IHG

Good morning, ladies and gentlemen, and welcome to InterContinental Hotels Group PLC Q1 Trading Update Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session through the phone lines and instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to Stuart Ford of IHG Hotels & Resorts. Please go ahead.

Thank you, Gavin, and good morning everyone from me. As Gavin said, welcome to IHG Hotels & Resorts conference call covering the 2026 first quarter trading update. I'm Stuart Ford, Senior Vice President, Head of Investor Relations at IHG, and I'm joined this morning by Elie Maalouf, our Chief Executive Officer, and by Michael Glover, our Chief Financial Officer. Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements as defined under U.S. law. Please refer to this morning's announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements.

For those analysts or institutional investors who are listening via our website, may I remind you that in order to ask questions, you will need to have registered using the details on page two of this morning's RNS release. The release together with the usual supplementary data pack for the first quarter can be downloaded from the Results and Presentation section under the Investors tab on ihgplc.com. Over to Elie.

Thanks, Stuart. Good morning, everyone. I will begin today's call by providing a brief overview of our global trading and development performance in the first quarter, as well as some other operational highlights. I will then hand over to Michael to go through each of the three regions and their respective growth drivers before the call for Q&A. Let me start by thanking our teams across the business for delivering a very strong trading performance in the first quarter of the year, demonstrating, yet again, the strategic advantage and resilience of our globally diverse footprint. I would also like to sincerely thank our colleagues in the Middle East. Their unwavering commitment and dedication to supporting guests and owners during these challenging times demonstrates what true hospitality means at IHG, and we continue to do all we can to support them.

We remain confident in the enduring appeal of the region for both business and leisure travel, and we expect trading activity to bounce back when the conflict ends and flight capacity is restored. Turning to Q1 trading, global RevPAR grew by 4.4%, driven by strong performance in all three regions and across all brands. ADR grew by 2%, and demand was robust with occupancy increasing by 1.5 percentage points. All three drivers of stay occasions contributed to the RevPAR growth. Rooms revenue on a comparable hotels basis for groups was strongest, up 7%, followed by business up 6% and leisure up 1%. Looking ahead, while many of you know that our booking window is short, we are pleased that our comparable on the books global revenue for Q2 indicates continued growth.

With the impact of the Middle East conflict and some wider disruption to international travel flows expected to be more than offset by increases in demand elsewhere. Importantly, in the U.S., which is by far our largest market, the underlying fundamentals for the industry remain robust with record employment levels, continued real wage growth, wealth creation, and the unprecedented levels of investment into areas like infrastructure, data centers, and artificial intelligence. Turning to our global development activity, we opened 14,900 rooms across 82 hotels in the quarter, including six brand launching in new countries. Highlights include opening Six Senses London, an incredible hotel that is redefining the ultra-luxury experience in the city. Our first Hotel Indigo property opened in the Turks and Caicos Islands, expanding our luxury lifestyle presence in the Caribbean, and it will soon be followed by InterContinental and Kimpton.

Our Essentials conversion brand Garner also made its debut in Greater China with the opening of Garner Beijing Art District. This hotel opened just one month after signing, highlighting the speed at which conversion deals can move from signing to opening. Together, our global openings exceeded last year's very strong first quarter and took our global estate to more than 7,000 hotels. This led to 6.6% gross growth year-on-year and 5% net growth. Year-to-date, net system growth was 0.9%, 20 basis points higher than the equivalent this time last year. We also added 21,400 rooms into our pipeline in the quarter, an increase of 6% year-over-year when excluding the Ruby brand acquisition in 2025.

Signings included our first new premium brand, Vignette Collection, in the U.K., our first Ruby hotel in the U.S., and debut signings for Six Senses and Kimpton in Beijing. This led to a closing pipeline of 343,000 rooms, which is 3% higher than a year ago and equivalent to 33% growth on our current system size. Conversions represented 53% of signings, reflecting the breadth and attractiveness of our brands and the benefit to owners of joining IHG's enterprise. We are very pleased with the progress of Garner, which has reached almost 200 open and pipeline hotels globally in 17 countries, less than three years since launch, and already exceeds 100 hotels in the Americas. We have released the latest episode of IHG Checks In On today.

This features brand milestones, including the rapid progress of Garner, the success of internationalizing the Hotel Indigo brand, and the incredible heights that the InterContinental Hotels & Resorts brand itself has reached as we celebrate its 80th anniversary this year. Turning briefly to some updates on our co-brand business. We announced back at our results in February that a new co-brand debit card agreement with Revolut and Visa in the U.K., and those card products are on track to launch in the coming months. We also said we are looking at further co-brand priority growth markets, with Japan being one. We're delighted to announce a new agreement with Sumitomo Mitsui Card Company, one of the largest credit card issuers in Japan, along with Visa.

These new co-brand card products in Japan will launch in 2027 and mark further progress in a priority growth market where we already have around 60 hotels and more than 20 in the pipeline and millions of IHG One Rewards members. A quick update on the great strides we're making on the technology front. At full year results, we laid out our approach to AI, which we group into three distinct areas. The first is guest acquisition and loyalty, the second is hotel commercial optimization, and the third is corporate cost efficiency. In the guest acquisition and loyalty area, we have made excellent progress in developing an AI-powered conversational search tool that will be launched on our website and mobile app in the coming months.

Guests and loyalty members will be able to use natural language search capabilities to describe in their own way and own words where they want to go and the hotel features and local attractions that are important to them. This is a significant development that will transform how guests discover and book stays across our 7,000 hotels while also attracting more direct bookings. Deploying our new AI-powered content management platform this year. This new platform will ensure the right hotel information shows up in the right channels at the right time while making it easier for AI-powered assistants to understand, recommend, and prioritize IHG Hotels as travel search patterns evolve. We are refreshing our loyalty platforms and rolling out a new cloud-based CRM tool powered by Salesforce so that our hotels can deliver more personalized experiences, offer more relevant promotions, and extend loyalty rewards faster and more effectively.

Each of these initiatives within guest acquisitions and loyalty are designed to elevate the guest experience when searching, discovering, booking, and staying at our IHG Hotels, and more importantly, to keep guests coming back. There are, of course, many other initiatives underway in this fast-moving space that keep advancing our leading technology platforms, and we will provide further detail in these areas with half year results. The year has seen a great start for trading performance and development activity, and we are delivering on our strategic priorities and growth algorithm. With that, let me now hand over to Michael, who will provide more color by region. He will also detail for you that while still early in the year, we are confident in achieving full year consensus growth forecast and profit expectations underpinned by the strength of our performance year to date.

Thanks, Elie. Let me start with the Americas, where RevPAR was up 3.6%. This growth rate is particularly notable as it came on top of strong comparatives this time last year, and momentum is expected to continue through the remainder of the year. Occupancy in the region was up 0.9 percentage points, and rate grew by 2%. In terms of demand types, groups were strongest, with comparable rooms revenue up year on year by 9%. Business also grew strongly, increasing by 6%, driven by broad-based growth across industries. Pleasingly, leisure was broadly flat compared with 2025 on a high base. In the U.S., which accounts for around 85% of the region's system size, RevPAR grew 3.4% and drove the Americas' overall performance. Outside of the U.S., Mexico was down 2%.

Canada grew in line with the overall region, and growth was very strong in Central America and the Caribbean. Good trading momentum in the Americas has continued in the second quarter to date. Looking at the rolling eight weeks to Saturday, May 2nd in aggregate, this indicated a further improvement in RevPAR growth to the 3.6% reported in the first quarter. This combined period normalizes for timing shifts of the holiday periods within March and April. In terms of system size and pipeline, gross system growth was 3.5% year-over-year, and net system growth accelerated for another consecutive quarter to 1.8%.

In total, we signed 5,900 rooms across the Americas, representing a 32% increase on the comparable period last year. Overall, we are very pleased with the strong performance in the U.S. and Americas in Q1, and we are confident in the industry fundamentals going forward. Moving on now to our Europe, Middle East, Asia, and Africa region, which had another strong quarter. RevPAR increased 5.6%, driven by a 2.1 percentage point rise in occupancy and 2.2% rate growth. Looking at the subregions, Q1 RevPAR grew by 11% in East Asia and Pacific, 5% in Continental Europe, and 3% in the U.K. Our business in the Middle East, which accounts for 19% of EMEAA system size and only 5% of IHG globally, saw significant disruptions to operations from the start of March.

Here, performance moved from growth of 9% in the first two months to a decline of 26% in March, resulting in a decrease of 2% for Q1 overall. In April, RevPAR in the Middle East declined closer to 50%, leading to a RevPAR decline of approximately 7% for EMEAA overall in the month. We expect performance to improve in May with travel for the Hajj pilgrimages, and religious tourism in Saudi Arabia has proven highly resilient. We are encouraged that comparable revenue on the books for EMEAA overall indicates an improvement in trading for May and June, which again reflects the breadth and diversity of this region. Turning to development, 3,900 rooms were opened in the quarter across EMEAA, following a very strong performance this time last year, which included 13 hotels from the NOVUM Hospitality agreement.

Gross system growth was 8% year-over-year, and net system growth was 7.1%. 7,100 rooms were signed into the pipeline in the quarter, so similar to the comparable period when excluding the Ruby brand acquisition in 2025. Finally, moving on to Greater China. As we had anticipated, the improving trend over the course of 2025 led to RevPAR growth in the final quarter last year. In Q1 this year, RevPAR growth accelerated to 5.7%, supported by strong leisure demand over the Chinese New Year festive period and improvement in business travel. Occupancy increased 2 percentage points and rate was up 1.8%. RevPAR in Tier 1 cities increased by 6.4%, supported by increased international inbound, and Hong Kong and Taiwan also performed strongly.

RevPAR in Tier 2-4 cities was up 2.9%. In this latest quarter, there were year-on-year increases in both domestic and international outbound travel. The latter was a driver of growth in our East Asian and Pacific subregion within EMEAA. In the near term, fuel price increases, which are currently leading to some flight cancellations, will slow some international outbound travel, that would, once again, lead to more domestic demand in China. We would expect outbound growth to quickly resume when flight schedules are restored, we would still anticipate continued growth in domestic travel given the many structural drivers to growth in the country. Turning to development activity in Greater China, a record-breaking momentum continued in Q1 with the opening of 7,500 rooms.

This was 73% more than the same quarter last year and included the milestone of surpassing 900 open hotels in the region. Gross growth was 12.9% year-over-year, and net system growth was 10.4%. There were 8,400 rooms signed in the quarter, similar to the strong first quarter last year. We remain very confident in the attractiveness of the long-term fundamentals across the vast China market, which are underpinned by a rapidly growing middle class, broad-based economic growth, and an under-penetration of hotels per capita. Government policy to boost domestic consumption is also leading to nationwide longer school holidays and flexible local guidance, which are additionally enabling more travel. Now touching briefly on the share buyback. We are currently 25% of the way through the $950 million program announced in February.

To date, this has reduced our share count this year by a further 1.1%. In concluding with some comments on consensus, as we've said in the statement, while we are still at an early stage in the financial year, we are confident in achieving full year consensus growth forecasts and profit expectations underpinned by the strength of our performance year to date. We published details of consensus on our website based upon the Visible Alpha data service. This currently sees consensus net system size growth at 4.5%. We continue to see more upside opportunity than downside risk to that figure, consistent with our message at full year results. Consensus operating profit from reportable segments stands at $1.38 billion.

The profit consensus implies growth of 9% on 2025's results. The adjusted earnings per share consensus, which is $5.66, implies growth of 13%. This would result in another year of IHG delivering on our growth algorithm. With that, I'll hand back to Elie for closing comments.

Thank you, Michael. To wrap up for you, we've achieved a very strong trading performance in Q1 with global RevPAR of 4.4%, driven by better than expected demand in most of the world and by the benefits of our diverse global footprint. Our development momentum also continued at pace with gross system growth of 6.6% and net system growth of 5%. We are proud to have reached a milestone of more than 7,000 hotels in our system, and we're excited about the strong pipeline of growth that will add to this. As we noted in today's statement, we are confident of continuing to deliver on our strategic priorities and growth algorithm, which capitalizes on the scale and capabilities of IHG's platform, our leading positions, and the attractive long-term structural growth drivers for both demand and supply across our markets. With that, I will now pass back to the operator to open up the call for your questions.

Ladies and gentlemen, we will now begin the question-and-answer session. If you are dialed into the call and would like to ask a question, please signal by pressing star one. We will pause for a moment to assemble the queue. We will take our first question from the line of Jamie Rollo from Morgan Stanley. Your line is open.

Thanks. Morning, everyone. I've got a couple of questions on the Middle East and then on China. The Middle East is 5% of your global represents and also what percent of the group pipeline and how we think about any sort of downside to those, to those two. On China, obviously a very strong quarter openings up 70%. As you said, Michael, signings similar to last year. Is there anything there in terms of phasing and timing of openings or do you still think you can do 10% net unit growth for the year? I just sticking with China with over half the openings now in the region, how should we think about the sort of fee algorithm and the mix impact from those? Thank you.

Thank you, Jamie. Its Elie, I'll take a crack at your questions and Michael, please can build up on those. Look, in the Middle East, yes, it's 5% of our rooms. Actually, in the area of conflict, it's a little bit less than that, but let's just go with the 5%. In terms of the IMFs, we don't disclose IMFs by region or sub-region. What we've said is that in our EMEAA region in total, which includes the Middle East, we are more skewed to managed hotels. Therefore, more of our IMFs come from EMEAA than, say, the Americas on a proportional basis. You're talking about, you know, 5% of our distribution. Yes, it's down, but it's a small number from a small number.

We've said that it's more than offset by better performance in the 95% of our business. That's the first thing. In terms of pipeline, the Middle East is 9% of our pipeline. Importantly, most of that pipeline is in the Kingdom of Saudi Arabia, which has been less affected than other parts of the GCC. It's a very strong domestic market. It's got a strong religious travel. As Michael said, the Hajj travel is expected to be just right up to our expectations here. We already have all sort of the bookings in for May, and it's trending very well. It didn't go down as much as, say, the UAE and has bounced back well.

If you look at that pipeline, 90% of our pipeline in the Middle East is actually in three countries, Kingdom of Saudi Arabia, Egypt, and Turkey. Egypt and Turkey are not impacted right now by the conflict and unlikely to be, and our pipeline is progressing well in all three of those countries. Now to China. There was nothing unusual in our system growth for the first quarter. We're confident that we can continue to post strong signings and system growth. It looks like it could be another year of record signings and system growth in China.

You know, when it comes down to the mix, I think the same framework on mix applies still that, yes, China is growing at a lower than average RevPAR for IHG. By the way, we're happy to see that RevPAR grow again. We've been saying for a couple of years that China would bottom out. It did bottom out in the second half of last year. It turned positive in the fourth quarter in RevPAR. It's now even more positive in the first quarter of 2026, and we expect that positive performance to continue for the rest of the year. Now we have a bigger estate in China. We have a positive RevPAR on top of that so that we're compounding our benefit from a bigger estate.

Yes, it comes in at a lower than average RevPAR while growing than the group, but that's compensated by high RevPAR in other parts of the system and our growth in luxury and lifestyle. It's net neutral to our mix.

Just back on the incentive fee. Yeah. Thanks, Elie. Just back on the incentive fee, obviously you give the $134 million, so two thirds is in EMEA. Maybe to ask that another way, that $134 million last year, that should still grow this year, right?

I mean, Jimmy, that is the right number that we gave last year. Obviously we're early in the year, and this Middle East will have, the, you know, have a big impact on that. We don't disclose how much it is by sub-region, as Elie mentioned. As you can see, we've had good RevPAR outside of the Middle East and East Asia Pacific, in Europe, in the U.K. We, you know, we still see positive growth there. We won't get into projecting and forecasting out IMF for the whole region. You can kind of see I mean, really, you kind of can put the Middle East in a box and other parts of the world are still doing well.

That's why we feel confident in kind of underpinning where consensus is on our, on our profit expectations. You know, we've talked about, you know, kind of the growth in RevPAR, and we've seen and we've talked about that driving. If you look at our, kind of fee and our base management fees and sensitivity to RevPAR, you know, you're talking about 1 point being $12 million-$13 million. There'll be a bit of offset of, you know, incentive management fees from the Middle East offsetting that a little bit. You know, kinda, a little bit better, you know, as you go through, as you think about that.

I mean, the overall point is that once again, the strategic design of our business, geographically diversified, brand diversified, segment diversified, fee stream diversified now even more, is very well structured to absorb inevitable disruptions that happen every year. Last year, you know, U.S. wasn't as strong and China wasn't as strong, the rest of the world was strong and our ancillary fees were strong and we had a strong year delivering on our algorithm. In the Middle East in one quarter, and we'll see how long that goes. The rest of the business does enough to not just offset it, but more than offset it. We're not getting into exactly what each fee will be for what quarter, but overall for the year, we're very confident in consensus. As Michael said, there's some flow through if RevPAR is better.

Thank you very much.

Thanks. Let's. Who's next?

Your next question comes to the line of Jaina Mistry from Barclays. Your line is open.

Good morning, Elie, Michael. Congratulations on a very strong Q1. Three questions from me as well. Just following up on that previous question, you're happy with consensus, but what kind of macro or geopolitical assumptions underpin this? Are you saying that even if the Middle East is soft for the rest of the year, we could still hit consensus expectations? Second question is around the U.S. consumer. I note that you said that U.S. momentum will continue through the rest of the year. How do you kind of square this with the impact of higher oil prices and whether that has an impact on RevPAR for U.S. corporates or leisure?

Very finally, just on net unit growth, you mentioned more upside than downside risk to full year consensus, but it feels like the risks versus full year results have kind of increased. You know, we're looking at the Middle East and also the risk from private credit. Are you seeing any changes to the financing environment as a result of, you know, private credit withdrawals in the wider environment? Thank you.

All right. Thank you, Jaina. I'll take a crack at your questions. Michael can support too. I love your third question. This is the first time we hear about private credit, but I actually have some experience to share with you. Anyway, on the macro geopolitical, we're not sort of geopolitical experts, but obviously being in 100 countries for decades, following events closely, having dealt with so many conflicts and disruptions, even my personal experience from the Middle East, I can tell you that, you know, we have a lot of experience dealing with disruptions. We make assumptions. I'd say the only assumption that we shared with you is that we think the worst of the conflict is behind us.

How long some continued disruption goes on, we're obviously not sure. It changes day by day and the news is breaking all the time, as you can tell, even yesterday evening. The trend right now looks towards de-escalation and looks towards some level of normalization. You know, I just wanna go back and say it's 5% of our business, of our rooms, less than 5% when you look at the area of conflict. With the 95% doing very well, we're not that exposed to how much longer it goes or how much longer it doesn't go. Sure. Can somebody design a scenario where the conflict gets to a stage and oil prices get to a stage, and there's therefore collateral damage to global economies?

I'm sure you can design a scenario, and you've read about them, but it doesn't seem that's not what's happening today, and it doesn't seem like that's the direction of travel. We're not seeing broader propagation of that right now beyond what Michael said, which is some flight cancellations, some disruptions in the immediate area, but all contained within the better performance we're seeing in the rest of our group. Coming to the U.S. consumer. Look, the U.S. consumer in actually in their surveys, we know what the consumer sentiment surveys say, and they don't sound too good. The consumer spending is good, and it's a significant driver of GDP growth, along with the capital investment and AI investment and data center investment and greater complex investment.

I think it's been quite some time that consumer sentiment surveys have disaggregated from consumer actual spending. That's because employment is strong, that's because GDP growth is strong, real wage growth is there. Financial markets are strong. You know, over 60% of U.S. households own equities, and 30% of U.S. household net worth is in equities. When equity markets are strong, there is a wealth effect, and it's been going on. Others will argue whether it's sustainable or not. All I can say is that despite the energy impact that the world's feeling, you've got U.S. markets at a record and actually European markets not far off. That's healthy for consumers. Could there be an impact to consumer behavior, let's set aside sentiment, but behavior from higher oil prices? You could paint that scenario.

We're actually not seeing that today. We're not seeing that in our numbers. All of our segments grew healthy RevPAR in Q1. Luxury, premium, mainstream, all core brands in the U.S. grew rev. As Michael said, in the eight weeks to the 2nd of May, we saw even further improvement. That's well after the conflict. I mean, someone can paint a scenario, but it's not what's happening today.

Can I just add into that, Elie? I mean, I think if you think about, and we talked about this, you know, post the full year results announcement. If you look at the consumer and you look at where gas prices are, you're talking about, you know, around a $1 a gallon more as it sits today. That could change, of course. As you sit today, if you think about an average tank of gas, it's probably costing you $20 more. If you look at the travel around the U.S., we're very heavily aligned to not just air travel, but drive to travel. If you're going on a vacation, you're driving, you know, 6, 700 miles. I mean, I think all in round trip, you're talking maybe an extra $100 of additional fuel costs associated with that.

We don't think we're not seeing any indication that that is someone who's making a decision not to do a trip because of an extra bit of $100 or more of gas prices. We're not necessarily seeing that come through. Quite conversely, we're seeing, you've seen business profits do well in the first quarter. We're seeing really strong business travel, as you can see in our demand drivers in the Americas. If we talk to bookers of travel at corporates, we're not seeing any slowdown in that or any indication that they're gonna slow down. There's also all the infrastructure work that's going on. That's very supportive for demand in the U.S.

You also have these groups that have picked up as well, and I think it's important to remember that within group, there's a lot of leisure group as well, and we're seeing good growth in leisure group as well. I think that environment gives us the confidence and certainly what we saw in April as we talked about the momentum continuing to increase. As you know, as we go through the year, there's a bit more easier comparables. We also have the World Cup coming. There's a lot of positive things that give us confidence that the U.S. can continue.

Look, one last thing on energy prices is, yes, the relative increase, in energy in gas prices in the U.S. is about $1 since the start of the war, but that is not a historic high. That is what the level was in 2022. It isn't as if this is a historic high. Yes, people don't like it, but it's clearly within the range of what they have tolerated when the business was still doing very well. The more important thing for U.S. consumers is that their other energy costs have really not gone up. The U.S. is much more dependent on natural gas for energy, for heating, for cooling, for electricity. Actually, natural gas prices are down in the U.S. from the start of the war. Not down by a lot, but they have not moved up.

Europe and the rest of the world is not as in the same situation. The U.S. consumer is not seeing, you know, a very big energy bill so far. There's other factors of the economy, GDP growth, strong employment, the infrastructure build-out, the AI build-out, the strong equity markets, the tax relief that's coming from the tax bill of 2025, that now is paying consumers higher tax rebates and lower tax assessments, and there are lower corporate assessments. That's actually adding more fuel to the economy. All that said, we think that the positives of Q1 have every reason right now, everything else being equal, to continue.

On your third question, regarding NUG and the Middle East. Actually, if you look at our plan for this year, the Middle East, and the openings we were planning for this year was roughly 5% of those overall openings within our kinda target or budget. We're not seeing anything that would suggest that that is gonna be massively disrupted. There may be a few hotels here and there that move and have a delay. Right now, as things are under construction and moving, they're continuing to be under construction and moving.

I think as you look about it and what gives us confidence to underpin and say there's more opportunity to where consensus is at 4.5% than there is risk, is there are other regions are doing really well. I think anything kind of disruption we may see in the Middle East, we can offset elsewhere in the world and that growth. I think as we said at the full year results announcement and we say today, you know, we really feel very confident about where we're headed and the ability, and there's more opportunity above where consensus is than there is risk to the downside.

Yeah. Your question about private credit. We've not seen a read-across or a radiation of the private credit issues into hotel development. Actually, if we look at the U.S., our signings in the first quarter up 30% year-over-year. Our ground breaks are up 30% year-over-year. I think private credit is invested maybe in other asset classes. A lot of software I read and understand and hear from people on Wall Street. It has not really translated into any effect on hotel development financing. Thank you, Jaina.

Thanks very much.

Your next question comes from the line of Estelle Weingrod from JPMorgan.

Hi, good morning. I've got two questions. The first one is on the World Cup. There was some articles referring to softer demand and some sort of group cancellations ahead of the event. Your competitors who have reported appear comfortable on that front. Anything you can share with us on trading around the World Cup? Should we expect a softer momentum just before or after the event, as we sometimes see in these events or not necessarily? I've got another question on co-brand credit cards. I mean, you've signed an agreement in the U.K. with Revolut. You just talked about Japan. Could these drive upside to your guidance to triple your credit card revenue by 2028? Thank you.

Thank you, Estelle. On the World Cup, first of all, looking forward to the start in a few weeks and enjoying a few matches. France looks like it's in a good position. We'll see. We'll see what happens. Now look, we're pleased with the bookings that we're seeing on World Cup, whether it's in the U.S., Mexico or Canada, against the expectations we had. I don't know what other people's expectations were, but our expectations are being met so far. You know, when you read about the other, the other narratives in the market, it's mostly because of big FIFA bookings in big cities that then get released. That's not what we're seeing in our properties. We had a level of expectation.

We haven't said how much, but if you read sort of where most analyst expectations or other company expectations were, somewhere people talked about somewhere between 30 and 80 basis points. If you look at most markers, we're somewhere in between and for the annual impact to our Americas business and that's being met. It was never really our biggest source of optimism for the Americas. It was the fundamentals I talked about for the U.S. and Americas that are driving our business. This is a nice thing on top. We're not seeing any impact on the shoulders of it, really. We think that the rest of the year has momentum, continuing the first quarter momentum. The World Cup is just something on top. It's gonna affect the latter part of May, June, and hopefully everybody will enjoy that.

On your second question on the co-brand, we're pleased that we are moving ahead with our agreement here in the U.K. with Revolut and Visa, so we're doing with Sumitomo Mitsui Card Company in Japan. You know, these card agreements are accretive outside of the U.S. They're nowhere near the profitability of the U.S. market. I don't think they would move our 2028, you know, target by anything meaningful.

Thank you.

Your next question comes from the line of Jarrod Castle from UBS. Your line is open.

Thanks. Thank you very much. Good morning, everyone. I think, Elie, you mentioned the use of Salesforce tool, you know, as relates to clients. If I'm not mistaken, Wyndham's also using Salesforce CRM. I think they announced last year, you know, about 10% of their percent in terms of redundancies this year in terms of, you know, the efficiencies the Salesforce tool provides. Just, you know, just any color in terms of how you'll be using it and how you're thinking, I guess, about, you know, what it means for headcount. Secondly, I guess related, you know, it sounds like, you know, maybe some of these tools are gonna drive cost control and efficiency at a greater rate. How are you thinking in terms of margin development?

I'm not talking necessarily about this year, but you know, you know, over the medium term in terms of what these tools might provide for you. Just lastly, you know, in terms of alternate forms of distribution, and I'm thinking, you know, OTAs in particular, are they, you know, trying to, you know, get closer to you? You know, maybe offer you more preferential treatment than before, potentially take rate, just given the challenges that they face in this new AI world. Thanks.

Thank you, Jarrod. I'm not familiar with what other people are doing with Salesforce on CRM. I know that we are in the process of launching really an industry-leading platform with Salesforce. The purpose of it is much broader than, and really much more important than cost containment. It's about getting much closer to our 160 million IHG One Rewards members to deliver more personalized experience to them so that we can really understand their guest preferences, track them better, have a single view across the whole organization from front desk, all the way to the loyalty plan, all the way to our sales teams, all the way to the booking channels. A single view of our customer with all of their information that they share with us so we can customize experiences and offers to them.

Deepen our loyalty, we reached 160 million loyalty members around the world, 60% of our bookings every night are from IHG One Rewards, 73% in the U.S. We want to go deeper and further, and this industry-leading tool will allow us to do it. It'll bolster our top-of-funnel visibility, make us even readier for GenAI booking and searching and driving more customers through our channels. It'll strengthen our direct channels, strengthen our relationship with our customers, and strengthen our performance. In the scheme of things, making our colleagues more productive is a good thing for the company. Making them more efficient is a good thing for the company. AI clearly is a powerful tool for that. In general, what you've seen on cost containment and efficiency at IHG is very good control.

Last year, our costs were down 3%. The year before, they were up 1%. We've guided to very low single-digit growth in our overheads. Part of that is driven by applying new technology, new processes, global centers of excellence. It's a total enterprise approach to making sure that our revenue growth is at a very high level and that our cost growth is nowhere near that. We're opening up the jaws of what you mentioned then as our margin expansion. We're not saying that our margin expansion guidance has increased, we certainly have more confidence. It's more underpinned by these initiatives. The 100-150 basis points on an annual run rate basis is further underpinned by the investments we're making in technology and processes and increasing the productivity and efficiency of our teams.

We have very productive, constructive relationships with the global OTAs. We continue to have constructive relationships. We're evolving our booking platforms, our content platforms, our CRM platforms to make them AI forward, AI first. I think they're doing the same thing. I think this will benefit the industry and benefit our guests. We think we're on the right side of this equation. I think we stand to benefit more from artificial intelligence through our digital booking channels, through our new content platform, through the new conversational search tools that we're mentioning. We're gonna get closer to our guests. We'll continue to have productive dialogue and relationships with the OTAs.

Great. Thanks very much.

Thank you, Jarrod. Richard.

Your next question.

I think you're up next.

Next line of Richard Clarke of Bernstein. Your line is open.

Thanks very much. Three questions, if I may. Just the first one on the U.S., an update on government travel within the U.S., how much of that was a ongoing headwind or tailwind in the first quarter, or any a tailwind we maybe expect that's supported through the rest of the year, assuming that's something that's strong, maybe. Secondly, your press release put out, I think it was 27 or 23 of April, after 11 hotels signed in Europe. A sort of quite pointed long paragraph about a new third-party management company that's been formed by a joint venture that's gonna work with world-renowned brands. Just with that release, you know, is third-party management a big unlock in more regions?

Maybe are you expecting these new management companies to sort of drive some extra consolidation within Europe? Lastly, I guess missing from your AI announcement that everyone else has done, is a sort of ubiquitous ChatGPT app. Is that still coming, or do you have some kind of objection to that mode of distribution?

All right. Government travel in the U.S. has bottomed out last year, of course. It's a tailwind in this year in the sense that we're comping against that negative. It has started to inch up. I wouldn't say soar up, but it has started to inch up. As we look at April, it was turning positive. You know, our outlook beyond that for Q2 and Q3 is even more positive. You know, it's bottoming up and turning up. We're not expecting it to get back to pre cutback levels this year. I think, yes, over time, just it'll build up. Government has a way of just creeping up, and government spending has a way of creeping up.

Whether you appreciate that or not, this seems to be the reality. It is, it has become a, you know, a tailwind of sorts. I wouldn't say a major one because government business is not a very big part of our business to begin with, less than 5%. I mean, total government business for us in the U.S., federal, state, and local is 5%. The federal is less than that, and it bottomed out. It's picking up. It is part of the tailwind. The strongest tailwind in the U.S., though, Richard, are the economic fundamentals. GDP growth, that leads to corporate. I mean, you saw the corporate profits so far with as many companies that have reported in the S&P 500, I think over 80% beat expectations.

Strong financial markets, strong employment, wage growth, huge infrastructure investment that isn't just going to the likes of Nvidia that are selling chips or Cisco that's selling servers. It goes to plumbing companies, electrician companies, goes to roofers, goes to concrete, goes to Caterpillar, goes to, you know, a lot of what was considered old economy businesses that hire a lot of people. We, as IHG, are actually more indexed towards the hinterlands of the country, towards industrial clients, manufacturing, technology, that is the real engine of the U.S. economy today. All of this is, you know, the comping against the negatives. The tailwinds, the World Cup. All those are nice little sprinkles on top, and we're happy to take it. On your questions about the third party management agreement.

There's nothing new about third party management agreements in Europe with us. We've done it before. This is a portfolio that's being acquired by an entity that is forming a management company to operate these hotels, but part of that formation is assuming the management company of the seller. I mean, it's a joint press release that we put out. There's a lot of context behind it. We're very pleased to have this addition of these hotels in key cities in Europe, and we look forward to them joining our system as they renovate and as they get through it.

Maybe just to give you.

It's a franchise deal, to be clear. We're not involved in the joint venture. We're not involved in the management. They're the ones that have a joint venture, they're the ones that are setting up the management company, and they're the ones that are going to do the operation. It's a straight, I think, 25-year management agreement for us.

Yeah, maybe just to give a little more color on it. It's a great long-term franchise agreement for 11 hotels, covering Germany, Belgium, France. It's more than 1,800 rooms. It is asset-light in nature. We're not acquiring those hotels. It consists of 11 Penta Hotels properties today. They're all converting and rebranding into Holiday Inn, voco, Garner, and really key city center and airport locations around the regions. It will actually mark the debut of our Garner in Belgium, which is exciting to see and will take Garner close to 50 open hotels in Germany. We're excited about that, and we expect that to kinda enter into IHG system in the first half of 2027.

It's a real strategic deal, I think it goes back to the power of our brands, the power of our loyalty program. We've talked about conversions in Europe. It's a good way. This created a great way to do that, where we don't have to do leases. We can do it in an asset light way. Again, it just continues that, what we've seen over the last few years of owners wanting to get into our brand to drive up their rates, drive up their occupancies, and deliver better profit. We think we can do that, and you've seen us do that over the last few years with several different major conversions. This is another one.

On your last question about working with AI platforms and apps. As we said before, we're talking to all and working with all the major platforms, whether it's Google, whether it's OpenAI, Anthropic. We're working with everybody. If and when we launch tools and partnerships and products with them, we will disclose that. I think the most important thing, though, is getting your system and getting your content ready and getting your technology platform ready so that when people do AI searches on these apps or on these, you know, tools, that you're showing up and getting the right visibility with the right content. That's why we went to great detail. I'm not sure how many are discussing it.

Went to great detail about the new content platform that is already being launched, showing new features from every hotel, making it, you know, translatable in 20 language instantly with video, with 3D, with floor plans, with virtual reality. That's actually the most important thing. You know, launching an app store is actually pretty easy. What is the content that it's pulling? Is your content in the cloud? Is the data structured in the right way to respond? Do you have the new images? Do you have the information? Have you structured it the right way? That's the real work that is advancing, and we're very proud to be launching it right now. Yeah, we'll have all these features in the end, including our own, but that is really the endpoint of the preparation. All right. Thank you, Richard.

Your next question comes the line of Alex Brignall from Rothschild & Co Redburn. Your line is open. Alex, your line is open. Your next question comes to line of Leo Carrington from Citi.

Good morning. Thank you. May I just ask a couple of follow-ups on the system growth and then change tack and ask on demand. Firstly, on the system growth, your conversions were, I think, 35% of openings and 50%+ of signings. Do you expect a further acceleration of conversion openings this year, or is this Q1 something to do with timing impact? Then thinking about the U.S. specifically, is that mix of conversions similar to the headline level? Just picking up on some of your comments, signings and ground breaks up 30%, I think, in Americas. Your peers have indicated new build activity is improving. I wonder if you have any comments there. Then separately. In the quarter, you managed to significantly outperform the industry across all the key regions.

Can you elaborate any beyond the general strategy for the IHG system? Are there any brand or mix factors which helped outperform the business? Travel and wider, anything that might help understand that quarter and strategies going forward? Thank you.

Let me start with the last question, we can work our way back also. RevPAR performance, then we can get into system growth and conversions in Americas. Mike and I will give you as much color as we can. I've said before that we're pleased with our RevPAR performance and TRevPAR performance. We're happy with that too. It's not We don't attribute it to one single factor. I think RevPAR performance, unless there's sort of an event, right, is on a consistent basis as we've been delivering for some time, comes from a full enterprise strategy and execution across many different things.

Strengthening our brands, the quality of our brands, the innovation and renovation of our brands, the service delivery, our technology platform that we talked about a bit earlier, that we talked about it the full year, strengthening our loyalty plan that's now delivering, you know, 60% of our room nights globally, it's delivering 73% of our room nights in Americas that has grown faster than I think other loyalty plans to 165 million members. Strengthening our distribution, strengthening our relationships with our owners, our operations. It comes across many different things. In any given quarter, we're not really quantifying how much came from each, but it's a long effort to make sure every aspect of performance.

Strengthening our revenue management with the best in the industry, AI-driven machine learning revenue management system out there, that we have now in all of our hotels. Our new PMS system that's gonna be in 4,000 hotels by the end of this year, and it's already in thousands around the world. All these features improve hotel performance, by basis points here and basis points there, and it starts to add up. The nice thing about it, because it's not just one thing, it doesn't sort of unwind either. It's not just a single factor in a single quarter. We think it has momentum, we think it is structural, and we're gonna continue to invest in our business, properly to strengthen all the aspects of its performance. Michael, why don't you start on the system growth conversions?

Yeah, sure. Let me just, I'll give you some numbers just to make sure we've got the right numbers. Globally, on rooms openings in the first quarter, we opened, new build were 64% of the openings and conversions were 35%. In terms of signings globally, new build were 47% of our signings and conversions were 53%. I think that's a great, healthy balance there. We don't necessarily have a target of new build versus conversion. I think we're really excited about what we're seeing with our conversion brands, whether that's voco, Vignette, Garner. Actually, we signed our first Penta in the quarter as well. As well as what we're getting in conversions with our existing brands, like whether that be Holiday Inn Express or Holiday Inn.

I think it's encouraging to see the conversions come in, but it's also even more encouraging to see all the new builds being built, especially as we've had over the last few years and even today, some questions around the financing environment. It really goes to show. As you go into the Americas in the first quarter, 72% of our openings were new builds. That again tells you that financing is available. People believe in the long-term structural drivers of the industry and that they can make a profit on this. Seeing that come through is really great. Conversely, we had 28% of our openings were conversions. If you look at our signings, roughly 42% of those were new builds and 58% were conversions.

You see a great mix there. Really, we're going after every deal. We don't have a preference for new build or conversions. We've introduced and have a new set of brands that really allow us to go after all of those opportunities that are available to us, and that's really how we think about it. Elie, did you want to add to that?

Yeah. I mean, what we've said consistently about conversions and about new builds is we want more of both. We're not targeting the proportion, and we're seeing more of both. Our signings were up in Q1. Our openings were up. They were up in 25%. They're up again in this quarter. So we want more of both, and wherever the proportion falls, so be it. We're pleased to see both advancing, new builds and conversions, because one shows that financing is becoming more available and people have the confidence and the courage to break new ground.

On the other hand, the strength in conversion shows the strength of our enterprise, strength of the IHG brand, strength of the IHG platforms, and that people who already own hotels and have different brands are looking at the performance of our system and saying they would prefer to be with IHG and get that performance and get that relationship and get that support. We believe that continues, especially now that we have more conversion brands, including Vignette Collection, which got its first signing here in the U.K., and we know that there's more coming. You look at the success of Garner, 200 hotels open under development around, you know, around the world and 100 in the U.S. already. We're just thrilled with that in less than three years.

To answer your question, it's been sort of a theme out there is, do we see conversions traveling at a structurally higher level than they used to four or five years ago? Yes, we do. Do we want the proportion to decline or increase? We just want more of both. In aggregate numbers, we think conversions will travel at a higher level than they did before.

Okay. Thank you, Elie. Thank you, Michael.

Okay.

Your next question comes out of Alex Brignall from Rothschild & Co Redburn. Your line is open.

Thank you very much for the second chance. Following on from Jamie's question earlier, just looking at the consensus that you have on EBIT, I think Mike, you said 8%. If we sort of work backwards with the margin expansion, I think there's still a little bit of sort of fees lagging your NUG and RevPAR, and you just said that the room mix and China offset each other. I think that's likely to be sort of lag as the NUG grows or accelerates, but if you could give anything more there, that'd be very helpful. Secondly, I didn't see it in the release, but often it is not recorded, but leverage expectations for the full year, and if you have seen any changes in sort of cash conversion expectations. Thank you very much.

Alex, I'll take your, I'll take those, and Elie can jump in. I think if you look at, you know, certainly where consensus is today at $1,380, against last year at $1,265, you're talking about a 9% increase in the EBIT based on where consensus sits today. I think what you're trying to get back to is that fee triangulation question, and obviously we don't give full P&L results now, including kind of revenue, fee revenue and profit for the first quarter.

What I would say is if you go back to a lot of what we talked about last year and some of the main drivers of why the fee triangulation was happening, and why were there was a difference between the combination of RevPAR and system size and then growth, a lot of those dynamics have continued. We're continuing, as you see, our system growth is improving and continuing to grow, therefore we do have more hotels in ramp up. You do still have the fact that as hotels come into the system, there's fee. There is also fee ramp-ups that happen as part of that as well. A lot of those things are still present. We do have a few hotels under renovation, particularly around EMEAA.

It's getting. I would say it's improving and getting better. Again, I would go back to fundamentally, we are not discounting our pricing. We are not changing our royalty rates. As we said last year, at full year results announcement, we don't see this as a long-term issue for us. It's more a dynamic of the current environment. In terms of cash conversion, there has been no change to cash conversion at all. We still feel very comfortable that we'll be in the 2.5x-3x range, as we said at full year. There's been no change to that. Feel very comfortable with continuing on in that range.

Fantastic. Very good. Thank you so much.

Thank you, Alex.

Your next question comes the line of André Juillard from Deutsche Bank. Your line is open.

Good morning, gentlemen. Congratulations for this solid start to the year. Just follow-up question on the segmentation. You showed that groups were particularly strong. Could you give us some more color about the components, business, leisure, and the regions where they perform especially well? Second question also about segmentation. Could you give us some more detail about the performance of the different brands or segments, if you really outperform on the upscale and luxury versus mid-scale, or is this relatively equal? Thank you.

I can start with maybe some of the RevPAR with your second question. If you look at, you know, how we would look at IHG results, and how we really look at our luxury, upper upscale portfolio, they have performed really strong in Q1. That doesn't also mean we haven't seen good RevPAR growth in our mid-scale and upper mid-scale areas as well. Across all of those, and we said every brand had improved in RevPAR and across all the segments that we had seen improvement. Really, the RevPAR growth that we've seen, it's been quite broad-based across everything. However, luxury upper upscale has performed better as has been the continuation of the trend, particularly in the U.S., if you look at that.

We've also seen, you know, urban markets do very well. We tend to do well in suburban markets. That has been kind of in line with what we had expected. All of those markets, whether at airport, interstate, small metro result, have all been positive in the U.S. You know, what we see is the RevPAR being quite positive there. In terms of kind of demand drivers and how we've looked at it, we did talk about globally, you know, business up 6% in Q1 2026, groups up 7%, leisure up 1%. We did discuss earlier about the Americas being up, business up 6%, groups up 9%, and leisure flat in the Americas.

I think it's important to remember that across that group portfolio, there's also leisure within those groups. If you add all that together, you're really seeing strong growth across all demand drivers there. As we look forward at forward bookings, everything still remains a solid, you know, subject, you know, to the Middle East, which let's kind of put that in a box. Obviously there's an impact there, and we do know that will be recovering as we've said earlier in the call. Across all the other areas, we're really still seeing strong growth in RevPAR across business, leisure, and groups.

When the fundamentals are strong in GDP growth and employment growth, in financial market strength, in private capital investment, in tax policy across our major markets, then it becomes broad-based. I think that's what we saw in the first quarter. We start to see some of that in the fourth quarter, actually last year, building up. Definitely see it here in the first quarter. It is broad-based. It's all segments. Keep in mind that the mainstream segment is a very, very large segment. When you're growing at 2%-3% RevPAR in a very large segment, that's substantial. We have a lot of exposure to that, which is very beneficial. We see it.

Even across our corporate transient travel, it was really broad-based across industries. It was broad-based across regions, it was broad-based also, you know, even though leisure looks like it grew less than transient than group, 60% of our group is leisure. Leisure can be 100 people, you know, going to a wedding. It can be six guys going on a golf trip. That's all group, but it's actually leisure group.

Okay, very useful. Thank you.

We have one question left in the queue, but if you would like to join the queue, please press star followed by one on your telephone. And your next question comes from the line of Kate Xiao of Bank of America. Your line is open.

Thank you very much for taking my questions. Hi, Elie. Hi, Michael. I have two questions. The first one just on unit growth. I guess that 5% in Q1, how should we think about this as a reference for, you know, the cadence and shape for remainder of the year, into the next quarter or so? You know, anything to call out in terms of openings and removals, you know, the puts and takes around there for people to think about how to budget and model for the rest of the year. Second question on Garner, which you've launched into China. Can you tell us a little bit about this format, how it compares with your other mid-scale offerings in the region?

In particular, how does it compare to some of the local offers, which have been a competitive strength, from the local brands, in China? Thank you.

All right. We're pleased with our progress in net system growth. We're pleased with the strength of our signing, strength of our openings, strength of our pipeline under construction, which led to strong openings in Q1. What we've said is consensus for the year is 4.5%. We're confident in that consensus. We see more upside than downside. We're not giving any more color on the shape of the remaining quarters, but we're confident in the full year. More importantly, we're confident in the continued progression over years of our signings, of our openings, of the growth of our system. We're not saying that we're putting a ceiling on what we can reach. We're not saying that we want to reach a certain number and then stop.

We're doing it in a thoughtful, gradual, sustainable way. You've heard me say all along that we wanna do it with keys with fees, keys that have fees. We could be 6% this year. We could have been 6% last year. I don't say that just exaggeration. There was enough there for us to do it in a certain way, we don't think it would have met our requirements or standards of either quality or capital intensity or keys with fees or quality of agreement or all those things that we think create true sustainable shareholder value in an asset like business with the right fee take. We believe we're on the right trajectory, we're confident in the consensus for the year, we think there's more upside than downside.

In China, we're pleased to have launched Garner to opened up our first property in record time. It's actually a very new asset that was going to be a local brand, but the owner felt that they had such a high quality asset and in a good location that they wanted a stronger system. We don't believe that we're competing directly with the local, say, more budget brands. We are positioning Garner in China at a similar level from an ADR point of view to Holiday Inn Express, which is much more new build in China. Garner is gonna be conversion. They're gonna be similar in terms of positioning of rate and positioning of customer, say, customer income, but one more conversion, one more new build.

As you would may know, in China, a lot of structures for hotels get built before they're branded. You know, in the U.S. and in Europe, you generally don't start a hotel project until you have a brand because you need to have a brand before you get the financing or before you can even get equity participation. In China, it's just different. We've been there 51 years. We kinda know how it works. A lot of developers will start up a hotel and then find a brand along the way, sometimes just a few months before opening. That was sometimes wasn't an easy fit for Holiday Inn Express because we have a certain pretty, you know, prototypical format for Express. Garner is more targeted to buildings that are either open Express.

It gives us an additional vector of growth, but the same positioning of Express, though not directly competitive with more budget local competitors.

Interesting. Thank you.

There are no further questions on the conference line. I will now hand back over to Elie Maalouf for closing remarks.

Well, many thanks to everybody on the call today. I just wanna remind you that our second quarter update and financial results for the first half of 2026 will be announced on Tuesday, 11th of August. Thank you all and goodbye.

[Operator Instructions] And I will now hand over to Elie Maalouf to introduce the Q&A session.

Thank you, and welcome to this Q&A session. I'm Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. Hopefully, you've all had a chance to watch the results presentation, which we made available at 7:00 U.K. time this morning, featuring myself and Michael Glover, our Chief Financial Officer. Michael and I are in different locations today. Michael is at our headquarters in Windsor and I am currently with our business in the U.S. So do bear with us as we coordinate sharing the questions. Before we open the line to take the first questions, I will briefly summarize our excellent performance in 2025. Our RevPAR grew by 1.5%, reflecting the breadth of our geographic footprint, the depth of our brands and the resilience of our operating model. We delivered gross system growth of 6.6% and net system growth of 4.7%, driven by outstanding development activity and record hotel openings. We signed over 102,000 rooms across 694 hotels, a 9% increase with over 2024 when excluding the Ruby acquisition in 2025 and the NOVUM Hospitality agreement in 2024. We expanded our fee margin by 360 basis points, driven by operating leverage and step-ups in ancillary fee streams. EBIT grew 13% and adjusted EPS grew 16%, supported by the completion of 2025's $900 million share buyback. In summary, we made excellent progress on our strategic priorities and we are confident in the strength of our enterprise platform and the attractive long-term growth outlook. Touching briefly on 2026, while very early in the year, we have seen and are pleased with the trading performance to date in all three regions. We have also announced a new -- today, a new $950 million share buyback program and formally launched our latest brand, Noted Collection. And with that, let me turn it over to the operator to take the first question.

Thank you, Elie. And your first question comes from the line of Richard Clarke of Bernstein.

If I'm allowed, I'll do three. I guess, if I look back at 2025, if I was to strip out the cost savings and the boost on card revenues and points revenues, I think your EPS would have grown off algorithm about somewhere in the mid-single digits. I appreciate it wasn't the best RevPAR year. If RevPAR doesn't play role in 2026 or going forward, do you have other levers to pull to kind of make sure you hit your algorithm? I guess second question, you said a couple of times, Michael, that there's some key money that's been deferred into the first quarter of 2026, just the scope of that and whether that should make us quite optimistic about unit growth and sort of luxury unit growth in 2026? And then thirdly, I think there was -- your margins down in China. You talk -- made a comment about improving unit economics or owner returns in China. I guess Holiday Inn Express now a $22 RevPAR brand in China? I don't think you'd open a $22 RevPAR brand in the U.S. So do you need to improve those RevPAR numbers? Do you need to improve owner returns? Does the brand work at that level of RevPAR?

Thank you, Richard. I'll take the key money question first. And then I'll turn over the fee margin triangulation while I'll touch on it briefly, then hand over to Michael for some details and turn over to him the margin question on China. So first on key money, as you saw in Michael's presentation, we have been very prudent and thoughtful deployers of capital across a range of places we -- and manners in which we deploy capital, whether it's key money, recyclable maintenance and, of course, our capital returns to shareholders. If you go back over an extended period of time, our capital has been fundamentally stable, up some years, down some years, because some of it's lumpy, but it's been pretty stable, while our revenues and profits have grown significantly, something we're very pleased with. But some of these investments, whether it's key money, whether recyclable, can be lumpy instead of happening towards the end of 1 year, they may happen in the other. So we're flagging that, some of it may roll over from '25 into '26, but then you never know what rolls over from '26 to '27. Nonetheless, we are confident in the growth track record that we have. Our 4.7% system size growth in 2025 is the 4th year of acceleration. Our 6 -- our best in 6 years. Our signings were strong, as you can see, up 9%. Our pipeline grew 4.4%. Our openings were strong at 10%. And that just shows that we have a lot of firepower. Now, we have more brands with Noted Collection being announced today. We're not putting a ceiling on our growth potential for 2026. The consensus is 4.4%. I would say there's more upside than downside to that number, but we're comfortable with it where it sits. And we think we have even more potential to continue to accelerate that system size growth. Michael will touch on the fee triangulation for 2025. Before he takes on the China margin thing, look, we have a lot of confidence in our trajectory in China. I've been saying for 2 years now that China is bottoming out gradually. It turned out to actually be true at some point, right? And we saw it gradually bottom out in 2025 quarter-after-quarter, turned positive in the fourth quarter. Indications are that, that will continue in the first quarter of 2026 and into the year. We have a bigger system now with over 880 hotels open, over 550 underdevelopment, record signings and openings again. And the economics at a general level, Michael will take you through the details. Our economics work across our brands. That strong signings, strong performance, strong openings of Express in China last year, where we keep the full economics, economics work for our owners. Now different tier markets have different rates, as you know. But because of the very strong openings that we have, that RevPAR is also influenced by the ramp-up, right? So many of those hotels are new in the year in China. Express is our fastest-growing brand. It was our latest growing brand, too, the one that started growing the latest because we started with Holiday Inn, Crowne Plaza, and InterContinental. So a lot of these brands are still in ramp-up. And some of them -- in fact, some of the hotels are still ramping up post pandemic. So I think that, that is influencing the RevPAR. If you look at the RevPAR in total in China, it's about half of where it is in the U.S., which is a good place to be for a GDP that's per capita that's probably 1/8 of what it is in the U.S., right? So you actually see leverage on the RevPAR from the GDP per capita economy, it's growing at 5%, the technology sector that is actually competitive with the U.S. technology sector, leaders in renewables, leaders in many industries, exports again at a record last year. We're confident in the Chinese economy. We're confident in our business in China. We're confident in how our hotels are going to perform in China. Michael, over to you.

Thanks, Elie. Yes, let me -- Richard, let me first go to your first question on kind of 2025 in earnings per share without the ancillaries and cost savings. I guess the first thing I would say there is the ancillaries are not going to stop growing. And so, if you look at what we've said kind of moving forward, while we don't have the step-ups next year, we do see strong growth there and at a rate in the double digits, above 10%. So we do still see that moving forward. The second thing around cost, obviously, we've talked about this a bit at the half year. When Elie and I came in, we really started to focus and look at how we could look at this cost base and how we could change the curve and really be able to take more dollars of revenue to the bottom line. And obviously, you've seen us do that in 2025 with costs being down about 3%. Now next year, we're -- in 2026, what we're looking at, is that being coming back and being around an increase of 1%, but still having some of that savings come through that we've been doing with our programs. And so we still feel like we'll have strong cost control as we move into 2026. And then, I think the other thing that we also mentioned at the half year was really around the fee triangulation where I think we talk about and many of you will know where you look at RevPAR and system size and look at the fee revenue growth. And we mentioned kind of a few things that were really impacting us in 2025. First and foremost, which is a really -- is a good thing, is that we've had a record number of openings. And obviously, as those hotels open, they're not fully ramped. So you don't get the fee income as quickly as you would normally because you're actually accelerating those openings. So it's not normalized yet year-over-year. And so you're having a bit of that impact in there as well. We also mentioned we have a large number of hotels under renovation that obviously has a fee impact as those hotels close and renovate and then come open again. And then the third thing was we mentioned at the half year was that we had a few large exits, particularly two hotels in New York, where the replacement hotel hasn't come in, but will be coming in and ramping up soon. So that's affected that fee triangulation and fee growth in the Americas. So we expect that to normalize as we move into this year and not have some of those effects. The other effect is you have the NOVUM Hotels, who came in and are in the process of ramping up. That was a large impact as they -- because a large set of hotels have come in over the last year or so. And then some smaller things like you had one less day with leap year this year. So a few smaller things there. I think we feel confident over the medium to long term, we can still get back to our growth algorithm, and that's still going to grow. I think what we showed this year is really the breadth of our organization and how we can actually, even in a turbulent time, as we've said, we can still deliver that growth algorithm, and we feel confident that we can continue to do that. And just I'll just add to, Elie's key money point. It is lumpy. And certainly, we have not changed that guidance at all that we're going to be in that $200 million to $250 million range. So same as what we said last year. And that overall capital will be around that $350 million a year mark. So we'll continue with that guidance and view there. In terms of China, the margin was down very slightly. And -- but yet overall profit was still up by $1 million. So overall, a good result in a year where you had RevPAR negative. And so, I think as we go forward, we've talked about and been saying for quite some time that China RevPAR is bottoming out. And we really saw that happen throughout the year with the fourth quarter actually turning positive, 1.1%. And as Elie mentioned, we're really pleased with how RevPAR is starting to shape up in Q1. We mentioned last year at the Q3 announcement, we felt like Q4 could -- sorry, Q1 into 2026 might look negative because of some of the tougher comps. As we sit here today, it looks like all three regions will be positive, and that includes China. And so early training indicating that it looks good. So let me pass back to Elie and just see if he wants to add anything on there.

No, Michael, that was great. Just on those factors affecting the fee triangulation for 2025, just note that most of those are positive things, right? Strong openings way above the prior year's renovations, then all those other factors, whether it was a leap year or whatever, all those -- we start to comp against in a better way. So they were good factors in one end and then they become tailwinds as we go forward.

And your next question comes from the line of Jaafar Mestari of BNP Paribas.

I have two, if that's okay. The first one is just on the fee business overheads. Those $23 million of cost efficiencies in '25, should we assume they were broad-based across the three regions, across central costs? Or was the restructuring this year particularly targeted in one region, thinking specifically Americas, were you able to flex the costs more in response to what's been a turbulent here? And then on credit card fees and ancillary fees in general, when you announced your two big renegotiations 18 months ago, loyalty point sales and the credit card fees, you are the only major global company to have something of that materiality going on really. It looks like you were closing the gap with U.S. peers who had historically more material contribution from those, and it's great that you're able to have a bit of a mark-to-market with issuers as you're much stronger today, et cetera. But since then, we've now seen Hyatt last November and then Marriott just last week, also announced their own major renegotiations, big explicit millions of dollars targets for increase in fee contributions over the next few years. My question is, once everyone is fully ramped up, so you've had your step up, it will continue to grow. They will have their step-up in the next 12, 18 months. When everyone's fully ramped up, where do you think that gap will be? Because historically, you were saying, well, we're a bit behind. We can convince insurers and increase that and catch-up. Where do you think that will be? Will the gap have closed over 36 months as everyone gets the renegotiations? Or will it have just translated your level of ancillaries and their level of ancillaries, please?

Thank you Jaafar, let me take those questions, and Michael, of course, jump in and build on that. So on the fee business cost, I think we just have to pull back and touch on what Michael said in his presentation earlier, what he mentioned when speaking to Richard's questions. We've always maintained a highly disciplined approach to cost management. If you look at the presentation, our cost growth over a long period of time has been well below revenue and profit growth. But since Michael and I came in, we've taken a more philosophical view of how do we just shape the whole cost structure for the future, make it future-ready, scalable, using technology, new processes, shared services, locations and now artificial intelligence. So we can continue in the future to grow revenues and profits at a much higher gradient than cost. This was not a reaction to last year because actually, we started our work, our strategic work when he and I assumed our positions in 2023. And it took some time to really design it strategically. We had outside help. We have inside teams. We had a long runway of work that we started deploying in 2024. We saw our cost growth in 2024, be only 1%. Then you saw cost reduction of up to minus 3% in 2025. So there's been a trajectory of us bringing in these initiatives in a thoughtful strategic way, not a reaction to a market that was up, for a market that was down. It's just really reshaping our cost base and our processes and our technology and taking advantage of new technologies like AI. So that is generally how we achieved the benefits of 2024 plus 1%, 2025, minus 3%. And we're saying that going forward, low or very low single digits is what would happen on average. It could be a little bit different from year-to-year, but we're not actually done with the opportunities in cost efficiency as technology continues to give us more opportunity. On the credit card fees, look, I won't comment on what others have renegotiated. Are we negotiating? Will we renegotiate? Those are questions for them, and we don't have the particulars of all the arrangements or where they plan to be in the future. What we do know is we have a lot of upside and a lot of exciting upside. Maybe the most upside, I don't know about other businesses, but we believe we have a lot or maybe the most upside in the industry. And we started delivering that in 2025 by doubling the fees and credit cards earned from 2023. And then we continue to be on the right track to triple it by 2028. We're not putting a ceiling on it. Whatsoever, we think it continues to grow from there. And I think that the -- as we grow our system, a number of hotels, as we grow our membership and IHG One Rewards is now 160 million members at a fast growth rate from 145 million. As we grow the engagement of our guests, it's not really how many members you have, it's how engaged you are. And now we're at 66% of our members constituting our nightly stays, 72%, 73% in the United States. So we're right up there in the industry. So we've got more members. They're more engaged, they're spending more. They're taking out more credit cards. Our sign-ups are up double digits for cards. And that is all fueling our growth in card fees, and that will continue. We don't see a ceiling to it. How it compares to others, I'm confident we compare very favorable to others. And frankly, the more potential others reveal, the higher our ceiling goes. So I'm not discouraged by what others are doing. In fact, it encourages me. Michael, do you want to -- just want to comment on overheads?

Yes, let me jump in on both of those actually. And Jaafar, great question on the overheads. And Elie mentioned it is broad-based, but he also mainly covered the P&L. And I'd say we've also done this within the system fund as well. Because that gives us more firepower as well. And so actually in terms of total dollars, we've saved more as a part of this program in the system fund than we have in the P&L, which is actually great, because it allows us to reinvest and go after things that drive revenue. And then if you look at kind of by region and being broad-based, it was across every region and every function within IHG, but we also had investment. And I think that's important to note as well. Certainly, we had the investment about integrating Ruby coming in EMEAA. That's why you might see some of the costs a little -- not as much down in EMEAA actually, I think it was slightly up. But we're also investing in places like India. And I think that's really important that it's not just about cost reduction, it's about investing our dollars where we can get the most growth in the future and repurposing those dollars. And that's what we want to do. Because we've said many, many times, our biggest risk is not capturing our share of that growth in the future because this is a growth industry, it's an industry that's going to achieve higher highs and higher lows. And we want to be a part of that, we want to participate. We want to compete in that. On the credit card fees, the only thing I'd add there is we announced a new credit card, Revolut, a deal here in the U.K. with Revolut, we have more countries we can go to, and it doesn't bring the quantum for sure that the U.S. does, and it's much smaller. But that just shows the power of the loyalty program as it grows. We have more opportunity in different countries around the world to continue to launch that. It's great to launch one here in the U.K., and we're in the process of launching others around the world and as we get those agreements done, we'll let you know about them. I'll pass it back to you, Elie.

Thank you, Michael. Thanks for Jaafar. I'll just add that in addition to credit cards and our ancillaries, let's not forget our point sales business, which grows very nicely and also has no ceiling to it and our emerging and rapidly growing branded residencies, all of which are high margin accretive to our bottom line. Next question.

Your next question comes from the line of Jamie Rollo of Morgan Stanley.

Three questions too, please. First, just on that Branded Residence income. I don't think you've quantified it yet. I know you've got 30 projects, both open and in the pipeline. But what did those generate for you last year? And when you say substantial increase in '27 and beyond, could you sort of give us some numbers behind that, please? Secondly, on the removals rate, I think it was 1.9% ex the Venetian. Should we expect that to fall back towards sort of 1.5% this year? Is that what's giving you confidence to the upside to the consensus 4.4% net unit growth? And then just coming back, if I may, on the sort of gap between the comparable and the total RevPAR and then looking at the fees, you've got a helpful slide on Slide 56. So there's about a 2-point gap between comparable and total RevPAR. And there's also another couple of points in the three regions between underlying fee income and the sum of total RevPAR and available rooms. Are you saying that those timing issues mean that those negative figures turn positive this year or at some point in the future? Just to, sort of, clarify the algorithm.

Thank you, Jamie. I'll take Branded Residences, removals, I'll turn over the fee income to Michael, and anything else he wants to build on. So look, Branded Residences, we're very excited about that business. It builds on the power of our Luxury & Lifestyle portfolio, that just keeps growing with the six brands we have now, mainly the ultra-luxury brands: Six Senses and Regent. I mean, just let me just give you an anecdote. I was -- I've already been to six countries, it's not even mid-February yet and -- or it is just mid-February. And I was in Bangkok early this month, late last month, and we have an InterContinental Residence project that had just started sales in the heart of the city, in December, of speaking to the owner, they were 40% sold by mid-January that raised prices 4x. I told them they have to raise prices again to slow these sales down. So -- and that's InterContinental, not even Regent and Six Senses, where we have most of our projects. So there's more coming across more brands. Yes, we have 30 projects today. We have many more that are going into the sales space. They are in London, when Six Senses is London is opening this coming month. The Branded Residences are all sold out or maybe there's one left I understand. Up to now, I'd say the fees range have not been that material. It's been $5 million to $10 million. However, we see substantial increase in that starting in 2027 and beyond. So again, we're not putting a ceiling on that. We think it's totally accretive, and we're very excited about where it's going. On the removals rate, yes, we're confident it will go back towards the 1.5% over the next few years. There was just a lot of lumpiness going on right now, especially in China as things normalize post-pandemic, but we see a path to clearly back to the 1.5%. I don't think that's the only thing that can give us -- it is lumpy, but I don't think it's the only thing that can give us more upside in 2026. The strength of our signings, the strength of our brand portfolio, the proven enterprise to get more openings going, whether it's conversion or even new build, all of that put together gives us more confidence in our system growth over the medium to long term. Yes, there's opportunity also in lower removals, but that's not the primary thing. It's a combination of everything. Michael, if you want to build on those and answer the question on fee income.

Yes, sure. I mean, I was going to say the similar on the net system size. I mean, we've been saying consensus is at 4.4% for next year. We certainly feel like there's more opportunity on the upside of that. Then there is risk to the downside as we move into the year based on the visibility we have. And really, Jamie, it's not just about removals coming down, which we do believe they will. It's really about those openings and how things are proving out and what we look at, we see really strong growth across EMEAA and China. You saw that in our results this year. We see -- if you exclude the Venetian, the U.S. at 1.5%, we're on the right track record or the Americas at 1.5%. We're on the right track there. So I think, we feel confident in that, and that's why we're willing to say that there's more opportunity to the upside to that 4.4%. And then when you look back -- and on your third question regarding the table in the chart -- in the presentation, thank you. We thought that would be helpful. It is. It is helpful, but it also goes back to what we talked about earlier and the reason for that total RevPAR being less than the comparable RevPAR, particularly the ramp-up of hotels. So it takes sometime for hotels once they open to build that base business and then begin to yield as you open more hotels, and we have that acceleration in openings, you've got more hotels in that as a percentage of your system than you used to have. And so that's affecting that. You also have the renovation effect. There's also, of course, the leap year effect, but then also the mix effect of when -- as hotels are opening around the world. So I think over time, yes, that gets back and that normalizes. We're going to still open as many hotels as we can. So we want to continue that as you see that acceleration. And really, you go back to Elie's point, of us growing our system size over the last 4 years. It just puts more openings in there and more hotels ramping up as a percent of the system size versus what we used to have. And so I do think that normalizes over time, and we get to a better position. And I'll pass back to Elie, if there's anything else.

Thank you, Jamie. Next caller.

And your next question comes from the line of Ricardo Benevides Freitas of Santander.

Two questions from my end. Firstly, on the brand portfolio, we've seen these two recent additions to your collections brand portfolio, right? What I wanted to ask is what other thematics, let's say, are you willing to approach on further brand acquisitions or entering? Is it more collections or any other specific team? And I wanted to ask you regarding -- I mean, you've had a very strong cash flow generation this year. Your net debt seems to be very under control. Why not a bit more allocated towards your share buyback program?

Thank you, Ricardo. I'll take the two questions and Michael, if you can build on the cash generation and leverage, if you wish. Look, obviously, we don't comment on what else we're going to launch until we launch and tell you, like today. And so actually, we indicated this collection in Q3, and we just named it today and formally launched, and we're very excited about it, reaching 150 hotels. We're starting in EMEAA with Noted Collections really because EMEAA has the largest percentage of unbranded hotels and we've typically launched our collection and conversion brands in EMEAA before going to east and west from there. So that's the future of the brand. It won't be just in EMEAA, but we'll go east and west, but establishes itself in EMEAA first. We do look at M&A from time-to-time, as you know, and we did Ruby acquisition last year. We don't need M&A to grow. It's helpful if we find the right opportunity in the portfolio. It's most likely -- although I won't say exclusively, it's most likely to be in premium and above premium, upper upscale luxury lifestyle, and we tend to launch our own brands, when it's a soft brand like Noted Collection or whether it's a mainstream brand like Garner, those we tend to launch on our own, although there could be exceptions to that. But we don't need M&A to grow. We have 21 very strong brands now. 11 of which launched in the last 11 years with a lot of runway. So those are still new. Those are basically still new and new to new countries. I think in 2025, there were 32 or 33 instances when we took one of our existing brands to a new country. As far as that country is concerned, that's a new brand launch, right? That's a new brand launch. So we have many more of these new country launches ahead of us for our brand portfolio, while we look at what else we could be interested in. What are some territories it could be appealing to us? We've been very successful in ultra luxury with the Regent and Six Senses. I'd say extremely successful, not just in the hotel brand itself by expanding it, also expanding into Branded Residences. If there was a right opportunity, we could add more there. We've talked before about looking at branded shared home rentals. It's something we'll continue to explore. Anything in premium, lifestyle like Ruby is interesting. Only if it's accretive, if it's different and differentiated from the brands you already have, if it's at the right valuation also, or the right trajectory if we launch it ourselves, we don't need it given the strength of our portfolio. But look, it's a dynamic industry, right? Guests interest are dynamic, owner, investment interests are dynamic. So our strategy can't be static. That's why we've added to our portfolio thoughtfully, but we're not competing with anybody to have a most number of brands, I don't think that, that is a recipe for success. We're competing for having the right brands for the right guests and the right owners. On cash generation, we have a very clear capital allocation policy and philosophy. First, we invest in the business, just like launching Noted or buying Ruby to grow the business because that's where the highest returns on invested capital come from for our shareholders. Number two, we maintain and grow our ordinary dividend. And number three, we return surplus capital to shareholders. And only when it's surplus. Fortunately, we have a strong asset-light growing cash-generating business that converts 100% on average of adjusted earnings into cash flow. And again, in 2025, we did that. And so we can return surplus capital. And we wanted to get it back into the stated leverage range of 2.5% to 3%, and we are. So we're confident that our business model can continue to generate surplus cash flow over the years and that we can return surplus cash flow to shareholders. But we're not commenting on where else our share buyback will go in the future. Michael, do you wish to build on that?

Yes. I mean, you said that really well. What I would also just say, if you go back and look at kind of where we were in -- when we first started the buybacks again, back in 2023, we were well below the leverage range. And so a lot of what you had going on in our buybacks was a step-up to get back into the range. And we finally have arrived in that. And I think what's exciting about this buyback is that we're able to actually grow the buyback again this year and be in the range. So we're no longer getting that -- delivering the buyback and having any of the step-up come in as part of that buyback, which is really a good indication of the kind of cash generation that this business can do. I'm very happy with that. And I'm also -- there's just a couple of other things, kind of nuanced in there that are really, really helpful. One, we've eliminated that we've greatly eliminated the currency translation on our debt. That's a huge benefit for us. And by the end of this year in the first quarter of next year, we will have completely eliminated that many of you who have followed us for many years have known about that. The other thing was we refinanced our RCF this year and have taken out and no longer have debt covenants on that. That gives us a lot of flexibility. And as we've said many times, with our shareholders, and the expectation is that we will continue to do buybacks. And so whether it's delivering cash this year or at the next one, we will do that and we're committed to do that. You've seen our track record on that from the $500 million we did in 2023 to the $750 million we did in '24 and -- excuse me, the $750 million we did in '23, the $800 million we did in '24 and then $900 million we did in '25. We've built that track record, and we'll continue to do that.

Your next question comes from the line of Jaina Mistry of Barclays.

I have three questions as well, two follow-ups. So the first follow-up is around Branded Resi. When we're thinking about your growth algos of 100 to 150 bps on the margin or roughly 10% EBIT growth, should we think about Branded Resi next year is contributing to growth over and above that algo? And then second question is around net unit growth. I mean, your commentary sounded really quite confident and bullish around it. If we're thinking about net unit growth being around the 4.5% mark in 2026. Is this the run rate going forward for the medium term as well, somewhere between 4.5% and 5%? And then very lastly, just on RevPAR, I wondered if you could set the stage for '26. Why are you confident in an inflection? Or indeed, are you confident in an inflection? And could you give some color by region about what you're expecting?

Thank you, Jaina. Let me start with your last question and then work our way back. Michael, please build on my responses, if you wish. So let me start with RevPAR outlook. Understanding we don't give guidance either by quarter or by year, but just give you some context also by region. Let's start where I'm sitting today in the United States, although by tomorrow morning, I'll be back in London. And if you look at 2025, we're very pleased with our performance in 2025 in the United States. We believe it was competitive, but we also know there was some burden on the industry 2025, which started very well in January and February. And then we had a series of things that became sort of headwinds. You have the tariff anxiety and uncertainty. You had reductions in government spending. The Dodge project, which affected government travel down, say, 20% on average. Then you had reductions in inbound, mostly from Canada, but a little bit also from Mexico and from Europe. Inbound for the U.S. ends up being down 4%. And then you had a record government blend shutdown in the fourth quarter. You take all those things, and yet, I think we performed competitively in 2025. Those things either don't reappear in 2026 in the U.S. or they don't get worse. We don't think government travel gets worse, it may not get better. We don't think there's going to be a government shutdown at that length or maybe not even one or whatsoever. Instead of reduced international travel, we got the World Cup. We've got [ USD 250 ]. In many cases, we've got a weaker dollar, which is not unhelpful. And so the comps get better going into 2026. But on top of that -- on top of that, the structural reasons to be confident in the U.S. are not a few. You have strong GDP growth as an exit rate from 2025. You have strong employment. Some months, the job report is higher than others, but January was surprisingly strong. Regardless, we're still at a record number of people employed in the U.S., low unemployment, real wage growth, diminishing inflation, improving trajectory for interest rates, they're at least stable to going down. Consumers are still spending up in October, November, 2.6%. Wages are outpacing inflation. The corporate area has clarity on tax after last year's tax bill, and that starts to be beneficial to individuals and to corporations this year with accelerated depreciation and higher refunds coming back. And so you put those things together, in addition with the super cycle of capital investment from technology companies, not just in AI and in technology, but also in the energy to provide that and infrastructure to provide that. That's just private sector investment. I mean, four companies have announced spending $660 billion. That's just four companies, let alone the others. So we've got a lot of capital investment going in. So I think that gives you confidence that the U.S. starts to comp against some negative factors last year. It's got a lot of positive factors. We're not putting a number on where the U.S. could be this year, but you have to -- you have to be a big pessimist to believe it doesn't have better fundamentals in '26 and 2025. Then I flip to the other side of the world. In China, I think it's visible, right, that we bottomed out. We've always said it won't be a V-shaped recovery, and we don't think it will be, but it's a recovery. It's a U-shaped recovery. We think the gradient is upward from where we are now ready. And that becomes a tailwind for us with a much bigger system, strong signing, strong openings, a leading position in the industry across all tiers. So we're confident about what's happening there. And then that China outbound that was up 22% last year at high rates, that is fueling our growth in Southeast Asia, big numbers in RevPAR, whether it's in Vietnam, Japan, South Korea, Indonesia, all those markets are strong for us because of the Chinese outbound. The Middle East strong double-digit to high single-digit RevPAR whether it's in UAE, in Dubai, regardless of the uncertainty, Middle East, our RevPAR was very strong there. So that region is doing well. In Europe, yes, low GDP growth, but what do you know? Strong travel growth. Mid-4s RevPAR last year, strong exit rate in Q4. And people travel to Europe from the U.S. was up 3% last year, Middle East going to Europe, Chinese travelers come back to Europe. So when I look across the globe, everything seems to be favorable compared to 2025, where we were negative in China returning positive, where things were flat in the U.S. there's fundamental for a little more optimism. And our EMEAA region continues to move at a good pace. So that's kind of why we are constructive about RevPAR going into 2026. And the early indicators, while early, and I'll say that we have a short booking windows, 60% of our bookings come in the last week, but early indicators so far are positive in all regions. On net unit growth, I think I talked about it earlier. We -- we've had a consistent trajectory now for 4 years of growing net unit growth, best in 6 years. In 2025, our strong signings and strong construction starts with 50% of our pipeline now under construction give us confidence in more openings. Our strong signings give us confidence in owner demand for our brands. Our brand portfolio is stronger. We're not putting a ceiling on where our net unit growth can be. We're comfortable with consensus where it is, Michael and I have both said that we think there's more upside than downside. But we're really more focused about the long-term trajectory for that to be sustainable so that we're not just doing say, unproductive uneconomic things to increase or not to work. You've heard me speak for years now, but keys with fees, not just keys. That's what we're focused on in all of our markets, but we think that's what we're achieving. We're not putting a ceiling on where we can go. We're very ambitious, but we're comfortable with the consensus. And Branded Residences. It's going to be a significant contributor over time. I think that probably starts in '27, given the time it takes for some of these projects to come for sale. And we -- when you start to look at it within the growth algorithm, all these things start to fall in it. We have a range of 100 to 150, sometimes, some years, some things will push us to the upper end of the range or slightly above the range. Some years, it won't happen quite like that. But at some point, it all starts to work within the algorithm. So we're comfortable that Branded Residences just gives us more confidence about our growth algorithm going forward. Michael, please jump in.

Elie, no, I mean I think you covered it in detail. Nothing more for me to add.

Let's take the next caller.

Your next question comes from the line of Alex Brignall of Rothschild & Co Redburn.

I'm just going to stick to one, if that's okay. It's a similar vein to Richard and Jamie earlier. If I take your fee revenues less your non-RevPAR fee revenues than your sort of take rate as a percentage of gross revenues was down 8 basis points this year, and it was down 6 basis points the year before and is down sort of 25, 30 basis points from pre-COVID levels. There was some noise in the COVID years. I can't imagine that this is from existing contracts. So how do we solve for that in terms of the contribution of new properties? The same trend is exactly as seen at Marriott and actually also Hilton this year. So how do we -- how does that not mean that new rooms are coming with a slightly lower sort of effective royalty rate?

Alex, thank you for your question. I'll take it, then Michael build on it. Our take rate is not reducing. I can tell you that. So there may be -- there are a few factors working into it. As we moved into more luxury lifestyle premium, and we've been very open about it, our key money has moved up too, because we're now participating by strategic choice in a sector that has more key money to plan it, but also has higher fees. So that key money amortization is starting to come through and affect a little bit of the fee revenue, and we've quantified that actually for you. And so I think that there is that factor and the -- but our fee rates that we get, whether it's mainstream, whether it's some premium, with a Luxury & Lifestyle have not been diminishing. And so you might be seeing some year-over-year fluctuations due to normalization of key money or other factors, but it's not a headline fee rate change. Michael?

Yes. I mean, I just would go back to the same factors I said when -- on Jamie's question, and Richard's question as well. I mean, it's just a bit of noise, Alex, right now. It goes back to these record level of openings being incrementally more than what we've had in the past. And just to give you an idea, it takes time for a hotel to ramp up. And because we've had such strong openings, you've got a greater percentage of that in your system. Over time, if those are normal -- openings are normalized, and it equals, it equals. But you've got more hotels earning less fees as they come in. And so that's affecting your fee triangulation and some of that fee growth. Now that normalizes over time. So that's why I say it's a bit of noise. Elie discussed the key money, which we talked about as well. We've talked about leap year, we've talked about renovations. There's a number of things like that, that are -- that's kind of in there that's affecting this. As we look out and we look forward and we model this business, there is nothing to suggest that we will not still be able to hit that high single-digit fee revenue growth over time. I go back to the algorithm. There's no reason to believe we can't generate the 100 to 150 basis points of margin improvement. We've been demonstrating that over the past several years and including that EBIT growth of around 10%. And that earnings per share growth in the 12% to 15% range. Everything we do, everything we look at how we model the business, nothing of that has changed with this noise that we're kind of seeing right now.

I mean, if you look at the pace of openings, Alex, not only was it a record in a number of hotels last year, but a lot of our openings tend to be skewed to the second half. Our fourth quarter tends to be our biggest opening. So from an arithmetic point of view, you're not really even getting 6 months of fees in that given year for those openings while the unit now accounts for the full year. Now that's okay if you have the same percentage increase in openings year-over-year because you start to lap all the same amount. But when you have a surge of openings like we've had, then you get a bit of dislocation, which normalizes. We're happy with that. We'd rather have more openings happening sooner. And as the hotels ramp up, the fees will come through. That doesn't concern us.

I just -- that's why I didn't ask the question like Richard and Jamie, I asked it as a percentage of the gross revenues, which would be, I guess, -- is there a reason for the fee revenues, just the net fee revenues and the gross revenues to have different timing? I wouldn't have thought that, that would affect in a year.

No, I mean, I think gross -- I mean, you get the fee -- Michael, maybe you can help with that, but the -- you get to the net fee from the gross fees and you're not earning the gross fees if the hotel opens in October. You're not earning the same amount of gross fees from a hotel that has a partial year of revenue but has a full year of denominators and net unit growth. So I think that it's -- you're not earning the full fees yet. So it's the same thing.

But the gross revenues would be -- and the gross fees are counted in the same way. That's why I'm not looking at it versus NUG. I'm just looking at it versus gross revenues, which you've disclosed in the release and the net revenues that you've disclosed in the release, and that's where the royalty rates has come down a bit. But we can take it offline.

Yes. Just I want to conclude that there is nothing that we see where our royalty rate is decreasing across any of our brands or our management fees neither. Thank you, Alex.

Your next question comes from the line of Andre Juillard of Deutsche Bank.

Just two follow-up questions for me. First is on segmentation. Could you give us some more color about the trend you're seeing segment-by-segment? And do you see a pickup in the MI segment especially? Second question about AI. I really appreciate the Slide 40, 41. Could you give us some more granularity about the disruption you're expecting from AI? Is it mainly a top line driver, a mix of top line and cost optimization? Is it a real change in the yield management? So I would appreciate any information you could give us.

Okay. Well, thank you, Andre. I'll start with your second question on AI. I'll turn over the question on segmentation to Michael, okay? So just bear with me because when we talk about artificial intelligence, we shouldn't just focus on one small thing, because our strategy around artificial intelligence and what we're seeing is broad and enterprise-wide. Yes, there is disruption, but I want to start by saying that there are two things that we fundamentally believe are not changing. The first one is that there will always be a guest that will want to travel for business or for leisure. We absolutely see no change in that. In fact, we see more interest in that. And on the other hand, they want to go to a destination that has a live real experience. The more people experience the virtual, the artificial, the digital, the more they favor live experiences. Sports events, theater, restaurant, bar and hotel, people want live experience, everything in between, the distribution, how you get there, how you book, how you view it, how you share it, how you search it, that is changing. We don't think it's a disruption for us. We think it's an opportunity for us. And we feel like we're in a strong position to capitalize on these opportunities and to actually deepen our competitive moat because of the huge strides we've made in recent years to modernize our tech stack. We're in a fortunate position because of the work we've been doing over 5, 6 years. You've heard me talk about our guest reservation system on the call. We're the first to roll out this industry-leading guest reservation system. Then we migrated our core enterprise data to the cloud and that allows to quickly plug AI powered systems into our tech ecosystem. Since then, we were the first to deploy machine learning AI revenue management to all of our hotels. So to your question about revenue management, we're already doing it. It's all of our hotels, AI Powered. Then we added new cloud-based DMS platform that will be most of our hotels by the end of this year. And now we're adding new loyalty and digital content platforms. So this foundation of systems, platforms, data solutions, places us in a very strong place and to be AI ready. And the areas of focus are generally the ones that you touched on, guest acquisition, commercial optimization, cost efficiency. So on guest acquisition, yes, it's about delivering top funnel visibility, driving booking conversion and deepening guest loyalty. I mean today, 66% of our global room nights come through IHG One Rewards. So strengthening that incredible foundation is a big opportunity. And we do that. First, in search, with this new content platform that we discussed in my presentation today, now we're going to be able -- which we're launching this content platform at scale this year. We already started launching some elements this year. You're going to be able to take all that digital information, the right information, put it in the right channel at the right time, that strengthens those digital hooks needed for our hotels to be recommended by AI agents. This matters as travel search patterns evolve. It will also create new ways to combine information digitally, move it around, shift it, recombine it, unlocking the greater flexibility and how this content is created, deliver, personalized. So it makes it an even more powerful factor when layering AI-generated search on top of it. And you're going to have more engaging types of content, which we don't have today, but we will, video, 360 images, virtual tours, automated language translation, floor plans, everything to get the attention, a, of guests searching directly or of their agents doing it. And we're going to begin deploying this platform this year. Second, in discover sort of we're working on trip planning capabilities in partnership with Google. It's not a stand-alone project for us. It's an evolution of how our guests plan trips and enabling a more conversational search experience on IHG's owned websites and apps. So we are going to be leaders ourselves in this. And we're going to be testing these capabilities with external customers later this year. And then we're adding AI-powered marketing across all of our tools for more targeted, more personalized, meaningful improvements on click-through rates and on ROI. Then, we mentioned in my presentation, a brand-new CRM system powered by Salesforce that launches this year for our loyalty platform, unifying all of our customer data in a new cloud-based system. This gives us a seamless view of our loyalty members, all their experiences, whether they're calling a customer care center, checking into hotel, requesting a copy of their bill, we can provide more personalized experiences, more relevant promotions, better benefits, loyalty rewards faster, more efficiently. And so we can scale our platform across the state. We're going to take this CRM platform and scale it across the state in 2026. And there are many other things that build around these tools to rapidly analyze huge amounts of data, guest feedback and be more responsive to our guests. Lastly, we talked about the commercial optimization. This, through the revenue management system that we have launched already is already creating revenue uplifts. You asked about cost efficiency. You see it in our results in 2025, with our cost being down 3%. We're using the latest technology, new ways of working, automating routine tasks, delivering insights through AI across the business. You've heard us say this technology, together with the process redesigns and greater leverage of our centralized support, it's unlocking a more efficient, more scalable cost base for us. In addition to the step change savings we delivered in 2025, we believe those are sustainable for the long term. So we think this actually is an opportunity to make our business stronger, more scalable, more efficient, build a deeper and wider moat and give us a competitive advantage. So Michael, do you want to address Andre's question on segmentation?

Yes, sure. Happy to do that. Well, first, I'll just start with where we ended up the year. As we discussed in my presentation, that business was up 2%, Leisure was flat for the group and groups were up 1%. And that's been very pleasing to see in as Elie described a turbulent year across, particularly the U.S. And so as we look forward in what we're seeing right now, as we started 2026, we actually saw really solid business demand coming in. Obviously, in the U.S., that then began to get affected by the storms in the cold weather that hit the U.S., but overall, still positive and moving forward. And so, then if you then look at groups and what we see right now, what we see on the books is still almost double digits up year-over-year. So it looks like groups are going to be strong. And remember, particularly in the U.S., 2025 was lapping against the election year, which had the big events like the Democratic National Convention and the Republican National Convention and then all the other events that happen as part of the election. So you're now out of that, and so you should have better comparables there as well as you get in it. So we look groups continue to be strong. We have less visibility in leisure as, of course, the booking windows on that are shorter. However there's nothing right now to indicate things would be slowing down there. If you go back to Elie's comments on the different markets and how we're seeing things shake up, it seems to be more positive than the previous year. Now we're obviously very early in the year, so we'll need to see how that progresses. But that's how we're seeing it shape up as we sit today.

Maybe one additional question, which is a follow-up. If you consider that you have 2/3 of your clients, which are a part of the loyalty program, what is a reasonable target for you? And what is proportion of new clients you're welcoming every year?

We're very pleased with the progress of our IHG One Rewards program hitting 160 million members. We believe that on a member per room, we're right up there and the leadership across the industry. The important thing is that they're very engaged too. You go back 5 years, we're below 50% room nights contribution from our loyalty plan now. We're over 66% globally, over 72% in the U.S. That's a remarkable move up. So they're engaged, they're staying more. They're spending more. They're joining our co-brand products. They're spending on those core brand products. So it's a whole flywheel of virtuous behavior that we're fostering. So we're not putting a ceiling on what our membership could be. We're not putting a ceiling of what our contribution could be. We're a growing business. Look, we -- with all of this, we still have only 4% of the rooms in the world with 10% of the pipeline. So as we grow our openings to grow our brands, to grow our system around the world, the opportunities for greater membership and greater penetration just continue to expand. We're ambitious, but we're not putting a ceiling on it.

And we have one more question in the queue, and this comes from the line of Kate Xiao of Bank of America.

Just a quick follow-up question from me. I wanted to ask about your pipeline, obviously, 33% relative pipeline size. And you mentioned over 50% of that is under construction. Is it possible to give some color around which bit of the pipeline is new build versus conversion? I'm asking that because in the context of conversion accounting for over 50% of the new openings last year and obviously, the 4.7% underlying, excluding the [ nation ] impact was helped by a bit of conversion and some conversion deals. I'm just thinking your visibility into kind of conversion this year. Are you looking at new conversion deals that could help kind of maybe give you a bit more confidence to really hit that 4.7% kind of run rate and maybe accelerate after that?

I'll just touch on conversions in general and Michael can take you through the proportions and what that's been. I just want to address, sort of, conversion opportunity and tell you that what we firmly believe is that the conversion opportunity is not as limited as some in the industry might have mentioned, the analyst industry might have mentioned. It is not for us strictly converting from independents. The addressable market is much larger. Most of our conversions actually come from branded operators, whether large or small or regional, it's owners who see the strength of our enterprise, the strength of our brand portfolio, the strength of our -- support of our people and want to join a stronger system. So we don't think it's limited just independence and therefore, we think that the addressable market is very large. And we have now more conversion brands and products with the addition today of Noted Collection. The success of voco, Vignette, of Garner, all of which are way ahead of our initial projections and are many more markets than we thought they would be early on. So -- and many of our conversions actually come from our non-specific conversion brand. So we can convert across most of our brand portfolio already, and we have more dedicated conversion brands and the addressable market is broad, and it's not just the U.S. It's actually EMEAA, where there's a large -- the largest unbranded proportion of hotels. And in China, conversions are picking up. So we think there's a lot of runway in conversions. And we're not looking at it as a percentage of signings and openings. Actually, I don't really care about the percentage. What I cares is that both grow. I care that new build signings grow, and they grew globally and that conversions grow, and they grow in absolute figures and the proportions can fall wherever they may. Michael, let me turn it over to you for the detail.

Sure. Thanks, Elie. Just to give you the numbers here, I think it may be a little surprising to say and to hear that only 20% of our pipeline is typically conversion around that. But there's logic behind that. It's because they come in and out of the pipeline much quicker as obviously, it takes not as much time to get those open as it does a new build. And so -- but if you look at 2025, just to give you a feel of that, if you look at our openings, roughly 40% of those openings around the world were conversions with 50 -- roughly 54% being new build, and then there were some other items in there as well. And then, of course, our signings were 52% conversion and 43% new build. So the reason you see those higher numbers in the signings and openings is that they come out quicker. And so that's why we would see overall the pipeline having a smaller percentage over time than what you see opening and signing.

And this does conclude our Q&A session. I would like to hand the call back over to Elie for closing remarks.

Thank you, everyone. It's been great to connect with you today. We are very proud of what our teams have accomplished in 2025, and we remain confident in our ability to continue delivering on our strategy and driving shareholder value creation going forward. Our next market communication will be our first quarter trading update on Thursday, the 7th of May. Thank you for your time and your interest in IHG, and I look forward to catching up with you soon.

Hello, everyone, and welcome to today's IHG Half Year Results Call. I will now hand the line over to Stuart Ford. Please go ahead.

Thanks, and hello and welcome from me to IHG's 2025 Half Year Results Q&A. So I'm Stuart Ford, Senior Vice President, Head of Investor Relations at IHG Hotels & Resorts. And I'm in the room today with Elie Maalouf, our Chief Executive Officer; Michael Glover, our Chief Financial Officer; and Jolie Fleming, our Chief Product and Technology Officer. I am obliged to remind all viewers of the webcast and listeners in on this call that the company may make certain forward-looking statements as defined under U.S. law. So do please refer to the accompanying results announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. In addition, we may also refer to certain non-GAAP financial measures. And once again, do please refer to the accompanying results announcement and SEC filings for reconciliations of those measures to the most directly comparable line items within the financial statements. That results announcement, together with the usual supplementary data pack as well as the replay of this morning's presentation and the slides for that presentation that accompany the webcast can all be downloaded from the Results and Presentation section under the Investors tab of ihgplc.com. So now over to Elie for a few opening comments.

Thank you, Stuart, and welcome to this question-and-answer session. I'm Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. Hopefully, you've all had a chance to watch the results presentation, which we made available at 7:00 this morning. It featured myself, along with Michael Glover, our Chief Financial Officer; and Jolie Fleming, our Chief Product and Technology Officer. Both Michael and Jolie are here with me today. Before we open the line to take the first question, I will summarize our strong performance in the first half of 2025. Our RevPAR grew by 1.8%, reflecting the breadth of our geographic footprint, the depth of our brands and the resiliency of our operating model. We delivered gross system growth of 7.7% and net system growth of 5.4%, driven by outstanding development activity and record openings. We signed over 51,000 rooms across 324 hotels, a 15% increase over 2024 when excluding M&A and large portfolio conversions. We expanded our fee margin by 390 basis points, driven by operating leverage and step-ups in ancillary fee streams. EBIT grew 13% and adjusted EPS grew 19%. We've completed 47% of our $900 million share buyback program, which, together with ordinary dividends, will return to shareholders over $1.1 billion this year. In summary, we made excellent progress on our strategic priorities, and we are confident in the strength of our enterprise platform and the attractive long-term growth outlook. And with that, let me turn it over to the operator to take the first question.

[Operator Instructions] The first question is from Jamie Rollo at Morgan Stanley.

Three questions, please. First, could we start, if we may, on any flavor on current trading. I know you don't guide, maybe talk a bit about how you think Q3 is looking and whether you expect a pickup in Q4 RevPAR in the U.S. given the election comps and holiday shifts mentioned by some of your peers? Secondly, just on the half, the Americas fee revenues were down about 1% despite sort of 1.5% RevPAR growth at around 1.5% adjusted net unit growth. So if you could sort of bridge that 4 point -- roughly 4-point gap for us and talk about whether some of that might continue into the back half of the year? And then finally, on the central line, obviously, a very big swing from negative 40 to positive 17. On your prerecorded call, you mentioned some cost phasing. So if you could please quantify that? And are we now looking at something like a sort of $30 million, maybe $40 million sustainable profit line? And should we expect that to grow in the future?

I'm going to address your first question, touch on the third one a little bit and turn over the second one and more detail on the third one to Michael. So first, current trading Q4, Q3, as you said, we don't give guidance. We look usually, of course, at the short term, but more usually at the midterm and the long term. And we feel, as we said in our statement, that most of the uncertainties and the turbulence that we experienced in March and April is subsiding. You still have some trade tensions, but you have more trade deals than trade tensions. You have financial markets that were down in March and April, they fully recovered, and got a record in the U.S. and in some European countries, too. You've got this clarity on the U.S. tax bill, provide certainty for businesses and consumers on lower tax rates going forward. We've got still job growth in the U.S. despite a job report last week that wasn't as high as people expected. It was still job growth. And we are at a record level of employment in the U.S. with stable inflation, stable interest rates. And you've really got a corporate capital investment boom, especially in technology in the U.S., driven mostly around data centers, AI infrastructure, power delivery to those and everything goes along with that. That's an underlying force. So we think that these fundamentals to continue a constructive outlook for U.S. demand, U.S. growth, U.S. hospitality and our performance in the U.S. are pretty good. What Q3, Q4 will be, we don't give guidance. But what we did say today, and which is similar to what we said after Q1, is we're comfortable, very comfortable with full year profit and EPS consensus. So we're not too stressed to add about it. If RevPAR is another point up or another point down, it's not going to change the trajectory of where we land at the end of the year at this point. We're focused on what we think is a constructive outlook going beyond that. Regarding Q4 election, you know what, we didn't call it out last year. We didn't think it was a significant mover for us. So we're not going to look at it in Q4 of this year as being anything different than what it was last year. Let me just touch on the central a little bit and Michael will go into the details. I don't think there should be a grand surprise about where we are in what is termed a central cost. We said for some time now that the point sales are going well, and they would step up another $25 million this year from the $25 million last year, and they're going to continue to grow. We said that our credit card revenues were going to step up and double this year from $40 million in 2023. And those are on track, and we've said that, and they're going to grow from there. And we've always been pretty efficient about our cost. Last year, our cost growth was only 1%. You can go back 15 years and see that our cost growth has been well disciplined below our revenue growth. We've taken some bigger opportunities this year that we saw -- that we could capture due to really the possibilities that we have with technology, artificial intelligence, shared service centers around the world that required a little further investment, which we called out in the release today, but those are sustainable. First, they're sustainable, and they're going to grow from there, but I don't think there should be any surprise there fundamentally. Michael, back to you on the last 2 questions.

Yes, sure. So Jamie, on the Americas fee revenue increases, obviously, what you're looking at there is the triangulation between net system growth and RevPAR growth in the half, you've seen 1.4% in the Americas, 1.2% RevPAR growth in the U.S., and you're seeing roughly in the Americas 0.3% system growth. So you're kind of triangulating that and saying why has that gone negative? Now there's a number of things causing that in the first half of the year. First, you do have some hotels that have exited that were pretty high fee-paying hotels. And those -- particularly, there was one in New York, and that has impacted that. But we have a replacement hotel coming in to replace that hotel. It's just not in the numbers yet, and so you're getting a bit of that. The second thing is we have a bit more of hotels under renovation right now. So if you look at that on a total rooms available basis, you see -- won't see the rooms available growth. That's partly driven by that. There's also a bit of the key money amortization coming into that. You also have the leap-year effect. We've got 1 less day in the first half of the year. So there's a few bits and pieces that are coming into that, that's driving that. We don't see it as a long-term issue there.

Not only that, let me just add that. I think the bigger thing to take into context here is our openings in Americas were up, I believe, 40% year-over-year in the half, and those haven't really fully ramped up. But when we have such a step-up in openings that is not the same year-over-year, there's still some ramp-up of those hotels that will accrete the fees on an increasing basis going forward, but we're not getting the full benefit of that yet. We're very happy with the fact that our opening stepped up that much in the Americas and in fact, globally, 75% year-over-year. But we still haven't gotten all the benefit from that fee growth because it is a significantly higher step-up than before.

Our next question is from Jarrod Castle at UBS.

Yes, 3 from me as well. Elie and Michael, you spoke a little bit about residential contribution in your prerecorded remarks. Just wondering -- if you can, can you give us anything around kind of general scale of contribution to group profitability and how you see kind of the phasing or lumpiness of that business? Is it smooth? Is it a particular period, et cetera? Secondly, some interesting kind of within the presentation, you have many bucket on the tech buckets you're kind of investing in, in terms of promote, optimize, engage. Can you give a bit a little color in terms of where time and investment is generally going amongst those 3 buckets? It seems it could be wrong, it seems like optimized through the PMS and the RMS systems. But that would be the greatest amount of time and spend, but any comments there? And then Michael, on your -- again, your prerecorded remarks, you spoke about Ruby, and that seems to be going well. Elie also spoke about Ruby in terms of pipeline and integration. But if I'm not mistaken, you also mentioned you have potential for further M&A or additional brands. Is that more a medium term? Or is there anything in the short term that can be done there?

So first, on branded residential, Look, we're very excited about our trajectory there. First, it really starts from having constructed what I think is the leading Luxury & Lifestyle collection out there, may not be the biggest yet. That's not the goal. I think is the most aspirational, the leading one. The majority of our Six Senses and Regent Hotels coming into the pipeline now are coming with the branded residential, and that's led us to having 30 properties now that are open and selling, and usually they start selling well before the hotel opens, right? Well, before the residents are even finished. And so that starts to bring cash flow to our owners and actually fees to us even before the hotel or the residences are ready. And we have quite a few more coming under development. There's a lot of excitement around this space. And it's extending beyond just those 2 ultra luxury brands, but also to InterContinental to Kimpton, and we're getting demand from owners for some of our other brands, some of other lifestyle brands. So I think we've got a vector of growth there for fee growth. It is today still smaller than co-brand and point sales, but it's growing, and we think it's going to be a consistent contributor. I'll be visiting actually next month in Dubai, some of our developments, where we have quite a bit of branded residential, either already selling some open and some coming. And here in London for you that are calling from here, the Six Senses in London is getting ready to open and those branded residential sales are on track. On how we're investing under the 3 technology pillars that Jolie spoke about. We don't disclose the individual investments. They are in our system fund. We manage them and govern them very prudently in the interest of the system fund of our owners. They all have very high returns, I can tell you, and we've been at it for some time. I mean, we've been investing in GRS for a long time, even before I started and here at IHG 11 years ago. Our new app has been a consistent investment for years. The PMS new project has been going on for at least a couple of years. It's now active in the market. And everything we're doing with the RMS, revenue management system, has been going on for a couple of years, and it's not most of our hotels. So it's nothing new. And you have to think about this as a consistent level of investment. It's not sort of a big build the product and then just watch it go. We think more in terms of product management here, in terms of -- not so much in terms of a project because you have to keep these things current. You have to keep it fresh. You have to keep it competitive. Those investments are in the system fund, but they're delivering very good return for our owners.

I would just add on that, Elie, a lot of that -- a lot of people think about do you have tech debt that you have to do and big outlays of cash that you have coming up. We really don't have that. As Elie mentioned, we have been consistently growing and investing in our tech as a result of our system fund. So we will continue to do that. And so we don't expect to see any large investments that would come out of the ordinary in what we do.

And part of it is because we've been on a journey for multiple years to stay current and update our tech stack. So we don't feel like we face a significant or any deficit that requires a massive leap of capital and effort. On new brands, M&A, of course, I'm not going to make any specific comments, as we never do. But we're very pleased with the trajectory of Ruby. 16 of the hotels I mentioned already in our system. The next 4 will be in our system before the end of the year. And the pipeline of 10, which is now a pipeline of 14 since we bought it will be opening over the next several years in incredible destinations today around Europe, but we'll be launching the brand in the U.S. by the end of the year, and then we'll take it further east from there. And we've shown that ability to take brands, whether the ones that we develop ourselves or the ones that require internationalize them and lead them to success. And by the way, adding more brands to our portfolio, which I don't know when it will occur, but it will occur. It has been occurring. So it's going to continue to occur. Doesn't have to be just inorganic through M&A or partnerships. At least half of the new brand additions we've had to our portfolio have been organic internal development. So that could occur, too.

Our next question is from Jaafar Mestari from BNP Paribas.

I've got 2, if that's alright. Firstly, on operating leverage. So Americas fee margin is up in the half, but there's obviously a better Q1 than Q2 there in terms of RevPAR. I know you're expecting some improvements later in the year in Q4. But big picture, how should we think about fee margins, if you were to remain around the 0 RevPAR? Would fee margins be flat. Could you make some progress from efficiencies? Would they be down because flat RevPAR and some cost inflation? I'm not expecting you to communicate on the Q2 fee margin, but yes, along those lines at flat RevPAR, how the fee margins look please? And then secondly, group's bookings, Americas Group's bookings, if I remember correctly, were one specific point of strength you had mentioned in the previous call with some visibility. I think you had plus 7% group's bookings on the books for the summer. In the half, group's occupancy was actually down in the Americas. Just curious what the moving parts are? Are the long lead time bookings you already had on the books, are they definitely happening and holding? It's just a short lead time bookings that have not been very strong? Or have there been any cancellations, for example, on the stuff you had on the books?

Yes. Well, let me pick up the operating leverage and the margin. I think we have said many times in the past, we expected Americas margin to continue to improve, and it wasn't at the highest level. So it's pleasing to see that continue to move. And we've had a number of things in the Americas, and we've talked about the cost exercise that we've done and the improvement in margin that we've seen from operating leverage. Our margin was 390 basis points up at the half, 130 of that has come through our ancillary fees. So we talked earlier about the step-up in credit cards and step-up in co-brand -- sorry, point sales, and that delivered 130 basis points. The operating leverage delivered 260 basis points. And within that, we had really strong cost management. And that is really around the company. It was across all functions within Central within the regions. So everybody has been involved with that program and working to reshape our cost base so that we can scale this business center in the future. And that's something that Elie and I have been working on since the beginning that we started. And fortunately, we've come to a time where we can make a step change in that. And that's what you've seen and that's what you've seen us do. The exceptional you see is really related to the setup of some of that, and we're able to take advantage of things like new technologies, like shared services centers, process improvement and continuous improvement. And we'll continue to do that, and we have the opportunity to continue to grow that. And that's no different for any of our regions or even in Central. And so as we look forward, in a lower RevPAR environment, we still have the system growth that will come in -- that we expect to come in. And then we still have the cost savings that will continue. So we said in there that we expect costs to be down 1% to 2% in the full year, so a little less than where we are here at the half. So we still expect to see really strong margin growth as we get to the full year.

I think what's even more important though is, first of all, we are being very efficient about our costs while we're growing the business and putting more resource and investing more in high-growth opportunities. We're integrating Ruby and building it out around the world. We're investing more in high-growth markets like India, the Middle East, Southeast Asia. We're investing more in high opportunity markets for us like Japan and Germany. We're developing all of our brands around the world. We're investing more in the technology stack that Jolie took you through. So this is not sort of a cost management that's leading to business retrenchment. Actually, we're finding this exciting opportunity to still grow, to amplify our business around the world and do it prudently. That's the leverage that we're getting from technology, from artificial intelligence, from our shared services centers, from process redesign. And I think that's the benefit of everybody, and the other thing is we're doing that while we'll be able to grow signings up 15%, openings up 75% and supporting all that growth in our estate, which adds to the operating leverage. Brings me to your question about operating leverage in the Americas. And yes, we're pleased with the improvement. Last year, the operating margin went down a little bit, and there were a lot of questions about had we topped out in the U.S., and we said, no, there are some moments, where we're digesting certain investments and that we would resume the operating leverage growth, and we're pleased to show that we are doing it. On the groups, there was, I'd say there was an inflection from Q1 to Q2 in all business in the Americas, particularly in the U.S. We attribute some of that to the Easter shift, and some of that, as we said earlier to the turbulence that occurred in March and April due to trade tensions, policy, tax questions, financial market drops. I mean when the financial markets in the U.S. dropped double digit, probably close to 20%, that probably created some pause in consumers and businesses. But we also said in May after Q1 that we're past the peak of that turbulence and that we saw things subsiding and attenuating and creating more certainty since then. And that's what we've seen. We've seen more certainty, more certainty on trade, more certainty on tax, financial markets have fully recovered. Job market is still strong. Investments -- corporate investments are strong. Corporate profits, through the second quarter, here they're being -- that are coming through on S&P are still pretty strong. So we think that's a constructive more stable, more certain outlook. And so whether it was business leisure or group, you saw a downshift from Q1 to Q2, but we think the outlook is more constructive going forward.

The next question is from Muneeba Kayani at Bank of America.

I wanted to start firstly on net system growth in the first half, which was 4.6% and then if we adjusted The Venetian, it's 5.4%. I wanted to hear your thoughts on net system growth, right? Because we've seen -- we've been in that 3%, 4 % range, I'd say, for a while, like do you think this is a sustainable tick up to a 5% level? And how are you thinking about that, given where you're looking of signings, openings pipeline are right now? That's the first question. Secondly, if you could talk about China, what are you seeing there? When do you think RevPAR trend could be flat or even positive? And anything on the development environment as well?

I'll take a shot at your questions and then Michael, if you want to add to it, feel free. So look, we are pleased that -- within this context, which is -- I think we acknowledge it. It has not been the most certain and clear context for the last 6 months. There's been a lot that's given people concern and pause and uncertainty and all that. Despite that, we're able to earn the confidence of our owners, who have powered our openings up 75% year-over-year. I mean, that is a demonstration of the confidence that our owners, our investors have in IHG's brands, IHG's enterprise to not only sign 15% more hotels for the future, but to open 75% more hotels. And that occurred across all of our regions. It was not just one region. It was Americas, it was EMEAA. It was Greater China. We are confident in reaching the consensus of net system size growth for this year. But look, we're always aspiring to do more. We're not saying that's the ceiling. We're not saying it couldn't be more. We hope to do more. I'm confident that over time, we will do more as our pipeline continues to grow, as our signings grow and openings grow. And our brands -- many of our brands are really early in their journey. They have pipelines that are not just at the minimum of 20%, which is at least the pipeline to open ratio of our brands. We have -- many of our brands are multiple times in pipeline or new ones of what's open. So they have decades of growth ahead of them and many countries to penetrate. We still, in the first half of the year, penetrated over a dozen countries with brands from our existing portfolio that had not been -- so that is growth. It may not be a brand launch, but it's a new brand launch for that country. And it's a new start and it's a new set of opportunities. So we're excited about where we can go and you look, you see how we're doing in conversions. Nearly about half of our openings and signings are conversions. That's double what we used to do. That's demonstration of the power of our enterprise, drawing brands to our enterprise, other hotels to our enterprise, and the introduction of the new brands that are more conversion friendly. So we're confident with this year, and we're confident we can do better going forward. On China, look, we, I think, have been consistent in our messaging in China that we are constructive and optimistic about China in the long term. And in the short term, we see China bottoming out in our industry. In fact, look, there are some sectors, some industries in China that are having a really good go right now, whether you're in electric vehicles, you're in artificial intelligence, you're in data. They're doing very well. The other sectors, we know the residential real estate is still in digestion of the over building, the overhang, but that is occurring. So I think that China, overall, we think the economy is bottoming out and improving. You have GDP growth over 5% in the second quarter. You saw export results today surprising people to the upside over 7%. So despite all these trade tensions, the economy still manages to increase exports. But in our industry, Q2, and in our company, Q2 was better than Q1 in RevPAR. Q2 was better than Q2 last year. We think the back half of the year is going to be better than the back half of the year last year as we continue to bottom out, flatten out. Whether we get to 0 this year or not, I think it's a possibility for the rest of the year. I don't think it's something that changes our outlook. We will turn the corner again in RevPAR given the undersupply or the underpenetration of hotels per capita, given the strong travel demand. So we're confident that we will get there sooner, maybe than later. We're not sure exactly when, but we are in the bottoming out phase. Meanwhile, I would pay -- I would call your attention to the record development progress we're having. Record signings in the first half, and we expect that to continue for the full year. Record openings, and we expect that to continue on top of records last year. And we're holding occupancy, which means that although we're adding and taking share in supply, and I emphasize taking share. We are still maintaining occupancy, so the market is still absorbing the supply we're bringing.

And we're still seeing that dynamic of -- the Chinese are traveling. I mean, as Elie mentioned, our occupancy was basically flat in the first half, up slightly, and even broadly flat in the second quarter. And we still saw the same dynamic happening of a lot of travel outbound. And so if you look at those countries around Southeast Asia, Japan, Korea, Vietnam, we all saw a double-digit RevPAR growth in there within our business. So we're seeing those Chinese travelers still travel. This is still the same dynamic of more outbound travel. As Elie said, we still feel confident about where that can go.

And we benefit from that outbound travel when they go to Korea, to Japan, to Vietnam, to any of those places where we've got hotels and sometimes at higher rates with IMFs in those markets. So it's not a disappointment for us.

The next question is from Richard Clarke at Bernstein.

Three, if I may. Just the first one, last quarter in Q1, you gave some very helpful directional commentary on the books revenue, I think, flat in the Americas, strong level of growth in EMEAA and heading better in China. Just wondering maybe one the philosophy of why you've not given that again? And has anything meaningfully changed on the book revenue? Secondly, closure is a bit higher. You gave a few explanations of that and said it doesn't change your view of 1.5% in the longer term, but are higher closures going to linger for a few quarters? Or is this just 1 quarter effect. And then lastly, just on Garner, just an update on how that brand is going. It feels like an interesting battleground where yourselves, Hilton and Marriott have all launched quite similar brands at the same time. So how are you competing in that? I know Marriott has gone with an innovative fee structure on City Express? Is there any desire from the owners to want to match that? Just an update on how Garner is progressing.

Richard, let me start from your third question on Garner. Look, we're very pleased with the progress of Garner. I mean we opened 28 Garners in the first half of the year. We've got 17 of those Garners came with the NOVUM deal, 8 openings in the U.S. So altogether, we have 51 open Garners. Globally, we've got another 80 or so in the pipeline. So you've got -- actually the pipeline is 138 hotels right now, 13,000 rooms across 10 countries. So I mean, the brand is powering ahead of our expectations. And the interesting thing is it's reaching international demand ahead of our expectations. We thought we'd be in a few international markets by now. We honestly think we would be in over a dozen. And that's exciting because we're seeing demand from owners across. So we -- there's enough territory here for more than one global company to be successful. I would not -- we don't look at it as sort of -- yes, of course, we're always competing with the others, but the opportunity is large enough, not just in the United States, but globally for several key players to be successful as you see in other segments. I mean there are multiple segments where the top players are all successful and grow share at the expense of others and grow share from new supply. So we think there's -- there are decades of growth for Garner ahead of us. And working sort of in reverse order, on the removals. I mean, first, I'd say they are more elevated than our long-term target, which we're comfortable with at 1.5%. But at the same time, we still had strong net system size growth of 5.4% and record openings. You've got a couple of factors in that we mentioned. In China, the rules are a little higher than we'd like. And that, I think, is just a phasing as there's the post-pandemic digestion that started later. We had, as Michael mentioned, a single large removal in the United States. But the good news is we have a replacement for it that is not in the brand system yet. So I don't think it's a structural shift. And we think that long term or even in the midterm, we will normalize back to our trend, but we're very pleased with the overall gross openings, signings and powering our net system size growth further. Let me turn it over to Michael to answer your question about on the books.

Yes. So Richard, when we gave out that Q2 on the books kind of guidance there, we really did that because we were trying to help explain that Easter timing. As we look into Q3, I think we've mentioned that Q3 could be similar to Q2. The booking windows are still very short. If you look at our booking windows there, roughly 60% of our bookings are coming in within 7 days of arrival. So the booking windows are still very short. So even for us right now, it's a little harder to have some of that visibility out longer term into kind of the fourth quarter and beyond given those booking windows.

Though you'd have to take some note of the fact that in looking at our business overall and where we stand today, early August, that we're very comfortable with consensus profit and consensus EPS and net system size growth. So that -- yes, we're looking at everything in the round. And look at RevPAR is 1 point more or 1 point less than expectations today. I don't think it makes a difference to where we land.

The next question is from Estelle Weingrod at JPMorgan.

The first one is on cost savings again around the H1-H2 phasing of this more specifically. I mean does it imply an acceleration of operating costs in H2 year-on-year? And also, can you give us more color on what are the key cost buckets that contributed to your good margin performance in H1? Is that mostly your overheads. And on that point on fee margin expansion, is that right thinking that the fee margin upside in H2 will likely purely come from ancillaries? And the last question, the third one, can you give us more color on EMEAA? It was a little bit behind. I mean not a complete surprise, but can you go through what dragged the slowdown, please?

Estelle, I'll take the cost.

Let me take the third one on EMEAA, and then Michael will pick up on cost savings and fee margin. Look, we're very pleased with our performance in EMEAA year-to-date and quarter-over-quarter. Of course, when you've got -- when you've got strong RevPAR last year and also in Q1 of 5%, at some point, you're probably not going to comp exactly like that. You had a significant number of onetime events last year in Europe. You had Olympics in Paris, European football championships in Germany. And of course, Taylor Swift, right, going around Europe. We can joke about that, that was probably more important than the Olympics or football championship. I mean, you had Americans flying into Europe, and I know quite a few, to go to Taylor Swift. Even Stuart sitting next to me here, he said he went down in Madrid because he couldn't get tickets in the U.K. It was a phenomenon. So we're lapping over that, but look, 3% in EMEAA is something we're pleased with in terms of performance, especially given some of the uncertainties. And so -- but you got to look more broadly in our business in EMEAA with very strong openings up 136%, signings up 36%. You got to look at the totality of our business, it's going in a very good direction.

Okay. From a cost savings perspective, I think you can from my presentation, IHG has really maintained a highly disciplined approach to cost management for a very long time now. This is a continuous mindset, which underpins how our business operates. And Elie and I have been looking at efficiency and effectiveness in our business since really day 1 on the job. And there's always ongoing action. And really through process redesign, greater leverage of centralized support and enhancing our use of technology, particularly AI, we are driving an even more highly efficient and scalable space with savings that are sustainable through the long term. Now we've got a little bit of cost, as I mentioned earlier, to set this up, but that's really setting this up so that we can take advantage of this for the long time. And obviously, we've seen these actions to deliver 4.5% cost savings in the first half. We mentioned that we felt like it would be about 1% to 2% in the full year. And so that would probably -- that would mean you're kind of flattish in the second half of the year. There's a bit of timing in that in the first half of the year as well. So we still expect to see margin accretion as a result of the cost savings in the full year. We definitely have the ancillaries. We still expect to have about 130 basis points of margin accretion associated with that. And so we still expect operational leverage due to growth of our system size and then to cost savings as we move into the rest of the year. So still, I think I'm going to be at the full year, a really solid result in terms of margin expansion.

The next question is from Alex Brignall at Rothschild & Co Redburn.

I'll do 2, if that's possible. Finally, just on costs, I'm really sorry to ask it again. I went through whole this morning with the IR team, but just the final piece of it. If we look at $57 million difference in the full year, we've got $32.5 million in credit card and loyalty and then the $15 million from the Central costs that you've taken out, which you sense that it's going to be is obviously H1 weighted. There's obviously another little bit in there. Could you just tell us where that's coming from and whether that's part of the ongoing improvement in the contribution of that central line or whether there's some timing? And then on net unit growth. A lot of your peers have talked about an expectation that conversions will add a greater proportion of their growth in the future than they have in the past, Marriott, specifically going from sort of 10%, 15% to 30%. And obviously, that's necessary in an environment where there's new construction growth. But can you just talk about how that will work? It's obviously very competitive and conversions are somewhat of a zero-sum game given it's not new supply. So how you think that will work in the context of key money, which has obviously been going up and some of the sort of bigger mass conversion deals where the fees for certainly your peers have not been anywhere near as high as the sort of normal group fees.

Okay. Let me take the Central question there. Yes, you explained some of that, but I'll just recap for everybody on the phone. We did say that our point sales at the beginning of the year and when we did this change, that it would drive $25 million of incremental revenue last year and then an incremental $25 million again this year for a total of $50 million. So you are seeing that $25 million come through this year, and we fully expect to realize that, and is a really strong revenue stream for us. The other side of that is the credit card. And you may remember that we did say that this year, we would double the credit card revenue that we had in 2023. And that was approximately $40 million. We've also said that continues to grow into 2028 up to 3x what we did in 2023. So we continue to grow those, and we feel like those are really strong growth revenue streams, and feel very confident about delivering that at this moment. Within Central, we also have always had revenue that comes through as well related to technology fees. And that also moves with RevPAR for the most part around -- for parts of the world, and also grows with system size as we add more units. And so you're seeing a bit of that come through. And then, of course, we've got cost savings within that central line that has -- we always had overheads in there as well. And so you're seeing some of that cost savings. That's really the 4 areas that are driving that central revenue line potential area to a profit now.

To add to that, the underlying fundamentals of the ancillaries, credit card and point sales are very healthy. You heard us report that we had credit record, very strong additions to our loyalty plan, very strong additions to our credit card, and that's ultimately the membership and the engagement of the membership is what leads to point sales, what leads to credit card applications, what leads the credit card spend. And so -- and of course, also the strength of the portfolio and the strength of our distribution. So with strong openings, strong signings and continued delivery in our Luxury & Lifestyle sector, too, which powers the loyalty plan too. So you got to look at those fundamentals and see, are those fundamentals underpinning the growth in the ancillaries? Because we got to this point in ancillaries and co-brand and point sales not just by doing that, but by building out a Luxury & Lifestyle collection and portfolio and getting distribution out there, by building out IHG One Rewards membership and engagement and replatforming the app and getting better benefits in there. And that's led to that ancillary growth, which is now no surprise, although we've been telling people, is in the numbers, and that is the biggest year-over-year inflection in the central in addition to the cost savings, which are all sustainable. We've got to look at the -- then of course, as Michael said, there are a lot of other little bits and pieces, but those are the fundamentals, and their underpinnings are healthy. On net unit growth conversions. I think you also there have to start with the fact that everybody is going to have a different story perhaps on that. We today have a broader conversion portfolio arsenal with our conversion brands at Vignette, voco, Garner. And we still do a lot of conversions in our established brands, but it was only those in the beginning. Now we got these brands that, as I was speaking earlier, richer, especially in Garner, it is doing very well. Voco is over 100 open and over 100 in pipeline. Vignette, well ahead of its projection to get the 100 open hotels in 10 years. And so that gives us more arsenal to go after conversions. And we are -- yes, we report and we discussed the proportion, which in the first half of the year, when you exclude Ruby, openings was 57% and was 39% in signings. But we're less focused on the proportion. What we're focused on is on growing both new-build and conversion. And new build, especially -- well, frankly, in the whole world, but expert in China, is still below its potential. It's improving. Our new-build signings are growing. Our new-build openings are growing, but our new-build signs are up 9% for the year. So it's improving, but it's still well below its potential. So I would not be unhappy if we grew our openings and signings even more than they're growing today. If we had more new build and the proportion of conversions was lower, but it was still more conversions. So it's not really a positioning or an articulation of proportion, it's about growing both, but we have more arsenal, more tools to grow conversions today. In terms of a couple of comments that you made that it's a zero-sum game. We look at it differently. It's a very big addressable market. I know you have recently published something talking about the addressable market. We just have a view that the addressable market is much bigger. It is not just the independents. The addressable market, in fact, most of the conversions we do are not from independents. We do from independents. Most of the conversions we do are from other brands. That is a big addressable market that, first, it continues to grow because new build feeds it, but also is addressable by our stronger brands and stronger enterprise system, which -- you may call it as your zero-sum game. We think it's actually healthy for the industry because it's not only not adding new supply there for support of our RevPAR, but it's improving the existing supply for guests and for owners and demonstrating the strength of our system.

I just have one follow-up on the loyalty contribution. That's a really, really helpful slide in the presentation about loyalty enrollments plus 22, but then Reward Night is going to plus 5, which is pretty much your net unit growth. So are we to read from that, that the 22% -- the number of loyalty members have grown a lot, but the percentage that booking has not really changed as percentage of the total because I'm just trying to tally that with the comment you made on high engagement from loyalty numbers.

I don't think that's a direct read across. After people enroll, it takes time for them to accumulate a balance, reach status and then redeem. And we're in a point right now where we have fast enrollment growth, that will translate into engagement into redemption growth, but it takes time for people to build a balance because had our enrollment growth not accelerated, you might see more of a one-to-one relationship, although it's not going to be like that quarter-to-quarter, year-over-year because different things leads people to behave differently, whether they want to use cash or points. But it does take time for people to build status, build their milestone rewards, build their points. But once they get in, they get engaged, they stay as we see and they reach that point of converting into redemptions.

And then we actually -- what you see is really strong growth in member penetration. And if you look at that, that rose to 65% in half 1, up 5% an increase from half 1 '24. The Americas region, the contribution level is reaching around 70%, and that's really up there a best-in-class contribution from the loyalty programs around the industry. So I think we're seeing really improvement everywhere across all 3 regions, but that just shows you the value of the platform and what we've built and the app that we built and how we relaunched it back in, what was it, 2022, half year 2022. And it's really been growing, and that contribution level is really great.

I mean, 5 years ago, our global loyalty contribution was around 50% -- loyalty being at 65%, 70% in the U.S. shows you that there is value to the work we've been doing. It's delivering for owners and delivering a better value proposition. So to us, that's a very important measure of engagement and success of the initiatives we've launched.

[Operator Instructions] Next question comes from Leo Carrington from Citi.

Two questions for me, please. Firstly, it probably ties into that last answer. But in the release, you noted 2 percentage points, I think, improvement in direct digital bookings. The drivers are outlined well, but I'd be really interested to know what you see in the other channels and presumably some of these have been giving share away to your channels. And then secondly, on the new-build signings, which you mentioned are up 9%. Is that still mostly driven by China? I'd be interested in hearing what developers are saying in the other regions and whether the other regions can also consistently grow new builds from here?

Okay. Can you repeat your second question, please, again?

Sure. Just around the new builds trajectory by region. China is still below its potential but presumably contributing more to that growth. I'd just like to know some more about what's happening in EMEAA and Americas with new build specifically.

Talk about your -- talk about the digital bookings. Now we're pleased with the growth in our digital bookings. I think we're -- from time to time, you see changes from -- for example, the voice channel is one that probably isn't growing anymore. People are shifting to digital channels, whether it's web or app. Our GDS channels are still doing well. We're not losing share to third-party channels, if that is your question. No, we're not losing share. If anything, we're gaining share from third-party channels, although we work very constructively with our third-party travel agencies, whether they're online or not. And we have a constructive relationship to bring the right inventory at the right price for the right customer and the right channel, but overall, digital has been on a consistent growth trajectory year after year as people's behaviors and device usage changes.

Elie, I'll start off maybe some of the new builds, just to give some additional facts and then you can give some color on that. If you look at our signings in the Americas, actually only 3% of our signings in the Americas were new build signings. In EMEAA, 51% of our signings in the half were new build. And that was actually up 45%. And as you then go so to Greater China, 67% of our signings were new build, and that was up about 4%. And as a group, we're up 9%. So overall, you really see there's still a lot of new-build signings coming. And that's great because we've got great brands for new-build signings in brands like avid and Atwell and things like that will really drive strong growth in those new build signings over time. At the same time, we've introduced great conversion brands, whether that be voco, Vignette, Garner. And then even our Holiday Inn Express brand continues to be one of the highest conversion brands that we have. So we have a really nice mix between new builds and conversions, and we feel really good about that. And to be honest, we want all signings, whether that's new build or conversion. And so we're out there trying to win everything.

We have no further questions on the call. So I will turn back to management for any closing comments.

Well, thank you, everyone. It's been great to connect with you today. We're very proud of what our teams have accomplished in the past 6 months, and we remain confident in our ability to continue delivering on our strategy and driving shareholder value creation going forward. Our next market communication will be our third quarter trading update on Thursday, the 23rd of October. Thank you for your time and interest in IHG, and I look forward to catching up with you soon.

This concludes today's call. Thank you all very much for joining. You may now disconnect.

Hello, and welcome to IHG's 2024 Full Year Results Presentation. I'm Stuart Ford, Senior Vice President and Head of Investor Relations at IHG Hotels & Resorts. And shortly, you'll be hearing from Elie Maalouf, our Chief Executive Officer; and Michael Glover, our Chief Financial Officer. Before we proceed, I'm obliged to remind all viewers and listeners that the company may make certain forward-looking statements as defined under U.S. law. Please refer to the accompanying full year results announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. In addition, the presentation will refer to certain non-GAAP financial measures. Once again, please refer to the accompanying full year results announcement and the company's SEC filings for reconciliations of these measures to the most directly comparable line items within the financial results. The results release, together with the usual supplementary data pack as well as the presentation slides accompanying this webcast can all be downloaded from the Results and Presentations section under the Investors tab on ihgplc.com. I would also draw your attention to the 2 additional announcements that accompanied the 2024 full year results. Those were the announcement launching a new $900 million buyback program for 2025 and the announcement regarding our acquisition of the Ruby Urban Lifestyle brand. Both of those are summarized within the results announcement itself and with further details within their own individual announcements. Now over to the 2024 highlights reel and followed by Elie. [Presentation]

Hello, and welcome to IHG's 2024 Full Year Results Presentation. I'm Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. I'll kick things off in a moment by sharing highlights from 2024, a year of excellent delivery on our clear framework to drive value creation, a framework which we set out in detail at our strategic update event this time last year. Michael Glover, our Chief Financial Officer, will then provide a financial review, after which I'll share areas of progress on our strategic priorities. 2024 was a very strong year of financial performance, growth and important progress against a clear strategy that is unlocking the full potential of our business for all stakeholders. RevPAR grew by 3% for the year, driven by rate and occupancy gains with good performance across groups, leisure and business and a strong finish in Q4. We added 59,000 rooms to our system, taking our total estate to 987,000 rooms across more than 6,600 hotels. Gross system growth was 6.2% and net system growth was 4.3%, representing the third consecutive year of acceleration. We signed 106,000 rooms across 714 hotels, 34% ahead of 2023 levels and equivalent to almost 2 a day, driven by strong momentum across our brand portfolio. This takes our pipeline to more than 2,200 hotels. Our fee margin grew 190 basis points, contributing to a 10% increase in operating profit from reportable segments. Adjusted EPS grew 15%, supported by the $800 million share buyback program. Today, we launched a new $900 million share buyback, which together with growing ordinary dividend payments is expected to return over $1.1 billion to shareholders in 2025. We're also very excited to announce the acquisition of the Ruby brand for $116 million, extending our portfolio into the premium urban lifestyle segment. Now let me hand over to Michael, who will take you through the details of our financial results.

Thanks, Elie. I'm Michael Glover, Chief Financial Officer for IHG Hotels & Resorts. Let me take you through some more detail of the great set of results our teams have delivered through 2024. I'll start as usual with our reportable segments, which is the fee business together with the owned and leased portfolio of 16 hotels. Revenue was $2.3 billion, and EBIT was $1.124 billion, representing growth of 7% and 10%, respectively. Within this, fee business revenue increased 6%, and fee business operating profit increased 9%. On an underlying basis, which measures growth at constant currency, fee revenues were up 7%, and profit was up 11%. Fee margin increased by 190 basis points to 61.2%. I'll touch on this in more detail shortly. Interest increased to $165 million, in line with guidance. This reflects higher average net debt due to returning capital to shareholders, a slightly increased blended interest rate following a bond refinancing and the interest charged in the year on the System Fund cash position. The effective tax rate of 27% was also in line with guidance. Earnings per share included the accretion benefit from the $800 million share buyback program we completed in 2024 as well as the annualization of the previous year's $750 million program. Through this combination of strong trading performance, fee margin progression and accretion from buybacks, earnings per share increased 15%. Moving on to a summary of RevPAR performance. The Americas finished the year strongly with Q4 RevPAR growth of 4.6%, leading to 2.5% for the full year. While ADR growth of 2% was the primary growth driver of this, the 0.3 percentage point uptick in occupancy demonstrates the robust demand patterns for the region. By subregion, economic stability in the U.S. pushed its RevPAR up 2% for the year, while Canada, Latin America and the Caribbean saw growth of 9%. We delivered another very strong quarter of performance in the EMEAA region with RevPAR growth of 6.9%, contributing to a full year performance of 6.6%. By major geographic submarkets, 2024 saw growth of over 10% in East Asia and the Pacific, which included the benefit of inbound leisure travel from Greater China. There was 6% growth in both the Middle East and Continental Europe and 2% growth in the U.K. In Greater China, where RevPAR was down 4.8% for the year, as I explained at the last trading update, year-on-year comparatives were especially tough in Q3 with RevPAR down 10.3% as we lapped a particularly strong leisure performance in summer 2023. Normalization then occurred as we progressed through the remainder of the year with RevPAR easing to 2.8% down in Q4. Occupancy was actually up in the fourth quarter and for the year was pretty much flat. It was the rate decline that drove the RevPAR performance, and this was principally due to higher rate leisure activity in 2023 moving outbound in 2024. We remain very confident in the attractive medium- and long-term growth outlook for Greater China, as reflected in the record level of hotel openings and signings seen in 2024. So taking the 3 regions together, our global RevPAR improved to growth of 4.6% in Q4, elevating the performance for the full year to growth of 3%. This slide presents the business, leisure and group's demand drivers, showing a breakdown of the booked revenue, split by room nights and ADR. Group showed the strongest performance globally, up 6%, as this driver saw strong demand recovery in 2024. Elsewhere, it was particularly pleasing to see an increase in leisure demand across all 3 regions, resulting in 3% rooms revenue growth. Business demand continued to perform well with global rooms revenue up 2%. So on a global basis, all 3 demand areas showed positive rooms revenue growth. Turning to system growth. Our openings in 2024 resulted in gross growth of 6.2% as 59,000 rooms joined the system. This was 23% more than 2023, and the 24,000 rooms added in Q4 was the second strongest quarterly performance in IHG's history. 18,000 rooms exited the system, equivalent to a 1.9% removal rate. This is a little higher than the 1.5% average we generally expect, but we do not consider the slightly elevated removals seen in 2024 as an indicator of a longer-term trend. The somewhat lumpy nature of hotel exits simply means that there are occasionally fluctuations either side of the mean average. Taken together, net system growth was, therefore, 4.3%. We signed a very impressive 106,000 rooms in the year, up 34% on 2023, demonstrating the attractiveness of our brands across the chain scales. The signings mix drives the pipeline to be weighted 53% across mid-scale segments and 47% across upscale and luxury, which will continue to drive a more balanced system mix and fee stream over the coming years. While we welcomed growth of 3% in the number of new build rooms signed, it was predominantly conversion activity, which drove performance with signings up 88% compared to 2023. Moving on now to give some further brief highlights for each region. I've already covered RevPAR, so let me touch on profit as well as openings and signings, starting with the Americas. Operating profit for the Americas was $828 million, up 2%, which closely matched the growth in revenue. Fee margin was down by 1 percentage point, as we continued to invest for growth in the region though as we've said before, there's still further runway for the Americas fee margin. Gross system growth was 3.2%, with openings up 62%, albeit on 2023's relatively low base. A typical removals rate of 1.6% meant that net system growth for the Americas was 1.6%. Meanwhile, the 27,000 rooms signed in the year were broadly in line with the strong performance of 28,000 signed in 2023. We maintained a pipeline of 109,000 rooms despite the elevated level of openings in the year, and this represents future growth equivalent to 21% of the region's system size. In our EMEAA region, operating profit jumped 26% to $270 million, outstripping the 10% growth in revenue. The increase in IMFs of 17% was clearly a factor in this, as was improvement in owned and leased profitability from $1 million in 2023 to $12 million in 2024. Fee business margin was up 480 basis points, driven by strong trading and the growth in IMFs. Gross system growth was 9.6% with the opening of 24,000 rooms, representing the strongest annual performance ever delivered by the EMEAA region. The NOVUM portfolio contributed 10,000 of the room openings. Over 50,000 rooms were signed across the EMEAA region in 2024, again, a record performance and more than double 2023's total. There were nearly 18,000 rooms that came with the NOVUM agreement as part of this. But even if you were to exclude these and Iberostar, signings were still up by 31%. The EMEAA pipeline jumped 26% year-on-year and now at over 100,000 rooms, represents 39% growth on the current system size for the region. Moving on to Greater China, where operating profit of $98 million was 2% up despite the challenging trading environment. This helped support margin growth, which increased 130 basis points to 60.9%. A record number of hotel openings in the year saw 19,000 rooms join IHG System and gross growth accelerated back into double digits at 10.4%. Just over 5,000 rooms left the system, resulting in a removals rate of 3%. This was higher than we typically expect, though simply reflects the lag of some hotels exiting post-COVID. A record number of hotel signings saw nearly 30,000 rooms added to the pipeline. Our broad progress across chain scales saw 93 hotel signings for the Holiday Inn Brand Family as well as 27 Luxury & Lifestyle hotel signings. It was another strong year for Crowne Plaza, too, with 17 signings, underlining the continued strength of the brand in the region. The total pipeline for Greater China is up 7% and is equivalent to 58% growth of current system size. Moving to summarize on fee margin, which was up 190 basis points. Positive operating leverage from trading performance delivered 130 basis points of this as fee revenue growth of 6% exceeded fee business cost growth of just 1%. On top of this, our margin was further enhanced around 60 basis points due to the previously referenced $25 million of revenue from the sale of certain loyalty points and other ancillary revenues now being included within IHG's reportable segments. As a reminder, ancillary fee streams such as those relating to loyalty point sales and the co-brand credit card are within central revenue, and therefore, do not contribute to the regional margin performance. In 2025, there will be further step-ups in fee margin from the full effect of the change in arrangements regarding the loyalty point sales and from the new co-brand credit card agreements. Moving on to cash flow. IHG typically converts approximately 100% of adjusted earnings to free cash flow. In recent years, we've seen performance well ahead of that, with 2023 delivering record free cash flow of $837 million at a conversion rate of 132%. This elevated cash conversion was partly due to the scale of inflows from the System Fund as a result of better-than-anticipated trading performance driving higher receipts. We noted at the half year stage, our expectation for cash conversion to be lower than 100% in 2024 due to our planned spend down of the System Fund surplus as well as higher key money outflows. However, initial cash inflows received in relation to the new co-brand credit card agreements improve this measure. We finished the year, therefore, with cash conversion of 94% and expect to return to typical levels of around 100% cash conversion going forward. A quick look now at capital expenditure in more detail. We have historically seen annual gross CapEx of up to $350 million and net CapEx, effectively key money and maintenance expenditure, of between $150 million and $200 million. Due to increased development activity, particularly in the Premium and Luxury & Lifestyle segments and some key money on the NOVUM conversion portfolio, net CapEx was $253 million. Key money is the biggest component of our net capital spend, and it doubled in the year to $206 million. As a leadership team, we strive to ensure disciplined spend of our capital in order to deliver high-quality growth. 2024 was a year in which a number of strategically important growth opportunities presented themselves, and we did not shy away from investing in this future growth nor will we as we move forward. We expect key money and maintenance CapEx of $200 million to $250 million annually. We expect net CapEx to be around this range. And our guidance for gross CapEx continues to be up to $350 million a year. Our strategy for uses of cash remains unchanged. After investing behind long-term growth, which is the foremost priority, we look to sustainably grow the ordinary dividend. In this regard, we are pleased to propose the final dividend will increase to $1.144, representing 10% growth. That rate of growth has been consistent for each of our dividend payments over the last 3 years. A year ago, we announced an $800 million buyback program, which completed in December. This repurchased 7.5 million shares and reduced the share count by 4.6% Together with ordinary dividend payments, we returned over $1 billion to shareholders, which was equivalent to 7.1% of IHG's market capitalization at the start of 2024. We are pleased to announce that a new share buyback program will commence immediately, targeting to return $900 million in 2025. On a prospective basis, given expectations for growth in EBITDA and cash generation this year and together with the acquisition of the Ruby brand for around $116 million, we would expect this to result in leverage around the lower end of our target range of 2.5x to 3x at the end of 2025. Concluding then with a wrap-up of points for those who maintain forecast models of IHG's performance. Interest costs will rise from 2024's $165 million to between $190 million and $205 million, given the increase in average net debt and the slightly higher blended cost of borrowing. Our adjusted effective tax rate is expected to hold steady around 27%, in line with what we have just reported for 2024. On CapEx, as noted a moment ago, our normal course gross CapEx spend could total up to $350 million, and our normal course net CapEx is a range of $200 million to $250 million. As a reminder, this slide also shows a summary of our growth ambitions over the medium to long term. With that, let me now hand back to Elie.

Thank you, Michael. Now I'll share an update on our areas of strategic progress in 2024. I would group these into 5 areas. First, we grew our system size and saw very healthy development activity across our brands, and we continue to outperform competitors on externally measured guest satisfaction index scores. Second, we expanded further into priority growth geographies, driving increased development momentum in the U.S., delivering record hotel signings and openings in Greater China, transforming our footprint in Germany, bringing new brands to Japan and expanding our pipelines in high-growth markets like Saudi Arabia and India. Third, we strengthened hotel owner returns, building on the commercial advantages of our industry-leading technology systems and overall enterprise platform. Fourth, we delivered a step change in the outlook for ancillary fee streams through our new arrangements on the sale of loyalty points to consumers and exciting new co-brand credit card agreements in the U.S. Finally, as Michael has already covered, our success in each of these 4 areas delivered increased profits, dividends and the return of further surplus capital to shareholders. The progress made in these 5 areas drove an outstanding set of financial results, demonstrating the power of our growth algorithm. Together, 3% RevPAR growth, 4.3% net system growth, a step change in ancillary fees and positive operating leverage drove a 10% increase in EBIT. And with the strength of our cash conversion, which funded the additional $800 million that we returned to shareholders through the buyback, we delivered adjusted EPS growth of 15% for the year. That performance is at the top end of what we laid out as the compound average that we are targeting for the business to achieve over the medium to long term. We are confident of continuing to deliver on this growth algorithm. Now let's delve into the progress we made against the 5 areas of focus in more detail, beginning with growing our brands. Starting with Luxury & Lifestyle, our 6 brands in this high fee per key segment represent 14% of our system size and 21% of our pipeline. Following strong development performance in 2023, we opened an additional 45 Luxury & Lifestyle hotels in 2024 and signed a further 88 properties. Each of our brands in this segment is delivering new signings and new openings in sought-after destinations. With Six Senses and Regent, we've approximately doubled the number of open and pipeline hotels since acquiring those brands. And with InterContinental, the world's largest luxury hotel brand, we have successfully implemented an exciting brand evolution, which is contributing to revenue share gains, increased enterprise contribution and impressive signings and openings activity. With a system of 227 hotels and a further 101 in the pipeline, InterContinental still has very strong growth opportunities ahead. Vignette Collection, just 3 years on from launch, already has 55 open and pipeline hotels. Our boutique luxury lifestyle brand, Kimpton, now has nearly 140, and Hotel Indigo, nearly 300. This will take Vignette's and Kimpton's presence to around 25 countries and Hotel Indigo to around 45, demonstrating our success in internationalizing our brand portfolio. Now turning to Premium, which accounts for 15% of system size and 20% of our pipeline. This segment delivered another year of robust growth with 55 openings and 95 signings. This included record room signing for voco and a strong performance for Crowne Plaza. Our powerhouse Essentials segment accounts for 60% of our system size and 47% of our pipeline. It continued to charge ahead with 213 hotel openings and an impressive 415 signings in 2024, driven by Holiday Inn, Holiday Inn Express and our newest Essentials brand, Garner. During the year, we invested in new food and beverage solutions for Holiday Inn, Holiday Inn Express and avid, which drove hotel owner returns while improving guest experience and strengthening the development proposition. We are also very pleased with the performance of Garner, which reached 117 open and pipeline hotels just 1 year since launch. The first 23 open hotels are across the U.S., U.K., Germany and Japan, while the 94 pipeline properties will establish the brand in its next 3 countries. The strong owner interest, trading performance and guest satisfaction scores give us confidence in Garner reaching over 500 hotels in the first 10 years and 1,000 over the next 20. Turning to Suites and Partnerships, which together account for 11% of system size and 12% of our pipeline. In 2024, we launched new prototype options for our 3 Suites brands, and we achieved great results with dual brand properties. Our newest Suites brand, Atwell Suites, also expanded its geographic scope in 2024 with its first 2 hotel signings in Greater China. We now have 3 of our 8 Essentials and Suites brands in the region, creating scope for even more opportunities for growth. Finally, a note on the Iberostar Beachfront Resorts exclusive partnership, which saw the number of hotels in both the system and pipeline increase in 2024 and also 2 former Iberostar non-beachfront properties were added to our system in the Americas. Together, these achievements drove our strongest gross and net system size growth performance in 5 years. With over 40% of our pipeline currently under construction, removal is expected to be around the 1.5% underlying trend going forward and attractive long-term structural industry growth drivers at play. We remain confident in the momentum of our system growth. We don't give formal guidance. But in 2025, we are targeting over 4% net system growth again. That would exclude the 0.7% impact from the end of the arrangement with The Venetian, Las Vegas, which we updated you on back in October. Our global pipeline now stands at approximately 1/3 of our system size and has the potential to unlock $0.5 billion of incremental annual fee revenue. This, together with the significant scope for further expansion in our priority growth geographies, also gives us confidence in our ability to deliver the high single-digit fee revenue growth outlined in our growth algorithm over the medium to long term. Today, we're also excited to announce the acquisition of Ruby, a premium urban lifestyle brand for modern travelers to must visit city destinations. Let's take a look at this short video reel. [Presentation]

We're thrilled to bring this new brand into our portfolio and extend our presence into the premium urban lifestyle segment. Ruby, with a stylish laid-back charm and soul, is already well established in Europe with a portfolio of 20 open hotels across 13 major cities. The open hotels will begin joining our system later this year, followed by an additional 10 hotels in the pipeline. Together, we anticipate these 30 hotels will generate approximately $8 million of incremental fee revenue by 2028. And that's just the beginning with further development expected by the seller and IHG's plans to expand the Ruby brand with other hotel owners globally. As we've successfully done with prior brand launches and acquisitions, franchise fees by 2030 are expected to be in excess of $15 million. Ruby's cost-efficient space saving designs and high degree of operational standardization and automation enhance owner economics in an industry segment characterized by high barriers to entry. The brand is both new build and conversion-friendly, including successful office conversions, and it will now benefit from ISG's leading enterprise platform and one of the world's most powerful hotel loyalty programs, IHG One Rewards. We anticipate scaling the Ruby brand to more than 120 hotels over the next 10 years and accelerating to more than 250 over 20 years across owners globally. Let's now turn to priority growth geographies where impressive signings and openings activity in individual countries is powering strong development activity across our 3 regions. Starting with our largest market, the U.S., which accounts for the majority of the Americas as well as 46% of our global system size and 28% of our global pipeline. Development momentum accelerated in 2024 as owner sentiment improved against the backdrop of strong employment conditions, robust consumer spending and a turn in the interest rate cycle. We broke ground on 18% more hotels and nearly doubled the number of rooms opened as hotel construction continued to recover. This led to a 1.6% net increase in our system size, and we signed 2% more rooms into the pipeline on top of a strong year of signings in 2023. Conversions accounted for approximately half of all U.S. openings and signings, driven in part by conversion-focused brands like voco and Garner scaling up and taking share. Our established brands also performed very well, driving nearly 2/3 of all signings and openings. We are confident this momentum will continue into 2025 with future U.S. growth underpinned by pipeline, representing 20% of current system size and in the year/for the year conversion opportunities. Turning to Greater China, where our teams delivered a record year of development activity in 2024 with 97 hotel openings and 160 signings taking our system size and pipeline to all-time highs. This momentum continued into the new year, recently celebrating our 800th hotel opening during IHG's 50th anniversary in the region. Our performance, which builds on a strong track record of compounding growth, underscores the strength of our enterprise platform and ability to grow across chain scales and locations within this vast market. And we are continuing to invest in our capabilities in the region with our new design and innovation lab in Shanghai, similar to our design center in Atlanta, honing fresh prototypes for our Essentials and Suites brands to further power our growth. Our pipeline, which represents nearly 60% of the region's current system size, shows the high levels of growth over many years still to come. We also remain confident in the long-term structural growth drivers of this market, which are underpinned by a rising middle class, growing appetite for both business and leisure travel and the under-penetration of hotels per capita. Turning to EMEAA and focusing on the 4 markets that drove our record development activity in 2024. Starting with Germany, where 2024 was a transformative year for us. In April, we announced the signing of a long-term franchise agreement with NOVUM Hospitality to convert 119 hotels to IHG Brands, of which 111 are in Germany. The agreement doubles our hotel presence in one of Europe's largest hotel markets with strong domestic consumption and inbound travel as well as being one of the largest sources of international outbound travelers globally. Since the April announcement, we have signed an additional 5 hotels with NOVUM, underscoring the strength of our relationship and the future growth potential in this high barrier-to-entry market. And our acquisition of Ruby further strengthens our footprint with 9 additional hotels in Germany joining our system and building on our existing network effect in this important market. In Japan, we introduced 3 brands in 2024, including the first 3 Garner hotels in Osaka and the first for the Vignette Collection. We also expanded the presence of our existing brands with the opening of our fifth, Hotel Indigo. These exciting additions bring us to more than 50 open hotels across 10 brands, supporting our goal of doubling our system size in Japan over the coming years. Saudi Arabia today accounts for only 2% of our current global system size. However, its rapid pipeline growth and exposure to Luxury & Lifestyle and Premium brands strengthen our current and future fee growth potential. We remain confident in the long-term growth drivers of this market, which will host numerous global events over the coming years, including the AFC Asian Cup in 2027, the Asian Winter Games in 2029, Expo 2030 and the 2034 FIFA World Cup. Lastly, turning to India. We're making important progress in a market where long-term growth is fueled by rising middle class and increasing consumer spend on travel and tourism. Another year of strong signings in 2024 drove a 20% increase in our pipeline, which is now larger than our existing system size, and therefore, sets us up to double our presence over the next few years. Each of these 6 markets offer meaningful scope to both widen and deepen our presence beyond our current open hotel and pipeline position today. Now turning to the important progress we're making in strengthening our commercial engine to drive hotel owner returns. Underpinning the strength of our enterprise is our connected technology ecosystem. Our platforms, including our award-winning mobile app and ihg.com, drive value for our owners through direct bookings, performance optimization and guest experience solutions. We have been building industry-leading guest reservation, revenue management and property management systems, bringing these together to drive hotel performance and maximize owner returns. Later in the year, we will provide you with a more in-depth review of our ecosystem, but let me touch on some of the latest progress. Our industry-leading guest reservation system maximizes guest choice and value through the upsell of unique room attributes, along with more effective cross-sell of guest stay extras. These upsell capabilities such as promoting larger rooms and better views are available across the estate globally. Around 30% of guests are seeing an offer during their booking journey. When selected, these offers are achieving average nightly room revenue increases of around $20 across our Essentials and Suites brands and $40 for Luxury and Lifestyle. This is driving share shift into premium rooms and more revenue to hotel owners, and we will scale this further in 2025. Next, our new revenue management system incorporates leading data science, machine learning and forecasting tools to deliver advanced insights and recommendations to owners. This has been rapidly rolled out to over half of our estate in 2024, and we expect to complete the remainder by the end of 2025. User recommendation rates have been high and results from control testing show encouraging levels of revenue uplift as well as market share. Finally, our new state-of-the-art property management systems are making core operational tasks even more efficient to create even greater value for owners. We deployed our new systems to more than 650 select service hotels in 2024, and we plan to accelerate the rollout in 2025. We are also continuing with pilots to test the new PMS solutions in full-service hotels. We are also continuing with pilots to test new PMS solutions in full-service hotels. Now, turning to IHG One Rewards. Our loyalty members are our most valuable guests. They are 10x more likely to book directly using channels such as our mobile app and ihg.com. They spend 20% more than non-members. They stay at our hotels more frequently. And growing numbers of them carry IHG co-brand credit cards. In 2024, we grew IHG One Rewards to more than 145 million members with enrollments up 13% year-over-year and 37% higher than 2019 levels. Globally, loyalty penetration now exceeds 60% of all room nights booked. And this figure is even higher in the U.S. and Americas at around 70%. Reward night redemptions, a key indicator of member engagement, increased 8% year-over-year and are around 30% higher than when the program was refreshed in 2022 and almost 50% higher than 2019 levels. We're also proud to share that our IHG One Rewards mobile app recently received 3 Webby Awards, including Best Travel App and Best User Experience in recognition of its leading capabilities. The strength of our loyalty program and direct channels is in turn driving increased digital contribution and total enterprise contribution, generating more revenue for owners and lowering their costs. Our enterprise across all the channels and sources we manage for our owners is now providing hotels with 81% of all rooms revenue booked. Beyond improving owner returns, IHG One Rewards members are also a key driver of the valuable ancillary fee streams generated from purchasing points and using co-brand credit cards. 2024 was a record-breaking year for credit card applications. Total card customers also increased at double-digit growth rates year-over-year, and total card spend was around 25% higher than levels seen before the relaunch of card products 2 years earlier. We expect continued growth in card spend and in the number of cardholder accounts. This, together with the new agreements signed with our financial services partners in November, is expected to drive approximately $40 million of incremental annual fee revenue in 2025 and an additional $40 million by 2028. We also strengthened our ancillary fee streams in 2024 through new arrangements, which bring fee revenue from point sales and certain other ancillary revenues into our reportable segments. This contributed around $25 million to our annual fee revenue in 2024, and steps up with an additional $25 million in 2025. Finally, we see meaningful fee growth potential from branded residential developments. We have more than 30 projects in the market across 5 brands in 15 countries, plus more in the pipeline. In 2024, notable branded residential signings included Kimpton Monterrey in Mexico and the Regent Residences Dubai at Marasi Marina along with several for Six Senses. We expect branded residential fees earned by IHG to increase in 2025 and expect substantial future growth potential in years beyond. To recap, we achieved notable milestones across our 5 areas of focus: growing our brands, expanding in priority growth geographies, enhancing hotel owner returns, driving ancillary fee streams and delivering increased dividends and returns of surplus capital to our shareholders. These areas of focus underpin 3 of our strategic pillars: relentless focus on growth, brands that guests and owners love and leading commercial engine. We also had significant achievements related to our fourth strategic pillar, care for our people, communities and planet. Starting with our people. We continue to invest in supporting and developing colleagues at all levels of the business, including through new tools and resources for IHG University. We were delighted that Forbes once again recognized IHG as one of the world's top companies for women and to see IHG rated in the top 10 of the Financial Times 2025 Diversity Leaders Rankings of 850 European companies. And our employee resource groups continue to grow around the world, extending to more than 5,000 members and allies across 36 chapters, helping to promote workplace inclusivity. On communities, we announced a new partnership with Action Against Hunger in 2024 to help support their life-saving outreach program designed to spot and tackle malnutrition. As part of this, we will use our scale to help grow awareness of this critical issue with our millions of guests around the globe. On carbon and energy, we continue to focus on reducing the environmental impact of our hotels, including launching our Low Carbon Pioneer's program, the first community of its kind in our industry designed to help us test, learn and share findings on energy sustainability measures. Our work to improve the efficiency of our hotel estate has reduced both emissions and energy per available room compared to a 2019 baseline. However, the need for greater clean energy infrastructure in major markets and our success growing and opening more hotels has led to total emissions increasing, meaning we are not on track to meet our original target of reducing greenhouse gas emissions by 46% by 2030. However, we remain committed to reducing emissions, and we'll continue our many initiatives, working closely with our hotel owners, while at the same time, continuing to evaluate our approach and performance in a rapidly changing sustainability landscape. Today, on our corporate website, we have released a separate presentation by Catherine Dolton, our Chief Sustainability Officer, who goes through our carbon and energy pillar in more detail and the progress being made. To conclude, we are very pleased with the strength of our financial performance, growth of our brands and progress made in 2024 against a clear strategy that is unlocking the full potential of our business for all stakeholders. Specifically, we delivered against the growth algorithm outlined during our strategic update event this time last year, delivering 2024 RevPAR growth of 3%, net system size growth of 4.3%, 190 basis points of fee margin expansion, adjusted EPS growth of 15% and more than $1 billion of capital return to shareholders through dividends and share buybacks. We remain confident in our ability to continue delivering the growth algorithm over the medium to long term, driven by high single-digit fee revenue growth, 100 to 150 basis points of margin expansion per annum from operating leverage, approximately 100% adjusted earnings converting into free cash flow, sustainable dividend growth, surplus capital return to shareholders while targeting financial leverage between 2.5x and 3x, and ultimately, delivering 12% to 15% adjusted EPS growth. And with that, we thank you for listening to our 2024 full year results presentation.

Well, thank you, and welcome to this question-and-answer session. I'm Elie Maalouf, Chief Executive Officer of IHG Hotels and Resorts. Hopefully, you've all had a chance to watch the results presentation, which we made available at 7:00 this morning. It featured myself, along with Michael Glover, our Chief Financial Officer, who is here with me today. Before we open the line to take your first question, I will summarize our strong performance in 2024. Our RevPAR grew by 3% with momentum improving across all regions in Q4. We delivered gross system growth of 6.2% and net system growth of 4.3%, representing the third consecutive year of accelerating system growth. We signed 106,000 rooms across 714 hotels, delivering a 34% increase in signings over 2024. We expanded our fee margin by 190 basis points driven by 130 basis points of uplift from operating leverage and 60 basis points of uplift from new ancillary fee agreements. EBIT grew 10% and adjusted EPS grew 15%. We completed our $800 million share buyback program which, together with ordinary dividends, returned over $1 billion to shareholders. And today, we announced the launch of a new $900 million share buyback program which, together with dividend payments, is expected to return over $1.1 billion to shareholders in 2025. And we announced the acquisition of the Ruby brand for $116 million, a premium urban lifestyle brand. In summary, we made excellent progress on our strategic priorities and are confident in the strength of our enterprise platform and the attractive long-term growth outlook. And with that, let me turn it over to the operator to take the first question.

[Operator Instructions] Our first question comes from Jamie Rollo with Morgan Stanley.

Three questions, please. Just starting with the key money, if I may. You're talking about over $200 million, worth over $200 million last year and probably up a bit this year. That's about 3x what it was in 2019. I just want to work out if that simply the impact on NOVUM and the higher mix of luxury? Or is there something else in terms of the competitive environment driving that? And also, Michael, what's the sort of revenue impact from that? I think you deducted off your fees, and we're now looking at the CapEx figure running into the mid-teens percentage of your fee income. Secondly, it's a very good margin performance across the group. But just in the Americas, that down 100 basis points. You flagged certain onetime costs. If you could please quantify that? And also why were the fees in the Americas in the second half only up 1%, that revenue when was [net] was up about 2% and RevPAR was around 3%? And then finally, on China, you've clarified that the removals was a bit of a one-off that 3%. But the openings and signings were also down a bit in the fourth quarter. Do you see any changes just generally to the development picture in China? And should we still that sort of high single-digit net unit growth there this year?

Yes, Jamie, I'll start with the key money. When you look at key money, last year, we guided to between $150 million and $200 million and came in a little ahead of that. This year, we're guiding $200 million to $250 million. But in total CapEx, we're still within that $350 million guidance we've given historically. So we still expect to come within that. I think you have really three dynamics going on as we shift into Premium and Luxury & Lifestyle, that's driving a significant more amount of key money. In fact, nearly 40% of our openings in the year were in Premium and Luxury & Lifestyle. That's obviously driving it. And of course, with NOVUM, we don't have many deals like that where we get 17,000 rooms kind of all at once. That has driven a bit of key money, and that will have a little bit of an impact into next year as well. And then I think the third factor that is maybe not as clear, as you've increased -- as we've increased the number of convergence, those hotels will stay in the pipeline as long as they have historically when you have a new-build. And so as you kind of move forward with that, you're seeing kind of that uptick in conversion happening and that key money accelerated in as a result of some of the conversion activity. So in terms of competitiveness, I think we're actually still around the same amount that we give on a per unit basis, and we haven't really seen any creep from that perspective. So it's just really those 3 factors. From a revenue impact of that, it's not as much as you would think. I think overall, next year, I would say that increase in key money only has about a $5 million to $6 million impact on fees next year because that -- as you know, that key money is amortized over the life of the contract. The contracts tend to be very long, and therefore, the impact in the individual year is not very significant. I'll go ahead and take the margin question in the Americas as well. Very comfortable with what we're doing in the Americas. We're investing in the Americas. We sat at like roughly 82%. We were at the high, I think, in 2004, we were at roughly 84%. We still feel like the Americas margin continued to move up. We're certainly making some impact. We're definitely making some investments there to continue growing. The openings tended to be a bit more back-end loaded. So you had the system size growth come in, which gives you a full year number, but the fees didn't have the full year impact. And so we would expect those to come in. I'll pause and take -- do you want to take the next question?

Yes. Let me just build also. No, we’re confident in the outlook for our total capital guidance of $350 million. But within that, the key money is driven by the factors that Michael mentioned, Luxury & Lifestyle conversions, not really doing more key money per key or key money per deal, but it’s the mix of deals. And that’s good for our mix of fees, higher fees per key and good for accelerating fees into the business because those conversions open more quickly. So we plan to continue that, and it’s part of the mix that we’re growing. On the Americas beyond the fee margin, I’d emphasize that we had 60% more openings. We had 13% more Ground breaks. We had 9% more applications. So our brands are really on the front foot, Garner, which we launched a little over a year ago, almost 120 hotels open pipeline around the world, strong signings in the Americas and going to now bring openings in because they’re conversion openings. So we think that’s going to bring fees in and clearly help the margin. Let me talk about China. I was – Michael and I were actually there about 3 weeks ago with our team, spent a week there with our teams, talked about 100 owners. I’m not kidding, Jamie, literally 100 owners, visited our properties, talked to our development team. We had a great year of signings in China last year. I mean you can look at the quarter-by-quarter, but we had nearly 30,000 signings, record number of hotel signings, record number of hotel openings. I was just on the call with our China team yesterday for a monthly review, and they’re seeing the same continue into 2025. We’re very optimistic about it. So it was a very strong Q2 last year. And I know sometimes the deals land where they land when you’re talking about big transactions, working with our owners there. But every single one of the owners that I met with to the person is enthusiastic about growing with IHG and felt pretty good. I know that some other sectors, some other industries in China aren’t doing as well like residential real estate, travel and tourism and IHG brands are doing quite well. So there’s nothing really to look at in the quarter-over-quarter. We think ‘25 is going to be another strong year of signings and openings in China, confident in the high single-digit net unit growth in China for years to come, not just given the fundamentals. But given our position in China, we inaugurated our 800th hotel when I was there. We have 550 under development. We introduced our third Essentials and Suites brand Atwell Suites, which – where we’ve already signed a few deals for 2025, and we expect more. And when you look at it, out of our 6 Essentials and Suites brands, we only had 2 in China, Holiday Inn and Holiday Inn Express. So there’s more room for us to expand the map and grow even further.

Our next question comes from Vicki Stern with Barclays.

Just firstly, I wanted to circle back on the key money question. Maybe stepping away from your specific guidance and the components you called out there that are driving that higher next year. Just more broadly in the industry, I think there seems to be a bit of anxiety that ultimately things are getting a bit more costly, a bit more competitive when it comes to key money. So just curious about the trends you're seeing. I think Marriott was talking about even in the low end now in the U.S., there's a bit more requirement for key money. Just what are you seeing out there, even if that's not specifically what's driving your key money higher next year? Second one is on fee growth. Marriott were also calling out one of the reasons for their lower fee growth guide next year being that lower expected IMFs coming through in China. So just curious sort of your perspective, I guess, firstly, on the RevPAR outlook for China and then your view on IMFs and whether those might be lower next year in '25 versus '24 for IHG? And then just lastly, on the broader RevPAR outlook, I guess your U.S. peers are guiding between 2% to 3% and 2% to 4%, your key U.S. peers for RevPAR in '25. Where are you thinking things might land? And if you could sort of give us a bit of a geographical lens on that.

Yes. Excellent. Good to hear from you, Vicki. I was just in the U.S. a couple of weeks ago at the ALIS Conference. Of course, as you know, I spend a lot of time back and forth between here and there. We're not seeing that trend in our mainstream brands in our Essentials and Suites of -- I mentioned Garner earlier. We haven't been doing key money for Garner whatsoever in the U.S. and don't see a higher incidence of it in our Essentials and Suites brand. The market has always been very competitive. That's for sure. And I don't know that it's different. Now without really focusing on any specific companies, but if you're trying to enter a segment that you're not in or strong in, maybe you feel the need to participate differently or to create different incentives, but we are well established in the segments that we compete in, in Essentials and Suites in North America and the U.S. and don't feel they need to do any more. And our signings made progress, our openings made progress, our ground breaks and applications made progress without really having to commit more on key money. Where we're making not bigger commitments per key or per hotel, but it's by sector is in Luxury, Lifestyle and Premium. And that has been part of our strategy from the beginning, and we're persisting with it also in the U.S. where we had, let's just say, not the same distribution of Luxury, Lifestyle and Premium made great gains in that opening some really halo properties, including Regent Santa Monica, new InterContinental in Seattle and so forth. And so those pay higher fees and pay for themselves, and we're quite pleased with that. So we're not seeing the same trend that others, but maybe it's because of where they're participating today and where they're seeking to participate tomorrow. In terms of China in general, and I'll turn it over to Michael about the IMFs, we see a progression of our business in China. If you look at our RevPAR in the second half of the year versus the first half of the year, let's compare to 2019, which was a baseline year. It was about a 4- to 5-point improvement in the second half of the year over the first half of the year. And occupancy was basically flat for us. And yes, rate came down, but a lot of that rate was really influenced by the strong outbound travel to Asia Pacific, and that's continued in the first half of the year, and we benefit from that, frankly. Chinese New Year just concluded. All the data show record travel domestically, but also even more travel to nearby Asian markets like Japan, Vietnam, South Korea, Indonesia, Thailand, et cetera. So -- and we benefit from those hotels there, especially with the IMFs, as you saw in our figures last year. So I said last year that my sense was that China was bottoming out, digesting the overbuilding in residential real estate. That's clearly the sense we have now. So we think clearly, this year is going to be a better year for RevPAR in China than it was last year. But Michael, why don't you get into the IMFs more particularly?

Yes. I mean I think it kind of aligns with what Elie is saying. If you look at where we've fit in 2024, we did $178 million in IMFs, obviously much smaller than the company you mentioned there. We're definitely more of a franchise business. But if you look at that outbound travel out of China, actually, and you look at kind of those areas around EMEAA, EMEAA actually was up $17 million in IMFs in that -- in the whole region. But a lot of that went into that Southeast Asia, and we do have managed hotels there, where we've been able to more than offset the decline of roughly $7 million of IMFs in Greater China. And as Elie mentioned, as we kind of started in January, the Chinese were traveling, and they were traveling really well as part of Chinese New Year. In fact, the extended Chinese New Year helped actually that outbound travel, and we saw really strong RevPAR growth in January. Now we need to see how it progresses. But as Elie said, we feel comfortable about where China is going and where it's moving. So from an IMF perspective, we're not worried about going backwards in terms of fee growth there. We would still see that continuing to grow.

Yes. And Vicki, I think your last question was U.S. RevPAR compared to what’s out there from others and analysts. I think that you look at the projections from STR and others, they’re in the high 1s for this year, for 2025. Frankly, we think 2025 can be as good in the U.S. or better. We obviously had a very strong fourth quarter in the U.S. at 4.1%, and we’re pleased to see an acceleration. And so we don’t give guidance. But if you look at the fundamentals that drive the U.S. travel business, got good GDP in Q4. Jobs report in January showed nearly record employment, unemployment coming down. Financial markets are strong. Consumer confidence is good. Supply isn’t high in going into 2025. And so the fundamentals for another good year of RevPAR growth in the U.S. are there. And Michael can touch on it in some detail. But based on January and February, what we’re seeing is at or ahead of what we expected.

Our next question comes from Jaina Mistry with Jefferies.

Three as well, if I may. The first one is another unfortunately, on key money. I mean you've hopefully given the breakdown by chain scale and segment. Is this key money more the U.S. phenomenon? Or do you deploy it in Luxury & Lifestyle and Premium in Asia and Europe as well to the same extent? And going forward, do you expect key money to remain at that $200 million to $250 million level in '26 and '27? Second question is on the Ruby acquisition. Congratulations. Do you expect Ruby to be earnings accretive in 2025? And then just lastly on free cash flow. I wondered what your level of confidence is in achieving 100% free cash flow this year, given that you met it last year in 2024 with the help of credit card inflows. And I guess key money is expected to remain elevated in '25 as well. So your thoughts there would be very helpful.

Okay. So in terms of where we deploy key money, it's really no different than what it's always been. In the U.S., let's say, the Americas, it's in Premium, Luxury & Lifestyle, not really in Essentials and Suites where we're biggest. No different than it's been before, except I'll repeat that our mix of deals and openings has purposely strategically moved further into Premium, Luxury & Lifestyle. That's why we added Voco, Vignette, Regents, Six Senses. We've been growing Kimpton, and we're going to continue to do that. And then the conversion mix, which is now 50% of deals open and signed. And that moves up key money, but also moves up fees. We're happy to pay the key money earlier because the hotels opening earlier versus pay 3 years from now on a new build, right? And there's a lower risk of, say, incompletion of a project when it's a conversion versus a new build. We like them both. But statistically, everyone will tell you, there's a higher probability of opening with a conversion than there is a new build signing because years go on and things could happen. As you move to the rest of the world, there's no different. In Europe, we've done key money before, especially when it's urban destinations or locations. And it continues, no more, no less than before. Clearly, when you get a package like the NOVUM deal, 119 total properties. And by the way, we've signed another 5 deals with NOVUM since then, which shows the growth and value of that agreement that we -- everybody would do an amount of key money for that, and we did. As you move east from there, in the Middle East, for Luxury & Lifestyle, again, not for mainstream and not for Essentials and Suites. Same thing in Southeast Asia. And in China, actually, we don't do key money in any category and haven't, just the structure of the market. So the structure of the market hasn't changed. We are actually pleased that we're signing more hotels and opening more hotels. Our signings are up 1/3 year-over-year, openings are up 23% year-over-year. And if that's coming in the categories where there is key money like Premium, Luxury & Lifestyle, well, that's fine because that's been part of our strategy. And so we -- we've guided to 200 or more in key money for this year and for the next couple of years. I think it's going to then moderate back down as we get through the digestion of some really halo projects that are opening over the next couple of years, including the one that completed its opening last year, the Regent Santa Monica. And we have a few of those really halo projects that are establishing our brands in key markets. But I think that the amounts are driven by strategy. They're within our total capital guidance, don't change or affect our algorithm. In fact, we -- when we put out our growth algorithm and the statistics that we shared with you last year at this time, that included in our knowledge and view already where key money was going to be headed for the medium to long term, driven by our growth, driven by our expansion and the mix of our portfolio. On Ruby, look, we're very excited about Ruby. Just really hits a spot in an area we've been looking. You've heard me talk previously about urban micro and people ask me, where would you look? I've mentioned urban micro. It's because we've been looking in that space and really preferring to acquire something so we can scale up much more quickly. We've launched very successfully in Essentials and Suites as you've seen with Garner, avid, Atwell. But in Premium and above, we've generally bought and scaled very successfully. So this brand with 30 hotels open in pipeline. In fact, it's 31 because just last week, they signed a great property downtown Copenhagen and there's more coming. We can see ourselves scaling this thing to 120 in 5 years, 250 in 10 years. And our track record with other brands shows that this is extremely feasible. So in 2025, what we've said in our results presentation, there's going to be $10 million of integration costs that are within our projections. And we don't expect to have a profit reported from that brand in of itself. It doesn't really move our projections much at all given its size and scale. And then in 2026, you're going to start to see some fee accretion. But look, this is a very attractive multiple. It was an off-market transaction in 2028 when the open hotels, pipeline hotels stabilized and many of them are really new. We're in mid-teens multiple on the acquisition. And by 2030, we're single digit, like sub-8 multiple. So this is an attractive acquisition at an attractive price with a lot of growth potential for us.

Thanks. And I’ll just pick up the free cash flow question, Jaina. I think if you look at our free cash flow and how it moved this year, we mentioned at the half year that a large portion of the decrease at the half year was related to the spend down of the System Fund surplus. And of course, we’ve had a bit more of key money in 2024 come in. And then that was offset by about $100 million of the signing bonus that came in, in 2024 from our partners on that – across various partners. Now as we look at 2025, we feel very confident in getting back to that 100%. One, we won’t have the spin down of the System Fund surplus to go through again. The key money is normalizing. That step-up is normalized. And then we also have another $37 million that we received in January actually coming from the co-brand credit card deal across all the partners. So I think we feel very comfortable as we move into the year and looking at where things sit that we would get back and get around 100% conversion, as we said, through our growth algorithm.

Our next question comes from Muneeba Kayani with Bank of America.

First question around net system growth, your pipeline, 33%. I think in the video, you said you're targeting around 4% net system growth. How are you thinking about that? And could we see that kind of increasing to, say, a higher level of 5% to 6%, is the first question. And then secondly, just on the cash return, the buyback is higher and you have 10% dividend growth. Your leverage is at 2.3x, which is below your target range. So how should we think about that buyback number growing and that dividend growing in the medium term? And then thirdly, on Ruby, you've talked about your expansion, I think, in the U.S. and Asia as well. Just in terms of like the founder, what is the involvement going forward? And can you talk a bit about the incentive program you have there?

Sure. Thank you, Muneeba. I'll take the first one, the last one, turn over the share buyback to Michael. We're very pleased with our net system growth in 2024 and the trajectory. It's our third consecutive year of increasing signings, openings and net system growth. And we're confident in 4% or more in 2025. We don't give specific guidance, but we're comfortable in that or more. And so we think that the power of the brands that we've been developing, the ones that we're launching and acquiring and the strength of our signings puts us in a position to continue to build that growth and keep reaching higher. Look, we'd love to always do more. But you've heard me also say that we want to do it thoughtfully. We want to grow profitably. We want keys with fees. And so whether we're doing partnerships or we're doing new deals, whether we're expanding into new markets, we're thinking of the whole algorithm. How does that net system growth drive RevPAR, which drives fees that drive margin growth that take us down to growth in EBIT and EPS, and we're delivering on that. So we're delivering at the high end of our expectation in 2024, and we're confident in doing that in '25 with the system growth we got today, and we think we can do better, too. Which kind of leads me to Ruby because we -- it's another tool in our arsenal to grow system in a space that we've been looking at hard, but we have not been participating. We're in urban. We're in urban lifestyle with Kimpton, with Indigo, with voco, Vignette, but we wanted this urban micro premium space. We think it's just a long-term structural trend across most of our markets. So yes, we're definitely going to take it outside of Europe. It's well established already. First, we're going to scale it up much more in Europe. And then we're going to go first to the U.S., and we said we'd be there by the end of the year, ready for development and then start going east from there. I'll tell you, our development teams around the world and some of our owners have been pushing us to participate in this space. They're eagerly waiting for us to bring Ruby forward and internationalize it for them. And you've seen us be successful with internationalizing brands that we acquire. When we acquired Regent and Six Senses. Since then, we've more than doubled the pipeline that we got, and we've made them extremely successful globally. Kimpton is now 140 hotels open in pipeline around the world and was just a domestic brand when we acquired it. So we kind of know how to do this. We may not be smart at many, many things, but this is something that I think we know how to do. The founder, -- and he's not -- he's the founder and principal but not the only investor. He's got a handful of large institutional investors from Europe that are at the table with him. They're going to remain owning the properties, but developing more properties, which is a built-in engine for us of growth in Europe, and they're highly committed to do it. And we built an incentive plan for them to do it that, frankly, is ambitious. But the more they achieve against it, the better it is for us. It actually lowers the overall multiple, lowers the cost for the next property, the next room. And so it's -- we're confident in growing the brand ourselves as we've done with many other brands by franchising it to other capable owners. But we're confident they will achieve a substantial level of growth, not sure exactly where on that ambition they'll be, but the more, the better for us. And I was actually with them Friday night after finalizing the transaction. They're very good at what they do. They've had a very strong compounded growth rate since they launched a brand in 2013 in the 40-ish percent, and they've got a very good pipeline of new transactions coming. So all this will be accretive.

Great. And on the cash return, I think Elie and I have been very clear since we came in that we were going to return cash to shareholders. And if you look at what we’ve done in 2022, we did $500 million, in 2023, we did $750 million, in 2024, $800 million. Now we’ve announced a $900 million buyback. And so we’ve talked about being consistent with that and continuing to deliver that. And we plan on doing that in the future. And actually, if you talk about the future and you just look at where consensus sits today, consensus sits today at about $1.237 billion. We think that’s a little low right now because not all analysts have put in the effect of the co-brand credit card. In fact, I was talking with some of the analysts today that are around $1,270 million. I think that’s about right in what we think. And if you just look at kind of where that would take you based on our growth algorithm, you’re at $1,270 million. And if you look at the interest changes that we’ve talked about, all in, you’re probably looking at earnings per share growth in the 17% range. We’ve told you today that we feel comfortable in the cash conversion and getting back to 100%. Our net debt to EBITDA at the end of the year would be – at this year was 2.3x. With the Ruby acquisition and the $900 million share buyback, we’re talking about it being at the kind of low end of our target range. So if you take all that together, I think you could surmise that it’d be another year where we would continue to do share buybacks, assuming everything came in and the Board decided that’s what they wanted to do, but we feel confident in that. And if you look at that, that’s actually ahead of our mid- to long-term growth algorithm. So I think we feel really strong – feel good about coming into this year and what we potentially can deliver.

Our next question comes from Jaafar Mestari.

I've got three, if that's okay. Firstly, on the adverse FX impact, $16 million for the group. Could you maybe roughly break that down by region? We tend to think of Americas as mostly USD, but was there a material headwind there on the smaller currencies? And then whether it was a positive on central costs because a lot of them are still sterling, please? And then just two related questions on your brand momentum on some of the newer brands. You've made some comments about Garner, Vignette ramping up strongly. Medium term, where do you think they stabilize? If I take voco, probably your most successful organic launch as a unit, is Vignette 0.3x of voco once it's fully ramped up? Is Garner 0.5? And just related to that, what about the slightly older, the EVEN, the HUALUXE, the avid? If I just look at the pipeline, it looks like they're plateauing. Would that be roughly your view as well? Or do you think there's a second leg market where you can still launch them or things you can do differently to reaccelerate these brands, please?

Okay. Well, thank you, Jaafar. I'll leave the FX question to Michael. I'll talk about the fun stuff. I'll talk about the brands. We're optimistic about the growth potential of all of our brands, and I'll take them sort of in order. You're right. I mean, Garner, we said would be 500 in 10 years, 1,000 in 20. I mean we're already nearly 120 open in pipeline in about a year. So we think we're well on track. And it went international much more quickly and broadly than I thought, it's in 6 and 7 countries, and it's very likely to be in more countries soon. It's hitting that trend of a desire for conversions and quality mid-scale properties that want to join a strong system. And our system is increasingly proving itself to be among the best in the industry. The -- when you go -- I mean, voca and Vignette, clearly, because they're an upscale and upper upscale, they're targeted for smaller but still very good end state size, and they're on track. They're both exactly on track, although they launched either before pandemic or in the pandemic. Voco is what about 140 or so open under development around the world. And Vignette is on track between what's open on development. The further up you go in the chain, the smaller the target size as you go to upper upscale and luxury, but they're both on track to where we want. And they keep appearing in new markets. Vignettes now in Japan. It's now in China, and we've got more coming. It's not just in the U.S. and in Europe. It's -- Vignette's in the Middle East and voco is in dozens and dozens of countries. So the map is wide for them, too. Looking, Atwell Suites and avid are doing very well. Avid is over 70 open, over 140 in pipeline. And it's only in one country. Now well, I guess it's in Canada and Mexico, but it's only in one region. We haven't taken it to Asia, to Europe, to China. But we took Atwell Suites to China, and we think we have a long runway there, and it's growing very well in the U.S. So I mean they're all on track. They have different trajectories based on where they are in the chain scale and the markets they participate in, but they're on track with the growth plans. And so then for Ruby, we have its own track. It's not going to be vastly suburban or ex-urban tertiary cities. It's really key cities and maybe the next level, not so much resort, but maybe a few resorts. And therefore, the dimension that we see for it is 120 in 10 years, 250 in '20 and we're starting with a very good base there, too. So I'd say I'm excited about the power of all of them. But as you see us broaden that portfolio and then broadening geographically, you can see that we have many more avenues for growth. Even in 2024, we had dozens of instances where we took an existing brand but to a new market where it wasn't participating. And we still have many of those combinations done thoughtfully, done where the fees are right, where the profit is right, but with many more of these combinations to exploit.

On the FX, yes, I mean, it definitely had an impact this year. We were 10% in operating profit growth. And then if you exclude the FX impact, it was 12%. So really solid growth, but it could have been even more except for the FX. If you look at that impact from the Americas, it’s roughly – of the $16 million, it was roughly $5 million. EMEAA was $6 million; Greater China, $1 million and then across our overheads around $4 million. That’s actually in the appendix. If you want to look at the slide, that is the currency impact. I think it’s Slide – Page #64 in the appendix. So if you want to look at it there, it breaks all that. It also breaks it out by the revenue.

Our next question is from Jarrod Castle with UBS.

Maybe three topical kind of questions. I mean, firstly, just the U.S. situation. I mean, how are you thinking about potential impact, a, from what's going on with removing some of the migrants, firstly, is it potentially going to have an impact on employment costs or the ability for certain hotels to function, maybe they're not IHG hotels? And then secondly, obviously, related to that, also the tariffs, be it on GDP or procurement, how are you're thinking about that? I guess switching to Europe, just any thoughts on if there is peace Ukraine, Russia, would you look to push again in Russia? Just thoughts on opportunities. And then lastly, you touched on ESG aspects. But can you talk a bit about how you're thinking about disruption caused by climate change, specifically? I'm thinking about recent events in California, in Florida, parts of the Med, in terms of fires in Greece and floods, et cetera. I mean how do you see that impacting your footprint both now and going forward in terms of how you're thinking about future signings?

Thank you, Jarrod. No, nothing casual about your topics today. So look, on the U.S., I would say we should all just take a deep breath and wait and see what actually happens, what are the final policy, what is the final status, what is the final effect. Clearly, there’s a lot of noise of what will be implemented, what won’t be implemented, what tariffs get applied and then they’re disapplied. And so I just think we should just take a breath, and it hasn’t been even 2 months. Actually, it hasn’t even been a month since inauguration. That’s in a couple of days. And let’s just see what actually happens. Generally, look, we’ve been in the U.S. 80 years. Almost every time there’s a new President from election, it is from the opposite party with very few exceptions, almost every time in the last 75 years. And so we’re used to a lot of change. Our business has prospered. It actually prospered under the previous administration from 2024. It prospered under the current administration, which was the previous administration between ‘16 and ‘20. And if I look at the fundamentals of the U.S. economy, they’re still pretty solid. And whether there are as many pro-growth policies implemented or not, I think the underlying drivers of the U.S. economy are less government-driven than they’re industry-driven. I mean the best technology in the world, highly educated population, strong infrastructure, strong financial markets, great propensity to travel, strong corporate sector. Those things have a propulsion of their own, and we’ll just have to wait and see what the final status of these policies. Also on migrants, let’s just really wait and see what happens. It’s a lot of talk, and we haven’t seen any effect in our hotels yet. And probably the wisest thing is to wait and see what actually happens, what changes in the context. There’s been a lot of conversation around migrants and migration for years. It never has really affected our business. We operate with documented workers. That’s our policy in our hotels, whether it’s managed or franchised. On the EU, we hope for peace. We hope for prosperity. We hope for growth in the EU. And in the U.K. we don’t have any plans to go back into Russia at this point, whatever the outcome is of that – those discussions. But hopefully, they bring a lasting piece. And disruptions from climate change, look, we watch it very closely. We take a very serious view on not just ESG, but climate policy. And unfortunately, there are natural disasters that occur frequently. We’re in 100 countries. And I have to tell you that there’s something unfortunately happening whether it’s a typhoon or a hurricane or a drought or an earthquake quite frequently and sadly in our regions at all times. It has not disrupted our overall business. Yes, it may disrupt business in one part until it recovers. But then our distribution, our – the 100 countries that we’re in, our diversification usually carries us through. And even this last year, despite the hurricanes in Florida, the fires in L.A., where I was just 2 weeks ago, typhoons in Asia, the net-net was not a disruption to our business. We’re not saying that we wish for these events. We’re just saying that we’ve got a lot of experience powering through them. And let’s not forget that hotels, in most cases, are a place of refuge and comfort. I was speaking to the – got a letter from Chief Executive of a major business in Los Angeles, who was very thankful that she and her colleagues could take refuge at the InterContinental Downtown L.A. when unfortunately, their homes were damaged in Pacific Palisades. We hope that none of this happens, but we’re always there for people when there are these events.

[Operator Instructions] Our next question comes from Kate Xiao with Bernstein.

There's one question on, if possible, the recently announced co-lending agreement with one of the lenders in the U.S., AVANA. I think the announcement was that there's a total commitment of $250 million in construction loans for certain U.S.-based projects. Can I please ask how much -- what kind of level you're expecting from the IHG side? Is it like a 50-50 kind of agreement? Or are you expecting less or a bit more? And what is the time line for that capital you expect to be drawn upon? And thirdly, do you see this as a temporary solution to the certain brands in the U.S.? Or do you think this could be rolled out potentially as a recurring kind of aid to wider brands for them to stay more competitive with other brands in the market?

Okay. Let me take that, and then I'll let Elie work on that or add on to whatever if I miss anything. First of all, it was something that Elie and I actually were working on in the Americas. And we've been trying to work it for some time as we think it's a unique way to help owners grow. Unfortunately, Elie and I weren't able to do it there, and the great team there now has been able to get it done once we left. So good on them. And what I would really say to and the way to look at it is we're partnering with them. The vast majority of capital that goes out will be part of the AVANA team and their capital, we will provide support, but it would be no more than what we would do with key money for any property. And so I would treat it within that $200 million to $250 million of capital guidance we've given. That was where it would sit. So we're very comfortable with that and that approach. It doesn't put us at any further risk because we'll be limited in our risk, but that's how I would think about it. And Elie, maybe you can just add on.

I mean, as you know, coming out of the pandemic and then you had inflation, you had interest rate increases, it was harder for our owners to get projects financed. And we’ve always helped them put together financing packages, telling the story to their lenders, describing the strength of the IHG brands and their enterprise, and that’s been a very important source of help. We partner very closely with our owners on getting through all the processes. And we thought this was an incremental thing we could do. Yes, the financial markets are improving, falling out for new development in the U.S. We see that ticking up. And I’ve said for now a couple of years, it’s going to tick up. It’s not going to soar up. It’s just going to tick up, and it is ticking up as inflation and interest rates have stabilized, maybe not gone down as much as people would have liked, but they’ve stabilized at least. And so while we’re sort of grinding up in new development financing, this could be a bit of an accelerator for certain properties and certain owners that we think we can support. But we don’t think we’re taking any material risk here, and it’s well within our guidance for capital.

Our next question comes from Andre Juillard with Deutsche Bank.

Three very short follow-up, if I may. First one on Ruby acquisition, which is -- which seems to be pretty attractive. Is there a magic number in terms of brands? You are now at 20. If I compare you to Marriott, Accor, they are well above that number. But what is the idea behind that? And what is the optimized number of brands you can manage? Second question about leverage. You were mentioning that you would probably be close to 2.5x net debt to EBITDA at the end of '25. Do you think about any change in your midterm guidance? Or do you still remain on the same number? And last question, if I may, about tax rate. You've been guiding on 27%. If we listen to what Donald Trump has been saying, he was thinking about lowering the tax rate in the U.S. Do you have an idea or quantification that we could anticipate? Or is it still early stage?

Thank you, Andre. I'll take the first question on the brand portfolio. I mean, look, if the mere number of brands that somebody had was the measure of success then valuations in the industry will be different than what they are. What really matters is having brands that are relevant to guests and to owners that you can scale in segments that are attractive. So we think we have a very powerful portfolio today and even before that addresses the main segments that we want to grow in. But we also know it's a dynamic industry, right? It's not a static industry. So your strategy can't be static. 10 years ago, we had 10 brands. But in 10 years, things change. People's travel preferences change and owners' desires to invest capital in different segments change, and we have to adapt with those, but going to those segments where there's an intersection. And the intersection is where there's strong demand by travelers and strong interest from owners to build. And where there's that intersection, we want to be at that intersection. If we're not, then we want to go there. We're not at the intersection of uber luxury where many of our own InterContinental and Kimpton travelers were sometimes wanting something even more exclusive and going. So we went in with Six Senses and Regent very successfully, not because we wanted 2 more brands and try to catch up with anybody else that was adding brands, but because there was shareholder value to create and we have, and we have a lot with Six Senses and with Regent. And same thing when you get to Essentials and Suites, we launched Garner, not because it was 2024, and we hadn't launched the brand yet. We saw a space, desire from owners who came to us and said, they would like to join us with their products. It wasn't quite a Holiday Inn Express, but if there was a conversion solution, et cetera. So we've been thinking about that for multiple years and then decided that was the right time. And it's been very successful. And so the urban micro space is one that has developed. It wasn't really much of anything 10 years ago, but has developed as real estate prices have increased in center cities as people's propensity to travel has increased as they've been looking for, yes, lifestyle experiences when they travel, but not necessarily just in their room. They want a great fit out there where they land in a city with a smart design, a buzzy dynamic public space, but not so much where it's not affordable anymore. And so this urban microspace is one that's been attractive to us, we've been spying it for some time, and we think Ruby is the best entry point in the industry for this. But that's not because we were at 19 and wanted to be at 20. It's because there's a space of profitable growth for us to go. So I think the industry will continue to be dynamic. I don't know that we will need anything in the near future, but I can tell you, 5 years from or whatever, as the industry develops, we'll be looking at other intersections of guest demand and owner interest to participate in. And if there are none new ones, we've got a lot to grow from the brands that we have already. And if there are new ones, we'll choose to participate.

Yes. I think as we go to the net debt-EBITDA question and the change to the medium- to long-term algorithm, I just go back to our uses of capital remain unchanged. We're going to invest in the business. We've done that consistently, whether that's launching new brands or acquiring new brands like we've just done with Ruby. We intend to sustainably grow the ordinary dividend and then return excess cash back to shareholders. And the model is allowing us to do that and do that consistently, and we'll continue to do that. As I mentioned earlier, if you look at, again, where is consensus and where we think it could move to and what that looks like from an earnings per share growth perspective, certainly, the co-brand credit card at $40 million that we've talked about being incremental this year and the $25 million from the point sales is pushing that to the top end and above those earnings per share targets that we laid out in that medium- to long-term growth algorithm. But we think about this business for the long term. And so as you think about the medium- to long-term growth algorithm, we feel like that's the right place to be. Now obviously, there will be some ups and downs. It is a medium- to long-term growth algorithm. The credit card and the point sales is going to push us over that kind of guidance. So that's a great thing, and it's good for our shareholders. We're just letting that flow through. And -- but we feel like that algorithm is the right place to be for us longer term. And then in terms of tax, I just certainly wouldn't put anything in yet and model anything. We've been -- we've shared today that we feel like modeling at 27% is the right tax rate for now. Let's wait and see what happens and what gets approved and all that turns out. And as soon as we do, we'll let you know how to model that differently.

Maybe one follow-up on the brand portfolio. I perfectly understand that. Yes. Just a follow-up on the brand portfolio. I perfectly understand that 20 is not a magic number. But just wanted to understand if you had an opportunity with Ruby on the urban segment. But with Iberostar, I think that it was quite interesting to see you moving on the resort side. Do you still feel that there is some potential -- some growth potential on that segment as well?

Look, we’re excited about the opportunities that the Iberostar relationship has opened up, and we grew it again in 2024. It has given us access to dozens and dozens of beachfront resorts that were not part of our system, and our guests appreciate that now that they can earn and burn loyalty points there and book directly through our channels. And we – in our over 400 Luxury & Lifestyle properties that are being developed around the world, there are many, many that are resort properties in North America, especially in Asia, in China, in the Middle East, there’s just a collection of resorts that’s been opening and that’s coming and some are beachfront resorts, some are mountain resorts. I mean, last year, we announced Six Senses Telluride in Colorado. We opened Regent Santa Monica in the L.A. region. We opened Region Phu Quoc in Vietnam. We have an urban – we opened Six Senses Kyoto sort of an urban resort. I mean, Indigo in the Galapagos and Indigo in the Grand Cayman. I mean it’s just a rolling thunder of great resorts that are coming and that have been coming. So I mean the map is very wide when you start talking resort. Yes, we’re excited about it, and there’s more we can do with our brands. And look, if we find another brand opportunity that is differentiated from what we do, we’ll certainly look at it. Obviously, we take a look at everything out there. As you’ve seen, we’re pretty thoughtful about what we buy. We don’t rush into anything. We try to do it where it’s a differentiated offer in our portfolio. We are very careful to find things that are valuable. We don’t overpay. We think that the multiple here in the mid-teens going in and quickly going down to single digit is very attractive. So we’re confident in our organic growth potential in resort and elsewhere, but always looking for what else can happen.

[Operator Instructions] Our next question comes from Alex Brignall with Redburn Atlantic.

Just one on net unit growth, please. The general theme of the quarter so far, the full year reporting is disappointment on net unit growth from, I guess, across the peer set with a lot of your peers who gave long-term net unit growth guides, sort of including within their guide things that they've either acquired one even included the hotel that you gave away the Venetian within what they called organic. And if we look at your numbers and take off NOVUM, which obviously you paid some money for last year in terms of the deal structure, then you're in the sort of mid-3s even if we include -- even if we add back the Venetian. So if we look forward and given that occupancy in the U.S. is still several hundred basis points below where it was in 2019, why does net unit growth need to get back to where it was? And do we just need to adjust for the fact that it's just going to be lower? It seems to be a sort of adjustment that lots of people are saying is temporary, but that seems good reason why net unit doesn't need to be as high given the demand environment, and it seems to be just pushed up by these little deals.

Yes. Thank you, Alex. Good to hear from you. Look, I won't speak for others what they guided to and what they've adjusted to. And what I'll tell you, from our point of view, we're actually pretty confident and pleased with where we're at and where we can go. The Venetian, we discussed openly Q3 was a legacy transaction, didn't earn the company any money. We're doing things differently today, and we're very grateful for the relationship we had with them, but we're both going in different directions, and that's just fine with us. But we were confident in the progression that we made in 2024 over 2023. Even if you did not count NOVUM in signings and openings, it was a progression. But I wouldn't characterize NOVUM as something similar to some of these other partnerships and acquisition. It was neither a partnership nor an acquisition. It was a franchise deal just happened to be 119 separate individual franchise deals. And so there are 20-year agreements. The pay fees, full system. There are no termination rights, and it's growing even further from there. It's not a pay for performance. It's none of those things that you may or may not have excluded from the numbers of others that should lead to any disappointment. So we don't exclude it from our underlying performance. We do a lot of conversions in every given year and maybe none necessarily right away of the same scale. But when you add them all up, it's still a lot of conversions that they could roll up to a big number, and I'm confident they will roll up to a big number in 2025 also. So we're confident in the guidance we've given for 2025 at 4% or above. And it's consistent with where we've been and always inching up and moving forward. It will be our fourth year of solid net system size growth and growing. And if the others have had to change the expectations or meet them in different ways, that's not down to us. Our algorithm works at the current net system size growth and will work better as it keeps moving up. As you can see that I think where there have been further questions, Alex, is where the changes in net system size growth have not led to the bottom of the algorithm outcome. In our case, that's not the situation. We delivered 15% EPS growth and 10% EBIT growth with clean, clear net system size growth and RevPAR that's been accelerating. So we're confident in continuing on the track we do. In terms of the industry, occupancy, yes, is a point or 2 in the U.S., but rate is strong, but supply is low. Supply is low and demand keeps growing and the supply has been constrained by restrictive financing environment. And you can see that our signings keep growing, and those of the industry keep growing. There is demand from owners to build. There is demand from guests to travel, but the financing market has been thawing out gently, and that's why our signings keep growing in the U.S. and our openings keep growing in the U.S. They're not a V-shaped recovery, but they're growing. And that means that demand is there from travelers, demand is there from owners, and it's going to continue to build, I think, to be back to where it used to be at a stabilized basis, maybe not the peak years, but on a stabilized basis.

Fantastic. If I could just tie it back to key money. Obviously, the NOVUM deal had an element of cash contribution in terms of the conversions, and there's been several questions asked about key money, so we don't need to ask about them anymore. But just in terms of the way that these deals are being structured, we've seen some that are done with a sort of OTA style fee structure. When you look out at these deals, you've done particularly well at the ones that you've done. Is it hard to find them where you sort of are happy with the terms being offered? Are you finding other people that are being sort of just taking the rooms because they just want the rooms. And as you said, it then doesn't end up in fees? Do you sort of -- are you just being particularly selective in the ones that you do in a market where others maybe aren't being so selective?

Well, look, again, I won't comment on what others are doing and why they're doing it. What I will say is we're not interested in keys without fees, right? We're interested in growing the value of our business for our shareholders. And now there are varying fees by market, varying fees by asset class. There are certain incredible halo assets, which may have a different fee structure, but they've got to be creating value for us. Otherwise, we're not going to participate. When you say the OTA type agreements that we've made, I'm not aware that we made any recently.

I was referring to your peers who have done them.

Okay. Well, we won’t comment on what they’ve done. What I can tell you is that we look at a lot of stuff that gets brought to us, and we’re very selective about what we do and what works, and it’s got to contribute to our growth algorithm on the medium to long term or we don’t consider it. Sometimes key money is involved, but that is only when we still feel like we’re getting a substantial level of value. I could – and you know this, Alex, we’ve said it before, we could go from our growth today to 7% growth to 6% net unit growth by just having done some of the deals that we would have seen in the last couple of years. I don’t think would have – I know would have created any value, but it would have been a distraction. Instead we focused our people on growing in the right way in the right markets and on doing the transactions like Ruby, like NOVUM that are long term, that are accretive, that pay fees that are at a good value that I think build great shareholder value or launching Garner, where for very little capital, we’re now at nearly 120 hotels open in pipeline in 6 or 7 countries. And I think we’re just getting started. Like we – I only have so much – Michael and I only have so much time in the day. And when we’re allocating to the higher value opportunities, I think it pays off for everybody.

Thank you very much. We currently have no more questions registered. So I will hand back over to Elie for any closing remarks.

Well, thank you, everyone. It's been really great to connect with you today, update you on our 2024 full year results and strategic priorities. We're very proud of what our teams accomplished in the past year, and we remain very confident in our ability to continue delivering on our strategy and driving shareholder value going forward. Our next market communication will be our first quarter trading update on Thursday, 8th of May. Thank you for your time and interest in IHG, and I look forward to catching up with you soon.