a9029g
SECURITIES
AND EXCHANGE COMMISSION
Washington
DC 20549
FORM 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 AND 15d-16
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For 20
March 2020
InterContinental Hotels Group PLC
(Registrant's
name)
Broadwater
Park, Denham, Buckinghamshire, UB9 5HJ, United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F
Form 40-F
Indicate
by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes
No
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): Not
applicable
EXHIBIT
INDEX
99.1
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Business
Update dated 20 March 2020
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Exhibit
No: 99.1
This announcement contains inside information
20 March 2020
InterContinental Hotels Group PLC
Business update
InterContinental Hotels Group ("IHG") [LON:IHG, NYSE:IHG (ADRs)]
provides a business update in light of the rapidly evolving
situation regarding Covid-19.
Keith Barr, Chief Executive Officer, IHG, said: "At this unprecedented time, our top
priority remains the health and wellbeing of our guests, colleagues
and partners, and ensuring that in light of such a significant
impact on the global economy and, in particular, on the travel
industry, we take the right steps to protect the long-term health
of our business.
Demand for hotels is currently at the lowest levels we've ever
seen. IHG has a robust business model and the measures we are
announcing today to reduce costs and preserve cash give us the
capacity to manage the business through this unique environment and
to support our owners during this incredibly difficult
time.
These were not easy choices and we are mindful of the impact these
decisions will have on our colleagues and shareholders. However, we
believe that these are essential to ensuring that we come out of
this as strong as we possibly can and ready to capitalise on what
remains an industry with excellent long-term growth
potential."
Current trading
IHG's Global RevPAR decreased 6% across January and February, with
a broadly flat performance in the US offset by declines in Greater
China, which saw an almost 90% decline in February. During March,
given the measures adopted by governments around the world to
restrict travel and social contact, we are anticipating Global
RevPAR declines of around 60%, with steeper declines in those
markets most impacted by restrictions. Cancellation activity for
April and May, and current booking trends, indicate continued
challenging conditions. In Greater China we now have 60 hotels
closed compared to 178 at the peak, and in recent days have begun
to see improvements in occupancy, albeit at low
levels.
Cost actions
We have many cost reduction and cash conservation measures at our
disposal. In this environment, we have acted decisively
across the business to challenge all discretionary costs and reduce
salary and incentives, including substantial decreases for Board
and Executive Committee members. These measures will result in a
reduction of up to $150m in our fee business costs. Similar
actions, along with a reduction in marketing spend, are being taken
across the System Fund in response to expected lower assessment fee
receipts. We are also taking action in our owned, leased and
managed lease hotels to contain costs.
In addition, to support our owners and manage their cash flows, we
have launched a comprehensive package of measures including
delaying renovations and relaxing brand standards.
Cash Flow
IHG remains conservatively leveraged. The staggered bond maturity
profile, with the first maturity of £400m not due for
repayment until 2022, provides long term funding. In addition, the
company has access to a $1.4bn Revolving Credit Facility (RCF),
which is currently $1.2bn undrawn, which
together with free cash flow generation provides significant
liquidity. The covenants on the RCF (detailed in Note 1)
provide significant headroom for either EBITDA deterioration or an
increase in net debt.
We are taking further steps to protect our cash flow, including
reducing our gross capital expenditure by ~$100m from 2019 levels
and managing working capital. In addition, the Board is withdrawing
its recommendation of a final dividend of 85.9¢ (~$150m)
announced on 18 February 2020 and will defer consideration of
further dividends until visibility has improved.
We continue to monitor the situation closely and will provide
further commentary at our First Quarter trading update on 7 May
2020.
-Ends-
Note 1: The RCF has
customary covenants in respect of interest cover and leverage
ratio, tested at half year and full year on a trailing twelve month
basis, the former requiring a ratio of EBITDA to net interest
payable above 3.5:1 and the latter a ratio of Net Debt:EBITDA of
below 3.5:1 on a "frozen GAAP" basis pre-IFRS 16. 2019 Net
Debt:EBITDA ratio on that basis was 2.4x (with the IFRS 16
adjustment reducing EBITDA and Net Debt by approximately $70m and
$440m respectively).
For further information, please contact:
Investor Relations (Heather Wood; Matt Kay; Rakesh
Patel)
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+44 (0)1895 512 176
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+44 (0)7527 419 431
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Media Relations (Yasmin Diamond; Mark Debenham)
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+44 (0)1895 512 097
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+44 (0)7527 424 046
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Note on forward looking statements
This press release may contain projections and forward looking
statements. The words "believe", "expect", "anticipate", "intend"
and "plan" and similar expressions identify forward-looking
statements. All statements other than statements of historical
facts included in this presentation, including, without limitation,
those regarding the Company's financial position, potential
business strategy, potential plans and potential objectives, are
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the Company's actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the Company's present and future business
strategies and the environment in which the Company will operate in
the future. Further, certain forward-looking statements are based
upon assumptions of future events which may not prove to be
accurate. The forward-looking statements in this document speak
only as at the date of this presentation and the Company assumes no
obligation to update or provide any additional information in
relation to such forward-looking statements.
The merits or suitability of investing in any securities previously
issued or issued in future by the Company for any investor's
particular situation should be independently determined by such
investor. Any such determination should involve, inter alia, an
assessment of the legal, tax, accounting, regulatory, financial,
credit and other related aspects of the transaction in
question.
Note to Editors
IHG® (InterContinental
Hotels Group) [LON:IHG,
NYSE:IHG (ADRs)] is a global organisation with a broad portfolio of
hotel brands, including Six
Senses Hotels Resorts Spas, Regent
Hotels & Resorts, InterContinental® Hotels
& Resorts, Kimpton® Hotels
& Restaurants, Hotel
Indigo®, EVEN® Hotels, HUALUXE® Hotels
and Resorts, Crowne
Plaza® Hotels
& Resorts, voco™, Holiday
Inn® Hotels
& Resorts , Holiday
Inn Express®, Holiday
Inn Club Vacations®, avid™
hotels, Staybridge
Suites®, Atwell
Suites™,
and Candlewood
Suites®.
IHG franchises, leases, manages or owns more than 5,900 hotels and
approximately 884,000 guest rooms in more than 100 countries, with
over 1,900 hotels in its development pipeline. IHG also
manages IHG® Rewards
Club, our global loyalty
programme, which has more than 100 million enrolled
members.
InterContinental Hotels Group PLC is the Group's holding company and is
incorporated in Great Britain and registered in England and Wales.
More than 400,000 people work across IHG's hotels and corporate
offices globally.
Visit www.ihg.com for
hotel information and reservations and www.ihgrewardsclub.com for
more on IHG Rewards Club. For our latest news,
visit: https://www.ihgplc.com/media and
follow us on social media at: https://twitter.com/ihgcorporate, www.facebook.com/ihgcorporate and www.linkedin.com/company/intercontinental-hotels-group.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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InterContinental Hotels Group PLC
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(Registrant)
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By:
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/s/ F. Cuttell
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Name:
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F.
CUTTELL
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Title:
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ASSISTANT
COMPANY SECRETARY
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Date:
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20 March 2020
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