Andrew Cosslett Chief Executive

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2 Andrew Cosslett Chief Executive

3 IHG's journey Goal Target Faster growth by making IHG s brands the first-choice for guests and hotel owners By end 2008: Net, organic growth of 50,000-60,000 rooms Strategy Priorities Build the industry s strongest operating system focused on the biggest markets and segments where scale really counts Brand performance Excellent hotel returns Market scale/knowledge Aligned organisation 3

4 Today s agenda The importance of brands Peter Gowers Chief Marketing Officer How we apply consumer insight Jenifer Zeigler InterContinental Brand Director Roland Fasel General Manager InterContinental London Park Lane How we drive hotel returns Richard Solomons Finance Director 4

5 Today s agenda The importance of brands Peter Gowers Chief Marketing Officer How we apply consumer insight Jenifer Zeigler InterContinental Brand Director Roland Fasel General Manager InterContinental London Park Lane How we drive hotel returns Richard Solomons Finance Director 5

6 Driving growth Target Goal By end 2008: Net, organic growth of 50,000-60,000 rooms Faster growth by making IHG s brands the first-choice for guests and hotel owners RevPAR X Rooms X Royalty rate 6

7 Importance of brands continues to grow Customers want brands Growth in branded consumer products Growing use of internet to book - brands offer reassurance Lenders want brands Last two cycles showed trading resilience of branded hotels Branded hotels easier to resell Owners want brands Brands deliver guests and aid financing Brands drive higher revpar; higher ROI 7

8 Strong global growth in branded rooms Worldwide Rooms 14,100 16,900 18,350 Worldwide Branded Rooms 2,900 4,400 6,713 Worldwide % Branded Rooms 21% 26% 37% Source: Mintel/TTI/IHG analysis 3% CAGR growth in worldwide rooms over last decade 10% CAGR growth in worldwide branded rooms in last decade Branding accelerates during downturn 8

9 Still significant growth to come 2004 Total Rooms '000 % Branded Rooms Branded Rooms '000 North America 5,650 65% 3,673 South America % 170 Americas 6,500 59% 3,843 Europe 6,550 25% 1,638 Middle East % 89 Africa % 73 EMEA 7,390 24% 1,799 East Asia 3,500 25% 875 South Asia % 20 Australia % 120 Other AsiaPac % 56 Asia Pacific 4,460 24% 1,071 Worldwide 18,350 37% 6,713 Source: Mintel/TTI/IHG analysis 9

10 Strong branded revenue growth 13% US Industry revenue growth 11% 5.9% 16 year CAGR 9% % growth per annum 7% 5% 3% 1% -1% -3% d d Unbranded Branded 3.0% 16 year CAGR -5% -7% Source: STR 10

11 The importance of having a brand portfolio Meets customer needs Customers have different stay needs but like to stay within the same loyalty programme Meets owner needs Owners like to work with a small number of brand owners but have different development opportunities Common brand platform allows increased systems investment Funds from all brands contribute to reservation channels, loyalty club etc - allows extra investment and innovation 11

12 IHG's 7 step process to build differentiated brands 1.DNA 2.Insight 3. Point of Difference 4. Innovation 5. Look & Feel 6. Consistency 7. Character 12

13 What IHG does differently Hotel Industry IHG Intuition Insight Generic brands Distinctive brands Focused on product Product and People 13

14 Getting branding right - Holiday Inn Express DNA Insight Point of Difference SMART Innovation: Shower Look & Feel: Advertising Consistency: Breakfast Character: Training Revenues growth +2.3ppt vs segment ( ) Segment pipeline share +4.6ppt ( ) Royalty rate +1ppt (2005) 14

15 Significant opportunity in the luxury segment Global room revenue by segment Forecast global room revenue growth by segment, Revenues ($ Billions) Revenue growth ($billion) Luxury Upscale Midscale Budget 0 Luxury Upscale Midscale Budget Source: IHG estimates Note: growth across top 20 global markets 15

16 Luxury hotel brands currently undifferentiated Bedding wars Fine dining Flat screen TVs.all expensive for owners 16

17 Differentiating InterContinental Customer preference Owner ROI Research Projects Point of Difference IN THE KNOW Owner Focused Brand Manager Owner input 17

18 Today s agenda The importance of brands Peter Gowers Chief Marketing Officer How we apply consumer insight Jenifer Zeigler InterContinental Brand Director Roland Fasel General Manager InterContinental London Park Lane How we drive hotel returns Richard Solomons Finance Director 18

19 Current InterContinental positioning Most global Five Star hotel brand 142 Hotels; 63 countries Strong representation in fast growing economies: China : 6 open; 9 pipeline Rest of Asia Pacific: 23 open; 9 pipeline Middle East : 30 open; 4 pipeline United States & Mexico: 24 open; 6 pipeline 19% of IHG's total gross revenues $2.1bn total gross revenues to 30 September % total gross revenue growth to 30 September

20 Performance already strong 15 Global InterContinental RevPAR Growth RevPAR Growth (%) Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 RevPAR growth outperformance vs global luxury sector 2005: 2.2ppt outperformance H1 2006: 3.4ppt outperformance 20

21 High growth opportunities Luxury segment growing around the world Leverages IHG's global footprint and owners' development opportunities Creates its own scale High revenue per hotel means fits most locations - other brands need market scale High value per management contract $300k- $3m fees; average $800k 21

22 InterContinental repositioning Phase I: Portfolio repositioning Phase II: Brand research 1998: InterContinental brand acquired hotels 1998: Older demographic targeted Conservative positioning : portfolio optimised 35 Lower quality hotel exits 35 Hotel renovations 60 High quality hotel additions : Consumer research Younger demographic identified Advertising focus changed "In the Know" positioning 2006: 142 hotels; 33 pipeline 2006: Brand repositioning launched 22

23 Getting branding right - InterContinental DNA Insight Point of Difference IN THE KNOW Innovation: Concierge Look & Feel: Updated brand image Consistency: Local experience Character: Colleague Engagement 23

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36 Dubai Nanjing Davos Arizona

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38 Today s agenda The importance of brands Peter Gowers Chief Marketing Officer How we apply consumer insight Jenifer Zeigler InterContinental Brand Director Roland Fasel General Manager InterContinental London Park Lane How we drive hotel returns Richard Solomons Finance Director 38

39 Bringing "In The Know" to life DNA Insight Point of Difference IN THE KNOW Innovation: Theo Randall Spa Club Lounge Look & Feel: Guest Rooms Public Areas Consistency: Arrival Service Character: People 39

40 Bringing "In The Know" to life DNA Insight Point of Difference IN THE KNOW Innovation: Theo Randall Spa Club Lounge Look & Feel: Guest Rooms Public Areas Consistency: Arrival Service Character: People 40

41 Theo Randall at the InterContinental 41

42 Club InterContinental 42

43 Bringing "In The Know" to life DNA Insight Point of Difference IN THE KNOW Innovation: Theo Randall Spa Club Lounge Look & Feel: Guest Rooms Public Areas Consistency: Arrival Service Character: People 43

44 Suite 44

45 Lobby 45

46 Bringing "In The Know" to life DNA Insight Point of Difference IN THE KNOW Innovation: Theo Randall Spa Club Lounge Look & Feel: Guest Rooms Public Areas Consistency: Arrival Service Character: People 46

47 Service 47

48 Bringing "In The Know" to life DNA Insight Point of Difference IN THE KNOW Innovation: Theo Randall Spa Club Lounge Look & Feel: Guest Rooms Public Areas Consistency: Arrival Service Character: People 48

49 People 49

50 Competitive Map In the know authentic Connaught Lanesborough Claridges Classic Traditional Ritz Four Seasons Dorchester Mandarin Oriental Modern Contemporary The Langham Churchill Hyatt Regency Great Eastern The Metropolitan Sanderson Generic Consumer promise 50

51 Market position Standard Rooms Superior Rooms Club Intercontinental Suites Signature Suites 112 Rooms 275 Rooms 60 Suites

52 Business mix Wholesale leisure Corporate rates Large meetings Individual customers % 44% 11% 25% Reduce Reduce Reduce Increase % 21% 16% 27% 52

53 Today s agenda The importance of brands Peter Gowers Chief Marketing Officer How we apply consumer insight Jenifer Zeigler InterContinental Brand Director Roland Fasel General Manager InterContinental London Park Lane How we drive hotel returns Richard Solomons Finance Director 53

54 IHG's journey Goal Target Faster growth by making IHG s brands the first-choice for guests and hotel owners By end 2008: Net, organic growth of 50,000-60,000 rooms Strategy Priorities Build the industry s strongest operating system focused on the biggest markets and segments where scale really counts Brand performance Excellent hotel returns Market scale/knowledge Aligned organisation 54

55 InterContinental London Park Lane refurbishment Hotel Built : InterContinental brand acquisition Property in need of refurbishment Capex Low capex spend - await refurbishment 2005/06: Refurbishment 70m Renewal capex 5m Enhancement capex 1m New brand standards Ongoing capex 5-7% of revenues 55

56 Major owned and leased asset refurbishment profile Refurbishment New Build New York 2000/2001 Paris Le Grand 2002/2003 Atlanta Hong Kong Goal to meet WACC across the cycle Boston 2006 London Park Lane

57 InterContinental London Park Lane earnings profile 2000 Revenue 43m; EBITDA 20m; EBIT 18m 2001 Revenue 33m; EBITDA 15m; EBIT 13m 2002 Revenue 31m; EBITDA 13m; EBIT 11m 2003 Revenue 30m; EBITDA 11m; EBIT 9m 2004 Revenue 31m; EBITDA 11m; EBIT 10m 2005 Revenue 18m; EBITDA (1m); EBIT (3)m 2006 Revenue 3m; EBITDA (4m); EBIT (8)m 2009 Revenue 45-50m; EBITDA 20-25m; EBIT 15-20m Net book value: 200m ROCE 7.5% - 10% 57

58 Andrew Cosslett Chief Executive

59 IHG's journey Goal Target Faster growth by making IHG s brands the first-choice for guests and hotel owners By end 2008: Net, organic growth of 50,000-60,000 rooms Strategy Priorities Build the industry s strongest operating system focused on the biggest markets and segments where scale really counts Brand performance Excellent hotel returns Market scale/knowledge Aligned organisation 59

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