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Goodwill and other intangible assets
 12 Months Ended
Dec. 31, 2023
Text Block [Abstract]  
Goodwill and other intangible assets
12. Goodwill and other intangible assets
 
    
 
     
  Goodwill
$m
    
  Brands
$m
     
  Software
$m
    
 Management
agreements
$m
    
Other
 intangibles
$m
    
   Total
$m
  
Cost
     
 
 
 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At 1 January 2022
     
 
532
 
  
 
439
 
   
 
878
 
  
 
122
 
  
 
26
 
  
 
1,997
 
Additions
     
 
–
 
  
 
–
 
   
 
46
 
  
 
–
 
  
 
–
 
  
 
46
 
Fully amortised assets written off
     
 
–
 
  
 
–
 
   
 
(94
) 
  
 
–
 
  
 
–
 
  
 
(94
) 
Disposals
     
 
(8
) 
  
 
–
 
   
 
–
 
  
 
–
 
  
 
–
 
  
 
(8
) 
Exchange and other adjustments
     
 
(11
) 
  
 
–
 
   
 
(5
) 
  
 
–
 
  
 
–
 
  
 
(16
) 
At 31 December 2022
     
 
513
 
  
 
439
 
   
 
825
 
  
 
122
 
  
 
26
 
  
 
1,925
 
Additions
     
 
–
 
  
 
–
 
   
 
52
 
  
 
–
 
  
 
1
 
  
 
53
 
Fully amortised assets written off
     
 
–
 
  
 
–
 
   
 
(52
) 
  
 
–
 
  
 
(3
) 
  
 
(55
) 
Disposals
     
 
–
 
  
 
–
 
   
 
(1
) 
  
 
–
 
  
 
–
 
  
 
(1
) 
Exchange and other adjustments
     
 
3
 
  
 
–
 
   
 
1
 
  
 
–
 
  
 
–
 
  
 
4
 
At 31 December 2023
     
 
516
 
  
 
439
 
   
 
825
 
  
 
122
 
  
 
24
 
  
 
1,926
 
Amortisation and impairment
     
 
 
 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At 1 January 2022
     
 
(191
) 
  
 
–
 
   
 
(485
) 
  
 
(113
) 
  
 
(13
) 
  
 
(802
) 
Provided
     
 
–
 
  
 
–
 
   
 
(20
) 
  
 
–
 
  
 
(3
) 
  
 
(23
) 
System Fund expense
     
 
–
 
  
 
–
 
   
 
(78
) 
  
 
–
 
  
 
(1
) 
  
 
(79
) 
Impairment reversal
     
 
–
 
  
 
–
 
   
 
–
 
  
 
12
 
  
 
–
 
  
 
12
 
Fully amortised assets written off
     
 
–
 
  
 
–
 
   
 
94
 
  
 
–
 
  
 
–
 
  
 
94
 
Disposals
     
 
8
 
  
 
–
 
   
 
–
 
  
 
–
 
  
 
–
 
  
 
8
 
Exchange and other adjustments
     
 
5
 
  
 
–
 
   
 
3
 
  
 
–
 
  
 
1
 
  
 
9
 
At 31 December 2022
     
 
(178
) 
  
 
–
 
   
 
(486
) 
  
 
(101
) 
  
 
(16
) 
  
 
(781
) 
Provided
     
 
–
 
  
 
–
 
   
 
(18
) 
  
 
(1
) 
  
 
(2
) 
  
 
(21
) 
System Fund expense
     
 
–
 
  
 
–
 
   
 
(76
) 
  
 
–
 
  
 
(1
) 
  
 
(77
) 
Fully amortised assets written off
     
 
–
 
  
 
–
 
   
 
52
 
  
 
–
 
  
 
3
 
  
 
55
 
Disposals
     
 
–
 
  
 
–
 
   
 
1
 
  
 
–
 
  
 
–
 
  
 
1
 
Exchange and other adjustments
     
 
(2
) 
  
 
–
 
   
 
(1
) 
  
 
(1
) 
  
 
–
 
  
 
(4
) 
At 31 December 2023
     
 
(180
) 
  
 
–
 
   
 
(528
) 
  
 
(103
) 
  
 
(16
) 
  
 
(827
) 
Net book value
     
 
 
 
  
 
 
 
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
At 31 December 2023
     
 
336
 
  
 
439
 
   
 
297
 
  
 
19
 
  
 
8
 
  
 
1,099
 
At 31 December 2022
     
 
335
 
  
 
439
 
   
 
339
 
  
 
21
 
  
 
10
 
  
 
1,144
 
At 1 January 2022
     
 
341
 
  
 
439
 
   
 
393
 
  
 
9
 
  
 
13
 
  
 
1,195
 
Goodwill and brands
Brands
Brands relate to the acquisitions of Kimpton ($193m), Regent ($57m) and Six Senses ($189m). They are each considered to have an indefinite life given their strong brand awareness and reputation, and management’s commitment to continued investment in their growth. The brands are protected by trademarks and there are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of the brands. In the hotel industry there are a number of brands that have existed for many years and IHG has brands that are over 60 years old.
Allocation of goodwill and b
r
ands to CGUs
 
                                                          
Analysed as:
  
            
At 1 January
2022
$m
    
Exchange
 adjustments
$m
    
At 31 December
2022
$m
    
Exchange
 adjustments
$m
     
At 31 December
2023
$m
            
  Goodwill
$m
     
   Brands
$m
  
Americas (group of CGUs)
      
 
419
 
  
 
–
 
  
 
419
 
  
 
–
 
   
 
419
 
      
 
132
 
   
 
287
 
EMEAA (group of CGUs)
      
 
337
 
  
 
(6
) 
  
 
331
 
  
 
1
 
   
 
332
 
      
 
196
 
   
 
136
 
Greater China
      
 
24
 
  
 
–
 
  
 
24
 
  
 
–
 
   
 
24
 
      
 
8
 
   
 
16
 
 
      
 
780
 
  
 
(6
) 
  
 
774
 
  
 
1
 
   
 
775
 
      
 
336
 
   
 
439
 
The recoverable amounts of the CGUs, or groups of CGUs, have been determined from value in use calculations. The key assumptions are RevPAR growth (detailed on page 161 within ‘Going concern’), terminal growth rates and
pre-tax
discount rates. Cash flows beyond the five-year period are extrapolated using
terminal growth rates that do not exceed the average long-term growth rates for the relevant markets
. Cash flow projections are discounted using
pre-tax
rates that are based on the Group’s weighted average cost of capital and incorporate adjustments reflecting risks specific to the territory of the CGU.
The weighted average terminal growth rates and
pre-tax
discount rates are as follows:
 
          
2023
           
2022
  
           
 Terminal
growth
rate
%
    
Pre-tax
  discount
rate
%
           
 Terminal
growth
rate
%
     
Pre-tax
  discount
rate
%
  
Americas
     
 
1.6
 
  
 
13.0
 
     
 
1.9
 
   
 
13.7
 
EMEAA
     
 
2.4
 
  
 
15.1
 
     
 
2.5
 
   
 
16.2
 
Greater China
     
 
2.5
 
  
 
12.1
 
     
 
2.5
 
   
 
13.8
 
The recoverable amounts of the CGUs, or groups of CGUs, exceeded their carrying value such that no impairment has arisen. Assumptions were sensitised, including using the Severe Downside Case scenario (detailed on page 161 within ‘Going concern’), with no impairment arising reflecting the number of years of Base Case forecasts required to recover the carrying value.
Software
Software includes $146m relating to the development of the next-generation Guest Reservation System with Amadeus. Internally developed software with a net book value of $105m is being amortised over
seven
to ten years, with five years remaining at 31 December 2023, reflecting the Group’s experience of the long life of guest reservation systems and the initial term over which the Group is party to a technology agreement with Amadeus. The remaining project value relates to enhancements to existing systems as part of the project, which are amortised over five years.
In 2023 and 2022, no impairment was charged.
Management agreements
Management agreements relate to contracts recognised at fair value on acquisition. The weighted average remaining amortisation period for all management agreements is 14 years (2022: 15 years).
2022 impairment reversal
The impairment reversal of $12m related to the Kimpton management agreement portfolio in the Americas region and arose due to strong trading conditions in 2022 and significantly improved industry forecasts. The key assumption was RevPAR growth which was approximately in line with the Group forecast detailed in the 2022 Annual Report. Cash flows beyond the five-year period were extrapolated using a 1.8% long-term growth rate that did not exceed the average long-term growth rates for the relevant market.
The portfolio was valued at value in use (which exceeded fair value less costs of disposal) using discounted cash flow techniques that measure the present value of projected
post-tax
income flows. The
post-tax
discount rate used was 10.8%; the
pre-tax
equivalent rate is 14.8%.