Building lasting guest relationships

June 2010

Hotel Indigo Scottsdale, USA

1

IHGs growth strategy to create sustainable value

Making best use of our scale to build and grow preferred hotel
brands for guests and owners in high value markets

Where we play

How we win

Markets

Powerful and distinct brands

Segments

Best demand delivery systems

Model

Aligned and engaged organisation

Rooms

RevPAR

Royalty Rate

The top 5 things you may not know about the hotel market
1

Brands matter online

Only 5% of our bookings are through online

travel agents

Vacations are a right

Rooms sold for leisure increased in 2009

Searching isnt booking

78% of hotel bookings begin with some

form of online search. Web bookings are
only 23% of our mix

Its a drive to business

Less than 30% of midscale guests fly

Hotel guests are hard

to find

Only 50% of Americans stay in a hotel in

any given year

Building lasting guest relationships

Hotel Indigo London Paddington, UK

4

Our journey to Great Hotels Guests Love

Scale in
Market segmentation and penetrating customer insight

.KNOWLEDGE

Thoughtful, innovative Brand evolution

.EXPERTISE
POWERFUL AND DISTINCT BRANDS
THAT
Consistent branded
hotel experience
BEST PRACTICE
PROVIDE
A DIFFERENTIATED
Widely available, quality
managedEXPERIENCE
and up to the mark
PIPELINE
GUEST
Great owners who buy into the strategy

.RELATIONSHIPS

High visibility, multi-media marketing

.MEDIA BUYING

THE
BEST DEMAND DELIVERY SYSTEM
Effective, tailored reservation and loyalty systems

.TECHNOLOGY

Collaborative and engaged employees

.NUMBERS

ALIGNED AND ENGAGED ORGANISATION

5

System scale drives revenue delivery

$16.8bn gross revenue* from all hotels in system
c.$1bn system funds from hotel contributions
Revenue delivered through the system up 19%pts since 2004 to 68%
Delivery driven by
Embedding lasting guest relationships

Exploiting all booking channels

Innovations

* Gross revenue is defined as total room revenue from franchised hotels and total hotel revenue from managed, owned and leased
hotels. It is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties.

Funding the system

All hotels contribute
c.3.0% of rooms revenue
(service contribution fee)

Advertising & Marketing

(c.25%)

c.4.75% total
PCR bill

Distribution
(Reservations and Channels) (c.40%)

Other fees for

value add services

Priority Club Rewards

(c.35%)

c.$1bn total system funds in 2009

Discretion to spend for marketing, reservations and other related activities
Marketing and reservations assessments spent in year collected

Exploiting all booking channels

InterContinental Hong Kong

8

Booking channels
$10.9bn

$13.7bn

2%
10%

5%

13%

11%
14%

14%
10%

20%

Online Travel Agency

Global Distribution System

18%

Call centres

PCR Hotel Direct

51%

IHG Websites

32%

2004

Hotel Direct

2009

Note: 2009 constant USD rates

Website upgrades to increase relevance and appeal

10

Central Reservations global scale and accessibility

Approximately 25 million calls handled per year with c.1,700 agents
Charleston
324 agents
c.4.6m calls pa

Birmingham
236 agents
c.2.6m calls pa

Bucharest
39 agents
c.0.4m calls pa
Tokyo
13 agents
c.0.1m calls pa

Salt Lake City

368 agents
c.6.1m calls pa

Guangzhou
31 agents
c.0.5m calls pa

Mexico City
48 agents
c.0.7m calls pa
Sao Paulo
10 agents
c.0.1m calls pa

Manila
225 agents
c.3.3m calls pa

Baguio
368 agents
c.6.4m calls pa

Note: 2009 full-year call volumes and year-end agent counts

11

Embedding lasting guest relationships

Crowne Plaza Lijiang Ancient Town, China

12

Online direct marketing

Top 20 Google advertiser globally
Purchasing over 3m keywords in
16 languages
Serving over 12bn online ad
impressions annually
Reaching customers during
online shopping:
Search Engines (Google, BING)
Community Guides
(Tripadvisor, CitySearch)
Mapping and Price Compare sites
(MapQuest, Kayak)

13

Targeted marketing
$28m investment over 3 years in modernising of infrastructure and processes
Enable the identification and marketing to an additional c.34m customers
Improve time to market and accuracy of campaigns
>$150m incremental revenue from these types of campaigns in 2009

14

Promotional marketing
Recent Promotions

Promotional Advertising

Biggest Free Nights Offer

High participation despite
economic downturn
Generated new Priority
Club members

Luckiest Loser
Capitalized on HHonors
devaluation of points
Over 90m print & online
media impressions

15

Social marketing

16

Mass marketing

17

Reaching corporate accounts - Sales

Our sales structure aligns with our accounts buying behavior
IHG Global
Strategic Accounts

Global
Accounts
Director

Key
Accounts
Director

Global, Regional and

Sub-regional Accounts

and touches a significant amount of our

system revenue:
$3.5bn room revenue

Key Accounts Manager

Regional Sales Center
(RSC)

Market-specific and
National Accounts

Hotel and Local

Accounts

National Sales Team

Local Market Area Sales Teams

Hotel Sales

280 Sales professionals

1,700 managed accounts
18

Recent sales initiatives

Business
Travel
Optimisation

Strategic Pricing - volume-based dynamic discount model

PCR Engagement - drive PCR penetration in all managed accounts

Easy Groups/Easy Meetings driving share of small meetings.

Meetings
Optimisation

Meeting Broker - improving lead management and processes

19

Priority Club Rewards (PCR)

Priority Club contribution +4% pts vs. 2008
Over 51m PCR members worldwide
Largest programme in hotel industry

Record hotel enrolments in 2009 (+28% YOY)

Increase value proposition of Priority Club points

Points & Cash - combine points with cash to redeem free nights faster

Flights Anywhere - redeem points for airline travel

Hotels Anywhere redeem points online for non IHG hotel rooms

Best Hotel Loyalty Programme

Business Traveller Magazine 2007, 2008, 2009
Global Traveller Magazine 2005, 2006, 2007, 2008, 2009
SmarterTravel Editors Choice Awards - 2009

20

The most valuable customers

They PAY more
10% premium on ADR versus other guests
Less price sensitive - choosing our brands for reasons other than strictly price

They STAY more

Studies show that PCR members stay >30% more with IHG post enrollment
PCR members 10 times more likely to stay at more than one hotel than non-members

They COST less

PCR members 3 times more likely to use lower cost on-line booking than non members
They use online travel agencies less

PCR members deliver more than double the profit of non-PCR members

21

Innovations

Staybridge Suites Cairo City Stars, Egypt

22

Mobile
Mobile bookings increased 600% (March 2010 vs. 2009)
Future enhancements to mobile in progress
Mobile Awareness Campaign launched March 2010
New IHG iPhone app launched April 2010

23

Retargeted online marketing

Retargeting those who leave IHGs website
YTD global campaigns generated
386m+ impressions for IHG brands

IHG
Websites

>$40m in revenue for the system

Creative messaging being used for all

brands in multiple languages
Customer Clusters

Media partners
Google, AOL, Yahoo! and Netmining

Note: Gross data all channels from 1 Jan 2010 to 7 April 2010

24

IHGs growth strategy to create sustainable value

Making best use of our scale to build and grow preferred hotel
brands for guests and owners in high value markets

Where we play

How we win

Markets

Powerful and distinct brands

Segments

Best demand delivery systems

Model

Aligned and engaged organisation

Rooms

RevPAR

Royalty Rate

25

WHY?
26

The traditional view of the hotel industry

LUXURY

$$$

UPPER UPSCALE
UPSCALE

$$

MIDSCALE WITH F&B

MIDSCALE WITHOUT F&B
ECONOMY

$
27

Then we thought we got sophisticated.

LUXURY

$$$
BOUTIQUES

UPPER UPSCALE
UPSCALE

$$

EXTENDED STAY

MIDSCALE WITH F&B

MIDSCALE WITHOUT F&B
ECONOMY

$
28

Approaching branding
House brand

Single brand

Rifle-shot brands

HOUSE
BRAND

BRAND

System

BRAND
By xx

BRAND
By xx

System

BRAND
By xx

BRAND BRAND BRAND

System

29

Our brands
Rifle-shot brands

System

30

Moving guests from like to love

Getting the basics right
is really important
is not easy
is not enough

We need to build a brand specific experience which

is consistently different and better than the competition
must deliver something that really matters to the guest

31

Moving guests from like to love - the guest journey

Make a
Awareness booking

Before
I leave

Journey Arrival &

to hotel Walk-in

Check-in Journey
to room

My
room

Ongoing
Facilities Departure Comms

32

Moving guests from like to love - the guest journey

Make a
Awareness booking

Before
I leave

Journey Arrival &

to hotel Walk-in

Check-in Journey
to room

My
room

Ongoing
Facilities Departure Comms

33

Moving guests from like to love - the guest journey

Awareness

Make a
booking

Before
I leave

Journey
to hotel

Arrival &
Walk-in

Check-in

Journey
to room

My
room

Facilities Departure

Ongoing
Comms

34

Moving guests from like to love - the guest journey

Awareness Make a
booking

Before
I leave

Journey
to hotel

Arrival &
Walk-in

Check-in

Journey
to room

My
room

Facilities

Departure

Ongoing
Comms

35

Summary
System scale key to building the best demand delivery system
Leading investment in marketing and expertise
System delivery up 19%pts since 2004 to 68%

Creating powerful and distinct brands

Psychology and emotion, not just price and function

Brought to life everywhere we touch the guest

36

Building lasting guest relationships

longstanding Priority Club Reward members

Ruth Farrell
9yrs
2009: 23 nights

Andrew Watson
12 yrs
2009: 26 nights

Michael Jorgeson
26yrs
2009: 114 nights

Jerry Harwood
12 yrs
2009: 70 nights

Robert Bonnem
20yrs
2009: 31 nights

Peter Kesterton
13 yrs
2009: 17 nights

Stephen Sohns
19yrs
2009: 21 nights

Mark Gilley
11yrs
2009: 35 nights

Martyn Cornell
12yrs
2009: 15 nights

Valerie Manso
24yrs
2009: 77 nights

Peter Duke
14 yrs
2009: 52 nights

37

Q&A

Holiday Inn Pataya, Thailand

38

Building lasting guest relationships

June 2010

Hotel Indigo Scottsdale, USA

39