Earnings Call: H2 2013

Feb 18, 2014

Good morning, everyone. Thank you for joining us today, and welcome to our 2013 full year results presentation. In a moment, Paul Edgecliffe-Johnson will take you through the financial results in detail, but first, let me cover some highlights. 2013 marks IHG's 10th anniversary as a standalone company, and was another year of strong performance for the business. Growing preference for our brands, combined with solid net rooms expansion, fueled increasingly from developing markets, drove good growth in fees. Our focus on cost efficiencies, combined with our success in leveraging our scale, has allowed us to reinvest in the business whilst growing our margins, an achievement we've repeated now for a number of years. We've once again demonstrated IHG's ability to drive powerful cash flows and to deliver against our commitment to reduce the capital intensity of the business, releasing some $444 million cash from disposals in the year. I'm delighted today to announce the disposal of InterContinental Mark Hopkins, San Francisco for $120 million. This follows our agreement to dispose of 80% of InterContinental New York The Barclay in December, with both deals highlighting the enduring appeal of the InterContinental brand. IHG's ability to reliably recycle capital provide us with the flexibility to invest behind our brands and our technology platforms, at the same time as being able to generate significant and consistent shareholder returns. The $638 million of capital we returned in 2013, via special dividend and share buyback, together with the 9% growth in the 2013 total dividend announced today, demonstrates both an ongoing commitment to our longstanding strategy and the confidence we have in our ability to drive strong performance into the future. I'd just like to say a few words about Paul before I hand over to him. Same tie, Paul. That's a coincidence, I think. We're not quite that slick. Paul joined IHG almost 10 years ago, and during that time, he's held a number of senior finance positions across the group. Most recently heading up finance for our Europe and our Asia, Middle East, and Africa regions. He's also led hotel development for Europe, Middle East, and Africa, as well as taking on the role of interim chief executive for that region during 2011. As you can see, Paul has a wealth of financial and operational experience, and he and I have worked together closely throughout his time at IHG, and I'm delighted to have him as our CFO. I'll now hand over to Paul, who will talk in more detail about the financial progress IHG has achieved in 2013, and I'll return later to discuss our strategy with a particular focus on the progress our brands have made during the year. Paul. Thank you, Richard, and good morning, everyone. It's been some years since I last stood up here. It's good to see some familiar faces, and I look forward to reconnecting with you in the coming months. We're pleased to report another year of strong results in which we have delivered growth in all of our core financial metrics. Increases in both rooms under our brand and in revenue per available room, or RevPAR, drove a 4% increase in fee revenue. Reported profit growth of 10% included three large liquidated damages received totaling $46 million in the year. Without the benefit of these, and excluding results from managed lease hotels and the owned revenue from InterContinental London Park Lane, which we sold in May, we grew underlying profit by 8% on a constant currency basis. Interest was $19 million higher at $73 million, reflecting average debt that was a little higher as we have executed on our capital returns program. Our effective tax rate increased by 2 percentage points to 29%. Our expectation remains that our tax rate will rise to the low 30s in 2014. After these higher tax and interest costs and an 8% reduction in weighted average shares, earnings per share increased to 158.3 cents, up 14% year-on-year. We had another year of strong cash generation, with free cash flow of $502 million, up 11% on last year. I'll go into more detail on this a little later on. Our focus remains on driving our three levers of growth to deliver long-term sustainable performance. Royalty rate is the metric that is most stable, as we operate long-term contracts, almost all of which now have a minimum 20-year duration. We don't expect to see significant movements year-on-year. Comparable RevPAR growth of 3.8% was driven by rate up 1.8% and a 130 basis point increase in average occupancy, which is now at 67.1%, the highest we have seen since 2007. We opened 35,000 new rooms in the year and removed 25,000. On an underlying basis, adjusting for the 4,000 rooms that exited in relation to the significant liquidated damages I mentioned earlier, net rooms increased 2.3%. 4.3% fee growth across the business added $49 million in absolute terms, taking total fees to nearly $1.2 billion. To give some more context as to where and how we drove this, I will now talk you through the performance of each of our regions in a little more detail. $39 million of our fee growth was generated in the Americas, our largest region. This is driven primarily by 4.3% comparable RevPAR growth, with average rate up 2.6% and a 110 basis point increase in average occupancy, which now stands at 66.4%, 30 basis points above the 2007 prior peak. We were pleased with the performance of each of our brands during the year, and in particular with the 130 basis point RevPAR outperformance that our higher price point hotels of Crowne Plaza and InterContinental both achieved against their industry competitors. Focusing in for a moment on the mid-price segment, Holiday Inn and Holiday Inn Express maintained a sizable rate premium to their competitors but grew RevPAR slightly more slowly in 2013. This is unsurprising given their significantly superior RevPAR performance throughout the cycle, proving to be much more robust during the downturn and recovering back to prior peak levels almost 12 months sooner than the wider U.S. industry. Back now to the region as a whole, and we opened 20,000 high-quality rooms and removed 18,000 from our system as part of our continued focus on quality and driving the long-term performance of our brands. On an underlying basis, revenue and profit were both up 7% in the Americas. This was driven by good growth in our franchise business and a strong performance from our owned and leased hotels, where 6% RevPAR growth and strong drop through drove operating profit up 25%. in 2013, we signed significantly more hotels in the Americas than in any year since 2008. This is a strong indicator of the success of our continued focus on quality and brand strength and sets us up well for the future. Moving on now to Europe, which drove $4 million of our fee revenue growth. After a slow start with tough comparatives for Germany and increased supply growth in the U.K., comparable RevPAR grew 1.7% across the year. In the fourth quarter, we achieved 5% growth, although this benefited from the timing of certain exhibitions and events in the quarter, so it is not fully representative of underlying economic conditions. We opened 3,500 rooms during the year and also removed 3,500 of our lowest quality rooms, including 1,300 rooms for which we received significant liquidated damages. Solid fee revenue progression reflected strong growth in franchise fees, up 7%. This, in conjunction with a $3 million property tax recovery at InterContinental Le Grand, drove underlying profit up 10%. 2013 was a good year for signings in Europe, with 50 hotels added, taking the pipeline to 110 hotels or 18,000 rooms. Seven signings in London alone will expand the footprint of each of our six brands already operating in the capital. We also saw strength in Russia, one of our key focus markets, where we signed five hotels. Moving now to look at our Asia, Middle East, and Africa region, where we delivered a strong underlying performance but saw fee revenues fall by almost $4 million. Having previously held the CFO role in this region, I know just how diverse it can be, with different dynamics driving each of our key markets. 6.1% comparable RevPAR growth was led by Southeast Asia and Japan, both up almost 10%. In the Middle East, more modest RevPAR growth reflected strong trading in the United Arab Emirates, offset by continued geopolitical unrest elsewhere in the region. We opened 4,000 rooms and removed 2,000 in the year, with almost all of the net rooms growth coming from developing market locations such as India, Indonesia, and Thailand. Despite this strong growth in our key business drivers, underlying profit was down 8%. This reflects the combination of our continued investment to deliver long-term growth in the region and a $10 million reduction in revenues from a small number of legacy contracts that have come up for renewal. Some of these have been renewed on current market terms, as we indicated at half year results, and some have been removed for quality reasons. Excluding this $10 million impact, fee revenue would have been up 4%. Asia, Middle East, and Africa will be a key market for our future growth. We have 32,000 rooms in the pipeline with a strong mix of developing market locations. Around half of the pipeline is under construction today, and over half of it is for our Holiday Inn brand family. Moving on now to Greater China, where we increased fee revenue by $3 million. Our ability to continue to grow RevPAR in 2013 while the industry was experiencing significant declines reflects our scale and the strength of our competitive position. We opened 8,000 rooms in the year, almost half of which were in the fourth quarter. This took year-end system size up 11%, our eighth consecutive year of double-digit growth. Given we achieved 1% RevPAR growth and 11% net system growth in 2013, a 3.3% increase in fee revenue does seem rather modest. However, there are several factors contributing to this, including our weighting of rooms openings to the fourth quarter, the macroeconomic conditions in the region, and the ongoing industry-wide reduction in spending on conferences and meetings. This resulted in 7% growth in fees from rooms being partly offset by a 1% decline in fees from food and beverage. We already have an established scale position in Greater China with well-recognized brands, and from this base, we are expanding and investing to build a strong domestic business across the entire country. This continued expansion of our portfolio does, however, have an impact on our fee revenue growth, and I'll provide some more color on this a little later. What this does mean, though, is that we have brands across multiple price points and hotels in 70 cities. This, in conjunction with our experienced team and our well-established operations and infrastructure, places us very well to trade resiliently in China. This also means we are not overly reliant on any one segment. In 2013, we took measures which drove transient business up 10%, and our Holiday Inn Express brand drove RevPAR up almost 5%. Despite the macroeconomic headwinds in the year, we still signed 15,000 new rooms in Greater China, up 15%, demonstrating the confidence our owners have in IHG and the great prospects for our business there. This takes our Greater China pipeline to 55,000 rooms, of which almost 70% is under construction, and we continue to have the industry's leading system and pipeline in the region. I think it would be helpful to include some additional information at this point to illustrate the developing markets dynamic a little better. It's unlikely we'll be repeating this data quarter to quarter, as we don't expect the dynamic to change too much. You will see in our announcement this morning that we've disclosed total RevPAR growth for our EMEA and Greater China regions. This differs from comparable RevPAR in that it includes rooms that have opened or exited in the last two years, and so reflects our change in mix, which means it has a more linear relationship with fee revenue growth. As Richard will tell you later, our key market strategy focuses our efforts on not just the largest markets, but also those which are the fastest-growing. This often means that we are adding hotels at the same time as the demand drivers in developing markets are being built, which inevitably means lower absolute levels of RevPAR, especially in the early years. This is especially so in Asia, Middle East and Africa, and Greater China, where we are significantly ahead of the competition when it comes to growing our business to ensure it is aligned with future demand. The faster we expand in developing markets in these regions, the more we will see this dynamic in our fee revenue growth. These fees are incremental to those we receive in established markets, where, of course, we are still growing, so this will continue to be positive for IHG's top line. It's not surprising, then, that our business mix will change quite considerably over time as we open new rooms. In Greater China, almost 60% of our comparable rooms are outside established markets, but this increases to 86% for the pipeline. Likewise, in Asia, Middle East, and Africa, around a third of the comparable rooms today are in developing markets, but this increases to 77% for the pipeline. As we've said before, new hotels opening in developing markets have an initial RevPAR on average around 30% of the level achieved by a mature hotel in that region. Even after three to five years, when these hotels are fully ramped up, they are only expected to achieve around 70% of the absolute RevPAR level of a similar hotel in a primary market, in the same way as elsewhere in the world. You will have seen from our release this morning that there are a number of one-off items we have highlighted that will impact 2014. We have included a summary of these in the appendices to this presentation, in addition to our usual slides showing performance of the company by business model in 2013. We have again delivered sustainable fee margin progression in 2013, with a higher-than-expected increase of 1.3 percentage points. This was the result of our continued focus on scale markets and productivity improvements, balanced with further investment for growth, together with a $7 million benefit from increased central revenue. Sustainable fee margin progression over the medium term remains a key focus for us, and since 2004, we have delivered an 11 percentage point increase. Some years will, of course, be better than others, and in the last few, we have seen above-average margin growth. This will be at a more normal level in 2014 as we continue to invest in brand development and in local infrastructure in developing markets to drive longer-term fee growth and market share. You'll probably be familiar with this slide, which illustrates how we use our capital to drive growth and maximize value for shareholders. I won't linger too much on this, but will reiterate that we continue to be committed to keeping an appropriately strong balance sheet and an investment-grade credit rating. In line with our strategy to reduce the assets intensity of our business, we completed the disposal of InterContinental London Park Lane in May, with total gross proceeds of $469 million. We have retained the brand over this hotel with a 60-year management contract. Richard has already mentioned the great deals that we have agreed for InterContinental Mark Hopkins, San Francisco, which we signed at 2:30 A.M. this morning, and InterContinental New York The Barclay. The Barclay was a complicated transaction, and having led the negotiations for the final six months, I was particularly pleased to see it reach a successful conclusion, including a commitment by the newly formed joint venture to invest approximately $175 million in a major renovation and repositioning program. Free cash flow generated by the business of $502 million was up 11% in the year, driven by a 10% increase in operating profit and strong cash conversion, with two-thirds of EBITDA converting to free cash flow. Net debt of $1.15 billion was slightly up on 2012 due to high levels of CapEx and returns of funds to shareholders, partly offset by disposal receipts. Moving on now to look at capital expenditure in a bit more detail. Recycled capital more than funded our $129 million of growth CapEx in 2013. This spend included $72 million to acquire three owned EVEN Hotels, just under half the amount we have committed to launch the brand. Maintenance capital expenditure of $140 million was in line with prior guidance. Around a third of this was spent on maintaining our own hotels and two-thirds on supporting our core infrastructure. Our medium-term CapEx guidance of up to $350 million a year is unchanged. This will be invested behind maintaining the strength of our technology platforms to ensure we remain competitive in the evolving digital world and strategic investments to drive the growth of our brands. We will continue to fund growth capital through asset recycling wherever possible. In addition to this, we will be contributing 20% of the cost of the refurbishment of the Barclay, in line with our joint venture share, which we currently expect to be invested across 2014 and 2015. in 2013, we continued our strong history of returning surplus funds to shareholders. For the second year in a row, we distributed over $600 million in additional returns over and above the ordinary dividend. We are now four-fifths through our buyback program, with just over $100 million of it still to be completed. Over the last 10 years, the strong free cash flow generated by our robust fee-based business model, combined with $6.2 billion generated from disposals, has enabled us to return some $9.6 billion to shareholders, whilst also selectively investing behind growing our business to optimally position it for the long term. As Richard mentioned, 9% growth in the ordinary dividend reflects our confidence in our long-term strategic position, although we remain mindful of the short-term external headwinds still impacting some markets around the world. Richard will now provide you with more details on how we are ensuring we retain our competitive position for the future, with a focus on our brands. Thank you, Paul. Many of you will be familiar with this slide, which I showed at our educational event in November. It shows the major tailwinds that we believe will continue to drive up demand for hotel rooms over the next few decades. Growing GDP, globalization of trade, and aging populations mean that companies will require more travel and individuals will have more disposable income, both key drivers of hotel demand, especially for mid-market brands. Growing outbound travel flows for both business and leisure will in particular favor IHG, given our geographic footprint and broad portfolio of brands, which we have positioned to meet a wide range of guest needs. We know that there are some solid drivers that will ensure that demand for hotel rooms will grow for some time into the future. Looking now to where that growth will be. Whilst IHG has hotels in some 100 countries and territories around the world, we are primarily focusing our efforts on just 10 markets. These are the largest or fastest-growing markets in the industry, in which IHG has scale, a strong existing brand presence, and which are aligned to our business model. We have calculated that by 2020, these 10 markets alone will account for more than three-quarters of industry growth, which means that combined, they will achieve some 4.6% compound annual growth in industry rooms revenue. IHG has the industry-leading system and pipeline position in these 10 markets today, and they make up more than 85% of our combined open and pipeline rooms. Having this focus is essential and is a key part of our strategy. It allows us to direct the bulk of our resources and efforts where most of the demand growth will be. Markets elsewhere are also important to us. We think about our business in these places in a more targeted fashion, and we will add hotels in a more selective way. It is not straightforward to continuously win in an ever-changing marketplace, but IHG has the right strategy to deliver high-quality growth into the future. Our targeted portfolio, combined with our winning model, underpinned by disciplined execution, will continue to drive superior returns for IHG shareholders. In order to operationalize this strategy, we have made it into something that all colleagues can buy into and understand, and we do this through our three clearly stated priorities of brands, people, and delivery. I have talked a lot recently about our two innovative new brands, EVEN Hotels and HUALUXE Hotels and Resorts, and we are making great progress with these and are looking forward to the first hotels opening. Today, though, I would like to focus specifically on our established brands and how we are evolving them to drive increased preference amongst our current and future guests. Hotel brands are a promise of a consistent, relevant, and differentiated hotel experience. IHG's latest annual trends report that we published last month suggests that to continue to win and maintain guest loyalty into the future, hotels need to deliver global, local, and personalized appeal for their guests. By delivering this, our brands will become truly three-dimensional which will build the trust and emotional connection we need to sustain lasting relationships with guests and to outperform into the future. Each year at IHG, we look after some 34 million unique guests staying more than 160 million nights from whom we receive regular feedback. Guest satisfaction is obviously hugely important, and we know and can quantify that improvement in this metric drives both the guest likelihood to return and their likelihood to recommend our brands to others. At the start of 2011, we introduced a new survey system across all our brands and regions that we call Guest Heartbeat. This requests online guest feedback via a third party. It is completely independent of the hotels and is standardized for all of our brands globally. This state-of-the-art system gives us huge insight into our guest views, with feedback that also helps us to make instant operational improvements at the hotel level. In 2013, we produced some really good results. We drove increased guest satisfaction at every single one of our brands as a result of many of the initiatives which are informed by our Guest Heartbeat system. These include training for our general managers to ensure the strongest possible connection between what each brand stands for and the delivery of the brand experience at the frontline, as well as more effective processes for the handling of problems at the hotel level. Improving the aggregate quality of the hotels in our system remains a top priority for us, and you heard from Paul that we exited a number of hotels in 2013. These were hotels which just weren't living up to our brand promise. In fact, those hotels that we removed from the system had, on average, guest satisfaction scores more than 5 points lower than the estate as a whole and were almost twice as old. Looking forward, we will continue to manage the quality of our system for the long term, removing hotels where necessary. Our brands are delivering superior and consistent experiences, which in turn drives RevPAR premiums and delivers better return on investments for us and for our owners. Third-party independent recognition is also an important endorser of our success. This is why we're so proud of the awards our brands, hotels, and corporate offices win. Just a sample of the more than 400 awards we won in 2013 are listed here on this slide. Our brands are performing well, we're improving guest satisfaction, and we're gaining significant amounts of external recognition for the great work we're doing. But that doesn't mean we're standing still. We are evolving our brands to ensure they remain relevant to guests and their needs. Back in November, I told you about the major research studies we've undertaken, which look at the universe of guest needs and occasions and their relative groupings in the hotel market. From this, we identified 9 global relevant and differentiated needs-based segments. The names of these and where our brands sit within them are shown on this slide. This unique and deep insight allows us to better differentiate our hotel experiences and will be a key driver of our ability to continue to grow ahead of the market. Let me tell you now about how we're using some of these insights to strengthen our established brands, starting with InterContinental. InterContinental Hotels & Resorts is, of course, our international luxury brand, which we've grown to be more than twice the size of any other luxury brand with the largest pipeline. In fact, InterContinental today is almost 3 times the size of Four Seasons and more than double the size of each of Ritz-Carlton, JW Marriott, Fairmont, and Shangri-La. The brand's ethos is to empower guests by providing diverse, enriching, and local experiences, what we call the InterContinental life. Its core global segments are mixing business with pleasure and short break experiences. We're focused on adding hotels in iconic locations. In 2013, we opened 9 new hotels in key markets such as Shanghai, Osaka, Lagos, Marseille, and Davos. Here are images of some of these hotels, which I hope show you the fantastic quality of these new additions. We also signed a further 14 hotels into the pipeline, including the third for London at the O2 Arena and a second for both Washington, D.C. and Sydney, Australia. In fact, 2013 was our best year for InterContinental signings since 2008 and our best for openings since 2010, demonstrating the strength of the brand and its appeal to owners around the world. The work we are doing and the key locations we are adding is driving up guest likelihood to return. The brand continues to receive numerous external accolades. in 2013, it was voted the world's leading hotel brand for the fifth consecutive year at the World Travel Awards, the Oscars of the industry. Looking into 2014, we are focusing on developing our brand proposition to appeal more to our target guests. This will include leveraging social media and digital channels to distribute content from our InterContinental Concierge service, one of the brand's core hallmarks. In recognition of the changing travel habits of today's InterContinental guests, this year, we will roll out our first global menu for the brand for children via a link-up with Annabel Karmel, one of the U.K.'s most trusted experts on children and families. We will be running pilots in Asia and the Middle East to explore how we refine our Club InterContinental offering, a private social space which offers bespoke services to guests. Moving on now to Hotel Indigo, the industry's first global brand of boutique. This combines the modern design and intimate service associated with a boutique hotel with the peace of mind and ease of staying with one of the world's largest hotel companies. Each Hotel Indigo reflects the local culture, character, and history of its surrounding neighborhood. Hence, the tagline, Refreshingly Local. With this brand, we are targeting a number of guest segments, including romantic getaway and short break experience. Since we took the brand global in 2008, we have seen great traction with 55 hotels now open and a further 51 in the pipeline. 2013 was a great year for the brand. Six openings included the first Hotel Indigo properties in each of Israel, Spain, and Hong Kong, really demonstrating our success in securing prime urban locations, photos of which you can see here. We have run some great consumer campaigns in 2013 to highlight Hotel Indigo's neighborhood focus. In Europe, we joined forces with iconic shoemaker Superga to create limited edition sightseeing shoes, which replace slippers in the hotel rooms to encourage guests to explore the local neighborhood in style. Meanwhile, in Hong Kong in December, we celebrated both the 3-year anniversary of the brand in Greater China and the opening of Hotel Indigo Hong Kong by branding two Hong Kong tramcars with the neighborhood stories from our five Hotel Indigo properties open in the region. The neighborhood focus will continue to be an important marketing theme for the brand into 2014, when we launch a consumer campaign to support the rollout of local digital guides to all of our hotels in the Americas. We are also looking forward to further country debuts for the brand in France and Russia. Holiday Inn continues to be an extremely successful brand and IHG's engine for growth. It is the largest hotel brand family in the world with the largest pipeline, and it enjoys a significant RevPAR premium to its industry segment. This is a remarkable achievement for a brand that is more than 60 years old and demonstrates the strength of its core values and the effective work we have been doing in recent years, using consumer insights to keep it relevant for consumers and owners in the 21st century. The brand had another strong year in 2013, opening some 150 hotels, including country debuts for the Holiday Inn core brand in Ecuador, the Cayman Islands, and Mauritius. We signed a further 280 hotels into the pipeline, which makes it our most successful year for brand family signings since 2008. Our brand segmentation study helped us better differentiate between our contemporary traveler target guest for Holiday Inn and our smart traveler target guest for Holiday Inn Express. In 2013, we ran a number of successful marketing campaigns for both brands across the world. For Holiday Inn Express, there was our first ever TV campaign in Europe, and we brought back our award-winning Stay Smart campaign in the U.S. In 2014, we will continue to innovate to enhance the propositions for our target guests across the brand family. In Greater China, the Kids Eat and Stay Free rollout will be accompanied by a marketing campaign, which is aimed at the growing family time segment in the region. In Europe, we will roll out the Open Lobby concept to more properties, including locations in the U.K., Russia, Germany, France, and Spain. In the Americas, we are adding more healthy items to our Holiday Inn Express breakfast offering. These pictures give you an idea of what these innovations will look like. I have talked on many occasions about the importance of the Crowne Plaza brand to IHG. With nearly 400 hotels open and almost 100 in the pipeline, of which more than half are in Greater China, it has a powerful footprint and a great potential for future growth. We are on a journey to improve the quality and consistency of the brand, primarily in the U.S., and we are really encouraged by the results so far. In 2013, our Crowne Plaza in the U.S. meaningfully outperformed the upscale segment. In North America, we improved our J.D. Power survey overall satisfaction index by some 15 points, a big step up. On a global basis, we have driven up guest likelihood to return by some 140 basis points. These are all strong indications of the brand's growing appeal to guests. Crowne Plaza now has a clear, relevant brand proposition, which we call Traveling for Success, and we have aligned the brand to the business productivity and building business interaction segments. These insights have led to a number of guest experience enhancements, which we piloted during 2013 with encouraging results. In Greater China, where the Crowne Plaza brand continues to be extremely successful, we have been investing in media campaigns to drive further improvements in brand awareness and preference. The most recent of these was Crown Your Dream Success, highlighting how the brand can help guests achieve their goals. In 2014, we will start the rollout of the new guest experience enhancements, starting with our Americas and Europe regions. We will also continue to remove substandard hotels from the system. As you are aware, we will use IHG's capital if necessary to make sure we add and retain representative Crowne Plaza hotels in the right locations to build awareness and showcase the brand properly. Turning now to our extended stay brands and starting with Staybridge Suites, a brand which IHG used its own capital to launch back in 1997, and since which has been released in full. Today, we have almost 200 hotels open with 80 in the pipeline, and we were the first extended stay brand to launch in the U.K. in 2008. In 2013, we opened seven Staybridge Suites hotels, including the first for Lebanon in Beirut, and we signed a further 32 hotels into the pipeline, including great new locations in Saudi Arabia and London. For those of you not familiar with extended stay hotels, this is one of the fastest-growing segments in the U.S. These brands are focused on providing a home away from home for guests who spend prolonged periods on the road. Staybridge Suites has some very loyal guests and the highest guest satisfaction of all IHG's brands. We've been doing a lot to improve this even further, working with our owners to renovate a number of our U.S. hotels over the past couple of years, which has driven excellent results. We've also been focused on brand innovations. The evening social is a key hallmark of the brand, providing a welcoming environment where guests can interact. Our new food and beverage menu has helped to drive strong increases in attendance at these events, thereby driving deeper engagement with the brand. Further guest experience innovations will be our focus for Staybridge Suites in 2014. This will include upgrades to the gym as well as leveraging the brand's first-ever video campaign to showcase the amenities and guest experience the Staybridge Suites brand offers. Candlewood Suites is our second extended stay brand, focused solely on the U.S. and Canada. Whilst it also looks to provide a home away from home, it has a slightly different target guest, one who is more self-sufficient and looking for a more casual experience. We acquired this brand in 2003, when it had a combined system size and pipeline of just 136 hotels, and we've grown this to almost three times that number today. Almost 20% of the estate has been refurbished over the past two years, driving great results. In response to our guest insights, we also introduced the lending locker, a place where guests can borrow common household items during their stay. This builds on the success of the Candlewood Cupboard, one of the brand's core hallmarks, which operates an honor system. By expanding the notion of trust of a lending locker, we're treating our guests like trusted members of the family, and this links to the core values of the brand. In 2014, we'll offer guests new pillow choices and leverage Candlewood Suites' first-ever video advertising campaign called Make It Your Home Base. Now, moving on to food and beverage, an area which is important to all of our brands, but one we've not talked to you much about before. This is an important element of the guest experience and something we've been increasing our focus on as a result of our guest insights work. Non-rooms revenue, the majority of which is from food and beverage, contributed around 15% of IHG's total gross revenues in 2013 and more than 40% in our Greater China and AMEA regions. From a fees perspective, this area is very important to us as we earn both base and incentive management fees on F&B for our managed hotels. This doesn't currently form part of our fee stream for franchised hotels. Our brands around the world operate some 5,400 restaurants and bars, making IHG the largest casual dining chain in the world. Food and beverage is therefore an integral part of our business, and there is a significant opportunity to make this a truly differentiating factor for our brands. We have taken a number of actions to ensure we maximize the opportunities in this area. We have added dedicated resource in each of our regions who have real experience in this field. In AMEA and Greater China, where we operate most of our managed F&B outlets, we have also set up additional support for our hotels on the ground. To win in the F&B space, we are also investing in training for hotel-based teams. As such, in 2013, we piloted an online food and beverage training tool with bespoke brand standards. This will be rolled out this year with initial focus on breakfast, where we have identified the biggest opportunities lie to improve the guest experience. We have also used our knowledge and insights to develop a framework for developing F&B concepts. Examples shown on this page include CHAR, our modern take on a traditional steakhouse. We have one of these open and a further 7 in the pipeline. Cai Feng Lou is a fine dining Chinese restaurant with a modern twist. We have almost 50 of these in the pipeline. Currently, both these concepts are only being developed in Greater China, but we see potential for both to be rolled out globally. Chaobella is a brand we have developed specifically for the Indian market. This serves both Italian and Chinese dishes, which are the most popular foreign cuisines in India, and appeals to the Indian culture of communal sharing of food as a family. We are delighted that Chaobella was listed last year as one of the top 500 restaurants in Asia by Miele Guide, widely recognized as the most authoritative dining guide in the region. Everything I have talked about so far is important because brands are the promise that we make to customers. But all of these great brands need to be supported by strong delivery systems. The guest experience is evolving all along the travel journey. Today, customers are often connected 24/7 through multiple devices, and several themes are emerging that influence customer behaviors and expectations. Social media has led to a huge number of experienced travelers posting online about their experiences in our hotels, which helps shape consumer sentiment and behavior. We are focused on how we can best serve our guests in this changing landscape and meet their wide array of needs throughout the entire guest journey, leveraging our systems, technology, customer data, and innovation to do so. This will all help us build trust with our guests and strengthen our proposition to owners, and is what led us to relaunch our loyalty program in July 2013 with a new name, IHG Rewards Club. IHG Rewards Club clearly communicates to consumers that all of our brands are part of the same IHG brand family. And we have also added new benefits, including being the first hotel company to offer free internet to all members in all our hotels globally. Since the relaunch, we have driven up the awareness of IHG as a brand family by 10 percentage points, and we have seen early increases in the number of different brands used by members. These are significant results in a short period of time and show delivery against the objectives of the relaunch. By making our loyalty program more effective, we will grow IHG's share of our guests' wallets, thereby driving up hotel revenues. Direct web channels remain at the heart of IHG's distribution strategy, and we continue to invest heavily in customer-facing enhancements to improve the guest experience and attract more revenue to this low-cost channel. Today, our websites across 13 languages support our strong online presence. These are being accessed by 90 million potential customers annually and have driven up web revenue over 30% in just three years. Mobile has quickly become a dominant touchpoint. IHG's mobile revenues last year were over $600 million, up 85% from 2012, and they continue to grow strongly. To support the relaunch of IHG Rewards Club, we made a number of enhancements to our consumer-facing websites, mobile site, and mobile apps, all of which help drive the great results I talked about earlier. in 2012, IHG was one of the first hotel companies to launch guest ratings and reviews on our branded websites, giving our guests the opportunity to read authentic customer feedback while booking their stays. Over 320,000 guest reviews are live globally, with an average hotel rating of 4.2 out of five stars. In fact, in 2013, we have collected more reviews on our sites for our hotels than TripAdvisor has for all IHG hotels. This highlights the greater relevance for guests and potential guests of reading reviews from experienced and brand loyal travelers. IHG has been a leader in many areas of the digital revolution. This is a difficult area in which to measure success, so we are pleased that our hard work has been widely recognized externally. IHG has the highest rated mobile apps in the industry. In the U.S. in 2013, the digital think tank L2 rated IHG as having the highest average digital IQ in the industry, beating all of our major competitors. In Greater China, the China Chief Marketing Officer Executive Council named IHG's WeChat service account the best in China across all industries. To sum up, this is an industry that has compelling long-term demand drivers in which IHG is well positioned to outperform. We have a clearly defined strategy which will deliver industry outperformance and high quality growth into the future. At the heart of this is our brands, which are some of the biggest and best in the world. InterContinental Hotels & Resorts and the Holiday Inn brand family are by far and away the largest brands in their price segments, and they are set for strong future growth, with 2013 marking the best year for signings for both brands since 2008. We are continuing to strengthen and add to our brands through our industry leading insights, and this is clearly working, driving up guest satisfaction scores and winning us over 400 industry awards. We are not standing still, though. We are continuing to innovate to ensure our brands remain fresh and preferred into the future. Food and beverage is a key part of the guest experience, and our insights in this area are allowing us to develop innovative concepts that are closely aligned to our guests' needs. IHG has a history of technology firsts in the industry, including the first ever reservations website and being the first to have mobile apps across all platforms. This pioneering approach has meant we best in class revenue delivery systems, providing the highest quality revenues to IHG hotels at the lowest possible cost. We will continue to invest behind our brands and technology. It is vital that we innovate, as we have done in the past, to meet changing consumer behaviors and sustain this industry leading position. We have once again demonstrated our commitment to returning funds to shareholders, and we are focused on continuing to do so into the future. Looking into 2014, although economic conditions in some markets remain uncertain, forward bookings data is encouraging, and we are confident that we will deliver another year of growth. Thank you. With that, Paul and I will be happy to take your questions. For those of you listening on the webcast, you also have the opportunity to send your questions in online. Sit down, take a drink of water. Jamie. Thanks. Good morning. Jamie Rollo from Morgan Stanley. Three questions, please. First, on central costs. Your gross central costs were flat last year. Is there any sort of phasing impact that could affect cost guidance for this year at the gross level, please? Secondly, is there any guidance you can give us on your expected removals this year, which obviously stepped up quite a lot last year? Similarly on expected openings, given the signings and the pipeline are strong. Then finally, I think you normally give us the percent of rooms sort of delivered through your central system, something in the high 60%. Could you please give us that figure and how it moved year on year? Thank you. Okay. Shall we just talk about removals, signings, openings, and that question. So before the removal of those few hotels for which we got well over $40 million liquidated damages, we had a 2.3% system size growth in 2013. It is a hard one to give specific guidance on year by year, given the fact that almost all, well, all of these hotels are with third-party owners. So I think our focus continues absolutely very much on signing quality hotels and driving quality. So the removals, almost all of the removals are about improving the quality of the portfolio, and I talked through the benefits that we have seen from a heartbeat perspective on that. So we are sitting here today with about 5% of the world's rooms and about 12% of the active pipeline. Our ability to continue to drive growth in our share of supply is very much there, and we will continue pushing that. I would not give firm guidance, but I think you can see from the signings, from the activity, and from the quality focus that we will continue to drive our system size. But it is very much about quality, not just about size. Paul, do you want to pick up the other two on costs and Sure. Yes. In terms of the gross central cost, Jamie, I think you are referring to that rather than the net after the central revenues which came in. Those central revenues are a little higher than in previous years, up $7 million due to some additional receipts from technology fees that we charge our owners. The central cost level, we are not seeing anything around phasing that would particularly have an impact on 2014. Just looking more in the round of that and the margin, which we increased by 1.3 percentage points, is a bit more than in previous years. I think, a couple of years we have increased it more than the average. The average over the last 10 years is at 1.1%. This year, 1.3%, so there might be some catch-up. In terms of the percentage of rooms through the systems, has that changed? Not materially. It does move around a little bit, but there is nothing particular to say there. That is why we did not bring it out, having just talked about it in November. So nothing significant there. Yes. I think it was at 69% for the year was the number. Yep. Is that $7 million of central recurring? Yeah. Yeah. Okay. Yeah. It is James Hollins from Investec. Three from me, please. The first one is on China. One of your competitors in the U.S. did Q4 RevPAR up 3.5%, guided to that being a similar rate for full year 2014. I think you did 2.4% in Q4. Is that a good proxy for where we should see 2014 on an underlying basis? Given the extensive new openings, particularly in Tier 2 cities, should the real number be about 2 percentage points below that? The second one is on the CapEx. I think you are guiding obviously up towards 350 or indeed above that with the Barclay. Can you give us a split of maintenance and investment, please? The final one is on the IHG, sorry, the InterContinental Le Grand. Did you consider disposing of that prior to refurbs like you have with the Barclay? Thanks. Do you want to take those? Yeah. Sure. In terms of China, it is such a big country and the dynamics in different cities are different that it is difficult to get an exact read across. I think when you look at our performance against the market, it was really significantly outperformed there, which is down to the scale of our business. We are more geographically spread because we have been there longer, and we are much bigger than our competitors. So if someone who is just in the Tier 1 market will have a slightly different mix in their business. We do not guide on the 2014 RevPAR in individual regions, so I do not think there is a lot more we can say in terms of that. In terms of the CapEx, we said that we think we are going to be at the top end of our normal guidance of 250 to 350 this year. Yes, the share of our investment behind the Barclay will be on top of that, so 20% of the $175 million that is going into that, which will be spent across 2014 and 2015. We do not split that out because it does differ a little bit year by year between maintenance and growth. We give regular updates as to how that is coming through. In terms of Le Grand, the refurbishment that we are doing there is particularly of the Salon Opera there, which is a national monument of France. A fabulous room if you have ever been there. It does need some structural work done to the ceiling, so we really do not have an option. We have to do that under the requirements of French law. Because we do not have that room available to sell and there will be some disruption to some of the rooms above it, then we are going to do some of the room product at the same time. I would not read anything into that. That is cool. Thanks, James. Simon. I will come to you next, Vicky. Good morning. It is Simon Larkin from Bank of America Merrill Lynch. A few questions from me, please. On fee-based margins, pre your central revenues and central costs, they were up around 55 bps with your developed markets, sort of U.S. and Europe, up around 50-100 bps. In your developing markets, as you guided being down more like sort of 150-200 bps. Whilst I know you are reticent to give a specific fee-based margin guidance going forward, I am guessing from what I have heard this morning, the broad shape of that mix is likely to be similar in 2014 over 2013. I guess my sort of question relates to, A, that but also, B, is this going to continue for maybe 2, 3 more years? Is this investment cycle likely to be sort of persistent for the next 2 or 3 years? Is it a question of sort of 12-24 months, then we can start seeing some of these margin numbers turn around the other way? I think, let me start on that. Paul, you can add if you like. I think we have grown our margins, as Paul said, about 11 percentage points over 10 years, which considering the growth of the business and the investment we have put in, particularly for the emerging markets, but also areas like technology and so on. We think that is a pretty solid performance, and is what we set out to do as we get the benefits of scale, not just in individual markets, but across the company. We have talked before that we will continue to grow our margin overall as a business. I think, again, that is appropriate given the size of the business. But we are not managing margins year by year or quarter by quarter, region by region. The reality is that we are investing as and when we need to do so. Whether it's as we've done in China before or to create a bigger business in India, given 12 hotels open and 48 in the pipeline, you have to invest behind that. I think our intent is to continue to grow margins overall at broadly the sort of level that we've been growing. I don't think it makes sense, frankly, to guide specifically by any particular region. I think you really need to look at it across the piece. Indeed, as we drive efficiencies in one market, we may take those to invest in another market, which will clearly alter the margins region by region. Paul, do you want to? I think you covered that very well, Richard. We're going to continue to grow margins. That's at the core of our strategy. Yes. Be sensitive as to where we're putting costs in. We've got our 10 key markets, and we know that if we continue to grow in those markets in particular, it'll be profitable growth rather than just expanding everywhere in the world. But we can't do it on a year-by-year basis, getting into the sort of granularity of market by market. I just have one second quick question. Can you give us any sort of indication of what performance incentive fees directionally did 2013 over 2012 in your managed business, of course? Yeah, I think we had a few more that were paying there, but it wasn't any major move. If I think across the geographical breakdown, again, there wasn't much of a move there, so nothing particular to write home about there. Thank you. Vicki? Morning. It's Vicki Stern from Barclays. Firstly, you talked about short-term external headwinds in your outlook commentary. Just curious to know what you see those as being in which key regions. Then in terms of RevPAR, so you're ahead of peak occupancy now in the U.S. I guess how much further do you see that going? Is it going to be all about rate growth from this point forward? Within that, obviously you talked about Holiday Inn has a slightly different shape in terms of the cycle, slightly more resilient. In light of that, in light of slightly higher supply growth generally coming through for that upper mid-scale segment, I suppose any comment you can give around your expected U.S. RevPAR growth outlook vis-à-vis the total industry? Thanks. Okay. I mean, I don't think I used the word headwinds. Just talked about some economic uncertainties, and I don't think we see anything more than you see. So when we look at some of the markets that we're in, Europe obviously still big question marks over return to real GDP growth in Europe. As we know, GDP is the best correlator to hotel revenues. In the shorter term, you've got corporate profits, you've got disposable income, and you've got confidence, which drives business travel. So I think we're frankly in the same environment as any other global businesses. So we've seen good performance in the U.S., very good performance in our EMEA region, as Paul talked about, but headwinds in Europe, some headwinds in parts of the Middle East as well still. And news today about more violence in Thailand, that's a small bit of our business, but I think that's the nature of a global company like ourselves. Overall, confident that we'll see growth, but still some headwinds in poor economic conditions in certain markets. Paul, do you want to pick up the other two? Sure. I think when you get to this point in the cycle and you're at the occupancies that we're at, then typically more of the growth is through rate. I think that'll be what we expect in the North American market. There's still growth in occupancy coming through in other parts of our business, where some of the hotels are still growing up through the system, particularly out in Asia, Middle East, and Greater China. In terms of the shape of Holiday Inn and how resilient that is through the cycle, really just wanted to pull that out. I suspect that you're all aware of that, but we thought it was just worth pointing out that this is a brand, the Holiday Inn brand family as a whole, that is much more resilient, so it does have a different shape through the cycle. Just to follow up on that. In that context, would you expect then it would most likely be underperforming at this latter end of the cycle? I'm not sure that it's underperforming, Vicki. I think it's when you look at the absolute level of RevPAR that it's achieving, it's significantly higher than its competition. It's got an ADR that's $5 higher, and it's got an occupancy that's higher. I think it's continuing to outperform. Does that mean that the growth will be a little different? Possibly. But I think that what matters to our owners is how well the hotel brand is delivering to them. I think that's a key point, that the volatility you see in the weaker brands or indeed in upscale and luxury is very different to what you see in this mid-market. At any particular point in time, whether it be a quarter or a year, you might say growth has been lower, but we don't see that as underperformance, nor do our owners. Actually, that resilience, that sustainability is a very important factor when you're choosing a brand. Yes, Tim. Morning. Tim Barrett from Nomura. Can I ask two things? Firstly, on growth CapEx, you've called out $129 million in the year, and it sounds like a couple of hundred million this year. Can you give some guidance on how that splits between acquisitions for EVEN refurbishments and other expenditure? Then on exits, asking Jamie's question slightly differently, can you say how many rooms are associated with the liquidated damages that you've already booked or are booking for this quarter? Thank you. Yeah, sure. Yeah. In terms of the growth CapEx for 2013, $72 million of that was for the three EVENs that we bought. In terms of going forward, how the $250 million to $350 million was split out between maintenance and CapEx, same answer to Jamie, actually. That we don't split it out exactly. It'll differ year by year, frankly. In terms of exits and how many rooms relate to the liquidated damages receipt that we will get in the first quarter this year, it's actually only a few rooms. It's a small hotel that's leaving in the North American market. In terms of what exited last year, I think we called that one out, and about 4,000 rooms that drove the $46 million of liquidated damages that we received last year. Thanks. Are you expecting to add or invest in more EVEN Hotels this year within your growth guidance? We said that we will spend $150 million behind launching the EVEN brand. We've put out $72 million so far in buying those hotels. We'll put some into refurbishing them and getting them open. So there probably will be some more coming out in 2014, yes. But of the EVENs we've signed, about half have been no capital, just been pure management contracts. We said we'll invest where we need to, as across our other brands, to get the right locations, right places, recycle that capital. So it's no different there, and I think the level of interest is high. We haven't rolled it out on a mass basis at this point because we clearly want to get the first few open and test the proposition. Geoffrey then. Yes. Geoffrey Harwood from Aureole. Just in terms of the resetting of these long-term contracts in the Middle East, is that process now largely over, or might that be an ongoing feature? To dog? Sure. Do you want me to? These are some contracts that we've held for a very long time. We've been in the Middle East for decades, and they came up for renewal. Some of them were put onto more normal current fee terms, and some we've decided to part company with really for quality reasons. That's what we will see probably for a few years. Those have been now cycled through. There's always some that will come up, but we just saw more of a spike coming through in the last year, 18 months. It was slightly abnormal last year? Yeah. Ian? Thank you. It is Ian Rennardson at Jefferies. Just curious as to the timing of why no special dividend, why no share buyback at this point, given you have sold the Barclay, given you have sold the one in San Fran, and given that you are just over one times net debt to EBITDA. Anything you could tell us about your thoughts on that, please? Same answer I usually give you, Ian. We have got an incredible track record of returning funds, over $9 billion in the 10 years that we have been an independent company. We have still got over $100 million left to go on the buyback. So I think we have got a good record. We will continue to balance the investment into the business, in the brand, in technology, and in growth versus returning to shareholders. But I think we have got a good record there, and we will get through the remaining buyback. Thank you. Okay. Yeah. Thanks. James Henning from Citi. On slide 6, you talked about the three growth drivers, RevPAR, rooms, and royalty rate. If you gross up the RevPAR and the rooms rate, you are coming out to kind of more like over 5% fee growth, but you reported 4.3. So it sort of implies royalty rates are under pressure in some way. Why is that? Can you bridge the gap and say what is driving that difference? We can work on bridging that. We can have another chat outside. But the royalty rate continued to go up. We have seen no diminution in that in this year, and it has gone up a little bit over the last 10 years. We see small incremental increases, but as most of our contracts are 20-year contracts and all the ones we are signing now, you do not see much of a movement year by year. But as to why the math does not work, we can talk about that. But it does work. Sorry, it does work. If you just multiply them together, I can see why you are saying it does not look like it works, but it does work. Ivor. Thank you. Ivor Jones from Numis. Richard, going to what you said about food and beverage, does it have any material implication for owners? Is it like a repositioning of one of the Holiday Inn brands, they would have to spend a lot of CapEx to adopt the new food and beverage proposals, or is it more at the edges? No, it is not like another big relaunch as we did before. I think the reason we just thought it was appropriate to talk about is we had not talked about it before, and it is a very big piece of the business, particularly in China and EMEA. There is no question that food and beverage is at the core of the guest experience. Frankly, whether it is the free breakfast in a Holiday Inn Express or whether it is more of a full-service restaurant offering in a Holiday Inn, and it is something we have focused on for many years. It is just we are amping it up today. It is one of those ongoing efforts, and from an owner perspective, it is about what is the best offering for your asset, what is the best menu you can offer, how can we actually help you buy that more efficiently? Certainly, as you are looking to refurbish a hotel or refresh a hotel, then we have offerings that you can take. It is not a massive change. It is simply about servicing the estate as it is today. But it does become more and more important, I think, as you grow the managed business and as you target your offerings more clearly. The restaurant, the food generally, whether it is restaurant, whether it is banqueting, whether it is room service, is a very important piece of the overall experience. Having that expertise is really important. Thank you. There's one thing I didn't quite understand. You said that IHG Rewards was a way of, I think, promoting, you might have said, all of the brands, but IHG isn't one of the brands. Is there an implication that IHG will get attached to the brands in some way? Or how does it work as a promotional tool when it's not itself a trading brand of a business? It's highly unlikely we'd attach IHG to the brands. It's not dissimilar to the way Starwood did with Starwood Preferred. What you've got, I think, again, the more you understand the different needs, the different occasions that guests use hotels for, which is what we've been very focused on, the clearer it is how you help them use different brands in the family. So if I think about myself, maybe true for you, I have an overnight stay at an airport, Holiday Inn Express is fine. A romantic week away with your partner is a nice resort. But you're the same person, same demographics. So with the Rewards Club is a loyalty program, or it's almost more than that, it's almost a relationship program. You're trying to build a relationship with guests and helping them understand that we've got a Holiday Inn Express here that works for you, an InterContinental here, an Indigo there. That is that awareness that the brands are part of a family we've been driving, which is a key enabler of driving share of guest wallet, which is what we think about. Yeah, Wyn. Wyn Ellis from Numis. Two questions. One a sort of general industry question on supply. How concerned are you about the supply growth starting to increase in the U.S., particularly in mid-scale, and also in the New York area, where there seems to be an awful lot of supply coming on. Is that of any concern to you, and what's your view on that? I think you can look at it in different ways. Frankly, as a brand owner, what is most important to us is that we have more than our share of that supply that is coming through. Ultimately, well over 80% of our income stream is share of revenues. We are very keen to make sure that our individual owners do well, and we drive the return on investment of their assets. Clearly, if supply growth is growing, we want our share. With 5% of the world's rooms, 12% of the active pipeline, we are very much in the position of growing our supply share. When you look at, we talk about supply, we talk about RevPAR. Ultimately, it is revenues that matter, which is why we report revenues, and we talk about that because that is how we make our money. Actually, I like new supply because we grow share through new supply. The other question I had was just on the significant one-offs and the sort of headwinds that you are going into for next year. If my calculation is right, you have got $41 million or so of liquidated damages, which do not repeat. You have got about $28 million of EBIT from disposed hotels, and then the refurbishments, another $14 million. There is $88 million of headwind. I guess offsetting that, you have got managed income on the hotels that you have sold, but also you have got lost EBIT on the hotels that you had the liquidated damages for. I mean, net-net, what do you think the sort of overall headwind is? Yeah, I think that we try and give absolutely as much information as we can, and you will see in the release this time that we have talked about some of the 2014 impact that you will see coming through, both the positives, so the liquidated damage we will get in Americas in the first quarter, and then the impact of the refurbishment at Le Grand, the impact of the refurbishments of some of the Asia, Middle East and Africa managed hotels, so that you should be able to put all that information through. We always look at the trading performance on an underlying basis. Looking at 2013, the liquidated damages receipts we have stripped out, and we looked at that as a one-off. Again, when we look at 2014, there will be an impact. 2015, there will not be an impact from those. I hope we've given enough information for you to plug that through. Okay, time for one more, I think. Nigel. Nigel Hicks from Agency Partners. Can you talk about the incentive fees that have come through this year and how they compare to last year? Also maybe to compare to 2007 in terms of whether it's number of hotels or whatever, as a percentage that is coming through in terms of incentive fees. I just want a sort of an idea of where we are through the cycle, whether we're sort of a year away, two years away from the top or five years still. Do you want me to take that? Yes, Paul, go on. It hasn't changed materially from last year when we looked at it. It's not something that does actually for us change that much year by year. It's not something that we keep a running total back against prior years. I'm honest, without going back and looking, I couldn't tell you how it compared to 2007 because it is pretty stable and robust through the period. Yeah. I think it's worth pointing out that, as I said, well over 80%, over 85% now of our income stream is share of revenues because we're a franchise and because of the way our contracts are structured. A lot of our contracts in Middle East and Asia are quite simple in terms of share of revenue, share of profit. We don't have the extreme volatility around incentive fees that I know some of our U.S. competitors have because they have a different mix and different sorts of contracts. I think it's not one of the key drivers, Nigel. Okay. Okay. Well, thank you very much. Appreciate you being here.