlers, with the remaining hotel and soft drinks

business (i.e. Britvic), being renamed as Intercontinental Hotel Group (IHG).

InterContinental Hotels Group

Following the announcement in October 2002 of the separation of Six Continents, IHG initiated a major

restructuring. The focus was on four key areas in order to improve their operating performance. These

included:

• redesigning the organisation to align it behind the new strategic priorities and speed up

decision making;

• changing the management to ensure the right people were in the right jobs;

• reducing the cost base through eliminating unnecessary work and streamlining processes;

• optimising capital deployment through a rigorous hotel by hotel review to determine

appropriate levels of ownership and capital expenditure and customer focus.

This change programme coincided with probably the second most difficult period experienced by the

hotel industry in living memory. Sluggish economies around the world, the threat of war in Iraq

followed by war, the advent of Severe Acute Respiratory Syndrome (‘SARS’) and the reluctance of

Americans to travel, particularly to France, all contributed to low levels of economic growth.

IHG Business Model and Portfolio Development

The intended aim of restructuring was to achieve an agile and responsive business model. This

involved the divestment of hotels considered not to fully reflect the IHG market positioning and

included a process of ‘sell and lease back under arrangement’. Using a combination of direct

ownership and management, franchise agreement, and manage and operate, IHG moved to a more

‘asset light’ business model, an increasingly common business model in the hotel industry.

This model comprised of three forms. In the managing and operating model, IHG would be contracted

by owners of the hotel, to operate and manage the property. This ensured that construction

companies and Retail Enterprise Investment Trusts (REITs) retain assets that appreciate in value while

not having the responsibility for operating the property. Alternatively, IHG would sell off their owned

hotel properties to investment speculators and would then be contracted by the investment

speculators to operate and run the hotel under the appropriate IHG brand.

In a typical franchise agreement, hotel owners contracted with IHG to promote their hotel through

the IHG brand. Observing IHG’s quality management and operations systems will form the basis of

the contractual agreement, with IHG promoting the hotel as part of its overall product brand portfolio.

The current portfolio consists of hotels occupying 4 distinct market segments:

• The Suites portfolio comprises of Staybridge Suites, Atwell Suites, Candlewood Suites, and

Holiday Inn Club Vacations. The suites concept was aimed at a ‘home away from home’ theme

that provided the guest with a first-class self-catering, extended stay facility.

• The Essentials portfolio comprises of Holiday Inn, Holiday Inn Express and Avid Hotels. The

provision here was based on functionality with a ‘work away from home’ theme. This

Page 4 of 17

encompassed a key developmental phase of IHG’s Guest Reservation System (GRS), enabling

hotels to tailor stays for guests and enable them to purchase differentiating experiences.

• The Premium portfolio comprises Voco Hotels, Crown Plaza Hotels and Resorts, EVEN Hotels

and the HUALUXE Hotels and Resorts. These hotels generated the highest revenue earning

capability, providing the most flexible of brands for owners, with diverse markets ranging from

the 470-room in Dubai to the 50-room Franklin Hotel in Manhattan. This focussed on

enhancing the originality of an existing property and, when it made its debut in the Americas,

it generated significant momentum.

• The Luxury and Lifestyle range of hotels included the Six Senses Hotels Resorts and Spas,

Regen Hotels, InterContinental Hotels and Resorts, Hotel Indigo and Kimpton Hotels &

Restaurants. The focus was ensuring that property retained a distinct character but that the

properties all offered engaging service and distinctive local personalities. Every property had

a spa-inspired bathroom, inviting guest rooms, complimentary Wi-Fi, 24-hour business

services, 24-hour fitness centres, creative meeting space, and an onsite bar/restaurant

focused on local flavours.

In 2005, the IHG Board of Directors commissioned a benchmark study to compare IHG’s CSR activities

and performance with a number of companies. At that time, the CSR performance of a number of

international companies outside the hotel sector raised public concerns around slave labour and poor

environmental practices. The benchmark study results raised concerns motivating IHG into:

• conducting a thorough internal and external stakeholder analysis from which to develop an

appropriate CSR strategy that reduced risks and enabling them to maximise opportunities;

• reviewing their business ethics policy across all business units;

• developing a Group-wide environmental policy and practice;

• reviewing the way data is gathered and reported, especially in the areas of energy efficiency

and human resources; and

• developing training and communication systems to implement the revised CSR strategy

By the end of 2005, IHG had taken the Britvic segment to IPO, retaining the controlling share. They

had also sold the major interest in 144 hotels, generating aggregate proceeds for the group of £2.5bn.

Of the 144 hotels sold, 126 remained within the brand. A further 31 hotels owned by IHG were on the

market expecting to achieve £0.6bn. They had also achieved the distinction of being the world’s

largest international hotels group with a further 186,000 rooms in pipeline and a loyalty programme,

developed in 2002, as the largest in the industry.

IHG Process and Concept Innovation

With the launch of the Hotel Indigo brand in 2004, IHG marked a distinct move away from the

traditional large-scale luxury hotel. The Indigo concept was aimed at providing local experiences in

boutique hotels in city centres. The brand has proved particularly popular in the Americas.

Green Engage launched in 2009, was designed to help hotels reduce energy costs, with hotels

achieving energy savings of up to 25%. The system, which received a LEED (Leadership in Energy and

Environmental Design) endorsement, allows hotels to track, measure and report on their energy,

water and waste, and recommends actions that will cut energy bills without compromising the guest

experience. Over 1,500 IHG hotels use Green Engage with 2,000 individual registered users. Energy

is the second biggest cost to the hotel industry with the average IHG hotel spending over $500,000 on

energy usage each year.

Page 5 of 17

In 2015, IHG launched content-rich websites for five brands which provide a more engaging

booking experience. Their award-winning mobile app piloted Mobile Folio a feature that enabled

guests to view hotel bills in real time and to make in-stay service requests.

In April 2015, IHG launched the second phase of its strategic relationship with Amadeus; a global

company specialising in airline scheduling, hotel reservations and data management. The aim was to

develop a next-generation, cloud-based Guest Reservation System (GRS) to replace IHG’s HOLIDEX,

IHG’s proprietary reservation system. The state-of-the-art guest reservation solution will be a first for

the hotel industry:

“Technological innovation is fundamental to driving superior experiences for our

guests before, during and after they stay with us,” said Richard Solomons, CEO of IHG.

“IHG has a long track record of innovating through technology to ensure we meet the

needs of current and future guests, starting with being the first company to offer

online bookings, having the highest rated app in the hotel and travel industry, and

offering mobile check-in and check-out. Our collaboration with Amadeus will build on

this heritage and will enable IHG to shape the future technological foundations of our

industry. The next-generation guest reservation system we will create with Amadeus

will deliver a powerful global platform for hotels to manage guest interaction, will be

intuitive for hotel teams, and will help us accelerate our work to revolutionize and

personalize the guest experience through technology."

(Source: https://www.hotelmanagement.net, 2015)

IHG and the Global Hotel Industry

As of 2020, of IHG’s 886,000 hotel rooms, 71% were franchised with 28% managed and 1% owned or

leased. 514,000 (58%) rooms were located in the Americas with 228,000 (26%) located in EMEAA

countries and 144,000 (16%) located in Greater China. Of the 886,000 rooms worldwide, 10%

constituted the luxury provision with 22% aimed at the Upscale market segment and 68% occupying

the midscale/Upper Midscale market segments.

Figure 1. Owned & Leased, Franchised and Managed Hotels, 2008 – 2019. Source: Statista IHG Profile, 2020

3,585 3,799 3,783 3,832 3,934 3,977 4,096 4,219 4,321 4,433

4,615 4,870

585 622 639 637 658 711

735 806 845 907

965 1,007

16 17 15 11 10

9 9 7 8

8 23

26

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

N U

M B

E R

O F

H O

T E

LS

Franchised Managed Owned and leased

Page 6 of 17

Figure 2. IHG growth by rooms, 2008 – 2019. Statista, IHG Company Profile. 2020.

Pipeline rooms are those hotel rooms either currently under construction or in the process of being

contractually negotiated., As of 01/01/2021, IHG had 272,000 rooms in the construction pipeline.

93,000 of those room (34%) are located in Greater China, with 103,000 rooms (38%) in the Americas

and 76,000 rooms (28%) in Europe, the Middle East, Africa and Asia (EMEAA).

Figure 3: Hotel pipeline construction projects, Worldwide 2021. Statista. Hotel Industry Profile. 2020.

Average Daily Rates (ADR) in the Hotel Industry tends to change throughout the year as they are

closely linked to hotel occupancy rates. When the demand for rooms is high, the ADR increases,

maximising revenue generation for the hotel (revenue management). Specific regions are visited more

frequently during certain times of year. For instance, hotel rooms in the Americas were rented more

frequently during the summer months, compared to the colder winter months in 2019.

54,736 56,121 58,429 57,598 57,314

60,103 61,235 62,040 63,650

65,998 69,281 70,981

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

N U

M B

E R

O F

H O

T E

L R

O O

M S

5,216

3,375

372 333 300

0

1,000

2,000

3,000

4,000

5,000

6,000

United States China United Kingdom Indonesia Germany

N U

M B

E R

O F

P R

O JE

C T

S I

N P

IP E

LI N

E

Page 7 of 17

While the number of worldwide rooms available was quick to recover following the 2008 recession,

the average daily room rate (ADR) charge remained fairly consistent until 2014 when all markets

except the Americas market began to falter early into 2019.

As a result of the coronavirus (COVID-19) pandemic the hotel industry has taken a hit in 2020. In May

2020, the ADR of hotels in Europe was 85.49 U.S. dollars. Daily hotel prices were lowest in the Asia

Pacific region during the same month.

Prior to the coronavirus (COVID-19) pandemic, the global forecast for ADR was for an increase through

2020 in to 2022. Asia`s rates were predicted to be higher than the global average, increasing by about

three percent. Latin America was expected to see a smaller increase of about 1%, due to the more

modest growth in demand within this region.

Figure 4: ADR of the hotel industry worldwide 2008-2019, by region. Statista. Hotel Industry Profile. 2020.

The occupancy rate of a hotel is the percentage of available rooms that are occupied or being rented

over a given time. Occupancy, along with average daily rate (ADR) and revenue per available room

(RevPAR), are important indicators of a hotel`s performance. The hotel industry in the United States

accounted for 218 billion U.S. dollars in revenue in 2018.

While the ADR declined, the occupancy percentage rate for hotels worldwide saw a steady increase

representing both an increased demand for rooms and stiff competition to attract hotel guests.

As a result of the coronavirus (COVID-19) pandemic the hotel industry saw an immediate decline in

2020. In May 2020, the hotel occupancy rate in Europe saw the most dramatic effects of the virus,

with occupancy rates of just 13.3 percent - compared to the previous year this figure was 82.3 percent

lower.

60

80

100

120

140

160

180

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

A V

E R

A G

E D

A IL

Y R

A T

E I

N U

.S .

D O

LL A

R S

Asia Pacific Americas Europe Middle East / Africa

Page 8 of 17

Figure 5: Occupancy rate of the hotel industry worldwide 2008-2019, by region. Statista. Hotel Industry Profile. 2020.

In its annual report for 2020, IHG reported a halving of group revenues of $2.39 billion while revenue

per available room fell by 52.5 per cent, with the UK down 65 per cent, because of hotel closures

and travel restrictions.

The Europe and Middle East region was the worst performer in the final quarter, with revpar down

by 70.5 per cent, while Greater China's recovery was more advanced, with revpar lower by 18.2 per

cent. The Americas fell by 49.5 per cent, buoyed by the domestic focus of the Holiday Inn brand. In

an interview with the Financial Times, Keith Barr, the current CEO stated:

Covid-19 had taken a heavy toll on demand across the sector and the return

to pre-pandemic levels would be a "multi-year" process, depending on the

progress of global vaccine rollouts and the lifting of restrictions. He said

that the company had continued to outperform the industry in its key

markets it had made an operating profit last year of $219 million, down 75

per cent on 2019. This has been the toughest time this company has ever

seen.

The pre-tax loss for the year of $-207 million compared with a pre-tax profit in 2019 of $427 million meant that there was no dividend. The group said that it had started a review into the future of approximately 200 Holiday Inn and Crowne Plaza hotels that are at risk because of customer satisfaction and property condition issues. IHG has a global workforce of about 350,000 people, mostly employed by its hotel partners, although as recently as December it was quoting a figure of 400,000. That implies job losses of 50,000, although Barr stated that ‘many would eventually be brought back’. Several of its hotels in London, including its premium Park Lane property, remain closed. In an interview with CNBC (Keith Barr CNBC 12/8/20), Barr stated "The hotel industry will not go back to full employment for three years, I would estimate,".

Its overall hotel portfolio for the year grew by 0.3 per cent, slower than the 2.9 per cent growth in the third quarter. IHG signed 56,000 new rooms in 360 hotels, a year-on-year decline of 43 per cent, lifting the total to 272,000 rooms in 1,815 hotels.

Shares of IHG, which have proved resilient over the past year, fell by 86p, or 1.6 per cent, to £52.26

Source: Times Newspapers Limited. 24 February 2021

50%

55%

60%

65%

70%

75%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

O C

C U

P A

N C

Y R

A T

E

Asia Pacific Americas Europe Middle East / Africa

Page 9 of 17

Future Hotel Trends.

A number of key trends are significantly impacting the Hotel Industry. Developments in digital

technology, combined with evolving and ever-changing consumer needs, are transforming guest

behaviours and creating a more dynamic competitive environment.

Technology continues to have a multifaceted and substantial impact on the industry. The prevalence

of mobile devices and the accessibility of the Internet continue to change how guests engage with,

and what they expect from, accommodation providers across the entire guest journey. Technology is

enabling guests to book their travel with greater control and immediacy and share their travel

experiences in more practical and engaging ways.

A growing number of guests now book their rooms within 24 hours of their arrival. Enabled by

technology, travel companies, hotels, review sites and online travel agents have been able to grow

their presence online, providing travellers globally with access to compelling content, price

transparency and the ability to compare a wealth of travel options. Technology is fuelling the growth

of alternative lodging providers, who have also been effective at opening up a large supply of private

urban accommodation by developing and marketing online distribution platforms. As Apple Pay made

booking travel on mobile devices easier – threats to established players have emerged and continued

to establish a strong presence and powerful impact. As younger travellers become loyal to their ‘over

the air’ booking application, in lieu of an airline or hotel, it makes securing regular and repeat

customers difficult. Airbnb, in particular, has had a direct impact on hotel occupancy rates with 193

million nights booked and gross revenue of $3,300m for the year ending 31/12/2020.

While Airbnb poses a significant competitive threat to the industry as a whole, hotel booking apps

present an increasingly significant threat to the REVPar and ADR achieved by traditional hotel

businesses. Apps such as Hotel Tonight, Hotel.com, Booking.com, and others, provide an up-to-the-

minute view of hotel room charges, so guests are able to choose the hotel stays that present the

cheapest available rate. Room pricing capabilities are now at the forefront of competitive rivalry and

form a key strategic resource for hotels because the Internet has made price transparent and yield

management more challenging as a result.

AI, robot concierge and check in, VR room experiences and in room voice activated controls provide

cutting edge guest experiences while advances in big data and data analytics are enabling hotel

companies to develop richer insights into guest needs, providing more personalised services and

tailored offers. However, the threat of cyber-crime is continuing to increase, placing greater demands

on cybersecurity and information and data management systems, with global organisations at

greatest risk.

Page 10 of 17

Exhibit 1

InterContinental Hotel Group Income Statement

(Please see ELE for spreadsheet version)

Period End Date 2020 2019 2018 2017 2016

Annual Income Statement: (GBP)

Net Sales or Revenue 1,866,878,290 3,626,917,472 3,252,576,567 3,164,256,899 1,271,029,433

Cost of Goods Sold 1,483,209,067 2,651,796,371 2,428,370,515 2,290,689,043 437,263,770

Depreciation and Amortization 85,779,704 90,927,691 86,245,401 60,567,371 71,148,003

Gross Income 297,889,519 884,193,410 737,960,651 813,000,485 762,617,660

Selling, General and Administrative Expense 253,440,035 258,673,604 233,237,563 261,682,104 243,830,136

Operating Income 44,449,484 625,519,806 504,723,088 551,318,381 518,787,524

Unusual Expense (Income) – Net 172,339,224 117,578,911 81,745,641 53,578,828 21,492,626

Nonoperating Income (Net) - Total 32,752,252 13,325,606 14,249,240 68,332,419 11,116,880

Interest Expense 112,293,431 94,063,129 74,996,001 59,014,362 68,924,628

Pretax Income 207,430,919- 427,203,372 362,230,686 507,057,610 439,487,150

Income Taxes 15,596,310- 122,282,067 98,994,721 89,298,047 128,955,756

Equity in Earnings of Affiliated Companies 10,917,417 2,351,578- 749,960- 2,329,514 1,482,250-

Consolidated Net Income 202,752,026- 302,569,727 262,486,004 420,089,077 309,049,144

Minority Interest 783,859 749,960 776,505 2,223,375

Net Income Before Extraordinary Items 301,785,868 261,736,044 419,312,572 306,825,769

Net Income 202,752,026- 301,785,868 261,736,044 419,312,572 306,825,769

EPS (Operational) 0- 2 2 2 2

Earnings per Share (Basic) 1- 2 1 2 2

Earnings per Share (Diluted) 1- 2 1 2 2

Earnings Per Share - As Reported 1- 2 1 2 2

Earnings per Share (Fully Diluted) 1- 2 1 2 2

EPS (Fiscal Year) 1- 2 1 2 2

Earnings Per Share After Extraordinary Items 1- 2 1 3 2

Earnings Per Share from Continuing Operations - Fiscal 1- 2 1 2 2

Earnings Per Share - Security 1- 2 1 2 2

Earnings Per Share After Extraordinary Items 1- 2 1 2 2

Shares Used to Calculate Basic Earnings per Share 182,000,000 183,000,000 180,499,928 183,349,927 192,829,718

Shares Used to Calculate Diluted Earnings Per Share 182,000,000 184,000,000 182,399,927 184,299,926 194,648,866

Common Shares Used to Calc EPS - Basic 182,000,000 183,000,000 180,499,928 183,349,927 192,829,718

Closing Price- End of Fiscal Period 47 52 45 50 40

Common Shares Outstanding Security 181,872,980 180,691,632 179,897,150 178,886,987

Diluted EPS- Percentage Change before Extraordinaries 168- 14 37- 44 64-

Dividends Per Share - Fiscal 0 1

Dividends Per Share - Gross 0 1

Dividends Per Share - Security 0 1

Page 11 of 17

Exhibit 2

InterContinental Hotel Group Statement of Financial Position

(Please see ELE for spreadsheet version)

Period End Date 2020 2019 2018 2017 2016

Annual Balance Sheet: (GBP)

Cash and Short Term Investments 1,226,087,275.00 150,217,022.00 553,548,995.00 136,019,220.00 166,713,875.00

Total Receivables Net 351,878,269.00 446,121,910.00 431,061,558.00 439,844,761.00 381,985,190.00

Total Inventories 3,657,778.00 4,529,156.00 3,925,879.00 2,217,705.00 2,427,872.00

Other Current Assets 55,598,230.00 86,808,832.00 85,584,171.00 54,703,382.00 78,501,194.00

Total Current Assets 1,637,221,552.00 687,676,920.00 1,074,120,603.00 632,785,067.00 629,628,131.00

Net Property, Plant and Equipment 368,704,049 603,132,667 617,148,241 314,174,829 339,092,785

Total Investments and Advances 185,815,136 297,414,607 291,300,251 272,777,675 297,009,671

Long Term Receivables 227,513,808 234,761,276 211,997,487 178,155,609 18,613,685

Intangible Assets 945,901,459 1,038,686,545 897,456,030 714,840,140 1,045,603,529

Deferred Tax Assets 82,665,789 49,820,721 49,466,080 55,442,617 38,845,952

Other Assets 238,487,143 254,387,620 71,451,010 56,921,090

Total Fixed and Intangible Assets 2,049,087,384 2,478,203,436 2,138,819,099 1,592,311,960 1,739,165,622

Total Assets 3,686,308,936 3,165,880,355 3,212,939,699 2,225,097,025 2,368,793,752

Short Term Debt 37,309,338 65,672,768 81,658,291 81,315,838 72,026,868

Current Portion of Long Term Debt/Capital Leases 623,285,416 49,065,861 43,184,673 11,827,758 13,757,941

Accounts Payable 58,524,452 67,937,347 103,643,216 59,878,026 76,073,322

Income Taxes Payable 21,946,670 37,742,970 39,258,794 47,311,033 40,464,533

Other Current Liabilities 624,748,528 809,964,144 836,997,487 745,888,006 715,412,941

Total Current Liabilities 1,365,814,404 1,030,383,091 1,104,742,462 946,220,662 917,735,605

Long-Term Debt 2,424,375,434 2,017,739,196 1,982,569,095 1,399,371,650 1,299,720,795

Provision for Risks and Charges 107,538,681 89,073,410 84,798,995 80,576,603 81,738,356

Deferred Tax Liabilities 69,497,787 89,073,410 97,361,809 74,662,724 203,131,955

Other Liabilities 1,071,729,033 1,045,480,280 831,501,258 686,009,980 480,718,649

Total Long-Term Debt and Other Liabilities 3,673,140,935 3,241,366,296 2,996,231,157 2,240,620,957 2,065,309,755

Total Liabilities 5,038,955,339 4,271,749,387 4,100,973,619 3,186,841,619 2,983,045,360

Common Stock 38,772,450 39,252,689 39,258,794 39,179,449 38,845,952

Capital Surplus 75,350,232 74,731,081 75,376,884 74,662,724 75,264,031

Retained Earnings 415,523,611 610,681,261 872,330,402 703,012,382 1,126,532,594

Unrealized Foreign Exchange Gain/Loss 218,003,585 287,601,434 329,773,869 278,691,554 364,990,086

Unrealized Gain/Loss Marketable Securities 8,047,112 43,026,986 36,903,266 58,399,556 89,831,263

Other Appropriated Reserves 2,113,464,282- 2,163,427,062- 2,244,817,839- 2,117,168,730- 2,307,287,662-

Treasury Stock 731,556- 3,774,297- 3,140,704- 3,696,174- 8,902,197-

Total Shareholders Equity 1,358,498,848- 1,111,907,907- 894,315,327- 966,919,239- 620,725,934-

Accumulated Minority Interest 5,852,445 6,038,875 6,281,407 5,174,644 6,474,325

Total Stockholders' Equity 1,352,646,403- 1,105,869,032- 888,033,920- 961,744,594- 614,251,608-

Total Liabilities and Shareholders Equity 3,686,308,936 3,165,880,355 3,212,939,699 2,225,097,025 2,368,793,752

- - - - -

Page 12 of 17

Exhibit 3

InterContinental Hotel Group Statement of Cash Flows

(Please see ELE for spreadsheet version)

Period End Date 31/12/2020 31/12/2019 31/12/2018 31/12/2017 31/12/2016

Annual Cash Flow Statement: (GBP)

Net Income Or Starting Line 202,752,028- 302,569,731 262,486,004 420,089,075 309,049,139

Accumulated Depreciation and Depletion 54,587,085 59,573,315 56,247,001 27,177,667 22,233,751

Amortization of Intangibles 31,192,620 31,354,376 29,998,400 33,389,705 48,914,252

Deferred Taxes 42,110,037- 2,351,578- 27,748,520 71,438,438-

Total Other Cash Flow 293,210,625 184,990,820 95,994,881 32,613,200 115,615,505

Decrease Or Increase In Receivables 29,632,989 54,870,158- 32,248,280- 55,131,838- 17,787,001-

Decrease Or Increase In Inventories 779,815

Increase/Decrease In Accounts Payable 53,807,269- 49,383,143- 8,249,560 27,177,667 75,594,753

Decrease Or Increase In Other Assets Or Liability 779,815- 36,057,533 103,494,481 29,507,181

Net Cash from Operating Activities 109,953,985 507,940,895 551,970,568 443,384,218 553,620,400

Capital Expenditures - Additions to Fixed Assets 20,275,203- 58,789,455- 34,498,160- 34,166,209- 23,716,001-

Additions to Other Assets 38,990,775- 81,521,378- 83,995,521- 133,558,819- 129,696,881-

Net Assets From Acquisitions 230,454,665- 28,498,480- 3,705,625-

Disposal of Fixed Assets 779,815 10,871,067

Purchase Or Sale Of Investments 7,798,155 11,757,891- 19,498,960- 20,965,629 1,482,250-

Others Uses (Investing) 1,499,920- 19,412,619-

Other Sources - Investing 2,223,375

Net Cash from Investing Activities 50,688,008- 382,523,390- 167,991,042- 155,300,952- 156,377,382-

Common Dividends Cash 565,162,632- 149,242,042- 460,467,323- 1,254,724,682-

Common/Preferred Redeemed, Retired, Converted, etc 3,919,297- 2,249,880- 2,329,514- 7,411,250-

Other Proceeds from Sale of Stock 783,859-

Issuance/Reduction of Debt, Net 1,104,220,000 99,550,200 214,489,000 118,805,000 187,505,000

Long Term Borrowings 1,427,842,167 415,477,846 340,176,390

Reduction In Long Term Debt 226,146,493-

Other Uses - Financing 1,252,384,943- 47,031,620- 442,476,843- 2,329,514- 344,623,507-

Other Sources - Financing 2,339,446 2,249,880 228

Net Cash from Financing Activities 1,055,870,177 517,347,208- 38,247,961 346,321,123- 1,079,078,049-

Effect of Exchange Rate on Cash 67,064,132 6,270,875 15,749,160- 12,424,076 45,208,627-

Net Change in Cash 1,182,200,287 385,658,828- 406,478,326 45,813,781- 727,043,658-

Free Cash Flow 89,678,780 449,151,440 517,472,410 409,218,010 529,904,400

Interest Paid Cash Flow 103,715,461 90,143,832 68,996,321 58,237,857 59,290,003

Taxation Cash Flow 31,972,435 110,524,176 49,497,361 114,146,200 96,346,254

Page 13 of 17

Exhibit 4

InterContinental Hotel Group Key Ratios

(Please see ELE for spreadsheet version)

2020

Current Ratio 1.20

Quick Ratio 1.20

Interest Coverage 0.40

Cash Ratio 0.90

Cash Flow to Debt Ratio 3.56

Cash Flow to Sales 7.18

Profitability Pre-Tax Margin TTM -11.31

Pre-Tax Margin, 5-Yr Average 16.86

Net Profit Margin TTM -10.97

Net Profit Margin, 5-Yr Average 12.58

Operating Margin, 5-Yr Average 23.47

EBIT -67.84

EBIT Margin, 5-Yr Average 19.29

Gross Margin, 5-Yr Average 40.78

Tax Rate, 5-Yr Average 24.48

Return on Average Equity, 5-Yr Average -54.46

Return on Average Assets TTM -6.31

Return on Average Assets, 5-Yr Average 9.20

Return on Investment TTM -18.85

Return on Investment, 5-Yr Average 20.57

Revenue per Employee TTM

129,321.00

Asset Turnover TTM 0.56

Receivables Turnover TTM 3.94

Inventory Turnover TTM 365.33

TTM = Trailing Twelve Months

Page 14 of 17

Exhibit 5

Leading hotel brands based on brand value worldwide in 2020 ($bn).

Source: Statista (2020). Hotel Industry worldwide.

Exhibit 6

Leading hotel companies worldwide as of June 2020, by number of properties

Source: Statista (2020). Hotel Industry worldwide.

10.83

6.03

4.53

4.5

3.87

2.47

2.4

2.33

1.77

1.75

0 2 4 6 8 10 12

HILTON HOTELS & RESORTS

MARRIOTT

HYATT

HOLIDAY INN

HAMPTON BY HILTON

SHANGRI-LA HOTELS AND RESORTS

DOUBLE TREE

MERCURE

COURTYARD MARRIOTT

INTERCONTINENTAL

9,280

7,484

7,118

6,160

5,895

4,131

1,392

1,261

1,183

980

939

741

650

634

233

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

WYNDHAM HOTEL GROUP

MARRIOTT INTERNATIONAL

CHOICE HOTELS INTERNATIONAL

HILTON WORLDWIDE

INTERCONTINENTAL HOTELS GROUP (IHG)

BEST WESTERN HOTELS & RESORTS

G6 HOSPITALITY

AIMBRIDGE HOSPITALITY

RADISSON HOTEL GROUP

RLH CORPORATION

HYATT HOTELS CORP.

WESTMONT HOSPITALITY GROUP

RED ROOF

EXTENDED STAY AMERICA

APPLE HOSPITALITY REIT

Page 15 of 17

Exhibit 7

American customer satisfaction index scores for hotel companies in the United States from 2008 -

2020

Source: Statista (2020). InterContinental Hotel Group Company Profile.

Exhibit 8

Public opinion on improving customer comfort levels in hotels after coronavirus (Covid-19)

worldwide pandemic as of May 2020

Source: Statista (2020). Hotel Industry Profile.

60%

39%

35%

33%

26%

23%

20%

20%

20%

13%

9%

0% 10% 20% 30% 40% 50% 60% 70%

INCREASED FREQUENCY OF CLEANING AND …

GUEST AREAS/PUBLIC SPACES ARRANGED FOR SOCIAL …

CONTACTLESS PAYMENT

TEMPERATURE CHECKS OF GUESTS ENTERING THE …

ROOM KEYS/LOCKS ACTIVATED BY A SMARTPHONE

SELF-SERVICE CHECK-IN VIA KIOSK

DIGITAL MESSAGING SERVICES TO AVOID PHYSICAL …

MORE FREQUENT COMMUNICATION OF POLICIES AND …

EXPANDED ROOM SERVICE OPTIONS

PERMANENTLY ENDING SOME HOTEL SERVICES (SPA, …

TEMPORARILY SUPENDING SOME HOTEL SERVICES …

Hilton Marriott Starwood (Marriott)

Hyatt IHG Best

Western Choice Wyndham

2008 78 78 74 78 74 70 71 70 2009 79 77 74 74 75 75 76 70 2010 80 80 77 79 78 76 74 70 2011 80 79 79 77 76 76 74 73 2012 80 78 75 76 77 76 76 70 2013 80 82 78 79 78 79 75 72 2014 78 81 76 78 78 74 74 72 2015 80 80 76 80 76 74 73 68 2016 81 80 78 79 76 75 74 70 2017 81 80 79 80 78 76 74 71 2018 82 81 79 79 77 77 73 70 2019 80 80 - 79 78 77 74 70 2020 82 80 - 79 78 76 73 72

Page 16 of 17

References

1. Airbnb (2021). Shareholders Letter. From Airbnb_Q4-2020-Shareholder-Letter_Final.pdf (q4cdn.com)

2. CNBC Television. (2021). CEO Interview: Keith Barr on the hotel industry’s outlook. From: IHG CEO Keith Barr on the hotel industry's outlook - Bing video

3. Factiva (2021). Factiva Company Report: InterContinental Hotel Group, Plc. From Factiva (oclc.org) 4. Hotel Management. (2015). IHG and Amadeus to develop guest reservation system. From:

IHG and Amadeus to develop guest reservation system (hotelmanagement.net) 5. Intercontinental Hotel Group. (2004). 2003 annual report. Retrieved From

Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

6. Intercontinental Hotel Group. (2006). 2005 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

7. Intercontinental Hotel Group. (2008). 2007 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

8. Intercontinental Hotel Group. (2011). 2010 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

9. Intercontinental Hotel Group. (2016). 2015 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

10. Intercontinental Hotel Group. (2018). 2017 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

11. Intercontinental Hotel Group. (2019). 2018 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

12. Intercontinental Hotel Group. (2020). 2019 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

13. Intercontinental Hotel Group. (2021). 2020 annual report. Retrieved From Annual Reports and Responsible Business Reports - Shareholder centre - Investors - InterContinental Hotels Group PLC (ihgplc.com)

14. InterContinental Hotel Group (2021). Investor Presentation: February 2021. From Title test (ihgplc.com)

15. InterContinental Hotel Group (2015). The future of Chinese travel. From Travel Insight | InterContinental Hotels Group (ihgplc.com)

16. InterContinental Hotel Group (2021). IHG, Green Engage System. From IHG Green Engage™ system | IHG

17. MarketLine (2020). Company Profile: InterContinental Hotel Group. From InterContinental Hotels Group Plc - Overview | MarketLine Intelligence Center (oclc.org)

18. Statista (2020). Hotel Industry Profile. From InterContinental Hotels Group | Statista (oclc.org) 19. Statista (2020). InterContinental Hotel Group. From InterContinental Hotels Group | Statista

(oclc.org) 20. Statista (2020). Travel & Tourism Report 2020. From: Travel & Tourism Report 2020 | Statista

(oclc.org) 21. Times Newspapers Limited. 24 February, 2021.

https://advance.lexis.com/document/?pdmfid=1519360&crid=54bd6cd3-d76d-44da-950f- 71a9125a4470&pddocfullpath=%2Fshared%2Fdocument%2Fnews%2Furn%3AcontentItem%3A6

Page 17 of 17

22T-TBF1-DYTY-C2C6-00000- 00&pdcontentcomponentid=10939&pdteaserkey=sr1&pditab=allpods&ecomp=Lzgnk&earg=sr1 &prid=1970670b-29d8-4acb-b0f0-04ffc6b85213 (visited March 10, 2021 at 2.00pm EST).