ihg plc - ihg in the middle east - kirk kinsell
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InterContinental and Crowne Plaza Dubai Festival City
IHG in the Middle EastKirk Kinsell
IHG is well positioned in the right locations – system
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Near East (25 hotels)
Saudi(23 hotels)
Gulf(28 hotels)
Libya
Egypt
Saudi Arabia
Oman
Syria
* Note: IHG manages Israel as part of it’s European operation, therefore system size and performance figures are not includedwithin the Middle East regional numbers. As at Q3 ’10.
Total System Rooms
TOTAL 7619,649
2
30
4
22
16
305
9,147
989
4,510
4,405
2293Other
Hotels
The Middle East in the context of EMEA
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62%
38%
84%
16%
65%
35%
Rest of Europe, Middle East & AfricaMiddle East
Source: IHG. ¹EBIT = is 2009 Europe Middle East and Africa region managed and franchised profits. ² Q3 2010
Managed & Franchised EBIT¹ Total system (rooms)² Total pipeline (rooms)²
Agenda
• Favourable market dynamics and strong fundamentals
• IHG in the Middle East
• Highly profitable growth – scaling the opportunity
• Summary
4
Favourable market dynamics and strong fundamentals
Holiday Inn Cairo Citystars
5
The Middle East region has grown rapidlyand is benefiting from favourable tailwinds
Middle East GDP ($b) Middle East Population (m)
Forecast total travel and tourism demand Airport capacity expansion (passengers m)
62
5
12
12
75
160
70
93
Dubai
Jebel Ali, Dubai
Abu Dhabi
Doha, Qatar Existing Capacity
Expansion
$262bn
$612bn
2010 2020
9% CAGR
Source: IMF, WTTC, Deloitte Hospitality; Press searches
Source: IMFSource: IMF
• Large and growing inbound market: 50m+ per year
• 50% of arrivals are from within the region (30 cities have >1m people)
2010
1,414
2000
524
2000 2010
123156
+10%+2%
% of World 1.6 2.12.3 2.3% of World
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Strong traditional drivers of leisure travel
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Historical Sites Religion
Beach Resorts City Leisure
PetraEgypt Mecca Medina
Red Sea Dubai Beirut
High business and domestic penetration
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Source: IHG September 2010 YTD
Business vs. Leisure International vs. Domestic
36%
64%
41%
59%
Business Leisure International Domestic
The Dubai Model – shifting from oil to tourism and increasing diversification
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• Solid fundamentals support attractive long-term prospects
• Diversification away from oil and natural resources
Dubai in 1991 Dubai in 2010
Yas Island – Abu Dhabi Economic Cities – Saudi The Pearl - Qatar Financial District - Bahrain
Gulf followers:
IHG in the Middle East
InterContinental Amman, Jordan
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IHG‟s heritage provides strong foundations
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IC Phoenicia Beirut
1960 1970 1980 1990 2000
IC Dubai
HI Salalah
CP Bahrain
IC Riyadh
HI Kuwait CP Sheikh Zayed Dubai
IC Semiramis HIEX Dubai Internet City
IC Amman SBS City Stars
IHG
OF
FIC
ES
BeirutSaudi Arabia
Cairo Dubai
2010
IC Dubai Festival City
SBS Yas Island
Strong history has also driven significant outbound travel to our properties in other regions (eg Europe)
Strong brand loyalty and guest satisfaction
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Source: IHG, All data September Year to date. All hotels
PCR room nights contribution (% and total) PCR contribution by market
29%
42%
2008 2010
0.9m
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Egypt Saudi Arabia UAE
2008 2010
1.3m
We have built a stand alone operation to provideleading owner support
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OPERATIONS ENABLERGROWTH
• 45 employees in the Dubai office
• Semi-autonomous operation
Hotel Operations
Sales &Marketing
Design &Engineering
Risk Management
Develop-ment
Finance
HumanResources
IT
Legal
IHG has the leading share of system and pipeline
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0
5000
10000
15000
20000
25000
30000
35000
IHG Starwood Accor Hilton Marriott Rotana Rezidor* Millenium
Ro
om
s
Pipeline System
Source: IHG Q3 2010; other data is STR Global September 2010. * Rezidor (Carlson)
Driving a significant recent ramp-up in pipeline growth
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Source: IHG
0
5
10
15
20
25
30
35
2005 2006 2007 2008 2009 Q3 2010
Pipeline
IHG System Size and Pipeline by Brand, rooms („000)
Building the right brands
Video
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Iconic, brand defining hotels –Crowne Plaza and Staybridge Suites Yas Island
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Iconic, brand defining hotels –InterContinental and Crowne Plaza Dubai Festival City
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Iconic, brand defining hotels -InterContinental Abu Dhabi
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Iconic, brand defining hotels –Crowne Plaza Sohar, Oman
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Iconic, brand defining hotels –Holiday Inn Riyadh Al Qasr
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Iconic, brand defining hotels -Holiday Inn Express Dubai Internet City
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Rigorous approach to development planning
• Market planning analyses supply and demand dynamics
• Location planning focuses on site profile, brand fit and upcoming major developments
• Owner profiling identifies individuals and organisations with long-term growth potential
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IHG is well positioned in the right locations – pipeline
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Near East
Saudi
Gulf
Libya
Egypt
Saudi Arabia
Oman
Syria
* Note: IHG manages Israel as part of it’s European operation, therefore system size and performance figures are not includedwithin the Middle East regional numbers. As at Q3 ’10.
Total Pipeline Rooms
TOTAL 3810,959
4
11
4
10
9
468
3,498
799
2,835
3,359
Other
Hotels
IHG is well positioned in the right locations – total
25
Near East
Saudi
Gulf
Libya
Egypt
Saudi Arabia
Oman
Syria
* Note: IHG manages Israel as part of it’s European operation, therefore system size and performance figures are not includedwithin the Middle East regional numbers. As at Q3 ’10.
Total System& Pipeline
Rooms
TOTAL 3810,959
4
11
4
10
9
468
3,498
799
2,835
3,359
Other
Hotels Rooms Hotels
7619,649
2
30
4
22
16
305
9,147
989
4,510
4,405
2293
We have built the right relationships with the right owners
22 21 20
13
High Net Worth Individuals Public/Private Sector Company
Government/Quasi Government/Royal
Mega Developer
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Source: IHG
• Broad base of contacts
• Strong loyal owner base
• Continued appetite for IHG brands with repeat owners
Type of Owners (# Properties owned)
Excellent owner relationships
Video
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Winning the War for Talent
• c.23,500 people work in our hotels across MEA
• Another c.14,000 people will be needed over the next 3 years
• Over 80,000 e-careers applications received in 2010
• Nationalisation important in the MEA war for talent
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Our people are highly engaged
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94% are proud towork for us
88% would recommend us as a
place to work
85% intend to stay with the company
for the next 2 years
85% feel happy to come to work at
IHG
84% are willing to put in extra effort to
get the job done
88% feel the job gives them a real
sense of achievement
IHG is well equipped for the future
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Trend IHG's Advantage
Focused and discerningdevelopment strategy
World class management offer backed by global system power
Globally preferred brands offeringunique guest experiences
Strong heritage and connections
“Room to grow” –focus on career development
Increased room supply
Most sophisticated owner –asset managers
Heightened brand awareness
Continued importanceof trust & relationships
Nationalisation
Highly profitable growth – scaling the opportunity
Crowne Plaza Muscat, Oman
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-2% 0% 2% 4% 6% 8% 10% 12% 14% 16%
Occupancy
Average Daily Rate
Strong RevPAR growth across the region
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Riyadh
Muscat
Manama
Kuwait
Jeddah
Dubai
Doha
Cairo
Beirut
Amman
Abu Dhabi
Middle East
Selected Middle East Markets RevPAR 10 Year CAGR (1999-2009)
Source: STR Global
Highly profitable
• Revenue decline partially due to the renewal of some old contracts
• No requirement for IHG capital expenditure
• Cost increase due to investment in stand-alone operations
• Established management structure supports future growth
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$m Middle East financial results (Managed and franchised only)
2009 2010 (forecast)
Revenue 60 58
Costs* (13) (14)
EBIT 47 44
Margin 78% 76%
* Does not include an allocation of Europe, Middle East and Africa regional overheads
Large and high quality pipeline
18
14
6
38
Pre-Construction Under Construction Pre Opening Total
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Pipeline by Construction Phase (# of total properties)
Source: IHG Q3 2010
Large and high quality pipeline –Crowne Plaza Dead Sea Resort, Jordan
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Large and high quality pipeline –InterContinental Tripoli, Libya
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Significant medium term opportunity
• A very strong pipeline spread across brands delivering above average profitability
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Source: IHG; System size September 2010 excludes 2 non-branded hotels
Current PipelineSeptember 2010 Management Fees ($‟000)
1130
916
1022
44
3874
2 4
$800 - $1,400
$600 - $900
$300 - $600
$150 - $400
$75 - $200
Our longer term potential
• Substantial long term opportunity
– Significant growth in midscale segment
– Ramp-up in new brand openings (Indigo,Staybridge Suites)
– Attractiveness of frontier markets (Syria, Libya, Iraq)
– Franchising growth - Express in Saudi
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IHG illustrative hotel potential
76
c.100
c.190
2010 2014 2020
Summary
• Global industry tailwinds benefit the Middle East
• Regional dynamics will support robust future growth
• IHG has a strong heritage and leading position in the region
• Key and loyal partnerships with the right owners
• Rigorous approach to development in the right locations
• Large and high quality pipeline
• No capital investment required to grow
• Highly profitable growth
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Q&A
InterContinental Taba Heights, Egypt
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InterContinental and Crowne Plaza Dubai Festival City
IHG in the Middle EastKirk Kinsell
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