Great Hotels GuestsLove - InterContinental Hotels Group … · Great Hotels GuestsLove ... George Turner became Company Secretary in January 2009, taking over from Richard Winter

Great Hotels Guests Love™

IHG Annual Review and Summary Financial Statement 2008

This year we asked our employees totake their own pictures and capturewhat Great Hotels Guests Lovemeans to them. We had a fantasticresponse and hope that you’ll find the photographs we feature, markedby the icon above, as engaging andinspiring as we have.

We pride ourselves ongiving our employees

‘Room to be yourself’

Find out how we’re tackling the ‘war for talent’ and attractingthe best people to work for us.

A great guest experience,every time

We want our guests to enjoy their stay and to come back again.Read about what we’re doing to stand out from the crowd.

page8 page12

Caught on camera

Inside...

Front cover photography:

Left: Photo by Charles Yap, taken atInterContinental Paris Le Grand, FranceOur recently retired chief concierge, GillesHarrault, shows off some of the tools of thetrade. He says “I’m often scribbling on mapsand need to make sure I never run out of ink.”

Centre: Photo by Amy Hu, taken at Holiday Inn Shanghai Vista, People’s Republic of China

“Holiday Inn is one of the very first Englishwords my three-year-old son learnt to say.And he really loves the relaunched brand!”

Right: Photo by Tejas Lakhani, takenat Holiday Inn Gem Park, Ooty, India

“All guests are given a royal welcome, making them feel like they have arrived at a palace they can call home.”

Great Hotels Guests Love is not just a snappy slogan. It’s a guide to ouractions and our way of doing business. It puts our guests at the veryheart of everything we do. It’s about developing great hotels and brandsthat stand out from the competition. It’s about doing things differentlyand delivering great service. It’s about taking guests by surprise – goingbeyond what they expect so they stay with us and recommend us toothers. Read all about how we have been working hard throughout 2008 to deliver Great Hotels Guests Love.

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1

One big world

An overview of the number of hotels in our system and development pipeline.

2008 results

A summary of our financialperformance during the year and a range of statutory,governance and other helpfulinformation for shareholders.

page18 page32Continuing operating profit*

up 13%to $535 million* Before exceptional items.

OVERVIEW

2 Highlights

3 Chairman’s statement

4 Chief Executive’s review

5 Statement from the IAHI, The Owners’ Association

HOW WE OPERATE

6 How it works

7 Seven great hotel brands

8 Guest experience

10 Driving demand

12 Our people

14 Responsible business

16 Corporate reputation

FACTS AND FIGURES

32 Summary financial statement

36 Our senior leadership team

38 Summary Directors’ report

39 Corporate governance

40 Summary remuneration report

44 Investor information

45 Financial calendar

WHERE WE OPERATE

18 Global overview

20 The Americas

24 Europe, Middle East and Africa

28 Asia Pacific

Highlights

Record 34,757 net room additions

Opened over one new hotel a day∞

Signed almost two new hotels a day∞

Final dividend maintained at 29.2¢§

The Americas

$451mº

2007 $440m

† Total system room revenue divided by the number of room nights available.

‡ Total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels (not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties).

º Includes four significant liquidated damages receipts totalling $33m; $13m in Americas, $16m in EMEA, $4m in Asia Pacific. (No such individually significant receipts in 2007).

* Operating profit before exceptional items. ∞ An average for 2008.

§ The Group’s reporting currency changed from sterling to US dollars in 2008. Dividends are now determined in US dollars and converted into sterling immediately before announcement. The sterling final dividend equivalent is 20.2p per share.

Asia Pacific

$68mº

2007 $63m

EMEA

$171mº

2007 $134m

Revenue per available room† up 0.9%Total gross revenue‡ from all hotels in IHG system

up 7% to $19.1bnContinuing revenue up 5% to $1,854mº

Continuing operating profit* up 13% to $535mº

2 IHG Annual Review and Summary Financial Statement 2008

Chairman’s statement 3

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Dear shareholder

PERFORMANCE

Our continuing revenue increased 5 per cent to $1.9 billion, with continuing operatingprofit before exceptional items of $535 million, up 13 per cent. Adjusted continuingearnings per share increased 26 per cent from 93.8 cents to 117.8 cents. We had a$132 million exceptional charge in the year. This consisted of $35 million in relationto the Holiday Inn relaunch; $19 million of cost savings-related severance charges;$96 million of non-cash asset impairments, reflecting the poorer trading environmentexpected in 2009; and other items including gains on asset sales, which netted to an$18 million credit.

The Board is recommending that the final dividend for 2008 is maintained at 29.2 centsper share, taking the full-year dividend to 41.4 cents per share, up 2 per cent on 2007.This converts to a sterling full-year dividend of 26.6 pence, up 29 per cent over 2007.

REPORTING CURRENCY

We changed the reporting currency of our Group accounts from sterling to US dollarswith our 2008 half-year results. This means we can reflect better the Group’s profile of revenues and operating profits which are largely US dollar-based. Dividends are nowdetermined in US dollars and converted into sterling immediately before announcement.

BOARD AND EXECUTIVE COMMITTEE

Stevan Porter 1954–2008

We were all deeply saddened by the loss of Steve Porter, a Board member and President of the Americas, who passed away in August 2008 after a short illness. Under Steve’s inspired leadership the Americas region has been established as a dominant force. He is greatly missed.

We must thank Richard Solomons, Finance Director, for taking on the additional role of leading the Americas region when Steve became seriously ill in July. Richarddid an outstanding job, ensuring a smooth transition to Jim Abrahamson, who wasappointed as our new President of the Americas in January this year. Jim joined IHGfrom Global Hyatt Corporation, where he was Head of Development, The Americas.Two of our Non-Executive Directors, Sir David Prosser and Robert Larson, retiredfrom the Board in May and December 2008, respectively. I thank them for theirexcellent service and contribution. George Turner became Company Secretary inJanuary 2009, taking over from Richard Winter who retires in April 2009. I thankRichard for his service over the past 15 years and wish him well for the future.

FINANCIAL POSITION AND SHAREHOLDER RETURNS

We continue with our prudent approach to managing our balance sheet. Wesuccessfully refinanced our debt facilities in May 2008, and have lowered ouroverall net debt position by $400 million to $1.3 billion. During the year, wecontinued with our existing share buyback programme, taking the total fundsreturned since March 2004 to more than £3.5 billion. We have deferred theremaining £30 million of the buyback programme in order to preserve cash and maintain the strength of our balance sheet.

OUTLOOK

Our solid performance in 2008 can be attributed to the exceptional efforts of all our people. Trading will undoubtedly be tough in 2009, but our strong balance

sheet, resilient business model, great brands and excellent management team, led by Andy Cosslett, give me continued confidence in the future for the Group.

David Webster Chairman

Chairman’s statement

“2008 was a good year for IHG. We grew both sales and profits,*outperforming theindustry in all ourmajor markets, and we have been preparing the business for a tougherenvironment in 2009.”

* Before exceptional items.

Chief Executive’s review

“During 2008 we witnessedunprecedentedevents in the worldeconomy. In spite ofthis, it was a goodyear for IHG. Webenefited from ourstrategy to focus on franchising andmanaging hotelsand beat our threeyear net roomsgrowth target byover 35 per cent.”

BUSINESS SUMMARY

In the year, we continued to grow sales, profits* and revenue per available room(RevPAR) – the industry’s main performance measure – which rose again, up 0.9 per cent globally. Throughout the year, we saw RevPAR outperformance in all our key markets, but in line with the industry we experienced a sharp downturn in the fourth quarter when our RevPAR declined 6.5 per cent. We have taken a number of actions to prepare the business for the tougher environment ahead. Sadly this has involved some redundancies across the Group.

ACCELERATED ROOMS GROWTH

We opened a record 430 hotels during 2008, including 115 hotels in the fourth quarter, when the economic conditions had worsened significantly.

We were pleased to beat our target to add 50,000-60,000 net rooms within three years and in the end we added more than 82,000 rooms to the system – a greatachievement. We signed 693 hotels, 98,886 rooms, into our forward developmentpipeline during the year. More than 25,000 of these rooms were signed in the fourth quarter, demonstrating the continuing appetite that owners and guests have for our brands all around the world. At the same time, we continued to focus on improving quality and we removed 193 hotels from our system. Overall, we grew the number of rooms in our system by 6 per cent on a net basis.

BRAND PERFORMANCE

The $1 billion relaunch of the Holiday Inn family of brands is progressing well. Almost 300 hotels had been relaunched by the end of 2008 and feedback from guests and owners has been encouraging. The improvements will deliver a higher quality guest experience and stronger returns for hotel owners.

In September 2008, we entered the timeshare market through an exclusive licensing and marketing agreement, launching our Holiday Inn Club Vacations brand. We successfully continued the expansion of our brands around the world with the launch of Staybridge Suites and Hotel Indigo outside our Americas region.

ADVANTAGES OF SCALE

With almost 620,000 rooms worldwide, we can deploy our significant scale to benefit both ourselves and our hotel owners. Our reservations channels now bring in $7.6 billion of room revenues and our Priority Club Rewards memberscontribute $5.9 billion. We now directly generate around 60 per cent of room nights at our hotels through our system.

This year we started several projects to make more of our scale, to maximiseefficiencies and drive cost savings. These include establishing a Group procurementteam and consolidating several accounting processes to overseas locations. Thesavings will continue in 2009 and we have committed to keeping our costs below 2008 levels.

The trading environment became significantly tougher throughout 2008 and there is no doubt 2009 will be very challenging, but ours is a resilient businessand our strategy remains the right one. Over the last few years, we have builtconfidence and momentum in the business and forged an even stronger bond with our community of outstanding owners with whom we operate our hotel system. Together we are all focused on a common goal, to create Great Hotels Guests Love and despite the poor short-term outlook, we remain confident we can deliver our ambition.

Andrew Cosslett Chief Executive



Q&A with Andy Cosslett:Does IHG have the right strategy to deal with the current economic climate?

Three years ago we made the decision to focus onfranchising and managing hotels, so we are predominantlya fee-based business. The benefits of this include a morepredictable income stream and high cash generation. We own fewer properties ourselves now and our growth isfunded by third-party investment. This growth helps us bemore resilient in a tougher economic environment as therevenue we receive from new rooms helps offset that lostfrom declines in RevPAR. We are confident our strategyand business model set us up well to weather the storm.

What is IHG doing to respond to the changing market conditions?

Over the past few years, we have taken a number ofstrategic decisions to set the business up for toughertimes. We have established a new procurement function to make the most of our scale, invested in technology andour reservations systems and focused our marketingspend on short-term tactical marketing and long-termbrand development. We will continue to review our costbase on an ongoing basis and invest in those things thatdrive guests to our hotels and revenues to our owners.

Is IHG any more advantaged than any other hotel company?

As one of the biggest hotel operators, we have theadvantage of scale. We have a number of strong brandsacross different price points, in nearly 100 countriesaround the world. Then we have the support structure –our reservations systems and our $1 billion marketingfund – to deliver more guests to our hotels. This is whyowners choose our brands.

We have a great management team to lead the business.The loss of Steve Porter has been felt widely across IHG and the industry and he will be sorely missed as a colleague and as a friend. We are delighted, however, to welcome Jim Abrahamson to the Group, who bringswith him a wealth of experience of hotel operations in the Americas region.

We also have a great working relationship with ourowners, both directly and through the IAHI, The Owners’Association. During these difficult times, it is even moreimportant to work side by side with our owners so that we can deliver Great Hotels Guests Love.

Chief Executive’s review and Statement from the IAHI 5

Raising the level of guest satisfaction

“We have a great collaborative relationship with IHG. In fact, it’s unique in the hotel industry.

Our Association works closely with IHG to helpdirect the future of the hotel brands we’re allcommitted to. It gives our members valuable access to global best practice and the IHGleadership team.

We were deeply saddened by the loss of StevePorter, President of the Americas, in August 2008. He was an energetic and passionate hotelier, a great champion of the IAHI and will be missed by all our members. We look forward to workingwith Jim Abrahamson as the new President of the region and welcome him to the team.

Over the past year we have worked with IHG toreview the IAHI business plan and help our ownersmeet the challenges of 2009 head on. We alsocontinued to work together to relaunch the iconicHoliday Inn brand. The relaunch is going well. At the end of 2008 almost 300 hotels hadrelaunched globally. More are rolling out every day and owners are starting to see the positiveresults it has on guest satisfaction and revenue.

The collective experience of our members, togetherwith the exceptional support of IHG, gives us thetools we need to deliver Great Hotels Guests Love.”

Thomas J. Corcoran, JrChairman, IAHI, The Owners’ Association & Chairman, The Felcor Trust

For further information go to www.iahi.org

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We operate hotels in three ways: as a franchisor, a manager and an owner. Our business model focuses on franchising and managing hotels on behalf of ourowners around the world.

how it worksWe have 3,585 hotels operating under franchise agreements, 585 hotels we manage on behalf of owners and 16 hotels we own ourselves.

OWNED AND LEASED

MANAGED

FRANCHISED

IHG

IHG

IHG

IHG

IHG

IHG

IHG

IHG usually suppliesgeneral manager

as a minimum

third party

IHG

third party

third party

high

low/none

none

all revenue

fee % of totalrevenue plus

% of profit

fee % of rooms revenue

BRAND MARKETING ANDDISTRIBUTION STAFF OWNERSHIP IHG CAPITAL IHG REVENUE

Franchising We have 3,585 hotels operating under franchise agreements,which represents nearly 86 percent of the estate. Franchisingenables owners to trade underone of our brands, leverage our scale and take advantage of our reservations systems such as our call centres, sales teams, websites and Priority Club Rewards. Owners also have our support in, and accessto, property improvement plans, quality training andmarketing support.

Managing We have 585 hotels operating under management contracts,representing almost 14 per centof the estate. Under a managedcontract we run the hotels on a day-to-day basis with directcontrol over quality and servicestandards, but ownership of the buildings remains with a third-party owner.

OwningToday we own just 16 hotels of the 4,186 operating under one of our brands – less than 1 per cent of the estate. Thesehotels have a net book value ofapproximately $1.7 billion, themajority of which is representedby our InterContinental hotels inLondon, Hong Kong, New Yorkand Paris. Since 2003 we’ve sold183 hotels and have retained our brands on 90 per cent ofthese, giving us a continuingincome stream.

more on the web: www.ihg.com Our brands 7

7great hotel brands and our multi-award-winning loyalty programme, Priority Club Rewards

InterContinental Hotels & Resorts 159 HOTELS, 54,736 ROOMS

71 HOTELS, 21,884 ROOMS IN DEVELOPMENT PIPELINE

Crowne Plaza 342 HOTELS, 93,382 ROOMS


Hotel Indigo22 HOTELS, 2,702 ROOMS


Holiday Inn1,353 HOTELS, 249,691 ROOMS


Holiday Inn Express1,932 HOTELS, 173,794 ROOMS


Staybridge Suites152 HOTELS, 16,644 ROOMS


Candlewood Suites204 HOTELS, 20,641 ROOMS


Priority Club Rewards42 MILLION MEMBERS WORLDWIDE

In the Know. InterContinental Hotels & Resorts believes in understated service and outstanding facilities. Whatmakes InterContinental stand out from the crowd is thedesire to help every guest discover what’s special about a destination so they enjoy a truly authentic experience.

The Place To Meet. Crowne Plaza prides itself on offeringsimple elegance and a full range of facilities. With a strongreputation for business services, excellent meeting facilitiesand state-of-the-art technology, Crowne Plaza knows whatit takes to ‘make it happen’ for our guests.

Escape the Mundane. Friendly, unpretentious hotels forpeople who want to stay somewhere a little bit different.Hotel Indigo is a boutique hotel that comes with all thebenefits of a big hotel company. It offers good value,creature comforts and a fresh, bright design. It’s a great option for both business and leisure travellers.

Relax, it’s Holiday Inn. One of the world’s most iconic hotelbrands with a reputation for dependable, friendly service,comfort and value. On average, three people check into a Holiday Inn every second somewhere around the world. The Holiday Inn relaunch is well under way and guests are telling us they love the changes we’ve made.

Stay Smart. Holiday Inn Express is focused on convenienceand comfort at great value. It’s the ideal choice for people on the road who are looking for a fresh, clean anduncomplicated hotel. Holiday Inn Express is alsorelaunching as part of the wider Holiday Inn programme.

Get Comfortable. A home away from home, StaybridgeSuites is ideal for business and leisure travellers who stay for an extended period of time and are looking for a residential style hotel. A central feature of everyStaybridge Suites is the Great Room, a communal areawhere guests can meet and relax.

Feel Free. For people who tend to stay for a week or more, Candlewood Suites offers spacious studios and one-bedroom suites each with a fully equipped kitchen and large work area. The focus at Candlewood Suites is on comfort, space and value.

It’s easier. Enjoy. The world’s first and largest hotel loyaltyprogramme, Priority Club Rewards offers members anunrivalled range of benefits. Our award-winning programmeis renowned across the industry for its innovation and is an important way of growing loyalty to our brands.

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Guest experience

Our marketing has two main aims. One is to get ourguests to love our hotels. The other is to drive revenueto hotels for our owners. And both go hand in hand, says Tom Seddon.

We want our guests to love our hotels and to come back time and timeagain. How do we do that? We have to ensure guests choose one of ourseven brands in the first place, that they can make their booking quicklyand easily and they have a great experience every time they stay.

Creating a great guest experience is something you have to work at –continually. The best example of this is Holiday Inn, which is undergoingthe biggest relaunch the hospitality industry has ever seen. At the end of2008 we had almost 300 relaunched hotels where people can really seeand feel the difference for themselves. More hotels are relaunching everyday and guests are telling us they love the change. Even in this moredifficult economic climate we’ve been signing a raft of new hotels to thebrand. We signed 419 Holiday Inn and Holiday Inn Express hotels in thepast 12 months and owners have told us that the brand relaunch was a big reason why they chose us, which is evidence that we’re doing it right.

An owner signs up to develop a hotel under one of our brands becausethey’re convinced we’ll deliver them more guests than any other hotelcompany. It’s our powerful ‘system’ that helps us do that.

How to spend a billion Our sales teams, reservations channels and loyalty programme are the three main elements of what’s often referred to as the IHG system. It’s this system that drives our guest bookings. The system fund, made up of contributions from all our owners, totals almost $1 billion, which we spend on behalf of our owners every year. It goes on our call centres,websites, sales teams, advertising and brand development. We nowdirectly generate almost 60 per cent of room nights at our hotels through our system.

Priority Club Rewards (PCR) is an amazingly powerful tool and had a big year in 2008. It celebrated its 25th anniversary, welcomed

its 40 millionth member and retained its position as the world’slargest hotel loyalty programme. It gives us a great databaseof customers who are more loyal than the average guest andspend more money with us when they stay.

We also have more than 300 sales people dedicated todeveloping relationships with corporate customers –big companies around the world, airlines that place theircrews, travel agents, and people who organise largebusiness events. Plus we have 8,000 hotel-based salespeople to drive local business.

A large part of our marketing budget is spent in the onlineworld, because guests have drastically changed how they

go about finding themselves a hotel room. Over 70 per cent of bookings now having an online element, such as searchingor booking. We have dedicated teams focusing on how wemake the most of our web presence. We’re the largestadvertiser with Google in the industry, the IHG website is the most visited hotel website and it’s the only hotel siteamong the top 30 travel-related websites in the world.


Customers can makebookings through:

• The Internet – 13 local languagewebsites and www.ihg.com is nowthe most popular hotel website

• Our reservations centres – 12 call centres around the world that take reservations in 15 languages

• Travel agents and online travelcompanies. Guests can book to stay in one of our hotels through hundreds of travel websites around the globe

“There’s no doubt that thetrading environment haschanged significantlyover the year. Now more than ever our hotel owners want our scale, strength and expertise to helpthem stay competitiveand get their fair share of the demand out there. Our guests want even better value for money. And we have to deliver.”

Tom SeddonChief Marketing Officer

passion&performance

How’s this for climbing into bed?It’s not so much the height of comfort as comfort at a great height. A woman inpyjamas abseiled down the Sony buildingin downtown Tokyo to rest on a CrownePlaza bed perched half way up – watchedby crowds of onlookers from the street.

The event last summer was amazinglysuccessful, garnering press coverage all around the world. The aim was topublicise the way the ANA Crowne Plazabrand, a joint venture between IHG andJapanese airline ANA, helps guests get a good night’s sleep. According to asurvey commissioned by ANA CrownePlaza, sleep deprivation is becoming anational problem in Japan, with four outof five business people suffering fromsleep problems.

Guest experience 9more on the web: www.ihg.com

After a lifetime of loyalty ourscheme gets its own rewardYou might think that in order to be given a lifetime achievement award you must at least be human. But at aprestigious travel industry gathering that honour was instead bestowed onPriority Club Rewards. The AnnualFreddie Awards, held in Arizona, USA,presented the Lifetime AchievementAward to mark our loyalty programme’s25th anniversary. The awards areorganised by InsideFlyer, an Americanmagazine for frequent flyers.

Priority Club Rewards was not only thehotel industry’s first loyalty programme;it is also the largest and fastest-growing.Some 42 million members worldwidecan now exchange points for a range of products and services.

Height of achievementIn Greater China we now have more than one million members of PriorityClub Rewards. To mark the milestone we built a 10-metre-high mock hotelmade out of photographs – and put it on show on one of the main streets ofShanghai. On the weekend of 15-16November, the unique model was added to the skyscrapers along HuaihaiRoad. The ‘hotel’ was modelled on theInterContinental Nanjing, which is due to open in 2009.

Relaunched Holiday Inn hotels are strikingly different As guests arrive at a new-style Holiday Inn they can’t help noticing the more modernsignage, and since most of them arrive in the evening they will be struck by the waythe outside of the building is awash with coloured light.

There are plants and benches by the entrance to make the hotel feel more welcoming,a front desk that is less cluttered and more professional, a special scent that’sdispersed through the lobby, and music playing in the background. When guests get to their bedroom they find upgraded bedding, clean, crisp white sheets, their choice of pillows, and better bathrooms with new showerheads and great-smelling soapsand lotions. We focused on upgrading the fundamental things that matter most toguests – and guests are noticing.

The concierge has the keyChief concierges at InterContinentalhotels around the world have becomethe stars of 140 destination videos, inwhich they take viewers on a tour of theirlocal area and share tips on what to seeand do. The videos are now on YouTubeand our website and have featured on in-flight televisions across the globe. The idea for the videos came out of our Concierge Programme, whichlaunched in 2006 to highlight that the concierge is not only the face ofInterContinental, they are also at theheart of the guest experience.

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logon, checkin...

From Merlin to Magic, our technological wizards have been working on a host of innovative ways for hotels to boost their performance and increasebookings. Tom Conophy reveals how this even includes enabling concierges to ‘twitter’ at guests.

Take over 4,000 hotels across the world, give them up-to-the-minuteinformation on their business performance, and what do you have? Answer: Merlin, our intranet system (the internal website for all IHGcolleagues). Our biggest success over the past year has been to connect all of our hotels around the world to it.

For the first time we have a single communicationsplatform across all our hotels. 20 technicians, as well as about 200 other people across the globe, workedon the project. We had to overcome the challenge of linking to some of ourmore remote locations and ensure that the right level of information isavailable to our employees.

By enabling business intelligence to be provided in almost ‘real time’,Merlin allows our owners and general managers to make decisions faster.This is important for revenue management, and shows how technology can really give businesses an edge – more important than ever in aneconomic downturn.

In today’s tougher times, it is also valuable to provide hotels with new ways of reaching out to guests, and we have achieved that by adding our hotels to Expedia, the Internet-based travel agency.

We have increased the number of customers which the reservationscentres can manage and boosted the conversion rate from call tobooking by moving the centres to a new Internet-based system. It gives more information on our call centre colleagues’ computerscreens, so they have fewer screens to navigate and can answerquestions more rapidly.

Other developments this year include the revitalisation of our websites, mapping all our hotels on Google Earth(see story, right) and the introduction of Hotel 360, a system to help us manage all our hotel and ownerinformation more efficiently.

Connecting with guestsAs social networking sites such as Facebook and Twitterincrease in popularity, guests expect us to be able to communicate with them using these websites. OurInterContinental concierges can now post information

to guests using Twitter and we’ve launched an onlinecommunity for some of our Priority Club Rewardsmembers to share their thoughts on IHG hotels and testnew marketing ideas. We’ll continue to test innovativeways of using the online world to enhance our guestservices. One of our big plans for next year is Magic –a next generation loyalty system which enables us tomarket to all our previous guests in their own language.

www.ihg.com

www.intercontinental.com

www.crowneplaza.com

www.holidayinn.com

www.hiexpress.com

www.hotelindigo.com

www.staybridge.com

www.candlewoodsuites.com

www.priorityclubrewards.com

Driving demand

“Technology is anintegral part of our daily lives. It’s changed ourbehaviours and our expectations. Our guests have told us it’s a big factor in where they choose to stay. So we need to meet theirexpectations to deliver a great guest experience.”

Tom ConophyChief Information Officer

Driving demand 11more on the web: www.ihg.com

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1. Now showing… More than 150 videos aboutIHG and our hotels, some ofthem made by guests, cannow be viewed on our newYouTube page. Log on towww.youtube.com/ihgplc

2. Click and easyGuests now have a new wayto plan a trip and book ahotel room anywhere in theworld in just a few clicks,thanks to our new GoogleEarth application. Thisgroundbreaking tool enablesguests to home in on theirdestination, find the nearestIHG hotel and book theirroom directly from the site.IHG was the first hotelcompany to plot all its hotels on Google Earth.

3. Check-ins checked outHotel owners can now installan extra, economical way of handling check-in andcheck-out. We’ve created alow-cost kiosk system thatallows guests to avoid anydelay at reception, view theirroom, upgrade, look overtheir bill and check them-selves in and out. A number of hotels in the US haveinstalled the kiosks andhotels in Asia and Europe aretesting them too. Customershave told us they really likebeing able to manage theirown arrival and departure.

4. Joined-up thinkingWhat do an iPod, mobilephone, gaming system andlaptop have in common? They can all be plugged into a guest connection devicethat IHG has developed,allowing guests to easilyhook up their electronicgadgets to the in-room TV,loudspeakers or Internet. Connectivity is crucial for our guests and the deviceswill be available to all ourhotels in 2009.

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Our people

How do you go about recruiting enough people to staff more than 1,700 new hotels? As Tracy Robbinsexplains, clearly setting out the Group’s commitment to employees is vital to win the ‘war for talent’.

Winning Ways

Do the right thing

Show we care

Aim higher

Celebrate difference

Work better together

“We want people who share our values and are engaged with our business. We want them to be proud of working for us and to tell their friends.”

Tracy RobbinsExecutive Vice President,Global Human Resources

People are at the heart of our core purpose, Great Hotels Guests Love. We treat our people as individuals, want them to feel valued for theircontribution and ask everyone to live our Winning Ways (the behaviourseveryone at IHG can buy into every day).

A lot of organisations talk about the war for talent, but for us it’s very real.We plan to open more than 1,700 hotels in the next few years and almost140,000 people will need to be found to work in them. We can’t rely ontraditional methods to recruit this number of people, so we’re gettingcreative. We use our own people to tell the story of who we are: ourrecruitment advertisements are fronted by our employees showcasing their hobbies (see picture, right). We wanted them to share something that inspires them, excites them and shows them as individuals becausethat’s how we want them to feel when they are working with us. Our careerswebsite was relaunched in December with new information and insight into what it’s really like to work for us. Just over one million people visitedthe site in 2008 and we now have more than 380,000 CVs that have beensubmitted online.

Careers beckon for 4,200 every year We are also developing the talent we need ourselves. Around 4,200 people a year will graduate from our Academies in China after we stepped up theIHG Academy programme. These Academies operate in 10 locations, fromShanghai to Shenzhen, and are supported by 24 partners, offering hospitalitycourses that we’ve helped to develop. Students are then given jobs with IHG when they successfully complete their courses, ranging from positionsin maintenance to revenue management and front office.

The next generation of general managersGeneral managers need to be financially savvy, understand brands,

deliver a great guest experience and get the best out of people. We have launched a selection tool to help our owners find thosemanagers with the skills to deliver Great Hotels Guests Love. We also conducted a talent review of over 1,100 senior managers to help us develop effective succession plans. Our new LearningManagement System gives general managers and front lineemployees a suite of online learning tools to prepare them

for their next role.

Employees love working hereWe’ve been measuring employee engagement in our ownedand managed estate for two years. We received a record90,000 responses – representing about 90 per cent ofemployees – to the latest survey in November.

During 2008, employee engagementimproved by 3 per cent to 68 per cent.

Nine out of 10 people told us they’re proud to work for IHG.87 per cent of employees would recommend IHG as a good place to work (27 per cent higher than externalbenchmark data) and we see the results of that every day. In our Americas region almost half of our vacancies are filled by employee referrals.

Our people 13more on the web: www.ihg.com

Real effort goes into relaunch Around 200,000 people are due to gothrough a massive training programmeas part of the relaunch of Holiday Inn.The ‘Stay Real’ initiative sets out newstandards of service to ensure ourguests receive a warm welcome and the best possible stay.

Every Holiday Inn will now have a guestexperience champion, whose job it is to make sure the new standards are kept up. The training has been designedto be highly interactive and dynamic, to increase the energy level around therelaunch and to continue to build on thehighly motivated teams we have aroundthe world.

At the end of the year 74 per cent ofHoliday Inn hotels had received thetraining in preparation for their relaunchand we’re receiving excellent feedbackfrom people who have attended.

...room to be yourself

1. Photo by Salma Hussaini, taken at Holiday Inn, DubaiThe team enjoy their ‘Stay Real’ training.

2. IHG Academy students, Shenzhen, People’s Republic of China

3. Jason Huang, Chef,InterContinental Hotels & ResortsJason loves kite flying. He mightnot bring his kite to work but he’shugely enthusiastic about his joband just as keen to impress theguests as his fellow kite flyers.

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Efforts bring their own awards

We’ve won some great awards this year,including:

• The Personnel TodayAward for EmployeeBranding

• The Management TodayAward for Britain’s Most Admired Company in the Leisure and Hotels sector

• One of the best places to work in Atlanta, USA,by Atlanta Magazine

• One of China’s TopEmployers by theCorporate ResearchFoundation

Hanging out with the boss Sit back in a cosy armchair, makeyourself comfortable and have a chatwith the leadership team. That’s theatmosphere we’re creating with TheLeaders Lounge. In this new onlineforum our most senior managers can find advice, assistance and tools to improve their leadership and that of their teams. Strategy and issuessuch as effective cost management are discussed, with tips and bestpractice being shared by all. It’s a great resource to help us on ourjourney to becoming one of the best companies in the world.

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JasonInterContinental Hotels & Resorts

We treat Corporate Responsibility with the same business acumen we do everything else. Acting in a responsible manner and doing good goesbeyond our legal obligations. It helps us to create value for the businessand build competitive advantage. It also helps us to define our businessstrategy and is key to attracting people to work for us.

Not only do we need to consider how travel and tourism affects theenvironment and the communities in which we operate but we also have to manage all this within the context of the global economic downturn.

In 2008 we put the fundamental elements of our CR strategy into place and achieved some great things. (See column, left)


Responsible business

At IHG, Corporate Responsibility (CR) isn’t an add-on, it’s integral to the way we do business. We’re working to meet guests’ and owners’ expectations with ourCorporate Responsibility initiatives by focusing on twokey areas of work – the environment and our role inlocal communities. These are areas in which we can make a big difference.

During 2008 we:

• Researched how CorporateResponsibility affects guest attitudes and behaviour

• Completed a comprehensive carbon and environmental footprint analysis

• Expanded the Innovation Hotel concept (see story, right)

• Integrated CR into brand planning, including the design of a Holiday Inn prototype that requires less constructionmaterial

• Were selected for the US Department of Energy initiative to explore building a hotel that’s up to 50 per cent more energy efficient within the next few years (see story, page 21)

• Developed Green Engage, our online sustainability management system(see story, right)

• Made our corporate offices more energy efficient with measures such as window tinting, sustainable furniture and carpets and energy saving light bulbs

• Won the Institute of CharteredSecretaries and Administrators award for ‘Most Innovative Approach to CSR’

We measured our environmental impacts, surveyed general managersabout what they do to help their communities, innovated new and betterways to design, build and operate our hotels and carried out consumerresearch to understand what really makes a difference to our guests.

We asked our hotel owners about the issues of ‘responsible’ tourism and respecting local communities. We also worked with them and partner organisations such as Harvard University, Cornell University and National Geographic to develop a rounded view of how we shouldapproach CR in a meaningful way.

We’re implementing policies to cover the environment, communities and human rights. To reinforce these we have set up a steering group of senior executives and communicated this work by releasing a moredetailed online CR Report.

Our focus now is to engage more with everyone in our business on ourapproach to CR and concentrate on what we can all do to play a part.

A responsible approach to business will not only help us to reduce ourimpact on the environment and become a better community partner but also reduce our costs.

To find out more about our work in this area read ouronline CR Report at www.ihg.com/responsibility

...long-term

A responsible business 15more on the web: www.ihg.com

Switching on huge savingsOur new sustainability management system, Green Engage, could save up to 25 per cent of hotel energy costs according to our early trials. This will save millions of dollars for IHG and hotelowners across the estate and help us deliver what guests told us they want – hotels with great environmental credentials which give them a sense of wellbeing.

Green Engage is an online system that helpsgeneral managers effectively manage their energyconsumption, water usage and waste production. It compares each hotel’s figures in these areas with similar IHG properties and suggests actions to make improvements, including insulating hotwater pipes, introducing a recycling programme,switching to organic cleaning materials andappointing an employee as a ‘green champion’.

Tom Corcoran, Chairman of the IAHI, The Owners’Association, said: ‘In the current economic climate and with rising energy bills, this system will help us to identify significant cost savings.’

Green Engage also allows hotels to measure their performance against leading externalenvironmental certifications. It will be available to all our hotels from mid-2009 and is key todelivering on our objectives.

Sitting pretty, with grass on its roofIt’s the world’s first entirely ‘green’ hotel. The onlineInnovation Hotel is our way of showcasing the latesttechnology in energy and waterconservation and recycling.

The ‘virtual’ hotel, which can be seen on our website, invitespeople to provide feedback onthe green technologies theyfeel are important. This helpsus prioritise turning the mostpopular and practical ideas into standard features withinthe next few years.

Among the highlights of the futuristic hotel are:

• Solar panels to heat water

• A rainwater collection system to supply water to toilets

• A roof garden rich in shrubberyto provide extra insulation

• Wind power to generateelectricity

• Recycled glass windows

• Furniture and fittings madeentirely from recycled materials

• The use of waste to provideheat and power

The concept hotel can be viewed atwww.ihg.com/innovation

Online Innovation Hotel

sustainability

1. Photo by Camye Mackey,taken at Holiday InnGaithersburg, Maryland, USAHoliday Inn is proud of beinggreen – in more ways than one.

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Corporate reputation

We see our good practices in risk management, health and safety, confidentiality, corporate governance,internal assurance and corporate culture as keyelements of offering an excellent guest experience.

sound and safe

“We wouldn’t be able to deliver Great HotelsGuests Love if we didn’thave a solid corporatereputation. We protectour company, ourinvestors, our guestsand our employees by maintaining thehighest standards ofcorporate governance,health and safety,confidentiality and risk management.”

George TurnerExecutive Vice President,General Counsel andCompany Secretary


Delivering Great Hotels Guests Love requires a soundcorporate reputation. It helps us to build our corporatebrand and is fundamental to our operations worldwide.

Corporate governance Sound governance is shaped by processes and policies which the Board ofDirectors, supported by the IHG Executive Committee, ensures are in place.The Audit, Remuneration, Nomination and Disclosure Committees withinIHG provide further support to maintain good governance practices, as do the Legal, Company Secretariat, Internal Audit and Risk Management teams.

But this is only part of the story. All our employees must follow the samegood practices in order to keep our corporate reputation at the highestlevel. That’s why we’ve embedded a large number of policies in our day-to-day operations, including our Code of Ethics and Business Conduct and Competition policies, together with guidelines on the environment,support for communities and human rights. All of these protocols arereviewed and refreshed regularly. Our Code of Ethics makes it clear that IHG’s reputation is built upon the trust and confidence of all our

stakeholders and is part of making IHG one of the best companies in the world.

Integrity of information Data privacy is a global issue and an ever-evolving area ofregulation. Our privacy programme is designed to maintain

the confidentiality of customer information and adhere to legal and regulatory compliance across all jurisdictions.

We were an early adopter of the TRUSTe privacy sealfor online reservations, an independent privacymonitoring service that’s recognised internationally.

As a public company, we also need to keepinformation secure to ensure the accuracy offinancial reporting to investors and the market.We maintain an information security programmethat assures confidentiality, integrity andavailability of information including financialdata, intellectual property, other essentialbusiness information and personal data.

Our policy on the identification, control anddissemination of information that could affect

the group’s share price is posted on Merlin, ourinternal website. We issue regular reminders about it to all staff who may be privy to such information.

Corporate reputation 17

Risk managementThe safety and security of our guests,employees and others is paramount and it’s a responsibility we take veryseriously. In today’s world our RiskManagement team is vital to ensuringthat we can provide safe and securehotels. The Risk Management team is responsible for a number ofprogrammes, including threatassessment, crisis management, and business continuity planning. They also train hotel employees and our corporate functions in all of thesematters. As a result, all of our hotels and offices are enlisted into the effortand our owners can be reassured thatthey have expertise on hand to tackle these critical areas.

Hotel safetyIn support of managed hotels, we’vedeveloped and implemented a commonsystematic approach to managing safetyrisks. This system is increasingly beingshared with franchised hotels around the world. To deliver this capability we:

• Form risk groups to develop global good practices and draft policy standards and guidelines

• Develop and maintain commonplatforms across the function

• Focus on our people to driveengagement and increase skill and competency

• Partner with world-class third parties to develop processes and capabilities.

Corporate risk We maintain a Global Risk Register inorder to identify significant risks to ourbusiness, and we assign accountabilityfor them. This enables us to quantify howdangerous these risks are, to identifyexisting controls, and to understand ourability to improve these controls, alongwith the benefits and costs of doing so.

Having an accurate and up-to-dateGlobal Risk Register is a vital part ofmaintaining good governance practiceand our corporate reputation. The RiskManagement function reports twice ayear to the Executive Committee and the Board on both hotel safety andcorporate risk.

Internal assuranceInternal Audit is an important element inmaking sure we adhere to the proceduresthat enable us to maintain our corporatereputation and manage significant risksto our strategic objectives.

Internal Audit’s annual plan of activity is predominantly based on key strategic,operational, financial and informationtechnology risks and includes hotel-levelassurance. It’s the job of our internalauditors to monitor and test the qualityof our processes and disciplines, aparticularly important task at a time of economic uncertainty.

The findings of our internal audits enableus to improve controls and procedurescontinuously. Actions are agreed inresponse to recommendations and theseare followed up to ensure satisfactorycontrol is maintained. Our Internal Auditteam regularly reports to the AuditCommittee to ensure independence and reflect best practice.

Through all these efforts and more, we have created a corporate reputationthat we firmly intend to continue todevelop and strengthen, supporting the success of the business worldwide.

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1. Photo by Dennis Jones, taken atour corporate offices, Atlanta, USARegi and Darrell don’t considertheir day complete until they’veput a smile on your face!

2. Photo by Errol Martin, takenat our Reservations Centre,PhilippinesThe team pride themselves onhaving a positive attitude andliving our Winning Ways.

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one big world

The Americas

OPEN IN PIPELINEHOTELS ROOMS HOTELS ROOMS

INTERCONTINENTAL HOTELS & RESORTS 55 18,502 7 2,293CROWNE PLAZA 187 51,124 43 9,647HOTEL INDIGO 21 2,638 55 7,032HOLIDAY INN 920 168,777 263 32,852HOLIDAY INN EXPRESS 1,722 146,024 639 56,465STAYBRIDGE SUITES 150 16,372 154 16,678CANDLEWOOD SUITES 204 20,641 242 21,790OTHER 1 2,412TOTAL 3,260 426,490 1,403 146,757

Number of hotels by business modelFranchised 3,051 hotels 382,070 roomsManaged 199 hotels 40,915 roomsOwned and leased 10 hotels 3,505 rooms

Number of hotels by brand

The Americas represents 65% of our continuing operating profit*

1

1. Photo by Mark Clark, taken at Holiday Inn Express Hotel & Suites, Fairbanks, Alaska, USA

“Our receptionist Angie welcomes a guest coming in from minus 38 degrees. That’s a warm welcome!”

2. Photo by Salima Hussaini, taken at Holiday Inn Dubai-Al Barsha

“Our Thai chef performs the ritesat a Thai wedding held in ourRoyal Buddha restaurant.”

3. Photo by Salena Hu, taken at Crowne Plaza City Centre,Ningbo, People’s Republic of ChinaThe photography competition has given our more seriousamateur photographers a chance to show off their talents!

Number of employees**

190,000

Global overview

more on the web: www.ihg.com Global overview 19

IHG’s hotel development pipeline equates to over 40% of our existing systemsize. It alone would make the ninth largest hotel company in the world andrepresents $15 billion of other people’s money invested in developing ourbrands. In 2008, we signed almost two hotels into our pipeline every day.

Europe, Middle East and Africa Asia Pacific

* Continuing operating profit before central overheads and exceptional items.

** Estimated number of employees working across our owned, managed and franchised hotels.


INTERCONTINENTAL HOTELS & RESORTS 64 20,836 28 7,062CROWNE PLAZA 89 20,729 25 7,287HOTEL INDIGO 1 64HOLIDAY INN 332 53,039 50 10,204HOLIDAY INN EXPRESS 186 21,564 57 7,790STAYBRIDGE SUITES 2 272 12 1,431OTHER 1 203 1 90TOTAL 675 116,707 173 33,864


INTERCONTINENTAL HOTELS & RESORTS 40 15,398 36 12,529CROWNE PLAZA 66 21,529 65 24,535HOTEL INDIGO 1 180HOLIDAY INN 101 27,875 74 21,205HOLIDAY INN EXPRESS 24 6,206 23 6,015OTHER 20 5,646TOTAL 251 76,654 199 64,464

Number of hotels by brand Number of hotels by brand

Number of hotels by business modelFranchised 492 hotels 74,076 roomsManaged 179 hotels 41,185 roomsOwned and leased 4 hotels 1,446 rooms

Number of hotels by business modelFranchised 42 hotels 9,821 roomsManaged 207 hotels 66,140 roomsOwned and leased 2 hotels 693 rooms

EMEA represents 25% of our continuing operating profit*

Asia Pacific represents 10% of our continuing operating profit*

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Number of employees**

75,000Number of employees**

65,000

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After joining us in January 2009 as our new presidentfor the Americas, Jim Abrahamson reveals just howenergetic the team has been in its pursuit of growth.

The Americas

“We’re extremelyfocused on ourrelationships withowners because it’s by working closely with them that we can achieve ourambition of GreatHotels Guests Love.Understanding the needs of ourowners and guestsbetter has been a focus this year and will be next year.”

Jim AbrahamsonPresident, The Americas

Performance highlights:

• Revenue per available room (RevPAR)

down 0.2%• Continuing revenue

up 2.0%to $920m

• Continuing operating profit*

up 2.5%to $451m

I’m delighted to join such a dynamic and exciting company. The team has a fantastic business here and I’d like to thank Richard Solomons and themanagement team for their work in ensuring a smooth transition. Ourscale and system have put us in a strong position to face the toughertrading environment that lies ahead and to build on the great work of Steve Porter.

Market performanceUnited States: As our number one market, the US has the largest numberof hotels open and the biggest development pipeline. The economicenvironment may be tough, but we set a new record in 2008 by opening 332 hotels, including our 200th Candlewood Suites.

During the year we entered the timeshare market for the first time by launching a new brand, Holiday Inn Club Vacations (see story, page 23).

Latin America: Business has been resilient, buoyed by strong local tradeand travel. The area bucked the global downturn and saw an increase in revenue per available room of about 15 per cent. We have 106 hotels in Mexico, more than any other company and we’re the only hotel groupapproved for the Mexican government’s scheme to give franchisees three year interest-free loans to pay initial fees. This should certainly help growth continue.

Canada: We now have 144 hotels in Canada. Holiday Inn continues to grow rapidly and our pipeline is the largest of all mid-scale hotel brands in the country, an achievement we’re very proud of.

Opened and on the wayChicago, Arizona and two in California were among the rapid roll-out ofnew InterContinental hotels. We also signed deals for InterContinentalhotels in Times Square, New York and Atlanta, Georgia.

Crowne Plaza, one of the hotel industry’s fastest-growing brands, saw a wealth of openings and signings. This includes the spectacular

and historic Brock Plaza opposite Niagara Falls and the 31-storey, 386 room hotel that will open in Las Vegas in 2010.

The Holiday Inn relaunch has given owners renewedconfidence that the brand is a first-choice franchise.

There are now more than 902 Holiday Innhotels in the Americas pipeline – a recordand the lion’s share of the brand’s global growth.

Staybridge Suites celebrated its 10th anniversary (see story, right) by opening its first hotel in Las Vegas.

In 2008, we opened 10 Hotel Indigo properties in the US –three in Florida alone. There are now more than 52 HotelIndigo properties in development in the US.


more on the web: www.ihg.com

Staybridge Suitescelebrates success on its 10th birthdayThe 10th anniversary of Staybridge Suites was a cause for celebration in December.

The first Staybridge Suitesopened in Atlanta, Georgia in 1998 to fulfil the needs of business travellers whospend weeks or months at a time on the road. Tenyears on, it played host to a celebration of the brand’sbirthday.

Staybridge Suites now has 152 hotels open and a globalpipeline of 166. The majority of these are in the US, butwe’ve also had great successin taking the brand to otherregions (see story, page 26).

1. One of the pieces of art on showat InterContinental ChicagoO’Hare, USA

2. Photo by Jill Cleveland,taken at Holiday Inn Express, Roswell, New Mexico, USA

“Guests at our hotel in Roswellthink the breakfasts are

‘out of this world’!”

3. Photo by Joseph Zaffuta,taken at Hotel Indigo Houston at the Galleria, Texas, USAThe Hotel Indigo team are ready to go!

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Charity begins at homeCandlewood Suites has joinedup with the charity Habitat for Humanity International to build homes for low-income families in the US,Latin America and India.

Pledging to build 10 housesto celebrate its 10thanniversary, employees tookon the task of building theirthird house this year. So far,houses have been built inDallas and Detroit, USA and Mexico. Three more arealready under way in India and the team’s seventh houseis planned for Atlanta, USA.

The Americas 21

Green buildings find the right chemistryThe US Department of Energyhas selected IHG to help findsolutions to the growingproblem of climate change.IHG is one of 24 companiesworking with Americanlaboratories on a $15 millionproject to design commercialbuildings that save significantamounts of energy.

The aim is to design,construct and operate a newbuilding that uses 50 per centless energy than a standardstructure within five years.This knowledge will help usreduce the environmentalimpact of developing andoperating our own hotels.

Art at its heartGuests staying at the newInterContinental ChicagoO’Hare have an unusualreason to linger – to enjoy the hotel’s own art gallery,looked after by an in-house curator.

The hotel runs a dailychampagne tour of itspaintings and sculptures,which include commissionedworks by artists ThomasMasters and Jay Ryan androtating art collections.

The 556-room hotel, whichopened in September, alsoboasts a 275-seat live-entertainment venue andthree world-class restaurants.

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The Americas continued

Lavish Broadway revivalgoes with a swingManhattan’s biggestindoor pool, a Butler Floorand even private puttinggreens are all part of an$85 million reinvention ofthe Crowne Plaza in TimesSquare, New York.

The 770-room hotel – the only one with anentrance on Broadway –raised the curtain on itsnew look in December. It boasts 18 rooms withtheir own putting greens,New York’s first ButlerFloor and a 50 ftswimming pool.

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Franchisee opens Latin America’sfirst hotel schoolLatin America has its first hotel school –thanks to the enthusiasm of one of ourlongstanding franchisees.

Herman Bern, president of our Owners’Association in the region, has opened the Panama International Hotel Schoolwithin his latest IHG hotel, the HolidayInn City of Knowledge in Panama City.

Students help to run the 137-room hotel,which opened in April. We’ve provided a sophisticated culinary theatre at thehotel and continue to support it byfunding scholarships and giving ouremployees in the region the opportunityto attend the school as part of our career development programme.

Opening the school has given us acompetitive advantage because we’re the only hotel company with this sort of facility in the region.

Relationship with ownersWe continue to work closely with the IAHI, our Owners’ Association, to provide franchisees with the help they need to improve service quality and drive revenue to their hotels. This is especially important in a tougher market, when working in partnership with our owners gives us a competitive advantage. The IAHI is a key partner in the relaunch of Holiday Inn, and has helped to ensure that the staff-training element of the process is ahead of schedule. In Latin America, the strength of our relationship with The Owners’ Association is illustrated by the way the regional IAHI president has worked with us to open the region’s first hotel school (see story, below).

Set to doubleRocky Mount, North Carolina becamehome to our 200th Candlewood Suiteshotel which opened in October. Thebrand’s global pipeline is set to add atleast another 200 in the next three to four years.

Guests at the hotel can take advantage of the ‘just-like-home’ amenitiesavailable at all Candlewood Suiteshotels, including complimentary high-speed Internet access, free local phonecalls, free on-site guest laundry and a 24-hour fitness centre.

They can also enjoy the free lendinglibrary of movies and music, which canbe played on the DVD and CD playersprovided in every guest room.

The Americas 23more on the web: www.ihg.com

Welcome to the world’s biggesttimeshare resortWe made our debut in the fast-growingworld of timeshare with the launch of a new brand – at the biggest single-sitetimeshare resort in the world.

Holiday Inn Club Vacations opened forbusiness in December with a resortboasting 2,412 villas on 1,400 acres nextto Walt Disney World Resort in Florida.The resort features four championshipgolf courses, seven swimming pools, an 80-acre lake for watersports and a variety of shops and restaurants. A flagship Holiday Inn Resort hotel and up to 2,500 additional timesharevillas are also due to be built there.

The opening is the result of an alliancebetween IHG and The Family of Orange Lake Resorts, owned by theWilson family, founders of Holiday Inn.Almost 56 years after Kemmons Wilson opened the first Holiday Inn in Memphis, Tennessee, his family is once again helping to create amilestone for the brand.

Orange Lake’s other sites in Vermont (60 villas), Wisconsin (68 villas) andFlorida (18 villas) have also joined the Holiday Inn Club Vacations brand, with more sites to follow in 2009.

1. Crowne Plaza Times Square,New York, USA

2. Holiday Inn Club Vacations,Orange Lake Resort,Orlando, Florida, USA

3. Photo by Kenon Beasley, taken at Holiday Inn Express Pensacola Beach, Florida, USAChief Engineer Don gets down to the paperwork.

4. Photo by Nehemiah Guillen, taken at Holiday Inn Hotel & Suites Santa Maria, California, USAEvery morning we start our day with a team meeting to motivate and inspire us todeliver Great Hotels Guests Love.

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Ways to win in WisconsinOwners looking to develop a new-buildCrowne Plaza should head for the stateof Wisconsin, where they will find thefirst prototype of the new Crowne Plazadesign. The hotel demonstrates howCrowne Plaza can be operationallyefficient and cost-effective for owners,how to make best use of its ‘The Place To Meet’ positioning, and how toincorporate design features that areimportant to upscale business travellers.

While converting existing buildings willalways play a role in our developmentstrategy, this prototype provides designideas that owners can replicate whenbuilding new hotels.

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With Hotel Indigo and Staybridge Suites making theirdebuts in the region and InterContinental signed up intwo new countries, it’s been a year of firsts. At the sametime, explains Kirk Kinsell, it’s also been a year of bignumbers as the region’s strong development pipelinekept openings going at a fast pace.

Europe, Middle East and Africa

“We’re a very diverseregion, operating in many differentcultures, languagesand backgrounds. But our owners andemployees all have a common goal toengage with IHG and create GreatHotels Guests Love.”

Kirk KinsellPresident, Europe,Middle East and Africa

Performance highlights


up 3.6%• Continuing revenue

up 5.3%to $518m


up 27.6%to $171m


Market performanceMiddle East: The Middle East is a fast-growing market where our brandsenjoy a high level of awareness and we have landmark hotels. Ourdevelopment strategy has been led by InterContinental and Holiday Inn,with continued growth in Crowne Plaza. We led the field in signings, with20 in total this year and we opened the region’s first Staybridge Suites in Cairo, Egypt.

UK: The UK put in a solid performance across all our brands. We had a particularly great year for Crowne Plaza. We carried out a marketingcampaign in Heathrow’s new Terminal 5, opened a Crowne Plaza inManchester with a cutting-edge design and converted a Marriott Hotel at Liverpool Airport. We also opened a Staybridge Suites and a Hotel Indigo in the UK during the year (see stories, pages 26 and 27).

Germany: Market research continues to show great opportunities inGermany for branded hotels, particularly for value-conscious customers,so we’re stepping up our investment there. We opened five Holiday Inn and Holiday Inn Express hotels during the year and intend to grow thesebrands in the future while looking for opportunities to introduce StaybridgeSuites and Hotel Indigo.

Russia: We now have seven hotels open in Russia. Over the year we’vesigned five deals and opened another Holiday Inn. One key benefit of ourmarket-leading position is that when Russians travel outside the countrythey often seek the reassurance of the brands they trust from home. The same is true of Middle Eastern travellers and we believe we’ll also

see that trend in the German outbound market.

Opened and on the way

In 2008 we welcomed the first Staybridge Suites and Hotel Indigo to the UK

(see stories, pages 26 and 27).

In the Middle East we now have two hotels in the Dubai Festival City complex. The InterContinental andCrowne Plaza were built and opened within three yearsand are both performing well. The InterContinentalResidence Suites, which has also been built on the same site, will open in 2009.

Then, of course, there’s the Holiday Inn relaunch, which is progressing at pace. At the end of 2008 we

had 42 hotels in the region show casing the relaunchedbrand and many more are under way. The early results are very positive.


Flagship on fine formThe InterContinental LondonPark Lane is beating thecompetition in its first fullyear of trading since thecompletion of a £70 millionrefurbishment. The faceliftwas timely, as a number of other five-star hotels in London are now closed and undergoing the sameprocess.

Theo Randall, chef at thehotel’s signature restaurant,has also received criticalacclaim from the press and the country’s top restaurantcritics. He won the ItalianRestaurant of the Year at theLondon Restaurant Awards,beating the extensive culinarycompetition the city offers.

Europe, Middle East and Africa 25

1. Photo by Iñaki Armada, taken at Holiday Inn Express Getafe,Madrid, SpainEveryone enjoys staying at Holiday Inn Express!

2. Award-winning chef, Theo Randall, at theInterContinental London Park Lane, UK

3. Crowne Plaza andInterContinental, Festival City Complex, Dubai

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Double debut forInterContinental in the Middle EastSyria and Morocco are due to gain their firstInterContinental hotels. The392-room InterContinentalDamascus in the centre of the Syrian capital will form part of the city’s onlyintegrated development,which will include a shoppingmall, cinema complex andoffice space. The hotel is duefor completion in 2010. Thefirst IHG property in Morocco will be the InterContinentalMarrakech Resort & Spa,scheduled to open in 2011.With 297 rooms and suitesand a large spa, guestshave a great chance tounwind after a day in thisbustling city.

more on the web: www.ihg.comW

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Europe, Middle East and Africa continued

All go in Saudi ArabiaWe’ve opened our 21sthotel in the Kingdom of Saudi Arabia with 12more Holiday Inn Expresshotels coming soon.

The 120-bedroomInterContinental Al Khobar, situated a few minutes from thecorniche in the heart of the city, opened inMarch. The 12 Holiday InnExpress hotels are due to open within the next five years after we signedan exclusive franchisedevelopment agreementwith Siraj Capital Ltd.

This reinforces ourcommitment to theKingdom as a vitallyimportant destination for domestic andinternational travellers.

Relationship with ownersWe work directly with all our owners, whether they have one hotel or many,and enjoy strong working relationships. Working closely with the IAHI, ourOwners’ Association, continues to be a focus for us, particularly around therelaunch of Holiday Inn. We’ve also been working closely with them to dealwith the tough trading conditions that face us in 2009.

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Staybridge comes to stay in Liverpool and CairoStaybridge Suites has made its debut outside the US, with the opening of hotels in Liverpool, UK and Cairo, Egypt. TheLiverpool hotel soon took the city’s number one position forhotels on the TripAdvisor Popularity Index. The Cairo property is within the innovative CityStars retail complex, in which thereare two other IHG hotels.

The Staybridge Suites brand is aimed at guests who usuallystay for more than five nights and incorporates homely touches such as a fireplace and communal kitchen.

At the opening Andy Cosslett said: “There’s a growing type of traveller who is away from home for many days or even weeks at a time and would prefer their hotel to feel more like home. It’s this gap between conventional hotels and serviced apartments that Staybridge Suites has beendesigned to bridge.”

Staybridge Suites celebrated its 10th anniversary in Decemberwith 152 hotels open worldwide and a pipeline of 166 hotels.Agreements have been signed to open Staybridge Suites in two locations in Russia, a 176-room hotel in St Petersburgand a 78-bedroom hotel in Nizhny Novgorod, Russia’s third-largest city.

Europe, Middle East and Africa 27more on the web: www.ihg.com

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UK turns Indigo The first Hotel Indigo outside the Americashas opened in Paddington, London. The 64-bedroom hotel, which launched in December, incorporates architecturalinfluences from nearby Paddington railway station, including murals of ornate metalwork.

This individuality of design is thanks to the ‘Interpret Indigo’ concept, which allowsdevelopers to adapt the hotel design toreflect the character of its location whilemaintaining the brand’s identity.

Hotel Indigo has enjoyed great successsince it made its debut in the US in 2004,with 56 hotels now in the pipeline for thisfast-growing brand. The hotels appeal to guests who seek more from theirexperiences – for instance, travellers who like to add leisure time to a businesstrip and guests who want to staysomewhere distinctive.

1. Opening ceremony, Staybridge Suites Cairo, Egypt

2. Photo by Marco Piastra,taken at Holiday Inn Express Malaga Airport, SpainThe team prides itself onblending the new brandhallmarks with a little local flavour.

3. InterContinental Al Khobar, Saudi Arabia

4. The world’s largest hangingbasket which marked the launch of Hotel Indigo London Paddington, UK

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Waste slimmed at head officeOur new global headquarters inDenham, Buckinghamshire, UK is a real-life example of sustainablebuilding design. More than 90 per cent of waste generated duringconstruction was reused or recycled,saving almost 400 tonnes of debris from going to landfill. The building,which we moved into in August, alsofeatures energy-efficient lighting and low-flow plumbing.

During 2009, we will be opening a prototype of a ‘green hotel room’ in our marketing suite to act as a learning centre for our owners and general managers.

With Hotel Indigo due to make its debut and our otherbrands growing fast, we’ve continued to develop quicklyacross the region, reports Peter Gowers.

Asia Pacific

“We’ve achieved rapidgrowth in GreaterChina in recent yearsand we’re leading thecompetition in thisimportant market.Three years ago we had around 50 hotels and now we’ve reached the milestone ofhaving over 100, with more than 120 in the pipeline.”

Peter GowersPresident, Asia Pacific

Performance highlights


up 1.6%• Continuing revenue

up 11.5%to $290m


up 7.9%to $68m


Market performanceGreater China: We continue to grow well in Greater China, with more than100 hotels now open and over 120 more in the pipeline (see story, page 30). This makes us the largest international hotel operator in the country bynumber of rooms. We now have more rooms here than in the UK. TheChinese tourism market continues to grow rapidly, with the country due to become one of the world’s biggest tourist destination within 10 years.We’re ideally positioned to benefit from this.

Japan: IHG ANA Hotels Group Japan, our joint venture with Japaneseairline ANA, is developing well. By the end of 2008, we had nine co-branded ANA Crowne Plaza hotels including our first new signing, the ANA Crowne Plaza Niigata. We continue on our journey to rebrand all the former ANA hotels to ANA Crowne Plaza, ANA InterContinental and ANA Holiday Inn.

India: We have 13 hotels in India and there are still rich opportunities to expand here. India already has quite a number of luxury hotels and the next wave of development will be hotels that offer a full service at affordable prices for domestic consumers. So we’re launching Holiday Inn hotels across key metropolitan areas. We signed several multi-hotel deals in 2008 and are well positioned to grow in this market over the coming years.

Opened and on the wayIn May we opened a 320-room Crowne Plaza at Singapore’s Changi Airport,the first international upscale hotel with direct access to Terminal 3.

We piloted new-look Holiday Inn hotels in six locations across Asia Pacific,including Shanghai, Bangkok and Sydney. Feedback has been very positive

and the relaunch continues to roll out to all 125 Holiday Inn andHoliday Inn Express hotels in the region. One of the new-style

hotels is the Holiday Inn Express Minzuyuan, in the Olympicprecinct in Beijing, which opened in time for the 2008 Olympic Games.

The Greater China pipeline includes six with Shimao Group, a real estate developer that plans to open them under three

IHG brands across four Chinese cities by 2013. These sixhotels alone will add 2,100 rooms to our system in China.

South Korea will see almost 1,000 more InterContinentaland Holiday Inn rooms and suites, thanks to a dealsigned in August to manage three properties, all due to open by the end of 2010.

Across Asia Pacific we now have 199 hotels in our development pipeline, so the main focus for the next few years isto get those open and trading successfully. This includes Asia Pacific’s first Hotel Indigo and the firstHoliday Inn in Vietnam (see stories, pages 30 and 31).


Asia Pacific 29

Chinese honours provebiggest is also bestWe’ve scooped severalawards in China, includingones for best hotel companyand best employer.

We walked away with threehonours at the China HotelStarlight Awards, known as the ‘Oscars’ of China’shospitality industry. IHG wasnamed Best InternationalHotel Company, Priority ClubRewards was named BestHotel Loyalty Programme in China and Edmond Ip, ChiefAdvisor for Asia Pacific, waspresented with a LifetimeAchievement Award.

In addition, the China HotelAnnual Forum named IHG as Best Employer in China’sHotel Industry.

1. Photo by Akash Saigal, taken at Crowne Plaza, Gurgaon, IndiaIt’s the little things that make a big difference. Guests loveseeing their name written in theircappuccino froth. Winner of our2008 Great Hotels Guests Lovephotography competition.

2. Holiday Inn Express Taichung Park, Taiwan

3. Crowne Plaza Changi Airport,Singapore

It’s a winner Holiday Inn has been named Best Mid-MarketHotel Brand in the World and Best Mid-Market Hotel Brand in Asia Pacific for the eighth year in a row.

The accolades, in theBusiness Traveller AsiaPacific Awards, reflect theviews of frequent businesstravellers who take part in an annual survey of travel-related services.

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Two’s company in TaiwanOnly a year ago there were no Holiday Inn Express hotelsin Taiwan – and now there are two. The brand made its debut in September withthe 138-room Holiday Inn Express at Taoyuan, near the international airport.Then, one month later, it was joined by the 169-roomHoliday Inn Express TaichungPark, in the island’s thirdlargest city. Each of them is the first internationalbranded hotel in its area.

Ozone cleans up in laundry testHotels across Asia Pacific are installing a new laundrysystem that uses ozone, anatural cleaning agent, aftertests produced amazingresults. The Crowne PlazaCoogee Beach in Australiafound ozone was great in acold wash and enabled hugesavings in gas (70 per cent),electricity (55 per cent), water (21 per cent), andlabour (17 per cent).

more on the web: www.ihg.com

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Asia Pacific continued

Indigo set to fly in ShanghaiAsia Pacific is to open itsfirst Hotel Indigo in one of the most prestigiouslocations in Shanghai,People’s Republic of China.The 180-room Hotel IndigoShanghai on the Bund will be on a riverfront sitealong the Huangpu River,with fantastic views ofseveral historic sites. It’sdue to open in time for the Shanghai World Expoin 2010.Hotel Indigo is expandingrapidly across the globe,with 22 hotels now openand 56 in the pipeline. Hitting 100!

Back in 1984, we were the firstinternational hotel group to enter Chinawhen we opened a Holiday Inn in Beijing.In September we celebrated the openingof our 100th hotel, the Crowne PlazaBeijing Zhongguancun, in the heart of China’s silicon valley.

Our growth philosophy is summed up by the Chinese saying ‘Qian Li Zhi XingShi Yu Zu Xia’, which means ‘In order to achieve long-term success we have to start with a strong foundation’. Our 24-year history, and great team, is thatstrong foundation. Here’s to many moreyears, and many more hotels, in China!

Relationship with ownersWe continue to extend our relationships with owners across the region.This success was reflected by 100 owners who joined us for our biggestever leadership conference, held in Shenzhen, People’s Republic of China, in November. Owners and general managers came together to hear updates and our plans for 2009. We were delighted to be joined bySpence Wilson, the son of Holiday Inn founder Kemmons Wilson, whospoke to the audience about the importance of the Holiday Inn relaunch.

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1. Crowne Plaza Zhongguancun, Beijing, People’s Republic ofChina – our 100th hotel in China

2. Photo by Andrew Guo, taken at Crowne Plaza City Centre, Ningbo, People’s Republic of ChinaOur chef makes la mian (noodles) by hand.

3. Our courageous Tess He,InterContinental Century CityChengdu, People’s Republic of China

Asia Pacific 31more on the web: www.ihg.com

Courageous Tess to the rescueMany of our people displayed greatcourage when a massive earthquake hit the Sichuan Province of China in May.

One was Tess He, a housekeeper at theInterContinental Century City Chengdu.When the property was evacuated as a precaution against aftershocks anelderly man and woman were unable to leave – so Tess went up to their roomand carried the lady out of the hotel on her back.

No IHG property in the region sufferedsignificant damage from the earthquake,which measured 7.9 on the Richter scale. But it affected the families of many employees, so IHG carried out a fundraising effort that generated more than one million Chinese Yuan (about $150,000). The money raised was used to help the families withaccommodation or equipment for their homes and to support the Chinese Red Cross.

InterContinental aims highOne of the region’s tallest buildings is to have an InterContinental hotel on its upper floors. The InterContinentalHanoi Landmark, due to open in 2011,will offer incredible views from a 70-storey, 336-metre tower to be built in the Vietnamese capital. The hotel will have 383 rooms and suites and 300serviced residences. The hotel’s atriumlobby, restaurants and bars will be onthe 60th floor of the Keangnam HanoiLandmark Tower. Private lifts will lead to guest rooms and suites and on to theworld’s highest Club InterContinentallounge on the top floor.

Vietnam has great growth potential for us. Hanoi is expected to attract two million international travellers and seven million domestic visitors by2010. We have a development pipeline of nine hotels across four cities –Hanoi, Ho Chi Minh City, Danang and Nha Trang.

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Holiday Inn thinks big in VietnamWe’re set to open our first Holiday Inn hotels inVietnam, with the signing ofthe Holiday Inn Hanoi DongDa and Holiday Inn Hoi Ann.Holiday Inn Hanoi Dong Dawill be part of the MBLandTower, a mixed-developmentcomplex with an upmarketretail and commercial centre. The hotel will be in the highest and mostrecognisable building of the complex and will offermore than 300 rooms when it opens in 2012.

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Beijing

Shanghai

Hong Kong

Sichuan

“In 2008 we exceeded by over 35% ourthree-yeartarget to add 50,000-60,000 netrooms. Continuingoperating profit*increased by 13% to $535m,despite the sharp economicdownturn in thefourth quarter, and our RevPARoutperformed theindustry in each of our key markets and segmentsaround the world.”

Richard Solomons Finance Director


This Summary Financial Statement provides a commentaryon the performance of the Group for the financial year ended31 December 2008.

GROUP AND REGIONAL TRADINGRevenue from continuing operations increased by 4.7% to $1,854m and continuingoperating profit* increased by 12.9% to $535m during the 12 months ended 31 December 2008.

The growth in revenues was driven by RevPAR gains in EMEA and Asia Pacific,continued expansion in China and the Middle East and the first full year of trading atthe re-opened InterContinental London Park Lane. Growth was achieved in all regionsin the first three quarters of the year. However, the worldwide financial crisis had asignificant impact on the results for the final quarter. In the fourth quarter, RevPARdeclined sharply across the Group falling by 6.5% globally, although IHG’s brandscontinued to outperform their segments in all key markets.

Included in these results is $33m of liquidated damages. Excluding these, revenue andoperating profit* from continuing operations increased by 2.8% and 5.9% respectively.

During 2008, the IHG global system increased by 237 hotels (34,757 rooms; 5.9%) to 4,186 hotels (619,851 rooms). Openings of 430 hotels (59,353 rooms) reflected, in particular, continued expansion in the US, the UK, the Middle East and China.

At the end of 2008, the IHG pipeline totalled 1,775 hotels (245,085 rooms). In the year,room signings of 98,886 rooms led to pipeline growth of 19,213 rooms. While signingswere below the record level of 2007, the level of signings and pipeline growthdemonstrates strong demand for IHG brands across all regions and represents a key driver of future profitability.

In the Americas, revenue and operating profit* from continuing operations increased by 2.0% to $920m and 2.5% to $451m respectively. As a result of sharp falls inoccupancy, RevPAR declined across all ownership types in the fourth quarter. In the full year, the region achieved RevPAR growth across the owned and managed estates.However, RevPAR declined marginally across the franchised portfolio. In the US, forcomparable hotels, all brands achieved premiums in RevPAR growth relative to theirapplicable market segment.

Continuing owned and leased revenue remained flat on 2007 at $257m but operatingprofit increased by 2.5% to $41m, driven by RevPAR growth of 0.8%, and a strong

performance from the InterContinental Mark Hopkins, San Francisco.

The managed results benefited from the receipt of $13m in liquidated damages.Excluding this, revenue decreased by 0.6% to $155m and operating profit fell by $3m to $38m. Growth remained strong in the Latin America region, where

rate-led RevPAR growth exceeded 15%. Offsetting this was a fall in revenuesfrom hotels in the US, driven by RevPAR declines in the fourth quarter.

The franchised results in the Americas benefited from increasedroyalty fees as a result of net room count growth of 4.6%. However,fees associated with signings and conversions declined as a result of lower real estate activity, due to the adverse impact of the globalfinancial crisis, and lower liquidated damages collected on hotelsexiting the system.

In EMEA, revenue and operating profit* from continuing operationsincreased by 5.3% to $518m and 27.6% to $171m respectively. Duringthe year, the region achieved RevPAR growth of 3.6% driven by gainsacross all brands operated under managed and franchise contracts.

In the owned and leased estate, continuing revenue decreased by 1.6% to $240m. However, strong revenue conversion at theInterContinental London Park Lane contributed to the continuing operating profit increase of $12m to $45m.

EMEA managed revenue increased by 0.6% to $168m and operatingprofit increased by 9.2% to $95m, driven by the receipt of $9m inliquidated damages. Strong growth in the Middle East continued throughthe addition of new rooms and strong RevPAR growth of 20.2%.

Summary financial statement

This Summary FinancialStatement was approved by the Board on 16 February2009 and signed on its behalf by Richard Solomons.It does not contain sufficientinformation to provide ascomplete an understanding of the Group’s results andstate of affairs as thatprovided in the Annual Reportand Financial Statements2008. That report may beobtained, free of charge, by writing to IHG or theCompany’s Registrar, Equiniti (contact details are provided on page 45).

The auditors have issued an unqualified report on the financial statementscontaining no statementunder Section 237(2) or 237(3)of the Companies Act 1985.

Information concerningDirectors’ emoluments is shown on pages 40 to 43.


Summary financial statement 33

Franchised revenue and operating profit increased by 35.8% to $110m and29.3% to $75m respectively, driven by room count expansion and RevPARgrowth in Continental Europe and the receipt of $7m of liquidated damages.

In Asia Pacific, revenue and operating profit* increased by 11.5% to $290m and7.9% to $68m respectively. The region achieved strong RevPAR growth acrossall brands and continued its strategic expansion in China.

In the owned and leased estate, revenue and operating profit increased by 9.7%to $159m and 19.4% to $43m respectively, as RevPAR growth continued at theInterContinental Hong Kong despite a slowdown during the fourth quarter.

Managed revenue increased by 14.1% to $113m as a result of increased roomcount in Greater China, comparable RevPAR growth of 10.7% in Beijing boostedby the Olympics, RevPAR growth of 9.9% in South East Asia and thecontribution from the joint venture with All Nippon Airways (ANA). Operatingprofit increased by 19.6% to $55m as revenue gains were partially offset bycontinued infrastructure investment in China and Southern Asia.

Franchised revenues increased from $16m to $18m driven by the receipt of$4m of liquidated damages. Excluding this receipt, operating profit declined by $2m, primarily as a result of reduced fee income in India due to the removalof non-brand compliant hotels.

After a further $5m of the previously announced $10m investment to supportthe launch of the ANA Crowne Plaza brand in Japan and the non-recurrence of a $2m favourable legal settlement in 2007, Asia Pacific regional overheadsincreased by $6m to $38m to support the rapid growth in the region.

During 2008, net central costs reduced by 4.9% from $163m to $155m, as aresult of the receipt of a favourable $3m insurance settlement and the impactof weaker sterling.

EXCEPTIONAL OPERATING ITEMS, INTEREST AND TAXATION

Exceptional operating costs of $132m consisted of $35m in relation to theHoliday Inn relaunch, $19m of cost savings-related severance costs, $96m of non-cash asset impairment reflecting the poorer trading environmentexpected in 2009 and other items including gains on asset sales, which nettedto an $18m credit.

Net financial expenses increased from $90m in 2007 to $101m in 2008. Average net debt levels in 2008 were higher than 2007, primarily as a result of the payment of the special dividend of £709m in June 2007. Net debt levelsremained stable in the first half of 2008, reducing slightly in the second half of the year.

The effective rate of tax on the combined operating profit* from continuing and discontinued operations was 23% (2007 22%).

EARNINGS PER SHARE, DIVIDENDS, TREASURY

Basic earnings per share in 2008 was 91.3¢, compared with 144.7¢ in 2007.Adjusted earnings per share was 120.9¢, against 97.2¢ in 2007. Adjustedcontinuing earnings per share was 117.8¢, 25.6% up on last year.

The Board has proposed a final dividend per share of 29.2¢ (20.2p). With theinterim dividend per share of 12.2¢ (6.4p), the full-year dividend per share for 2008 will total 41.4¢ (26.6p).

In response to the challenging economic environment the Group increased its focus on cash management during 2008. In the year, $641m of cash wasgenerated from operating activities, an increase of $176m on 2007. Overall, net debt decreased by $386m to $1,273m.

RETURN OF FUNDS

During the year, IHG returned $139m to shareholders through share buybacks,taking the total returned since March 2004 to more than £3.5bn. As part of thefocus on cash management the remaining £30m of IHG’s fourth £150m sharebuyback programme has been deferred.

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Independent auditors’ statement to the members ofInterContinental Hotels Group PLC

We have examined the Group’s SummaryFinancial Statement for the year ended 31 December 2008 which comprises theGroup income statement, Group cash flowstatement and Group balance sheet. Thisreport is made solely to the Company’smembers, as a body, in accordance withSection 251 of the Companies Act 1985. To the fullest extent required by the law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for theopinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Directors are responsible for preparing the Annual Review and SummaryFinancial Statement, in accordance withapplicable law. Our responsibility is to report to you our opinion on the consistencyof the Summary Financial Statement within the Annual Review and Summary Financial Statement with the full financialstatements, Directors’ Report and Directors’Remuneration Report, and its compliancewith the relevant requirements of Section251 of the Companies Act 1985 and theregulations made thereunder. We also read the other information contained in the Annual Review and Summary FinancialStatement and consider the implications for our report if we become aware of anyapparent misstatements or materialinconsistencies with the Summary Financial Statement.

BASIS OF AUDIT OPINION

We conducted our examination inaccordance with Bulletin 1999/6 ‘TheAuditors’ Statement on the SummaryFinancial Statement’ issued by the Auditing Practices Board. Our report on the Company’s full annual financialstatements describes the basis of our audit opinion on those financialstatements and the Directors’Remuneration Report.

OPINION

In our opinion the Summary FinancialStatement is consistent with the fullfinancial statements, Directors’ Report and Directors’ Remuneration Report of InterContinental Hotels Group PLC for the year ended 31 December 2008 and complies with the applicablerequirements of Section 251 of theCompanies Act 1985, and regulations made thereunder.

Ernst & Young LLP Registered AuditorLondon, 16 February 2009.



Group income statement2008 2007

Before Beforeexceptional Exceptional exceptional Exceptional

items items Total items items TotalFor the year ended 31 December 2008 $m $m $m $m $m $m

RevenueAmericas 920 – 920 902 – 902EMEA 518 – 518 492 – 492Asia Pacific 290 – 290 260 – 260Central 126 – 126 117 – 117Continuing operations 1,854 – 1,854 1,771 – 1,771Discontinued operations 43 – 43 79 – 79

1,897 – 1,897 1,850 – 1,850

Operating profitAmericas 451 (99) 352 440 17 457EMEA 171 (21) 150 134 21 155Asia Pacific 68 (2) 66 63 17 80Central (155) (10) (165) (163) 5 (158)Operating profit – continuing operations 535 (132) 403 474 60 534Net financial expenses (101) – (101) (90) – (90)Profit before tax – continuing operations 434 (132) 302 384 60 444Tax (96) 42 (54) (84) 60 (24)Profit after tax – continuing operations 338 (90) 248 300 120 420Profit for the year from discontinued operations 9 5 14 11 32 43Profit for the year attributable to equity holders of the parent 347 (85) 262 311 152 463

Earnings per ordinary share (cents)Basic – continuing operations 86.4 131.3Adjusted – continuing operations 117.8 93.8Basic – total operations 91.3 144.7Adjusted – total operations 120.9 97.2

Dividend per share (cents)Final – paid in respect of prior year 29.2 25.9Interim paid 12.2 11.5Special interim paid – 400.0Final – proposed 29.2 29.2

Summary financial statement continued

Summary financial statement 35

Group cash flow statement2008 2007

For the year ended 31 December 2008 $m $m

Cash flow from operations 740 605Net interest paid (100) (66)Tax received/(paid) on operating activities 1 (74)Net cash from operating activities 641 465Capital expenditure (108) (186)Proceeds from disposal of operations, associates and other financial assets 86 211Tax paid on disposals (3) (64)Dividends paid (118) (1,524)Purchase of own shares (139) (162)(Decrease)/increase in borrowings (316) 1,108Other financing movements (18) (85)Net movement in cash and cash equivalents in the year 25 (237)Cash and cash equivalents at beginning of the year 105 351Exchange rate effects (48) (9)Cash and cash equivalents at end of the year 82 105

Group balance sheet2008 2007*

31 December 2008 $m $m

ASSETSProperty, plant and equipment 1,684 1,934Goodwill 143 221Intangible assets 302 335Investment in associates 43 65Retirement benefit assets 40 49Other financial assets 152 188Total non-current assets 2,364 2,792Inventories 4 6Trade and other receivables 412 472Current tax receivable 36 109Cash and cash equivalents 82 105Other financial assets 10 18Total current assets 544 710Non-current assets classified as held for sale 210 115Total assets 3,118 3,617

LIABILITIESLoans and other borrowings (21) (16)Trade and other payables (746) (784)Current tax payable (374) (426)Total current liabilities (1,141) (1,226)Loans and other borrowings (1,334) (1,748)Retirement benefit obligations (129) (112)Trade and other payables (392) (279)Deferred tax payable (117) (148)Total non-current liabilities (1,972) (2,287)Liabilities classified as held for sale (4) (6)Total liabilities (3,117) (3,519)Net assets 1 98

IHG shareholders’ equity (6) 92Minority equity interest 7 6Total equity 1 98

* Restated for a $17m reclassification between retirement benefit assets and deferred tax payable.

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Our senior leadership team

Seated: Tom Conophy Jonathan Linen David Webster

Standing: Tracy Robbins Kirk Kinsell George Turner Peter Gowers Jennifer Laing

* A Non-Executive Director and a member of the Nomination Committee

# An independent Non-Executive Director and a member of the Audit, Remuneration and Nomination Committees

• An independent Non-Executive Director and a member of the Audit and NominationCommittees

† An independent Non-Executive Director and a member of the Remuneration and Nomination Committees

‡ A member of the Executive Committee § Not a main Board Director

Non-ExecutivesDavid Webster Non-Executive Chairman* Appointed a Director in April 2003. AppointedNon-Executive Chairman in January 2004.Also Non-Executive Chairman of MakinsonCowell Limited and a Director of Temple BarInvestment Trust PLC. Formerly Chairmanof Safeway plc. Chairman of the NominationCommittee. Age 64.

David Kappler Senior Independent Non-Executive Director#

Appointed a Director and Senior IndependentDirector in June 2004. Non-ExecutiveChairman of Premier Foods plc and a Non-Executive Director of Shire plc.Formerly Chief Financial Officer of Cadbury Schweppes plc. Chairman of the Audit Committee. Age 61.

Ralph Kugler Non-Executive Director#

Appointed a Director in April 2003. WasPresident, Unilever Home and PersonalCare, and a Director of Unilever PLC andUnilever N.V. until May 2008. Chairman of the Remuneration Committee. Age 52.

Jennifer Laing Non-Executive Director•

Appointed a Director in August 2005. Hasover 30 years’ experience in advertising andwas, until 2007, Associate Dean, ExternalRelations at London Business School. Also serves as a Non-Executive Director of Hudson Highland Group Inc. Age 61.

Jonathan Linen Non-Executive Director†

Appointed a Director in December 2005. Was formerly Vice Chairman of the American Express Company. Serves as aNon-Executive Director of Yum! Brands, Inc.and of Modern Bank, N.A., and on a number of US Councils and advisory boards. Age 65.

Ying Yeh Non-Executive Director†

Appointed a Director in December 2007. Is Chairman and President, North AsiaRegion, President, Business Development,Asia Pacific Region and Vice President,Eastman Kodak Company. Also a Non-Executive Director of AB Volvo. Age 60.

Our senior leadership team 37

Andrew Cosslett Ying Yeh

David Kappler Richard Solomons Tom Seddon Ralph Kugler Jim Abrahamson

Peter Gowers President, Asia Pacific‡§

Joined the Group in 1999. AppointedPresident, Asia Pacific in 2007, withresponsibility for the business developmentand performance of all the hotel brands andproperties in the Asia Pacific region. Age 36.

Kirk Kinsell President, EMEA‡§

Joined the Group in 2002. AppointedPresident, EMEA in 2007. Responsible for the business development andperformance of all the hotel brands andproperties in the EMEA region. Age 54.

Tracy Robbins Executive Vice President, Global Human Resources‡§

Joined the Group in December 2005 from Compass Group PLC. Responsible forglobal talent management and leadershipdevelopment, reward strategy andimplementation. Age 45.

Tom Seddon Executive Vice President and Chief Marketing Officer‡§

Having served in senior positions with IHG’s predecessor companies until 2004,rejoined the Group in 2007 from SUBWAY®.Responsible for worldwide brandmanagement, global sales, marketing, loyalty programmes and corporateresponsibility. Age 40.

Richard Solomons Finance Director‡

Finance Director since April 2003.Responsible for corporate and regionalfinance, Group financial control, strategy,investor relations, tax, treasury and internal audit. Age 47.

George Turner Executive Vice President,General Counsel and Company Secretary‡§

Joined the Group in September 2008 from Imperial Chemical Industries PLC.Appointed EVP, General Counsel andCompany Secretary in January 2009.Responsible for corporate governance, risk management, insurance, data privacy,company secretariat and legal. Age 38.

ExecutivesAndrew Cosslett Chief Executive‡

Appointed Chief Executive in February 2005.Joined the Group from Cadbury Schweppes plcwhere he was most recently President, Europe,Middle East & Africa. Serves on the ExecutiveCommittee of The World Travel & TourismCouncil and the President’s Committee of the CBI. Age 53.

Jim Abrahamson President, The Americas‡§

Joined the Group in January 2009 from Global Hyatt Corporation. Responsible for the business development and performanceof all the hotel brands and properties in theAmericas region. Age 53.

Tom Conophy Executive Vice President and Chief Information Officer‡§

Joined the Group in February 2006 fromStarwood Hotels & Resorts International.Responsible for global technology, including IT systems and information managementthroughout the Group. Age 48.

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Activities of the GroupThe principal activities of the Group are in hotels and resorts, with franchising, management, ownership and leasing interests in almost 4,200 establishments, with nearly 620,000 guest rooms in nearly 100 countries and territories around the world.

A review of the performance of the Group is contained in theChairman’s statement and the Chief Executive’s review on pages 3 to 5, the business reviews presented on pages 20 to 31 and in the Summary Financial Statement on pages 32 to 35.

Significant growth during the yearDuring 2008, the Group increased its development pipeline to 1,775 hotels (245,085 rooms), up by 6% and 8.5% respectivelycompared with 2007.

Results and dividendsThe profit on ordinary activities before taxation was $316m. Aninterim dividend of 6.4p per share was paid on 3 October 2008. The Directors are recommending a final dividend of 20.2p per shareto be paid on 5 June 2009 to shareholders on the Register at closeof business on 27 March 2009.

Share repurchasesDuring the year, 9,219,325 ordinary shares were purchased andcancelled at a cost of £69,995,626 (excluding transaction costs)under IHG’s planned share repurchase programme. As at the dateof this report, £30m of the Company’s £150m share repurchaseprogramme has yet to be completed. The programme is currentlydeferred in order to preserve cash and maintain the strength ofIHG’s balance sheet.

The share buyback authority remains in force until the AnnualGeneral Meeting in 2009, and a resolution to renew the authoritywill be put to shareholders at that Meeting.

Share capitalAt 31 December 2008, the Company’s issued share capitalconsisted of 285,552,193 ordinary shares of 13 29⁄47p each. There are no special control rights or restrictions on transferattaching to these ordinary shares.

During the year, no awards or grants over shares were made that would be dilutive of the Company’s ordinary share capital.

Substantial shareholdings As at 16 February 2009, the Company had been notified byshareholders of the following substantial interests, representing3% or more of its ordinary share capital:

Ellerman Corporation Limited 10%

Morgan Stanley Investment Management Limited 5.60%

Cedar Rock Capital Limited 5.07%

Legal & General Group Plc 4.09%

Lloyds TSB Group plc* 3.84%

DirectorsDetails of current Board members are shown on pages 36 and 37.Jennifer Laing, Jonathan Linen, and Richard Solomons arestanding for re-election at the Annual General Meeting on 29 May 2009. The Executive Directors have service contracts. The Non-Executive Directors have letters of appointment.

The Board may exercise all the powers of the Company. The Groupmaintains insurance cover for and has provided indemnities to itsDirectors and officers, as permitted by the Companies Act 2006.

EmployeesIHG directly employed an average of 8,334 people worldwide during2008, whose costs are borne by the Group. When the whole IHGestate is taken into account, approximately 330,000 people areemployed globally across IHG’s brands. The Group is committed toproviding staff with equality of opportunity, without discrimination.Great emphasis is placed on employee communications, particularlyon matters relating to the Group’s business and its performance.

DonationsDuring the year, the Group donated $1,394,400 in support ofcommunity initiatives and charitable causes, including donations in kind. No payments were made for political purposes.

Going concernThe wider economic environment currently creates tradinguncertainty for the hotel industry and IHG. However, at the end of 2008, the Group was trading significantly within its bankingcovenants and debt facilities. IHG’s fee-based model and widegeographic spread also mean that it is well placed to managethrough the current economic downturn.

The financial statements for the year ended 31 December 2008have therefore been prepared on a going concern basis.

AuditorsThe Directors confirm that they have taken steps to makethemselves aware of relevant audit information. None of theDirectors is aware of any relevant audit information which has not been disclosed to the auditors.

The reappointment of Ernst & Young LLP as auditors of theCompany will be put to members at the Annual General Meeting.

Annual General MeetingThe Notice of the Annual General Meeting to be held at 11.00am on Friday, 29 May 2009 is contained in a circular which is sent to shareholders with this Review.

Summary Directors’ report

* Now called Lloyds Banking Group plc.

Summary Directors’ report and Corporate governance 39

Combined Code complianceThe Board is committed to compliance with the principles set out in the Combined Code on Corporate Governance and considers thatthe Company has complied with Code requirements throughout the year ended 31 December 2008.

Internal controlThe Board is responsible for the Group’s system of internal controland risk management and for reviewing its effectiveness. In orderto discharge that responsibility, the Board has established theprocedures necessary to apply the Code, including clear operatingprocedures, lines of responsibility and delegated authority.

For the year ended 31 December 2008, the Board has conducted a review of the effectiveness of the system of internal control. The system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and it can only provide reasonable and not absolute assurance against materialmisstatement or loss. Whilst areas for improvement in internalcontrol have been identified and actions initiated, no significantshortcomings in internal control have been identified from theannual assessment.

Board and CommitteesThe Board is responsible to the shareholders for the strategicdirection, development, performance and control of the Group. It also ensures that the necessary financial and human resourcesare in place for the Group to meet its objectives. There are eightregular Board meetings a year and further meetings as needed.

David Webster was Non-Executive Chairman throughout the year.In addition, a team of five experienced independent Non-ExecutiveDirectors represent a strong source of advice and judgement. Therole of David Kappler, the Senior Independent Director, includesbeing available to liaise with shareholders who have issues to raise.Induction programmes are prepared for new Directors and ongoingtraining needs for all Directors are kept under review.

In addition to the Executive Committee, the following mainCommittees of the Board have been established: Audit Committee,Remuneration Committee and Nomination Committee. The Audit,Remuneration and Nomination Committees consist wholly of Non-Executive Directors. The Chairman of the Company is amember of the Nomination Committee only. The terms of referenceof these Committees were reviewed during 2008 to ensure that they continue to reflect best practice, and are available on theCompany’s website+ or from the Company Secretary’s office on request.

A new Corporate Responsibility Committee of the Board wasestablished in February 2009.

+ Visit www.ihg.com/investors

A performance evaluation of the Board and of individual Directorswas undertaken for 2008. This concluded that the Board as a wholeoperates in an effective manner, and that each Director continuesto make an effective contribution, and retains a strong commitmentto the role. The work of each main Committee was also consideredto be effective.

Company SecretaryAll Directors have access to the advice and services of theCompany Secretary. His duties include responsibility for advisingthe Board on corporate governance, and for ensuring goodinformation flows to the Board and its Committees and betweensenior management and the Non-Executive Directors.

Shareholder relationsThe Group reports formally to shareholders twice a year andreleases quarterly results. In addition, regular meetings are heldwith major institutional shareholders to discuss progress of thebusiness, its performance, plans and objectives. The Chairman, theSenior Independent Director and other Non-Executive Directors areavailable to meet with major shareholders to discuss governanceand strategy, and to understand any issues and concerns.

The Annual General Meeting provides an additional usefulopportunity to meet private shareholders. Information of interest to investors is also maintained on the Company’s website.+

Summary Audit Committee reportThe Audit Committee, which is chaired by a financial expert, supports the Board in meeting its responsibilities in relation to the integrity of the Group’s financialstatements and associated announcements, the adequacyof internal control and risk management systems and theappointment and work of the internal and external auditors.The external auditor and the Head of Internal Audit bothhave the opportunity to meet privately with the Committee.

During the year, the Committee’s deliberations included a wide range of matters addressing all its main areas ofresponsibility. The Committee’s main focus was to reviewthe quarterly, interim and full-year financial results and to review the effectiveness of internal control, financialreporting and risk management processes, through reportsand presentations received from internal audit, the externalauditors and management. Particular consideration wasalso given to the Group tax strategy, the implications of newaccounting standards, and the impact on IHG of increasedvolatility and risk aversion in the financial markets.

Corporate governance

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Summary remuneration report

IntroductionThe Summary Remuneration Report is an extract of information fromthe full Remuneration Report contained in the Annual Report andFinancial Statements 2008, a copy of which is available on request andcan be viewed on the Company’s website at www.ihg.com/investorsunder financial library. The Remuneration Report will be put to thevote at the forthcoming Annual General Meeting.

The Remuneration CommitteeThe Committee agrees, on behalf of the Board, all aspects of theremuneration of the Executive Directors and other members of the Executive Committee. It also agrees the strategy, direction and policy for the remuneration of other senior management.

Remuneration policyFor Executive Directors and for senior executives, the followingpolicy has applied throughout the year and, except where stated,will apply in future years, subject to periodic review.

Overall remuneration is intended to attract and retain high-qualityexecutives, to reward achievements aligned with strategic objectives,and to facilitate global assignments. Upper quartile rewards areprovided for achievement of challenging targets.

The Group has performance-related reward policies, designed toprovide the appropriate balance between fixed remuneration andvariable ‘risk’ reward. The normal policy for Executive Directors is that using ‘target’ or ‘expected value’ calculations, theirperformance-related incentives will equate to approximately 70% of total annual remuneration (excluding pensions and benefits).

Non-Executive Directors (including the Chairman) are paid feesapproved by the full Board, taking account of the fees paid in othercompanies of similar complexity. Higher fees are paid to the SeniorIndependent Director, who chairs the Audit Committee, and to theChairman of the Remuneration Committee.

Key developments2008 was a good year for IHG, despite the tough market conditions.Growth in operating profit from continuing operations beforeexceptional items was 13% and IHG comfortably exceeded itsthree-year target of adding 50,000-60,000 net rooms by the end of 2008.

2009 is expected to be a highly challenging year in light of the global economic climate. Consequently, there will be a stronger focus on cost control and on preserving profitability. Some adjustments have therefore been made to the operation of incentive plans in 2009.

Achieving IHG’s earnings targets is a priority. Therefore, for the 2009 Annual Bonus Plan, the weighting placed on earningsbefore interest and tax (EBIT) has been increased. In addition,specific cost-savings targets will be included in individuals’ keyperformance objectives. For the Long Term Incentive Plan, thecurrent measures of TSR and EPS will be retained, with targets set at stretching levels. The Committee will be conducting a further review of executive incentive arrangements in 2009.

Also, in view of the challenging cost environment, base salaries and fees for Executive and Non-Executive Directors have beenfrozen at 2008 levels.

Remuneration structureBase salary and benefitsSalary is based on both individual performance and marketinformation. Internal relativities and salary levels in the wideremployment market are also taken into account. Benefits in themain relate to company cars and private healthcare cover.

Annual bonusChallenging performance goals are set and these must be achievedbefore the target bonus becomes payable. These goals include bothpersonal objectives and targets linked to the Group’s financial andoperational performance.

For awards in 2008 and to be made in respect of 2009, the targetbonus award level is 115% of salary, subject to a maximum bonusof 200% of salary. Half of the bonus is in shares, payable threeyears after the award date. No matching shares are awarded.

Long Term Incentive PlanIHG’s Long Term Incentive Plan (LTIP) aims to encouragecontinuing improvement in the Group’s performance over thelonger term, through the annual award of shares, subject to thesatisfaction of a performance condition, normally measured over three years.

Generally, a separate performance cycle commences each year.The Company’s TSR is measured against the Dow Jones WorldHotels index. Graded awards are made for performance equal tothe index or better. The second performance measure is growth in adjusted earnings per share (EPS). In light of the significantmarket slowdown, the EPS growth scale for the 2009/2011 LTIPperformance cycle has been reduced, but it is consideredstretching in the context of market expectations of industry-widerevenue per available room (RevPAR) decline. Due to the reducedEPS scale, the maximum award level for the EPS element of theLTIP performance measures will be reduced by half.

Fixed (approx 30%)

Key

TSR = Total Shareholder Return

EPS = Earnings Per Share

Base salary

Variable (approx 70%)

Long-term

incentive

Long Term

Incentive Plan

(Performance Shares)

Linked to individual

performance, financial

and operational

measures

Linked to relative

TSR and

adjusted EPS

growth

Annual Bonus Plan

(Cash and

Deferred Shares)

Short-term

incentive

Summary remuneration report 41

Share ownershipExecutive Directors are expected to hold all shares earned (net ofany share sales required to meet personal tax liabilities) from theGroup’s remuneration plans while the value of their holding is less than twice their base salary or three times in the case of theChief Executive.

Contracts of serviceThe Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. AllExecutive Directors’ contracts were fully compliant with theCommittee’s policy throughout 2008. Non-Executive Directors have letters of appointment. David Webster’s appointment as Non-Executive Chairman is subject to six months’ notice.

External appointmentsExecutive Directors are allowed to accept one non-executiveappointment, subject to Board approval, as long as this is not likely to lead to a conflict of interest.

Pension arrangementsExecutive Directors participated in the relevant Group pensionschemes either in the UK or in the US.

1 Jan 2008 to 1 Jan 2007 to 31 Dec 2008 31 Dec 2007

£000 £000

Executive DirectorsAndrew Cosslett 1,307 1,276Stevan Porter1 1,101 677Richard Solomons2 980 771Non-Executive DirectorsDavid Webster 392 392David Kappler 95 95Ralph Kugler3 72 60Jennifer Laing 60 60Robert C Larson 60 60Jonathan Linen 60 60Sir David Prosser4 33 80Ying Yeh5 60 5Former Directors6 1 1,124Total 4,221 4,660

1 Stevan Porter relinquished his responsibilities in July 2008, due to illness. He passed away on 7 August 2008. His emoluments for the year include apro-rated cash payment in respect of his participation in the Annual BonusPlan for 2008 and sundry accruals and allowances, paid to his estate.

2 Richard Solomons undertook the additional role of interim President of theAmericas region from July 2008, until the end of 2008, ensuring a smoothtransition for Stevan Porter’s successor, who joined the Group in January2009. His emoluments include additional salary and participation in a special cash bonus plan for this period.

3 Ralph Kugler became Chairman of the Remuneration Committee on 1 June 2008, for which a higher fee is paid.

4 Sir David Prosser retired as a Director and as Chairman of theRemuneration Committee on 31 May 2008.

5 Ying Yeh was appointed as a Director on 1 December 2007.

6 Richard Hartman retired as a Director on 25 September 2007. Hisemoluments include salary and benefits for 2007 and Annual Bonus Planpayments made in 2008, in respect of the 2007 financial year. Sir Ian Prosserretired as a Director on 31 December 2003. However, he had an ongoinghealthcare benefit of £1,150 during the year.

Performance graphThroughout 2008, IHG was a member of the FTSE 100 index. The following graph shows the Company’s TSR performance against thatachieved by the FTSE 100 index for the last five financial years.

Directors’ emolumentsThe emoluments shown below represent salary, fees and cash bonuses (excluding pensions and bonus awards paid in shares) and taxassessable benefits and allowances, including company cars and healthcare cover.

Source: DatastreamInterContinental Hotels Group PLC – Total Shareholder Return Index FTSE 100 – Total Shareholder Return Index

31 Dec 200831 Dec 200731 Dec 200631 Dec 200531 Dec 200431 Dec 2003

300

250

200

150

100

50

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Long-term rewardExecutive share optionsBetween 2003 and 2005, grants of options were made under the IHG Executive Share Option Plan. No executive share options have beengranted since 2005. Executive share options held at 31 December 2008 by Directors who served during the year are summarised as follows:

Weighted Executive Exercised Executive average

options held during options held at option Directors at 1 Jan 2008 the year 31 Dec 2008 price (p)4

Andrew Cosslett 157,300 – 157,3001 619.83Stevan Porter 321,630 – 321,6302 531.82Richard Solomons 330,870 – 330,8703 532.36

1 Exercisable up to April 2015.

2 Stevan Porter’s outstanding vested options are exercisable by his personal representatives until 6 August 2009.

3 Options granted to Richard Solomons in 2004 are exercisable up to April 2014; those granted in 2005 are exercisable up to April 2015.

4 Weighted average option price of options held at 31 December 2008.

No Director exercised options during the year. The gain on exercise by Directors in aggregate was therefore nil in the year ended 31 December 2008 (2007 nil).

Annual Bonus Plan (ABP)Messrs Cosslett, Porter and Solomons participated in the ABP during the year ended 31 December 2008. Messrs Cosslett and Solomons are expected to receive an award on 23 February 2009. Matching shares are no longer awarded. Directors’ pre-tax share interests during the year were:

ABP Value ABP shares based

Awards vested on share ABP during during ABP price of

Awards the year the year Value at Awards 562p at held at 1 Jan 2008 to 1 Jan 2008 to vesting held at 31 Dec 2008

Directors 1 Jan 2008 31 Dec 2008 31 Dec 2008 £ 31 Dec 2008 £

Andrew Cosslett 113,625 28,877 225,241 84,748 476,28371,2871 71,287 400,633

Total 156,035 876,916Stevan Porter 93,817 93,8172 604,901 –

35,7431 35,7432 193,906 –Total –Richard Solomons 101,696 47,480 357,284 54,216 304,694

45,6341 45,634 256,463Total 99,850 561,157

1 This award was based on financial year 2007 performance. Andrew Cosslett’s total bonus was 52.5% of his base salary, Stevan Porter’s total bonus was 45.25% of his base salary and Richard Solomons’ total bonus was 52.5% of his base salary. In each case, bonus awards were based on Group/Regional earnings beforeinterest and tax performance and on net annual rooms additions, and one matching share was awarded for every two bonus shares earned.

2 In addition to 45,509 ABP shares which vested normally in March 2008, in accordance with Plan rules, Stevan Porter’s ABP shares, which were due to vest from2009 onwards, vested early at the discretion of the Remuneration Committee, following his death in August 2008. The value of these entitlements was calculated as at 7 November 2008. The shares will be released to Mr Porter’s estate following completion of UK probate in due course.

Summary remuneration report continued

Summary remuneration report 43

Long Term Incentive Plan (LTIP) In 2008, there were three cycles in operation and one cycle which vested. The awards made to Directors who served during the year ended 31 December 2008 in respect of the performance cycles ending on 31 December 2007, 2008, 2009 and 2010 and the maximum pre-taxnumber of shares due if performance targets are achieved in full are set out in the table below. For the cycle ending on 31 December 2008,the Company finished third in the TSR group and achieved relative cumulative annual rooms growth (CAGR) of 4.9%. Accordingly, 86.7% of the award will vest on 18 February 2009.

Maximum Maximum LTIP LTIP value

shares shares based awarded vested on share

Maximum during during Market Maximum price of LTIP Awards the year the year price per Value at LTIP Awards 562p at

held at 1 Jan 2008 to 1 Jan 2008 to share at vesting held at 31 Dec 2008 Directors 1 Jan 2008 31 Dec 2008 31 Dec 2008 vesting £ 31 Dec 2008 £

Andrew Cosslett 636,446 253,5591 152,7382 827p 1,263,143 613,805 3,449,584Stevan Porter 399,807 147,2091 96,7192 827p 799,866 –

171,4683 542.5p 930,214 –Richard Solomons 407,129 161,2411 97,6322 827p 807,417 391,820 2,202,028Total 1,005,625 5,651,612

1 This award is based on performance to 31 December 2010 where the performance measure relates to both the Company’s TSR relative to the Dow Jones WorldHotels index and the compound annual growth rate in adjusted earnings per share (EPS) over the performance period.

2 This award was based on performance to 31 December 2007 where the performance measure related to both the Company’s TSR against a group of seven other comparator companies and cumulative annual growth rate (CAGR) of rooms in the IHG system relative to a group of five other comparator companies. The number of shares released was graded, according to a) where the Company finished in the TSR comparator group, with 50% of the award being released for first or second position and 10% of the award being released for median position; and b) relative CAGR of rooms, with 50% of the award being released for 3.4% (upper quartile) CAGR and 10% of the award being released for 2.4% (median) CAGR. The Company finished in fourth place in the TSR group and achieved a relative CAGR of 3.1%. Accordingly, 55.3% of the award vested on 20 February 2008.

3 In addition to 96,719 LTIP shares which vested normally in February 2008 (see note 2 above), in accordance with Plan rules, Stevan Porter’s LTIP shares, which were due to vest in 2009, 2010 and 2011, were pro-rated to reflect his contractual service and performance during the applicable performance periods. The Remuneration Committee calculated the value of these entitlements as at 7 November 2008 at which point they vested. The shares will be transferred to Mr Porter’s estate following completion of UK probate in due course.

PensionsUK plans (final salary)The increases in transfer value over the year (less Directors’ contributions) and accrued pensions at the year end were:

Accrued Age at Increase in pension at

Directors 31 Dec 2008 transfer value 31 Dec 2008

Andrew Cosslett 53 807,800 102,600Richard Solomons 47 1,035,800 197,300

US and International plans (defined contribution)The Company contributions made in respect of Stevan Porter during the year were £67,700.

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RegistrarFor enquiries concerning individual shareholdings, notification of a holder’s change of address and for information on a range of shareholder services please contact the Company’s Registrar,Equiniti (details shown on page 45).

Website and electronic communicationFollowing changes introduced by the Companies Act 2006, as part ofthe Company’s commitment to reducing the cost and environmentalimpact of producing and distributing printed documents in verylarge quantities, IHG’s Annual Report and Annual Review have been made available to the majority of shareholders through theCompany’s website www.ihg.com/investors under financial library.

Share dealing servicesEquiniti offer a postal dealing facility for IHG shares. For moreinformation on this service, call 0871 384 2132†. They also offer atelephone and internet dealing service, Shareview Dealing, whichprovides a simple and convenient way of buying and selling shares.For telephone dealings call 08456 037 037 between 8.00am and4.30pm Monday to Friday, and for internet dealings log on towww.shareview.co.uk/dealing

Individual Savings Accounts (ISAs) Equiniti offer ISAs in IHG shares. Further information may beobtained from Equiniti (details shown on page 45), or through their helpline, telephone 0871 384 2244†.

Dividend servicesThe Company offers a Dividend Reinvestment Plan (DRIP) forshareholdersto purchase additional IHG shares with their cashdividends. For further information about the DRIP, please contactour Registrar helpline on 0871 384 2268†. A DRIP application andinformation booklet are available on the Company’s websitewww.ihg.com/investors under shareholder centre/shares anddividends.

Shareholders who would like their dividends to be paid directly intoa bank or building society account, or who wish to amalgamatetheir shareholder accounts in order to avoid duplicate mailing of shareholder communications should contact our Registrar.

Overseas shareholders can have their dividends paid direct to theirbank account or by cheque in another major currency. Please contactour Registrar for further details. Charges are payable for this service.

If you think that you have out of date dividend warrants oroutstanding dividend payments please contact our Registrar forfurther information.

Share price informationThe latest share price is available in the financial press, on Ceefaxand Teletext and also on the Financial Times Cityline Service,telephone 09058 171690 (calls charged at 75p per minute from a BT landline). Further details of the share price may be found onthe Company’s website www.ihg.com/investors under share price.

Changes to the base cost of IHG sharesDetails of all the changes to the base cost of IHG shares held sinceApril 2003 up to December 2008, for UK Capital Gains Tax purposes,may be found on the Company’s website at www.ihg.com/cgt

ShareGiftThe Orr Mackintosh Foundation operates this charity sharedonation scheme for shareholders with small holdings of shares,the value of which makes them uneconomic to sell. Details can beobtained from Equiniti, the ShareGift website www.sharegift.orgor by calling ShareGift on 020 7930 3737.

Corporate Responsibility ReportIHG has published an online Corporate Responsibility Report for2008 covering progress on a range of environmental, social andcommunity issues. This is available on our corporate website and can be downloaded directly at www.ihg.com/responsibility

Shareholder securityMany companies have become aware that their shareholders have received unsolicited telephone calls or correspondenceconcerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. These operations are commonlyknown as ‘boiler rooms’. More detailed information on this orsimilar activity can be found on the Financial Services Authoritywebsite www.moneymadeclear.fsa.gov.uk

Details of any share dealing facilities that the Company endorseswill be included in Company mailings.

American Depositary Receipts (ADRs) The Company’s shares are listed on the New York Stock Exchangein the form of American Depositary Shares, evidenced by ADRs andtraded under the symbol ‘IHG’. Each ADR represents one ordinaryshare. All enquiries regarding ADR holder accounts and payment of dividends should be directed to JPMorgan Chase & Co., theauthorised depositary bank (details shown on page 45).

The Company is subject to the reporting requirements of theSecurities and Exchange Commission (SEC) in the US and files with the SEC an Annual Report on Form 20-F. The Form 20-F canbe found on the Company’s website www.ihg.com/investors undershareholder centre/shares and dividends/adr or by visiting theSEC’s website at www.sec.gov/edgar.shtml

Summary forward-looking statementThis Annual Review and Summary Financial Statement containscertain forward-looking statements as defined under US legislation(Section 21E of the Securities Exchange Act of 1934). By theirnature, such statements involve uncertainty; as a consequence,actual results and developments may differ materially from thoseexpressed in or implied by such statements. A more detailedexplanation of the risks and uncertainties related to forward-looking statements is set out on page 103 of the Annual Report and Financial Statements 2008, copies of which are available fromthe registered office of the Company or on the Company’s websiteat www.ihg.com/investors under financial library.

Investor information

Investor information and Financial calendar 45

Registered officeBroadwater Park, DenhamBuckinghamshire UB9 5HR

Telephone +44 (0) 1895 512 000

Fax +44 (0) 1895 512 101

For general information aboutthe Group’s business pleasecontact the Corporate Affairsdepartment at the aboveaddress. For all other enquiriesplease contact the CompanySecretariat at the aboveaddress or [email protected]

RegistrarEquiniti, Aspect HouseSpencer Road, Lancing West Sussex BN99 6DA

Telephone 0871 384 2132*†

(UK callers)

+44 121 415 7034 (non-UK callers)

www.shareview.co.uk

*For those with hearing difficulties a text phone is available on 0871 384 2255† for UK callers with compatible equipment.

†Telephone calls to these numbersare currently charged at 8p perminute if using a BT landline. Othertelephone service providers maycharge different rates.

ADR depositaryJPMorgan Chase & Co.PO Box 64504 St. Paul, MN 55164-0504 USA

Telephone (800) 990 1135 (US callers – toll free)

+1 651 453 2128 (non-US callers)

[email protected] www.adr.com

StockbrokersJPMorgan Cazenove Limited Bank of America Merrill Lynch

AuditorsErnst & Young LLP

Investment bankersCitiJPMorgan Cazenove LimitedBank of America Merrill Lynch

SolicitorsLinklaters LLP

Priority Club RewardsIf you wish to enquire about, orto join Priority Club Rewards,IHG’s loyalty programme forfrequent travellers, please go towww.priorityclubrewards.comor telephone:

+44 (0) 870 607 2582 or 0870 60 PCLUB (in Europe, Middle East andAfrica) (toll charges apply);

1 888 211 9874 (in US and Canada) (toll free);

00 1 800 272 9273 (in Mexico) (toll free);

801 975 3013 (Spanish) (in Central and South America)(toll charges apply);

801 975 3063 (English) (in Central and South America)(toll charges apply);

+63 2 857 8788 (from most countries in AsiaPacific) (toll charges apply).

Financial calendar2008

Payment of interim dividend of 6.4p per share (12.2 cents per ADR) 3 OctoberFinancial year end 31 December

2009Preliminary announcement of annual results 17 FebruaryFinal dividend of 20.2p per share (29.2 cents per ADR): Ex-dividend date 25 March

Record date 27 MarchAnnouncement of first quarter results 12 MayAnnual General Meeting 29 MayFinal dividend of 20.2p per share (29.2 cents per ADR): Payment date 5 JuneAnnouncement of interim results 11 AugustInterim dividend: Payment date OctoberAnnouncement of third quarter results 10 NovemberFinancial year end 31 December

2010Preliminary announcement of annual results February

For further investorinformation visit

www.ihg.com/investors

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make a booking at www.ihg.com

InterContinental Hotels Group PLCBroadwater ParkDenham, Buckinghamshire, UB9 5HRTelephone +44 (0) 1895 512 000Fax +44 (0) 1895 512 101

Holiday Inn London-Heathrow, UK

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