InterContinental Hotels Group PLC (IHG) Earnings Call Transcript & Summary

Okay. Great. Hi, everyone. I'm Vicki Stern. I head up the European Leisure Research team at Barclays. And delighted to have with us today Elie Maalouf, who's CEO of IHG. Elie is going to give us a few comments just to kick things off, and then we'll start with the Q&A.

Thank you, Vicki. Good afternoon, everybody. By way of introduction, for anyone less familiar with IHG Hotels & Resorts, we are a leading global hospitality company with over 6,200 hotels in our system. That equates to 930,000 open rooms across more than 100 countries. And we have further 1,900 hotels or nearly 300,000 rooms signed in the pipeline and that's equivalent to more than 30% growth over the coming years and over 40% of which are already under construction. So we have a strong portfolio of 19 brands across our 5 categories and those are luxury and lifestyle, premium, essential suites and exclusive partners. Using the industry terminology for chain scales, around 2/3 of our system is focused on the mid-scale and upper mid-scale segments, which includes our global market-leading Holiday Inn Express brand, which has more than 3,000 properties around the world and 1/3 is across the upper upscale and luxury chain scales, which includes the Intercontinental brand, the world's first and largest international luxury brand. Of our 5 categories, when we look at the category of luxury and lifestyle, those 6 brands represent 14% of our state today, but importantly, it's 22% of our pipeline. So around twice the size from 5 years ago. Our model is asset light and predominantly franchised, with 70% of our system being franchised, 28% being managed and 2% exclusive partners and less than 1% being asset-heavy owned or leased. We are geographically diverse with 56% of the current system in the Americas, 26% in EMEAA and 18% in Greater China. And for the pipeline, broadly speaking, it is closer to being an equal 3-way split across those 3 regions. As 1 of the 3 global market leaders, but in a fragmented market, we have over 4% share of global supply, but 2.5x that, which is 11% share of the global industry pipeline. This puts us in a very strong position to continue increasing our scale and capturing market share. We have built a high barrier-to-entry global business that is very difficult to replicate. Through the investments we have made over many decades to grow our scale, strengthen our enterprise platform and deliver a high margin, high earnings growth business. So IHG has a model with high-quality fee streams, low capital requirements to expand our system of hotels around the world, proven resilient characteristics, and we are well positioned for future growth underpinned by strong industry fundamentals and our strategic priorities. Coming on to briefly highlight our progress in the third quarter of 2023. We saw strong trading with Q3 RevPAR up 10.5% year-on-year and 12.8% ahead of pre-pandemic levels of 2019. And for Q3 year-to-date, RevPAR is up 18.9% year-on-year and up 10.2% versus 2019. And our net unit growth, we grew 4.7% year-on-year and 2% year-to-date. In the first 3 quarters of this year, we opened 25% more rooms and signed 16% more rooms year-on-year, leading to 5% growth in our pipeline. And just as a reminder on profitability and cash flow dynamics, going back to the half year stage, our fee margin improved by 3.3 percentage points to 58.8%, and our EBIT for the first half of the full year was up -- for the first half of the year, was up 27%, while adjusted EPS grew by 50% on last year. Now consensus expectations for the full year have moved up recently to be now at a little over $1 billion. So 2023 will be the first year of exceeding the $865 million of EBIT delivered in 2019 and by some considerable distance, and EPS consensus of over $3.70 this year would represent more than 20% ahead of where we were pre-COVID. And on cash flow, our highly cash generative business model continues to fund growth investment and is returning $1 billion to shareholders through ordinary dividends and share buybacks in 2023, equivalent to around 8% of our market cap. Now I'm sure Vicki will want to come back on some of these points. And now that we're fully ahead of pre-COVID levels, what our growth outlook is. And so with that, let me sit down and turn it over to you, Vicki.

Thank you for that. I really want to come back indeed on some of those. I want to start and sort of get straight stuck in on RevPAR. And so obviously, I actually doesn't guide on RevPAR 1 year forward. Your U.S. peers have commented and they seem to be indicating low to mid-single-digit growth for next year. Just curious to get your perspective, the lay of land as you see things today, perhaps geographical color, business, leisure, et cetera. And broadly, if you think that's the right sort of ballpark to have in mind for next year.

I think first let's step back a moment and look at the underlying drivers of travel demand and hospitality demand, which is the middle class growth, GDP growth around the world. And those have just been unaltered, interrupted during the pandemic, but have recovered very quickly, and they're unaltered. And that's reason why we've seen travel returned strongly and continue. Now if you go more specifically to prognostications for next year. In the United States, STR, Smith Travel Research is predicting, I think, 4%, a little more than 4% for next year RevPAR, a little more than 3% for 2025. What would underpin that. First, you have low unemployment, actually, not just in the United States, but in Europe and in China. You have inflation that's moderating, which means that wage growth, which has been coming, but now wage growth is becoming real versus barely keeping up with inflation. You have interest rates moderating. Your financial markets generally strong, especially in the U.S. Home prices are right today and just hit another record in the United States. Home sales aren't high, but home prices are high. So I think the general state of the consumer and of corporation is pretty good, most corporations are exceeding expectations in their performance, in their results. So you got corporates in pretty good shape, consumer in pretty good shape. Those are usually good underpinnings for demand growth. And with supply being still constrained somewhat in the United States and also in Europe, that is also another underpin for RevPAR growth.

And as you look around the world today, obviously, there are sort of patches where things going to be slightly more uncertain. Are you seeing any pockets of difficulty from a booking standpoint, I'm obviously thinking about the Middle East, which some of your peers have commented on already. Anything that's sort of troubling you around the world?

Well, I mean, obviously, we're extremely distressed and sad to see what's happening in the Middle East. We hope that there's an immediate and constant end to the hostilities. And our first objective is the safety of our guests and of our colleagues in the region. From a business point of view, we have 5 hotels in Israel, so a very small percentage of our business. The greater Middle East is maybe 5% of our system, but most of that is in the Kingdom of Saudi Arabia and in the Emirates. So again, further away from conflict in a pretty resilient area. Not seeing anything that on a group-wide is structural at this point. But at the same time, I mean, if you pull back, unfortunately, being a global company in over 100 countries in all regions of the world, there is unfortunately always something that is happening around the world, either a natural disaster or a conflict. Last year it was Ukraine. This year, the Middle East, there are unfortunate natural disasters that happen that are distressing. But we're broadly distributed enough where the thing -- these events tend to even out for us.

And so just kind of going on from that, some of the key cities in Europe, I guess, there has also been heightened activity around protests, which are a little bit more significant for you, I guess, in some of the parts in the Middle East. Again, any sort of softness in recent weeks to have...

Well, we're not seeing any correlation between the social activity, political activity you're seeing in some of the European cities to our business at this point.

Okay. Great. And I think this is probably quite an important time of the year for you in terms of corporate negotiated rates. So since we have you live, anything to sort of give us a flavor on in terms of what they're looking like for next year.

Well, I mean if you go back during the pandemic, we say paused corporate negotiated rate increases. We were happy just to keep things year-on-year flat although demand was pretty low. As you know, the demand has resumed from a corporate point of view, from a group point of view, very well since then. This year was the first year where we benefited from the corporate negotiated rates that we put in place at the end of 2022. That was low double-digit increase, and we'd be looking for something similar next year.

Okay. And I want to just turn to China. I think back at the time of H1, you understand will be quite cautious in terms of the outlook for China. And actually, Q3 turned out to be pretty good, albeit it looks like the industry data softened a little bit recently. But just as you see things, obviously, you are very domestic skewed in China, the outlook there as you see it.

Well, we take a long-term outlook, not just a short-term outlook. And we've been through the worst, of course, of the pandemic over there. But we've been in China over 40 years. I think Greater China, including Hong Kong, 48 years. And so it's been a very successful business. We have probably nearly 700 hotels opened by the end of this year. We have another 500 on development. Our pipeline has continued to grow, now post pandemic signings and openings continue to grow. And we've seen travel resume very well by Q3, we were ahead of 2019. As you said, it kind of surprised us and that momentum is continuing. So I think that, if you look at long term, there are some constraints and issues in the residential real estate sector in China, which are well publicized and well covered. But travel is really disaggregated from that. It's a domestic economy. Unemployment is low. The economy continues to grow, albeit not at the same rate as before, but continues to grow. And travel is a favorite activity of not just the Chinese consumer, but of the government, which has it as 1 of its 5 pillars. I think the underpinnings for China as a strategy for growth in China are 2. First, the brooms penetration in China, is -- per capita is 1/8 of what it is in the U.S. So as China continues to industrialize, as middle class continues to grow, as incomes continue to grow, you're going to see that penetration increase. When I joined the company 9 years ago, it was 1/10. So it's more than doubled since, it's going to continue to double, mostly in the domestic economy. The second thing is GDP per capita is still only 27%, 28% of what it is in the U.S. So that GDP per capita can continue to grow. And we know, as the affluence, as the middle class expands, as affluence expands, people travel for business, and travel for leisure. That's exactly what we're seeing right now post pandemic.

Okay. And so sort of related to that because it's obviously quite a key feature in terms of unit growth. I think you're targeting sort of close to 4% for this year. And your sort of level of confidence in achieving that. I think obviously it does require quite a way to go in terms of signings. But will come on to future years in a moment. But just how you're feeling about the targets for this year.

Yes, that's what we're aiming for. And it requires, of course, a big quarter of openings in Q4, but that's always been our biggest opening quarter. And so it's not really out of the ordinary from previous performance. It's just kind of a trend in the industry, certainly trending in our company. We opened the most hotels in the fourth quarter, and I think we're going to have a strong quarter of openings in Q4.

Okay. And again, I know you don't guide to net unit growth 1 year forward. I think consensus has something like 4% assumed for you next year. Obviously, this year, you've had the health of Iberostar, but I think you talked about potentially some other deals like that. But how are you feeling about that sort of consensus level of 4%?

I mean there are some important underpins to our confidence in continuing to increase net unit growth. First, more structurally, we have significantly expanded the portfolio, the products we have, the brands we have, our conversion brands like Voco, like Vignette, like Garner, the luxury and lifestyle brands like Regent, Six Senses, Atwell Suites, avid suites and Mainstream. So we have more products to grow with than we did in 2017, 2018, 2019. So coming out of the pandemic, we have more vectors of growth in our portfolio. Number two, we've been growing our signings and openings already this year, 16% growth in signings year-over-year to Q3, 25% growth in openings despite the fact that for most of the year, interest rates have been rising and inflation a bit of an issue. Now we see interest rates moderating, inflation moderating. And against that backdrop, our signings and openings are increasing. We have a broader portfolio. So I think the underpins are there for us to continue at a very competitive level of net unit growth. Mind you, in 2017, 2018, 2019, with a smaller portfolio of brands, our net system size growth went from 4% to 4.8% to 5.6%. I think we have more ways to grow today.

And I think one of those ways is obviously Garner, which you've recently launched as the mid-scale conversion brand. And I think just before you launched that, you'd indicated there's something like 100 indications of interest. So now that you're actually live, just curious how the momentum is looking and ballpark of when you might sort of sign and open that number?

Yes. I mean we had a lot of early interest. That interest is now converting into real signings and eventually openings. It's many of those initial owners and many other owners that weren't knowledgeable to know about the brand. As they discover more about it, they're very excited about it. It's not only going to have 100 hotels ventures kind of have many hundreds of hotels. So we're confident in reaching the 500 hotels in 10 years that we said when we launched the brand, I think it's the right brand at the right time.

You sort of talked there about the business has so many more levers, if you like, than it had a few years back. Obviously, the industry backlog has been difficult for everybody in terms of opening signings. Your best-in-class of the peers is targeting, I think, 5.5%, 6% unit growth now for next year. What are the key deltas that could get you to that sort of level? What are the main things holding you back today?

Look, our stated goal is to be in the leadership and net system size growth. We've been there before when we had fewer brands. When financing conditions were more normal, we weren't recovering from pandemic at that time. I think this year, getting close to 4% and continuing on that trajectory will keep us in the leadership. And that's, as I said, with a substantially broader portfolio of brands, with a stronger loyalty plan that we launched last year and with, hopefully, and I think visibly improving structure in the market with interest rates declining, inflation declining, consumer confidence was strong. And let's not forget, demand is still strong. We're at RevPAR record rates, group and business travel is still recovering. So I think there's confidence in our owners and our investors and eventually in the lending community to expand financing for hotels. So I think if you look back at 2017, 2018, 2019, when we went from 4% to high 4s to 5.6%, we have confidence we can continue to grow in that system size growth and be in the leadership.

Okay. And sort of related to that, I think you talked more and more recently about how you see your growth algorithm, the sort of 10% to 12% of EBIT growth. And obviously, the cash generation on top, adding a few percent to that. Can you just sort of walk through for the benefit of the audience that the building blocks of that 10% to 12%? And I guess if you think that's a relevant view for next year as well as the medium term.

We think it's a reliable, consistent business model that we have, and we take great care to execute it. So we start with a view that over time, we can achieve 3% to 4% RevPAR growth. And when you think of GDP growth globally being 2% to 3%. Hospitality has grown at GDP plus historically. We think we have grown, and we think we continue to grow a GDP plus-plus because of the strength of our brands, the strength of our enterprise system and our global distribution in the growing markets and that's what we've done. So 3% to 4% RevPAR growth. We think we can be in the 4% to 5% net system size growth, which we've done before, and I think we're nearing that already. You take those 2 together, it gives you high single-digit revenue growth every year. Now when you take that high single-digit revenue growth, and you add the 100 to 150 basis points of margin expansion, and we delivered over 100 basis points over the last 10 years of margin expansion, but a bit more in 2023 year-to-date so far, that gets you to low single-digit EBIT growth, 10% to 12%. It doesn't stop there though. We're a highly cash-generative business. Yes, we're targeting a 2.5% to 3% leverage ratio, and a 2 to 2.5 coverage of our ordinary dividend, but that leaves quite a bit of cash available every year. And absent opportunities to invest in the business and to increase our ordinary dividend, that leaves still an amount of cash. Returning that cash through buybacks can then take that 10% to 12% EBIT growth to about a 13% to 15% low double-digit low-teens EPS growth. So that's a growth algorithm. And if you look historically, that's kind of where we've been.

And do you think it's relevant as we look into next year? Obviously, there's some uncertainties in the world, are you still sort of happy with that kind of...

Realistically, one point of RevPAR plus or minus won't materially change our ability to generate the cash in an asset-light business with a fairly scalable cost model, right? I mean it just -- if you have something like the pandemic then, yes, of course, that makes a difference. But 1% of RevPAR up or down doesn't fundamentally change the scalability of our business model and the cash production of our business.

And sort of changing tax likely, you've been talking a lot more recently about credit card fees and the opportunity there, which I guess could be maybe additive to that algorithm you talked about, just what is the opportunity as you see it. It's never been a significant portion of the income, but I guess you're going to renegotiate that contract soon, so keen to know what that could mean.

Absolutely. Look, it's a great opportunity for us. And it really is part of the overall strategy. It doesn't -- it's not a piece of its own. If you look at what we've been doing in the enterprise, one, expanding the brand portfolio, as we've talked about. We're creating more options for guests, especially in luxury and lifestyle, where you have a higher spending customer that is more attractive to credit card issuers and to retailers and to other travel-related parts of the ecosystem, whether it's airlines, car rentals, et cetera. So we've expanded our portfolio from just InterCon to 6 luxury and lifestyle brands with 22% of our pipeline now being the luxury lifestyle versus 14% of our open rooms. So that's one part of the strategy. Then we followed with the relaunch of our IHG One Rewards loyalty plan last year, which has been extremely successful. We've seen room nights grow substantially. We've seen loyalty contribution grow substantially. Now that's engaging more travelers into our plan. And so then that converges with the credit -- current credit card agreement that we have that expires at the end of 2025 and gives us an opportunity to renegotiate or rebid that agreement against the backdrop of a stronger brand portfolio, a higher spending customer base and a broader customer base and a stronger loyalty plan. And just before even we renegotiate the 2 credit card -- the new 2 new credit cards we launched just last year, late last year have been performing very well this year with 80% growth, an uptake from customer and double-digit spending increases from the customer per card. So that really creates the conditions for us to capitalize on the credit card growth, which today, by way of facts, we have $100 million of revenue that comes in from total credit card business. 2/3 of it goes to the system fund, about 1/3 goes to the P&L. Now that used to be 100% of system fund in 2020. And today, it's 1/3 to the P&L. That could change, I am not saying it will, but it could at some point. But more broadly, the whole pie is going to grow. The whole pies can grow after we negotiate as our credit card spend per card grows, as our customer base grows, and as our loyalty plan grows. To give you an indicator, 2 of our leading competitors are probably earning 10x plus on the P&L, what that 1/3, or $33 million or so that we're taking. And that's at a basically 100% flow-through in fee. So yes, we think it's a big opportunity for us and for our shareholders.

Great. Just turning to sort of broader points around the industry. So obviously, there's talks at the moment between Choice and [ Wynd ] and not asking you to comment on your views on that. But should that deal go ahead and comes to the fact that you've obviously just launched a mid-scale conversion brand. How would you see that playing through for you in terms of changing the backdrop of the industry and the landscape for you?

I mean we announced Garner before there was any of this M&A activity out there. And we believe that it was a very strong proposition for guests who are looking for a more consistent stay, higher-quality stay, still an affordable one, but with a stronger loyalty plan, a stronger brand family, where they have the surety, and the sense of value they get from IHG Hotels and Resorts. And we also thought it was a strong proposition for owners who could participate in a strong system that delivers high quality, low cost of distribution revenue from major corporations, major groups, a 50% plus room nights from our loyalty plan, et cetera, things that come from our strong enterprise system, a strong sales force connected to all the major corporations in the world, et cetera. And we had interest from owners saying there's -- we already have a Holiday Express in this market. You already have an avid, you already have a Candlewood Suites. I'd like to be part of your mainstream family without really changing much of my hotel, but I have a high-quality property, is there a way to do this? So we got inspiration from that, and we launched after a long deliberation, we launched Garner Hotels, which has attracted a lot of interest, as I mentioned earlier. I think this recent market activity, M&A activity only reinforces that thesis and let me just leave it there.

Fair enough. So this doesn't seem to be the narrative right now, and hopefully, it won't play through. But if we were to come into any sort of severe recession, what sort of cost potential -- is there much cost in the organization that you think you could take out? I'm conscious of the fact that we've only just sort of come out the other side of COVID and there was a lot of costs that came out. So there are things that could be done.

Well, first, I mean, we've been waiting for not even a severe recession, just a recession in the United States. And I think a depression in Europe this year, neither have occurred thankfully, fortunately. So not all projections are accurate. And I think that the backdrop right now doesn't really lend well to those kind of projections. But at some point, this is -- all industries and this industry makes highs and lows, the thing to focus on is that we make higher highs and higher lows. We make higher highs and higher lows. Will things slow down at some point, maybe perhaps in some parts of the world. But does this industry make higher highs in terms of RevPAR, in terms of travel, in terms of total revenue, yes, it does. And you go back 80 years, that's what it does. So we're really more focused on the long term. But we also have a highly scalable, very efficient business model, which we've proven during times of severe distress like the pandemic or the GFC from 12, 13 years ago that we can take measures that protect our shareholders, even protecting all the way down, we're positive cash flow during the pandemic, and did not have to raise either equity or debt. So I think that we've proven that we have that resilience, should a severe occurrence happen, but more importantly, we're more confident in the long term opportunities, business that makes higher highs and higher lows, and making on investments to capitalize on those.

And one topic we get asked about a lot for lots of our companies, particularly those that have big U.S. exposure is the concept of a relisting over here in the U.S. curious to what extent that's come up with the Board and what extent is the real possibility for you?

I mean first of all, I must say Vicki since moving to London, I have been having a great time there. It's a great city. It's a lot of fun. It's actually a very good place to run a global company from just in terms of time zone, in terms of accessibility, air travel to anywhere around the world, and it's a truly global city, so I'm enjoying my time. I don't want anybody to get a different impression despite the fact I'm an American citizen. My wife likes it, too. Second, look, we are a global company first, and we have a very strong footprint in the U.S. We've said before and we'll say again that our Board is always looking for the sustainable ways to grow shareholder value. We recognize that the U.S. market has deep liquidity and that -- a large part of our business is here, too. But we also recognize that executing our strategy is the most valuable part for our shareholders, and that's what really I'm focused on today. So we'll continue to evaluate opportunities like that and structures like that, but it's not my top priority right now.

Okay. Pleased to hear that rain hasn't put you off just yet. And you sort of touched on this a little bit with the -- when you were walking through the algorithm, but just to sort of to check. Share buybacks, you didn't announce one obviously with Q3, but you made it pretty clear at that time that we should be conscious of the model very much. That's a part of the algorithm going forward. But from an M&A standpoint, is there anything else out there that could deviate -- it doesn't feel like you're sort of particularly leaning in on M&A at the moment, but anything that could tempt you?

I think we've been clear. And for those who are new to our conversations, I'll go through our capital allocation strategy. I'm sure you've heard 100 times, but maybe the first time for some. We have a highly cash-generative model. And from that cash, our priorities in order of priority are first investment business that could be launching new brands, that could be investing in enterprise systems, that could be M&A, which we've done before, if we find the right long-term shareholder value growth accretive opportunity. Number 2 is to sustain and increase our ordinary dividend. Number 3 is to return capital to shareholders. Previously, it was through special dividends. Now it's much more in share buybacks. So that is the capital allocation priority, which does not exclude M&A should the right opportunity comes from, but we're confident that our organic strategy does not need M&A, can benefit from it, should the right opportunity occur. So I think that I would focus on the fact that we have high potential to generate free cash flow in the magnitudes that we have been generating and returning and we would use it differently if we found an even better opportunity to grow shareholder value.

You talked earlier about the sort of margin growth in that algorithm, 100 to 150 bps pretty consistently. I think the U.S. margins, which grew a lot last year have sort of grown a little bit less recently as there's been a bit of reinvestment going back into the U.S. But just are there sort of pockets anywhere across the business where you see any need for greater investment or we should really think about scalable 100, 150 of margin growth.

Look we're always investing in the business. I think in 2023, it wasn't a question of necessarily reinvesting in the business because we had underinvested. It was more a function of 2022, surprised I think everybody in the industry in terms of how quickly the business returned, how quickly revenue returned, travel returned, business, group, leisure. And just some of the spending didn't happen in time. So the hiring didn't happen in time as we were all ramping back up from the pandemic, where we had taken deep measures. I think you saw that not just at IHG, but across the industry. So it wasn't sort of catching up or not being underinvested, it was just the fact on a good way that revenue grew much more quickly than anybody had anticipated, which is a good thing. We are always investing in the business. whether it's to make sure that our China business continues the high growth that it has and doubles and doubles again, whether we capture the opportunities in Southeast Asia, whether that's India, Vietnam, Indonesia, Philippines, Malaysia, Singapore, whether we continue to grow in the Middle East, which despite the current sad conflict still is a great opportunity for growth, especially in Saudi Arabia and the United Arab Emirates. And whether we continue to invest in our business in the U.S., we're always finding ways to invest. I mean, one thing that we've spoken about and we're rolling out right now is a brand new revenue management system industry-leading as we were industry leading with the global reservation system in the cloud several years ago. We are now industry leading with a new cloud-based AI-powered revenue management system that we just finished piloting. We're going to roll out in 2024. We think it's going to give our owners and our colleagues a way to much more forensically and accurately and profitably price rooms and capturing high-value demand. So we're always doing that investment. I think the 100 to 150 basis points is what someone could project over the long term.

Great. I'll pause there, just open up and see if there's any questions from the audience at all.

Too busy to join lunch.

It has all been finished. I just wanted to ask then around the sort of quality and health of the pipeline. I don't think your attrition rates actually changed too much during COVID. I think you used to have sort of 8% of the pipeline that didn't open and maybe it went up to 10%, but nothing significant. When you look at the pipeline, is there a portion of that pipeline that you think is sort of you can forensically clean it and sort of check that is still live? Is there a portion that's less obvious?

It's a constant process. We're always every year, every quarter, we're going through the pipeline globally, not just in some regions, always going through the pipeline to see which deals are moving forward, which deals are not. And so that's why you've seen that there has not been a severe sort of up and down in our pipeline attrition because it's a constant process. We have clearly during the pandemic. There were some historical reasons why we would have taken a different view, and you saw a couple of point uptick, but it's back down to normal. So you see that the proportion under construction in our pipeline remains healthy and steady at 40%, which means that even as our pipeline is growing and grew 5% year-to-date through Q3, our construction starts are growing, too. So the health of the pipeline continues to be the same condition, but it's not accidental. It's because we're always looking at which deals are not likely anymore and making sure that we have a healthy and fresh pipeline.

And last one is around the sort of exit rate. Obviously, you did a sort of cleanup of the portfolio during COVID. And now the guidance is very much the sort of 1.5% level of exit. Is there anything sort of -- I mean, I suppose we were taken a little bit by surprise when that happened in the first place during COVID, is there anything else out there that is potentially going to increase that exit rate? Or you think 1.5% is now the right level for the business?

When you took out Holiday Inn and Crowne Plaza at the time, the exit rate for the remaining portfolio was 1.5%. So it isn't as if it was a in average with a very wide distribution. It was 1.5%. Holiday Inn and Crowne Plaza had some specific issues with shorter-term contracts done a long time ago that did not have reinvestment requirements in it. So it's something that we have changed that I have changed since I joined the company 9 years ago. We have now longer agreements, but reinvestment agreement, reinvestment commitments every 7 and 14 years into the properties. So we had to take a forensic look at them. And I think what we did was right for the health of Holiday Inn and Crowne Plaza, which are now growing again in a better condition. And we're growing again in a better condition. But there's no read across to the rest of our brands, which I would say I mean, all of our brands are in very healthy shape. If you look no -- none of our brands is less than 20% pipeline to open, even Holiday Inn, which you say is our -- brand has been around longer than 80 years, 20% pipeline to open. Crowne Plaza, 20% pipeline to open. InterCon, we talked about having nearly 100 hotels under development against the 215 that are open. No luxury brand in the world comes close to that pipeline today. It shows you how relevant that brand is. All of our new brands have pipelines are 2, 3, 4x their open distribution. Indigo is going to double in the next 3 years based on the 120 hotels or plus that it has in the pipeline. So this is a portfolio that has strong growth characteristics within each brand. So the 30% that we have in total pipeline to open is pretty well distributed across the whole portfolio.

Great. I think it's flashing 0 to me, so time is up. So any closing remarks before we left.

Well, thank you for taking time to join us today. I hope this was helpful in learning more about IHG Hotels & Resorts.

Great. Thank you, everyone.

Thank you, Vicki.