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Property, plant and equipment
 12 Months Ended
Dec. 31, 2021
Text Block [Abstract]  
Property, plant and equipment
14. Property, plant and equipment
 
         
    Land and
buildings
$m
    
Fixtures,
fittings
and
    equipment
$m
    
              Total
$m
  
Cost
       
 
 
 
  
 
 
 
  
 
 
 
At 1 January 2020
       
 
207
 
  
 
307
 
  
 
514
 
Additions
       
 
2
 
  
 
28
 
  
 
30
 
Fully depreciated assets written off
       
 
–
 
  
 
(17
) 
  
 
(17
) 
Disposals
       
 
(1
) 
  
 
(2
) 
  
 
(3
) 
Exchange and other adjustments
       
 
–
 
  
 
6
 
  
 
6
 
At 31 December 2020
       
 
208
 
  
 
322
 
  
 
530
 
Additions
       
 
–
 
  
 
17
 
  
 
17
 
Fully depreciated assets written off
       
 
–
 
  
 
(7
) 
  
 
(7
) 
Disposals
       
 
(103
) 
  
 
(29
) 
  
 
(132
) 
Exchange and other adjustments
       
 
–
 
  
 
(4
) 
  
 
(4
) 
At 31 December 2021
       
 
105
 
  
 
299
 
  
 
404
 
Depreciation and impairment
       
 
 
 
  
 
 
 
  
 
 
 
At 1 January 2020
       
 
(73
) 
  
 
(132
) 
  
 
(205
) 
Provided
       
 
(4
) 
  
 
(33
) 
  
 
(37
) 
System Fund expense
       
 
–
 
  
 
(5
) 
  
 
(5
) 
Impairment charge
       
 
(39
) 
  
 
(51
) 
  
 
(90
) 
System Fund impairment charge
       
 
–
 
  
 
(5
) 
  
 
(5
) 
Fully depreciated assets written off
       
 
–
 
  
 
17
 
  
 
17
 
Disposals
       
 
1
 
  
 
1
 
  
 
2
 
Exchange and other adjustments
       
 
–
 
  
 
(6
) 
  
 
(6
) 
At 31 December 2020
       
 
(115
) 
  
 
(214
) 
  
 
(329
) 
Provided
       
 
(4
) 
  
 
(27
) 
  
 
(31
) 
System Fund expense
       
 
–
 
  
 
(4
) 
  
 
(4
) 
Fully depreciated assets written off
       
 
–
 
  
 
7
 
  
 
7
 
Disposals
       
 
66
 
  
 
21
 
  
 
87
 
Exchange and other adjustments
       
 
–
 
  
 
3
 
  
 
3
 
At 31 December 2021
       
 
(53
) 
  
 
(214
) 
  
 
(267
) 
         
Net book value
       
 
 
 
  
 
 
 
  
 
 
 
At 31 December 2021
       
 
52
 
  
 
85
 
  
 
137
 
At 31 December 2020
       
 
93
 
  
 
108
 
  
 
201
 
At 1 January 2020
       
 
134
 
  
 
175
 
  
 
309
 
The Group’s property, plant and equipment mainly comprises buildings and leasehold improvements on 19 hotels (2020: 23 hotels), but also offices and computer hardware, throughout the world.
In 2021, there were no impairments relating to property, plant and equipment and no indicators that impairment losses recognised in prior years may have reversed.
2020 impairment of property, plant and equipment
Total impairment charges of $90m were recognised in relation to property, plant and equipment in 2020, in addition $5m was recognised in the System Fund.
The recoverable amount of property, plant and equipment in the UK portfolio was measured at value in use, using a discounted cash flow approach. The key assumptions were 2021 revenues and profits, based on hotel budgets. For the purposes of impairment testing it was assumed that the landlord would exercise a termination right such that the current leases would end in 2022 and that the hotels would remain loss-making over this period. The recoverable amount of the property, plant and equipment tested for impairment was assessed as $nil resulting in an impairment charge of $50m. Estimated future cash flows were discounted at a
pre-tax
rate of 10.1%.
An impairment charge of $35m was also recognised on property, plant and equipment relating to three premium-branded hotels in North America. The recoverable amount was measured at value in use, using a discounted cash flow approach that measures the present value of projected income flows (over a
10-year
period) and the income from the property sale. The key assumptions were RevPAR growth assuming a five-year period of recovery to 2019 levels, discount rates and terminal capitalisation rates. Cash flows beyond the five-year period were extrapolated using a US long-term growth rate of 1.7%. Estimated future cash flows were discounted at
pre-tax
rates of
11.0%-12.0%
and capitalisation rates of
7.5%-9.0%
were used to calculate the eventual sales values of the hotels. The hotels were sold in 2021 (see note 12).
Impairment charges of $3m were also recognised in relation to three land sites held by the Group in the US which were measured at fair value. The sites were appraised by a professional external valuer using comparable sales data. Within the fair value hierarchy, this is categorised as a Level 3 measurement.
Impairment charges of $7m were recognised in relation to property, plant and equipment in the US corporate headquarters. The key assumptions and sensitivities are detailed in note 15. $5m of this impairment charge was borne by the System Fund in line with the principles for cost allocation relating to this facility. The remaining $2m was recognised in the Americas region ($1m) and Central ($1m).
Net book value by operating segment
 
         
  Americas
$m
     
            EMEAA
$m
     
            Greater
China
$m
     
            Central
$m
     
                Total
$m
  
Land and buildings
       
 
41
 
   
 
1
 
   
 
–
 
   
 
10
 
   
 
52
 
Fixtures, fittings and equipment
       
 
31
 
   
 
11
 
   
 
–
 
   
 
43
 
   
 
85
 
 
       
 
72
 
   
 
12
 
   
 
–
 
   
 
53
 
   
 
137