Earnings Call: H1 2021

Aug 10, 2021

Hello, everyone, and welcome to the IHG Interim Results to the 30th June 2021. My name is Breka, and I'll be the event specialist running today's call. And I will now hand over to our host, Stuart Ford, to begin. So Stuart, please go ahead when you're ready. Thanks very much. So good morning, everyone, and welcome to IHG's conference call for the first half results of 2021. I'm Stuart Ford, Head of Investor Relations at IHG, and I'm joined this morning by Keith Barr, our Group Chief Executive Officer and Paul Edgecliffe Johnson, our Chief Financial Officer and Group Head of Strategy. Just to remind listeners on the call that in the session today. The company may make certain forward looking statements as defined under U. S. Law. Please do 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, can I remind you that in order to ask questions, you will need to dial in user using the details on Page 2 of the R and S release? That release, together with the presentation and the usual supplementary data pack, steward and good morning everyone. In a moment, Paul will talk you through our financial performance, but first let me share some key highlights from the half. In February, we set up clear plans on how we are positioning IHG for growth as the industry recovers from the pandemic. Building on the big investments we've made in our brand portfolio, in Ichi Concerto and our guest reservation system, enhancements to loyalty and owner economics and the work we've done on our cost base. This has really been about making sure that everything is in place succeed in this new environment and accelerate our growth as things improve. And they are improving. The impact of travel restrictions around the world are still of course being felt with global RevPAR down 43% relative to 2019, But demand has been progressively recovering with a significant improvement in the Q2 sustained into July. We'll talk in more detail about this shortly, but there's a lot to be confident about when we look at some of our biggest markets like the U. S. And Greater China. Some locations are at record occupancy. Resort destinations are in massive demand. Domestic flights are filling up And corporate and group business is starting to come back. This is giving us great confidence and it's giving our owners confidence too. In terms of growth, as we said previously, we plan for 2021 to be a transitional year with a higher than average removals rate. On a growth basis, our net system size grew by 5% for the half, including 132 openings, up 46% on last year. On a net basis, net system size growth was flat year on year. It's critical that we keep investing in our business, in our brand portfolio and in the enterprise that underpins it as we focus on accelerating our system growth from next year onwards. And we continue to take big steps forward during the half. We're making rapid progress on our review of around 200 Holiday Inn and Crowne Plaza Hotels with our focus on protecting the quality and consistency of the estate, supported by a huge amount of investment from our owners into many of those properties. And you'll have seen that we've also announced today the launch of a new luxury and lifestyle collection brand in the coming weeks. There were a number of excellent signings across the brand portfolio in the first half as well. 203 hotels in total, which is more than one a day and up almost a quarter on last year. I'll talk about each of these elements in a little more detail later on, but for now, let me hand over to Paul to take you through the financial results. Thank you, Keith, and good morning, everyone. You'll see that throughout our materials, we are comparing our performance against both 2020 2019, But I'll focus my comments on the latter comparison as it is the most meaningful. Starting as usual with our headline results and Reportable segment. Revenue decreased 44 percent to $565,000,000 And operating profit decreased 54 percent to $188,000,000 Underlying revenue from the fee business decreased 32%. And operating profit decreased 44%, driven by the adverse mix effect of weaker performances in the managed business. In Central Operations and Overheads, the net operating loss reduced to $40,000,000 driven by the $8,000,000 benefit from the System Fund reporting change and the cost saving program we implemented last year, which remains on track to deliver a sustainable $75,000,000 reduction. Adjusted interest, including charges relating to the system fund increased to $72,000,000 as expected. This reflects that although net debt is lower, gross debt And gross cash are both higher. Our interim effective tax rate remains elevated at 36%. We estimate the effective tax rate for the full year will be in the mid to low 30% range, although forecasting in this area remains challenging. In aggregate, this performance has resulted in an adjusted earnings per share of $0.404 Down 73% against the first half of twenty nineteen, although up strongly from the $0.449 this time last year. Turning now to our drivers of performance. The restrictions in our key markets around the world contributed to an occupancy decline of 21 percentage points, with rate down 17% against the first half of twenty nineteen. This resulted in group RevPAR down 43% on a comparable basis, which includes the adverse impact from hotels that were temporarily closed. Group RevPAR was impacted by the owned, leased and managed leased estate, which declined by 72%. The fee business estate performed significantly better with RevPAR declining 42%. This variance in performance continues to impact our RevPAR sensitivities, which in 2020 was a $15,000,000 movement in EBIT per 1% movement in RevPAR. We're now starting to see some small improvements in the sensitivity, which is trending a bit better than $15,000,000 As a reminder, our RevPAR sensitivity is referring in 2021 versus 2019 And it's calculated before cost savings with the majority of $75,000,000 having been delivered in the first half. During the first half of the year, we added 17,000 rooms to our system. Our continued focus on the long term health and quality of our established brands results in the planned removal of 19,000 rooms, 13,000 of which related to the Holiday Inn and Crowne Plaza Estates in the Americas and EMEA region, which I'll talk about in more detail later. These additions and removals brought net system size growth on a year on year basis to 0.1% or up 3.3% versus 2019. Our usual summary of total RevPAR growth and total rooms available on an underlying basis can be found in the appendix. Turning now to the drivers of our RevPAR performance in the first half. Q1 saw continued impact from government mandated restrictions in a number of our key markets. However, both occupancy and rate saw sequential monthly improvement from March, reflecting vaccination rollouts and the easing of restrictions. By June, it was encouraging to see rates back at 90% of 2019 levels And occupancy down only 18 percentage points. This reflects the sophistication of our revenue management tools and the mix impact from our leisure and resort hotels. Occupancy and rates continued to improve in July, with nearly 50% of our hotels achieving RevPAR above 2019 levels. And in the more recent weeks, we've seen rates on par to 2019. Our recovery in the Q2 was driven by domestic leisure market. In the U. S, resort locations, Which represent around 5% of the Americas estate led the recovery with RevPAR 3% ahead of 2019. Our non urban locations, which are weighted to franchise mid scale and upper mid scale properties and represent more than 2 thirds of the Americas estate, strongly outperformed urban market. In EMEA, recovery was unsurprisingly led by markets, which eased domestic restrictions, such as Australia and the U. K. From mid May as well as the Middle East. And in Greater China, RevPAR Was 33% ahead of 2019 levels in Tier 4 location, owing to these markets being dominated by leisure orientated and resort hotels that benefited from strong domestic demand. I will now take you through each of these regional performances in more detail. Starting with the Americas. RevPAR was down 34% versus 2019, with the U. S. Down 30%. In the Q2, U. S. RevPAR improved to down 23%. Underlying fee business revenue was down 29% And underlying fee operating profit was down 27%. This strong relationship reflects that the estate is largely franchised together with the good progress on cost savings. We opened 9,000 rooms across the Americas with around 5,000 of those in the second quarter. And we signed a further 8,000 rooms, half of which were for our Holiday in brand family, taking our Americas pipeline to 97,000 rooms. Looking at our business and leisure mix in more detail. Demand from business travelers been relatively resilient over the past year and in the last quarter has started to accelerate as corporate demand and group meetings start to return. Leisure demand has recovered more rapidly, particularly in the last few months where activity has been close to 2019 level. Moving now to Europe, Middle East, Asia and Africa, where RevPAR was down 68% in the half with the 2nd quarter down 65%. Government mandated restrictions in Continental Europe and lower levels of international travel across Southeast Asia resulted in RevPAR down 82% and 67%, respectively, in the Q2. The UK fared better with a 60% reduction in the 2nd quarter as leisure travel was permitted from mid May onwards. Underlying fee revenue was down 67% to $53,000,000 And underlying fee operating profit declined by $95,000,000 to a loss of $3,000,000 Looking briefly at the development environment, We opened around 2,000 rooms in the half and removed 6,000 rooms, of which 5,000 were Holiday Inn and Crown Plaza properties. A strong pickup in signings saw a further 9,000 rooms added to our pipeline. Turning now to Greater China, where RevPAR was down 26% for the half and 16% in the second quarter. Tier 1 cities were down 26% for the 2nd quarter, reflecting their greater weighting to upscale and luxury hotels and international inbound travel. Tier 2 to 4 cities saw RevPAR increase 4% in the Q2, reflecting their greater mix of leisure and resort destinations and the pickup in demand from domestic travel. Underlying revenue was down 23% and underlying operating profit was down 32% to 25 impacted by $9,000,000 of lower incentive management fee income. We opened 7,000 rooms in the half and had a very strong period of signings with a further 16,000 rooms added to our pipeline, bringing the region's combined open and pipeline hotels to over 1,000 properties. Moving on to look at the progress made with the review we announced in February of around 200 Holiday Inn and Crown Plaza Properties. We've been working closely with those hotels, which were identified as being below where we would like them to be in areas such as customer satisfaction and property condition. In the first half of the year, fifty six hotels or 13,000 rooms exited for these two brands in the Americas and EMEA regions. In addition, improvement plans were agreed with over 30 hotels whereby they will stay in the system. We expect to have completed the review by the end of this year. The conclusion of this review, combined with the significant investments made by owners to date across the remainder of the estate, will help drive further consistency and quality. From 2016 to 2019, our continued focus on quality led to an average hotel removals rate of 2.2% per year. Within this, the rate of removals in the Holiday Inn and Crowne Plaza Estates in the Americas and EMEA was higher at 3.1% and the remainder of the estate at 1.6% a year. We expect post completion of the review to see a lower average removal rate across the estate, with Crowne Plaza and Holiday Inn exit Falling back in line with our underlying rate of around 1.5%. Turning now to CapEx. We spent gross CapEx of $42,000,000 and net CapEx of $1,000,000 Maintenance CapEx was $23,000,000 lower than last Given reduced expenditure at hotels and corporate offices, we anticipate higher spend in the second half of the year. We also expect key money to increase in the second half. On the system funds, given the latter stages of GRS projects, CapEx spend is now lower and depreciation is higher, which combined lowered net CapEx by $29,000,000 Our medium term guidance remains unchanged at up to $350,000,000 gross per annum. We expect our recyclable investments and system fund capital investments to net to 0 over the medium term, resulting in net CapEx of $150,000,000 per annum. Moving on now to cash flow. In the first half, our adjusted free cash flow. So an inflow of $147,000,000 compared to an outflow of $66,000,000 in the first half last year. Our net cash inflow, which included an adverse exchange rate movement, led to a $71,000,000 reduction to our net debt. In that context, our strategy for uses of cash remains unchanged. Our first focus is to reinvest to drive growth. Secondly, we want to generate sufficient funds to pay a progressive ordinary dividend. Lastly, where there is further cash available which is truly surplus, we will return this to shareholders as we have previously demonstrated. We've seen trading improve significantly during the first half of the year, leading to profitability rebounding, and we are confident that the proven, highly cash generative nature of our business model will allow resumption of dividend payments in due course. With signings and openings returning strongly and a lower structural rate of removal, we are well positioned for long term system growth. This system growth combined with RevPAR recovery and the significant sustainable reductions we've made to our cost base positioned just well for further substantial improvements in profitability. Thank you. And I'll now hand you back to Keith. Thanks, Paul. I'd like to spend some time looking at our industry and how we are supporting our guests and owners as demand returns. As Paul mentioned, we're seeing strong recovery in demand with positive forward booking indicators over the summer around domestic leisure And good signs of returning corporate demand and groups activity. You can see this trend coming through wherever the virus is more under control And where vaccinations are rolling out at good pace. Confidence breeds confidence. As more people travel, More consumers start to think about their next trip. As businesses turn to hybrid working, more think about how to bring their teams together or to meet clients face to face. As more guests head through the doors of our hotels, more of our owners start to turn their thoughts to growth and opening new hotels with us. And the conversations they're having with banks and lenders are easier than they were a few months back. We can see all of this playing out and we're focused on making sure we can perform strongly in the markets where this is the case and be there for our hotel teams and owners in the market that still have a little way to go yet in the recovery. For our guests, it's very clear how much importance they place on cleanliness and safety. And we've enhanced our standards and training programs with science led protocols. The importance of seamless technology and a growing preference for sustainable practices also continues to come to the fore And both these elements are represented as key priorities in our strategy. In terms of growth fundamentals, As pressure on independent hotels has increased during the pandemic, that part of the market continues to shift to brands of scale. Our own makeup signings across a number of our brands reflects that and we're well placed to continue that trend bolstered further by the launch of our new collection brand. We remain completely focused on delivering industry leading net rooms growth. Our 4 strategic priorities are in place to help us achieve that, putting an even sharper focus on our brands, our services and solutions, owner returns and reputation. Starting with customer centricity, it's critical that we put our 2 sets of customers, Our owners and our guests at the heart of everything we do. Challenging ourselves to always operate with insight and make informed decisions is how we create tailored services and solutions that increase demand, strengthen guest preference and deliver strong owner returns. It is something we've taken to a different level. And during the first half, we saw that reflected in our guest satisfaction index being net positive throughout the period, ahead of our competitors. Outside of the work we've done around cleanliness and safety, we've brought in the appeal of our iQ Rewards loyalty program with new promotions and earn and burn opportunities and we're supporting returning business travel with tailored campaigns and enhancements to our meetings and events offer. When it comes to our owners, we've been there to support them through the pandemic, including consistently trying to reduce costs where we can. So much great work has been done to offset extra costs around safety and cleanliness protocols. With changes to operating procedures and use of procurement, we've been able to deliver significant cost savings. For example, across our mid scale breakfast offering, All whilst maintaining the highest quality guest experience. We have also created comprehensive hiring toolkits and increase our partnerships to support owners with recruitment as occupancy increases. If we look at our priority to create digital advantage as a company, this is about how we drive direct bookings to our hotels, Create rich integrated digital experiences for our guests and deliver revenue enhancing propositions to owners. Our investments in our cloud based technology platform, IHG Concerto has allowed us to rapidly deploy technological development to support a safe and secure guest experience and reduce unnecessary contact. Contactless check-in is receiving strong guest feedback and is already live in 3,000 hotels in the U. S. And Canada. With IHE Concerto, we can also develop and roll out performance enhancing tools faster and easier than ever before. The next phase of our guest reservation system, attribute pricing is making good progress to enable the curated merchandising of rooms and selection of add ons for fully tailored stays. This is a huge lift this year to catalog the inventory of nearly 6,000 hotels and almost 900,000 rooms, but we're working towards having a truly differentiated offer. Turning now in more detail to how we are building loved and trusted brands. First, Our Essentials and Suites brands, which have demonstrated both great resilience during this pandemic and continued further growth. Holiday Inn Express is a key growth engine for us and we're investing to ensure it remains preferred choice in its segment for guests and owners. A big moment as we get back to more normal times has been the return of our signature self-service breakfast in the U. S. And plans are in place to roll this out globally as market conditions allow. The brand has also reached the incredible milestone of 3,000 hotels with nearly 70 opening in the half and the pace of openings in the Americas and Greater China on par with 2019. Its 667 properties in the pipeline represent over 20% of the current system size with a strong growth outlook in all regions. As we continue to grow the brand, We also keep pushing to ensure it can offer even stronger returns for our owners. Our evolved Formula Blue public space and guest room designs in the Americas Include a new purchase ready format that is using our procurement scale, deliver cost savings of more than 10%. Equally, for Holiday Inn, which was recently voted by consumers as the most trusted hotel brand in the US, We have optimized our breakfast offer for guests and owners. And our new build prototype, which brings fresh and modern design to our hotels across the Americas, delivering a 5 point uplift in guest satisfaction. In Europe, our open lobby concept is being adopted in almost the entire state And also generating meaningful uplift in guest satisfaction and increased food and beverage revenue for owners. If we turn to Avid, which we expect to be our next brand of scale, we continue to see strong guest satisfaction scores across the open estate. It's low cost to build and operate and competitive price point make it attractive to owners and guests. We think its appeal is likely to increase in a constrained economic environment. Avid is already our 2nd highest contributor to net system size growth after Holiday Inn Express. And we've got a pipeline now of 175 hotels with the open state expected to reach 50 by the end of the year. Our Candlewood Suites and Staybridge Suites brands have really been exceptional throughout this pandemic. And in June, we saw them deliver occupancy levels of around 80% in line with 2019. Our new prototype designs, which offer owners lower build and operating costs are now committed in over 170 Candlewood Suites and more than 160 Staybridge Suites. And momentum for the brand has continued with strong signings for both, including our 1st favorite suites in India. Turning next to our premium and luxury and lifestyle brands. Looking at premium, we continue to see very strong interest in our conversion brand, FOCO. We've made excellent signings in the Middle East and following its launch in the Americas and Greater China last year, we've secured signings in Chicago, Washington and New Orleans in the U. S. And Nanjing in China. Notably, the pace at which hotels are converting into our system, A key part of the VOCO offer is really helping owners maximize returns and quickly benefit from our global scale. At Crowne Plaza, the actions we have taken to further strengthen the brand is resonating with our guests. Over 70% of the U. S. Estate has recently updated and we've been seeing a significant improvement in the latest J. D. Power guest satisfaction rankings. We look at our luxury and lifestyle brands. Our hotels are performing well with seeing strong outperformance and guest satisfaction across all brands. And we're seeing a number of our owners choosing to invest significant capital into new hotels or in renovations to their existing properties. There were some very strong luxury signings and openings in the half. For 6 Senses, we signed 4 hotels, including 2 in Greater China and we opened a stunning property in Botanique, Brazil. We're seeing good momentum for Regent with an iconic signing in Kyoto, Japan And the renovation of the InterContinental Hong Kong, which will rebrand to a flagship Regent is well underway and on track to open next year. For Kimpton, openings in France and Australia are further step in its international expansion alongside some great domestic openings in the U. S. Hotel Indigo, the largest boutique brand in the industry continues to break into new markets. And we're on track to take the estate from just over 100 properties today to double that in the next 3 to 5 years. Let me now share the steps we're taking to further round out our brand portfolio. Over the past 4 years, we have transformed our brand offering, growing to 16 brands through organic launches of Avid, VOCA and Atwal Suites, enhancing our luxury and lifestyle offer with the acquisitions of 6 Senses and Regent. Each one of those brands represents A really clear and compelling growth opportunity for us. Adding momentum to our already more established brands, they're still the growth engine of the business today. As we've engaged with owners and developers on our expanded portfolio, it's become very clear that there is strong demand and appetite for a collection brand from IHG in the luxury and lifestyle space. Something that could create more opportunities to work with us on properties that today may not have quite the right fit in our portfolio. Before I talk about the collection brand, Let me first recap for you where we've already got to with our strong positioning in luxury and lifestyle. Building on the heritage of InterContinental Hotels and Resorts, the world's 1st and largest luxury hotel brand. We are already the world's number 2 luxury and lifestyle player by system size and pipeline. With the acquisitions of Regent and Six Senses and the international expansion of Kimpton and Hotel Indigo, creating an impressive portfolio for both guests and owners. From 2 brands in 2014, we now have 5. And from 240 properties, we now have over 430 today. With more than 100,000 rooms, luxury and lifestyle is already 13% of iQIYI's total system size And our brands in this space represent 17% of our total pipeline. As you can see, our strategic expansion has been designed to fill different guest needs across luxury and upper upscale. But we want to go even further with the launch of our new collection brand. We're keeping a tight lid on the brand's name and features for just a few weeks longer, but it will perfectly complement our existing 5 brands and also offer a different price point to our upscale conversion brand, VOCA. This collection brand will allow iQI to fast track further growth in segments worth over $100,000,000,000 And where 1,500,000 rooms are currently independent. We expect the brand to grow to more than 100 properties over the next decade. With independent hotels having seen significant trading pressures, owners are increasingly looking to access the scale benefit of branded systems and their marketing, loyalty and technology platforms. This trend is already seen conversions grow to become a quarter of IHG's signings over the last for 18 months. While all of our luxury and lifestyle brands represent attractive conversion opportunities, owners of high quality independent hotels that join the collection brand will be able to do so with limited capital outlay And with the retention of their hotel's distinctive identity and character. Owners will gain access to our world class revenue delivery systems, distribution channels, loyalty offer and procurement scale to drive higher returns. The brand will also Fully supported by dedicated luxury operations, marketing, sales and reservation teams. The rapid success we've already had with VOCO underlines IHG's proven track record of creating distinctive high quality propositions capable of scaling fast and delivering commercial outperformance. For guests, we know there is pent up demand for distinct experiences, unique service, especially from affluent millennial and Gen Z travelers. But they also want the trust and assurance of a big brand as well as the benefits of a big loyalty program. We'll be able to meet all those demands by creating an exclusive collection of high quality hotels in leading urban and resort locations. We have made significant progress with Journey to Tomorrow. Our new 2,030 responsible business plan, which starts a decade of ambitious commitments. Starting with our people, We are continually investing in our culture that we support, develop and empower colleagues and attract new talent into the business. We have programs to increase the diversity of IIC's leadership and talent and ongoing education is paramount, Which is why conscious inclusion training has been provided to all corporate colleagues and leaders globally. It has also been the 7th consecutive year in a row that IHG has been recognized as a best place to work for equality. In our communities, we are working to improve the lives of 30,000,000 people around the world by driving economic and social change through skills training and innovation. Our IHG Academy is extending the reach of its training and resources with new strategic partnerships to deliver even more skills development, hospitality training and career pathways. And with such a global footprint and strong pipeline of hotels, it's vital that we work closely with our owners and partners to ensure we operate and grow in ways that protect the world around us. Our environmental targets include reducing carbon emissions in line with climate science. Supporting this, we are improving our collection of energy usage data across our hotels to the upgrade of IHG Green Engage, our environmental management system. To pioneer the transformation to a minimal waste hospitality industry, we're in the final stages of supplier contracts that will remove the single use miniature bathroom amenities right across our global state in 2022. And as part of our actions to reduce the water footprint of our hotels and help secure water access to those at greatest risk in our communities, We have also launched 2 further stewardship projects in Shenzhen, China and Hayman Island, Australia. So to sum it up, the long term attractiveness of our markets remains clear. While there continues to be some volatility, Demand has returned strongly in the recent months and forward booking indicators for the duration of the summer are positive. We're also seeing the return of transient business and group's demand as corporate activity ramps up in the second half. Our owners are confident too. As reflected in another 132 hotels opening in the period and 203 signings, Both sizable increases on last year and we expect this pace to further accelerate as the development environment strengthens. We are executing against the strategic priorities we outlined at the start of the year. We're well placed to gain further share with leading brands in the largest markets and segments, supported by our powerful technology and loyalty platforms and a clear commitment to do the right thing by our people, Communities and Planet. Our category leading brands together with our new brand launches give us great confidence in our ability to deliver sustainable industry leading net system size growth in the years ahead. And all the actions we have taken over the last 18 months position us to exceed our pre pandemic levels of growth and profitability. We are therefore confident in the strength of our positioning and future prospects. With that, Paul and I are happy to take your questions. The first question from the phone line comes from Jamie Rollo of Morgan Stanley. So Jamie, Your line is open. Please go ahead. Thanks. Good morning, everyone. I've got three questions, please. The first two are just on the rooms growth numbers. Can we sort of pin you down on some clearer targets for that, please? You've been targeting industry leading for some time and it's been sort of close to 0, I guess, for 2 years, including this year. I get the better removals Should add sort of 50 basis points from 2022, but your signings are still down quite sharply in Q2, down about a quarter from 2019, which could weigh on openings over the next couple of years. So clearly, next year is going to be better than 0 at the net level. But if industry leading in, say, 5%. Is that a sort of realistic number for next year? And then secondly, specifically on the new brands, Which all sound great. I mean, Avid seems to be the one with the most opportunity and that's the largest in the pipeline. But its own pipeline has fallen by 20% in the last year. Is it fair to say that's a bit behind target? It just looks like there's been no sort of signings. You're just opening what's in the existing pipeline. And then finally, on the cost savings, if my math is right, it looks like first half The costs were about €60,000,000 below H1 2019 using your restated numbers, which She annualizes well above the €75,000,000 So it looks like there's just a bit more permanent savings than just temporary in there. So So should we not expect the $75,000,000 to be beaten at some point? Thanks. Great. Thanks, Jamie, and good to hear from you. I'll pick up on the rooms growth And then I'm going to let Paul talk about the avid signings and on the cost savings. Yes. Thanks, and good morning, Jamie. Certainly, in terms of the cost saving, We saved significantly last year, as you know. We saved about $150,000,000 And if you look over the very long term, we've always been tight on costs. If you think about how much margin we've added to the business over the years and the strength of our efficiency initiatives. And yes, as you look at our costs in the first half versus 2019, we have done the majority of the $75,000,000 of saves that we've said will be structural and permanent. But equally, this is a growth business and the imperative is to make sure that we can optimize The success of the business long term. So we are happy to invest back in. We still have some positions that are open in the company because it's actually hard to recruiter reposition at the moment. So we'll be investing back in to make sure that we are as well set as possible. If that all does get invested as planned, then we expect to come in around the $75,000,000 structural reduction. Could be a little more than that. You will have to wait and see. In terms of Avid, yes, as you say, a really good rate of growth there. And it's going to be a very significant brand for us. It's our 2nd highest contributor to growth. We've talked before about the nature of an avid owner, which is not the institutional owner or family office owner of, say, for our InterContinental. And so they have had to focus over the last 12 months or so more on their operating business than on new development activity. But we are starting to see a real change in that. I'm sure Keith will come on and talk about this when he talks about These owners are now very much focused back on getting sites, getting hotels they have in the pipeline under construction, And that all goes very well for the future of our mainstream brand. So very pleased with the progress with Avid. Thanks, Paul. So Jamie, more broadly on rooms growth, I think first let me talk a little bit about sentiment and then get into the numbers. I mean, I was traveling in the U. S. 2 weeks ago on catching up with some of our U. S. Owners. I was at the Alice conference and I I was talking to people at the Hoa conference the other day and we had the hunt. You are seeing really the development sentiment in the mainstream segments begin to come back and accelerate as performance has been very, very strong in that segment over the summer and lenders are now feeling more confident moving forward too. So I think that It was right for there to be a bit of a pause in many ways for the segment in this industry for a period of time. You are now seeing that sentiment move in that direction, which will lead itself to acceleration for Express, for Avid and for Atwell as you do there. So if you remember back in 2017, we talked about needing to accelerate industry leading levels of growth and look what we've delivered in 2019. From a gross perspective, we led the industry from all the major players And our net basis was effectively, it got slightly behind Hilton, probably equal to Marriott effectively or maybe higher than Marriott. So we showed that over a number of years we can progressively get to that point. And we said 2021 was going to be a transitional year. And if you look at the removals we had, of We had the SVC portfolio, which had an impact of 102 hotels and we're doing the Holiday Inn and Crowne Plaza review, which will strengthen those brands for the longer term. And then we had a normal level of removals and they kind of almost fall into the 3 distinct buckets. So when we think about our owners now having more confidence, We're seeing ground breaks begin to move forward. I would expect that 2022 and 2023 looks a lot more like 2018 2019 as we how we accelerated into that level of growth moving forward too and have very, very confidence in our business to be able to achieve that. And I think honestly that number you put out there is realistic. 5% is sort of kind of where the industry needs to be getting to be one of the top players. And any specific targets for Avid you could share with us? We've got a pipeline already of 175 hotels and system size of 38. This is going to be a multi, multi 100 unit brand. I mean, it will take it a while to get up to Holiday Inn Express's 3,000, probably beyond My time in the industry, given it's taken some decades to get there. But no reason why I can't get there over time. This is a brand with a very long runway ahead of it. Okay, great. 5% for next year. Thank you, Jamie. Thanks very much. Cheers. Thank you. Owner. We now have a question from Bilal Aziz from UBS. So, Bilal, please go ahead. Good morning, everyone. Thank you for taking my question. And 2 for me, please. Just thinking beyond the summer now, can you perhaps remind us of your business versus leisure mix into the Q3 and perhaps share some data points on the business side, which are giving you more confidence on bookings for the Q3. I know one of the U. S. Peers gave mid week occupancy already. And then tied to that, it feels like you're formally indicating high group profits versus 2019. Perhaps you could flesh out how linear you think that could be based on all the variables you've seen now? Or perhaps another way to think about it, what's the level of RevPAR client you're comfortable with to get back to 2019 process, please. Thank you. Great. Thank you, Bhagavath. I'll let Paul talk about the profitability and I'll talk a little bit about And I'll talk a little bit about the business and leisure mix, what we're seeing moving forward what we're seeing to date and what we think the future may hold. And so we've traditionally talked about our business leisure mix being around sixtyforty that changed a little bit clearly during the pandemic. But Again, that's a good way to think about our mix and within that 60%, you've got group being probably about 10% to 15% range overall. So I think taking a step back, thinking about throughout the pandemic, we saw essential business travel continue in our hotels, which drove occupancy levels. At the worst of the pandemic, we still had 60% occupancy levels in some of our suites properties and we're in the 40% for our essential properties. And that was essential business travel and that's continuing on. So those individuals who are going to manufacturing plants to service them, the people who have to travel from city to city to do their jobs, That's happening and that's accelerating. We are now beginning to see corporate travel come back, which is more discretionary in nature. Looking at some of the airline numbers I saw the other day, they were saying 50% to 60% of corporate travel coming back and that would step up into Q3 and Q4. We are seeing some groups meetings and events begin to book, and taking place in our hotels in COVID safe ways. So we're definitely seeing that accelerate. The real question is going to be to what degree does discretionary business travel come back in Q3 and Q4 and how does that accelerate into then to 2022? I'm not sure that anyone has hard and fast data on that. Other than saying is we're seeing building momentum in that space for Q3 and Q4. Talking to our corporate customers, We're hearing they want to go out and connect with clients. They want to go out there and see their teams. Anecdotally, we stopped as a hotel company for the most part for a better portion of a year and we're now back out on the road. I was in Atlanta, Salt Lake City, Los Angeles. I'm getting over to Paris soon. We're getting our teams together, our franchise support people are out there. So we're traveling to do our jobs and we're seeing other companies doing the same too. So Hard to say exactly what level of uptick you'll see in Q3 and Q4. We do think you will see continued movement of leisure though as well because a lot of people couldn't travel this summer either affordably because pricing has been so aggressive over the summer for leisure and resort destination or Basically empty nesters, people without kids can travel in those periods of time now. So they're going to be doing that. So we think leisure will continue to be solid. Essential business travel will continue and that discretionary business travel will come back into play and really be accelerating into 2022. But it's going to be directly correlated to vaccination rates, consumer confidence and lifting of travel restrictions, which are honestly those are beyond our control, but they're all I'll let Paul talk about profitability now. Yes. So you correctly note that if we were at the same level of demand and rates, then we would see a more profitable business. I think it actually goes a little beyond that. I think that what we've proven over the last 18 months is the resilience of the business, the power of the brand, the way we have helped our owners run their businesses, which has been very much appreciated. And I think we'll drive even more business to us from them over time. The way we've treated our employees, our colleagues, the way we've supported them, I think, will drive greater levels of loyalty. So I think we will come out of this with a stronger business than we went into it with. We've also worked, as Keith has been talking about, to develop a new brand, which has huge opportunity. In terms purely of the profitability side, then We have saved structurally $75,000,000 from our cost base. And you'll remember that we talked about the change in The accounting around some of the credit card fees, which has brought in another $20,000,000 $25,000,000 of profit. So when you combine those 2, that's about $100,000,000 additional profit that comes into the business. When you think about the pre pandemic sensitivity of RevPAR to profit, then you were talking about 1% was about $13,000,000 or so. And in due course, it will revert back to around that. So on a purely numerical basis, if you were taking that 100 or so. And 13, it's 7.5% or 8%, I think. To RevPAR would still drive the same level of profitability. I think one of the really encouraging things we're seeing is that rate has Been so strong. There was a question, would rate take a long time to recover? We've actually seen in recent weeks across the business as a whole, aggregate rate higher than we saw in the same period of 2019. It's just an indication of when demand is there, then we can get back to full rate in the business. Thanks very much. Great, mate. Thanks very much. Thank you. The next question comes from Vicki Stern of Barclays. So Vicki, please go ahead. Yeah, good morning. Just firstly on the signings. You've given some helpful color there particularly on the U. S. In terms of how trends have shifted a little bit more favorably recently. If you could just sort of flesh out what you're seeing in some of the other markets, and I suppose more broadly what it's going to take, if you like, to get things back to where they were before in terms of signings rates. In terms of unit growth, I think Marriott were indicating a slowdown in construction starts in recent months, and that potentially could weigh on their unit growth over the next sort of 1 to 2 years. Just curious what you're seeing there. It sounds if you're sort of particularly concerned in the answer to Jamie's question, so keen to hear your thoughts on that. And then coming back on that point, Paul, about pricing. Yes, it's been kind of noticeable just how quickly pricing has recovered. I mean some of the industries are going beyond that and suggesting that unlike in previous cycles, we potentially see price come back in line with occupancy as opposed to with a sort of lag. Obviously that's how things have gone so far. But if you could just sort of flesh out what you think things might look like as we get back into a sort of more normal mix business versus leisure, etcetera? Thanks. I'll take pricing, then I'll talk a little bit about signings and about ground rigs. Vicky? Yes. So in terms of pricing, it is a really interesting one because people did point to the previous cycles and said, well, look, it could take some years before we see full pricing. It's absolutely not what we've seen. I think it's an indication of the strength of the revenue management discipline that exists in the industry. And it's not just us, To others, we have very good revenue management capabilities, revenue management tools that we've talked about and I think you know well. There's also the question as to whether you because there's a bit of a supply squeeze perhaps that you see Rates accelerate even faster. We know the demand is there, and I think we all studied in our basic economics that when Demand is greater than supply than you see, a lot of pricing power in for hotel owners. So maybe we'll see that, but it certainly augurs well for the future. Thanks, Paul. And good to talk to you, Vicki. I think if you talk about from an industry perspective, most of the big players have been talking about the U. S. Hit peak signings at an industry level probably was 2017, 2018. And so The U. S. Has structurally been in a bit of a slowing, still growing, but a bit of slowing. And when you look at now though, we have more quivers in our than we used to ours in our quiver, I should say, than we used to have. We now have Avid, we have Atwell, We've got VOCO. We now have the collection brand. And so we have more opportunities to maintain and grow signing share in the U. S. Than we previously had to. So that gives us confidence there. What we are really seeing is acceleration in EMEA and Greater China. So effectively, both of those regions In Q2, we're ahead of where they were in 2019. And so we're definitely seeing the opportunity for conversion activity. So I would say China is back to normal. So that is the normal from a new build perspective, from a ground breaks perspective, from a conversion that feels Just like 2019 and has for a period of time, EMEA is clearly beginning to accelerate with a mixture of new builds and conversion and the brands give us that opportunity to gain share there and similarly in the U. S. Too. So I think we're very, very confident in our ability to go back to what Jamie's question was to get 'twenty two and 'twenty three from a growth perspective should look a lot more like 2018 2019. And in terms of ground breaks, I think it's just a slightly different portfolio mix when you think about mainstream owners can break ground open in 12 to 18 months versus if you're upper up scale or luxury hotels could take 3, 5, 6 years to build to. So I think that might have been why Tony made those sorts of comments around ground breaks overall. Guest. Thank you. We now have Jafar Mestari from Exane BNP Paribas. So Jafar, please go ahead. Your line is open. Hi, morning everyone. I had 2, if that's okay. First, I wanted to come back on the Holiday Inn and Crowne Plaza portfolio review. Just to understand how the rest of the process works, you've got 56 exits so far and you've got 30 agreements to invest and to remain in the system. Just curious what exactly is the status of the remaining 114 properties. I guess my underlying question is, is it good to have another 114 properties still TBC Because they would have already left if they had no interest or is it bad because they're longer more complex negotiations and ultimately Exits may be higher on the remaining than they've been so far. And then separately, you're talking about investment for growth in H2. There's obviously the new brand launch, but historically, you never had to I've laid an envelope of X million for the brand launches, all being part of savings and reinvestments. I'm just curious if there's a number we should have in mind if you're able to put a cap on how much you're going to be investing, in particular, in CapEx. Thanks, Jafar. So in terms of the Holiday Inn and Crowne Plaza, we are pleased with the progress, and we think that this will really help as the Holiday Inn And Crowne Plaza Brands grow over time. It's a story we've been working on for a really long time. If you think back to what we've been doing Crowne Plaza Accelerate, which has seen a lot of hotels upgraded. Owners have been putting a lot of CapEx into Crown Plazas in the States in particular. And once we're through this and we see the hotels exit that The will exit. We've actually had 75% of the Crowne Plaza Estate renovated in the last 5 years. So it's going to be a really high quality estate, and that will mean that it's in a much better position to grow going forward. In terms of exactly how many of the 200 We'll go how many will stay. Well, look, we're still in discussions with owners. I think that my best steer would be To model out from what we've seen today, which would take you to something like 130 exits 70 hotels staying with significant refurbishment capital coming in. It might differ a little bit from that, But that will be my best guidance, if you like. In terms of investment for growth In the second half of the year. So as Keith talked about, we are a growth business and the focus has to be on growth. So if we see opportunities to, for example, add some further developers in markets where there's a lot of opportunity or to invest behind getting hotels open faster. We'll do that. It isn't really about investing behind the new collection brand. There's not a lot that we can invest behind right away. Over time, we will put a few $1,000,000 behind it, but it's not very significant. This is around making sure that Wherever we are in the world, we have the capacity to take on board this very significant level of demand for our brand to make sure that we are optimized for growth. Having reshaped the business and taken a lot of cost out, so that's how we're thinking about it. Okay, super. Maybe just as a follow-up on that, if there isn't a number we should have in mind for page 2, then it looks like obviously the phasing of Profit this year will end up being very different from what we would have expected. We're just facing off cost savings with the €6,000,000 of liquid and damages, etcetera, etcetera. But it looks like it's mostly phasing. On the net basis for full year 2021, Are you going to be investing a significant chunk of OpEx that you may not have expected to invest 6 months or it doesn't sound like it? Well, I think of the 75,000,000 we've said that the majority has been done in the first half, so maybe sort of 2 thirds or so. So we will invest more in the second half if we see the opportunities. If there aren't any opportunities, then we won't invest it. But and we are, as you know, You think about our track record, we are very sensible investors, whether it's OpEx or CapEx. So if we see opportunities to invest in capabilities that allow to grow faster. We'll absolutely do it. And I hope they will be there. Fine. Thank you very much. Thank you, Mark. Thank you. We now have a question from Richard Clarke of AB Bernstein. So Richard, please go ahead. Good morning. Thanks for taking my question. Just maybe just want to start on Slide 11. I know you're not giving us a July Rev part number. But just in terms of the U. S. And the delta variance, has that continued to tick up through July and maybe expectations from there with Business and Leisure. And my eyes were just drawn a little bit to the left hand side of that chart. The pre pandemic, your leisure travel was up 7% to 11% Your business travel was down 3% to 4% in January, February and just it's a long time ago, but if you can remember what caused that dynamic that would be interesting. Second question just on the system fund. Your system fund revenues are down year on year despite franchise Fees being up about 30%. I know you've taken some of the credit card revenues out, but I think you're also lapping the pause on the technology fee Through that, is there any sort of additional fee savings going through there? You've made Cumulative loss on the system fund of about $150,000,000 Do you get to claim that back over time? Just the dynamics looking there. And then third question, I actually noticed you signed quite a lot of hotels in Crowne Plaza and Holiday Inn. You obviously talked about the impact on the removals on your growth. Are these going to start really meaningfully contributing to sort of gross room growth going forward? Is that the ambition? Or do you just expect they kind of to stay where they are going forward. Thanks, Richard. It's good to hear from you. I'm going to let Paul pick up the first 2, then I'll pick up the earnings on Crown Partners and follow-up then. So thanks, Keith. July was a really good month actually, And the sequential improvement that we saw was the highest we've seen year to date. So it did continue to be very good. And August has been good trading as well. You've seen the industry numbers in the U. S. And We saw more than half of our hotels with RevPAR better than 2019. So it certainly continued. And To date, we haven't seen much impact from Delta over in the States. There's continued growth in demand both on leisure and in business. There's a lot of people who want to get away on leisure breaks who haven't been able to because hotels are full or the airlines are full. So there's still a lot of pent up demand. And as Keith talked about, there's a lot of people who want to get out traveling again, seeing clients, seeing their teams. And I think that that's going to augur well. Going back to January February 2020, gosh, that feels a long time ago, doesn't it? I think in terms of business there, you're seeing a bit of a reduction in group activity, and you're seeing a bit of an increase in holiday breaks back then. So that would be my best explanation for that. In terms of System Fund revenues, yes, it's always a bit complex as to what's going on. I think the probably the most important question there is what happens to the cash. And last year, we talked about the fact that We were happy to effectively subsidize the system fund and let it run to a cash flow negative position so that we could keep investing in the business, and that will mainly get paid back this year. So that we'll be pretty much cash flow neutral role on it by the end of 2021. Okay. Thanks, Paul. I mean, our focus for Holiday Inn in Crowne Plaza for a number of years. They're strong global brands that have great, great growth potential and they have continued to grow again around the world. I think about our time, my time in China, Crowne Plaza now is the leading brand in that segment. I believe it's now over 100 hotels open. I mean it's a powerhouse brand and That continues throughout Asia and into Europe. And we've been strengthening it in the U. S. As Paul noted, 70% of the portfolio will now have been basically invested in and renovated, which can just raise the profile of that brand. And think of the tall way they end, whether that's been open lobby in the U. S. With a new prototype, which takes the cost to build and operate down in the U. S. It's also been voted in as the number one most trusted hotel brand. So there's huge potential for growth of those both of those brands. You look at can we find 32,000 rooms in the first half and 4,300 were Crowne Plaza, almost 5,000 were Holiday So definitely brands that can continue to grow around the world, accelerating more in certain markets than others, but I'm very, very confident in their futures. And The investments that we're making now to with this review of Hall and A Crowne Plaza sort of the last big step of making sure that we address some of the concerns that we had to make sure they continue to be strong and grow. That's great. Thanks very much. Thanks, Vijay. Thank you. We now have a question from Leo Carrigan at Credit Suisse. So Leo, please go ahead when you're ready. Good morning. Thank you. Could I ask about the brand launch in Luxury and Lifestyle? Did you or why didn't you consider seeding this collection with the acquisition of an Existing soft brand. Previously, you've indicated that all you have all the brands you need or you had all the brands you needed. So does this new brand or new collection represents an opportunity that just didn't happen before the pandemic? And last question on this topic, our last question overall. Near term, what kind of hotel numbers do you think you'll be able to track for the new collection. Have you already been sounding out owners for this collection? Thanks, Leo. I mean, if you reflect back, I think it was February in 2017, Paul and I basically signaled that we were going to be either acquiring or launching brands and we actually did signal the first five. We actually called out not by name at the time, but it was Avid, it was at well, it was VOCO, Six Senses and Regent. And we said that there were going to be other brand opportunities potentially in the future, but we had prioritized them in that order for Very strategic reasons. We saw the scale growth opportunity of Avid and Atwell in kind of that mainstream segment. We saw the conversion opportunity of VOCO and upscale and the strengthening of our luxury positioning to go with Timken and lifestyle and Hotel Indigo with Regent and Six Senses. It then became clear to us we wanted to do a collection brand at some point. We just want to make sure that we got this other brand launches out there and successful. And there's a few other segments we could go into. Why this is such an important brand for us now A, we've strengthened our technology platform. We've strengthened our loyalty platform, which are critical components of delivering to a collection play. Wanted to make sure that we could really have that enterprise that could deliver high returns for our owners, increased investment in our procurement function as well too. So getting all those things right for a collection or softer brand and they're in place now. And it also enables us to go after different opportunities, luxury lifestyle independent hotels. It could let us lean into the all inclusive space as well too. So it gives us a lot of optionality. And really, it's why not why seed it or not seed it? We can do this organically. You know, we can build this brand organically, leverage our investments we've made in technology and loyalty and not have to utilize capital to go acquire something. And there's enough owner interest out there already. We've had a number of conversations with strategic owners, who want to sign up for this brand too. So We'll have more information coming out in a few weeks' time. But yeah, I expect that you'll see us quickly signing a number of hotels this year and that begin to accelerate. We said 110 years. That's sort of a it's a good number to have, but we probably could be more than that as well. But again, we'll be seeding it with some great assets We work with some great owners already. That's very helpful. Thank you. Thanks, Dan. We now have Tim Barra of Numis Securities. Sir Tim, please go ahead with your question. Your line is open. Thanks. Good morning, everyone. I had 2 on connected things, please. A few people have mentioned that Slide 11 is really And I think it is. But I wanted to take the question to its sort of logical conclusion really and to find out if you've got any updated thoughts on Structural changes in business demand in the very long term. And then another question was on owner finances. The topic that hasn't come up much, but obviously EMEAA occupancy in the 30s means owners are still burning cash. So is there anything you're worried about around owner finances for the balance of this year? Thanks very much. Thanks. So I'll let Paul take owner finances and I'll talk about the structural impact on business demand. Thanks, Keith. So hey, Tim. We're trying to support owners throughout this period to the very greatest extent we can. You'll remember what we put in place last year and that's been really appreciated by the owners. And in the U. S, We're getting paid by owners just as we were pre pandemic. So a very strong return there, same in China. It is tougher in some of the markets of EMEA. But what we're seeing is that lenders are very supportive. Our brands are very strong, And they look at the owners of the hotels. And they know that once restrictions are lifted, demand comes back, rate comes back, the owners will have very successful businesses again. So a lot of support there. And on occasion, we're having to be flexible with the owner. We're in long term relationships with them, and that's what you do when you're in a long term relationship. But there's nothing I'll particularly call out. And I'm sure that as recovery comes in those markets, then just as we've seen in the U. S, those earnings will come back to robust health. Thanks, Paul. I said this before, but I do think the death of business travel has been grossly exaggerated. And I fundamentally, I think we fundamentally believe it will come back over time that the shape and profile may look a little different than it used to, But fundamentally that people need to connect, that people are going to need to travel for business. And remember, a huge portion of our business travel is essential business travel. It's been here throughout the pandemic. And so this is more about the discretionary piece, the group's meetings and events and that travel. And I really do believe it's going to come back based upon the conversations we're having star corporate, the conversations I'm having with other CEOs, but it will come back over a number of years. It won't be back tomorrow, But travel budget is going to be increasing next year. I'm hearing that from many, many people. I know our travel budget is increasing next year. And again, Truthfully, it's about opening up, right? We're still seeing a lot of the world has not reopened, but when we've seen like the U. S. Reopen, demand came back and that was leisure, essential business travel and discretionary. We're now beginning to see that happen parts of Europe. Asia will be the next piece to it too. So I think it will take time And then there'll be new sources of demand too that will come into play as well that we're going to see. So, will the business leisure mix fundamentally change for this business. It could move a little bit. People are talking about that. Maybe with this new lifestyle of people working a bit more from home and Working from hotels, there'll be more that that leisure piece coming into it. But the bigger question is, do we believe that the demand for this industry business and leisure is going to come back to pre pandemic level? The answer is yes. It will come back. The shape will take a bit of time. Great. That's helpful. Thanks a lot. Thanks, Tim. Thank you. We have our final question from the phone lines from Alex Brignall from Redburn. So Alex, Please go ahead. Good morning. Thanks so much. I have 3 just to be consistent. So On the RevPAR side, I guess if we look at the growth in the signings, it may have become even more skewed towards China. Could you just remind us of the mix impact that you get just when we're looking at index and the RevPAR numbers? There's obviously a mix impact of The places where you grow and China has a lower RevPAR, so what that might do for kind of mix as we go through the next few years. The second is on churn. A few kind of hotels, France has just called out Higher churn and someone put it down to kind of maintenance requirements that are needed for to maintain kind of brand standards. Obviously, you're seeing that in Crown Plaza. How might that continue going forward? In the event that There remains a bit of pressure setting for some years, then the requirements of maintaining brand standards seems like quite a lot. Do you think that's going to be a drop in standard? Or Do you think that will therefore see higher churn overall? And then the third question, I guess, is just back to the one Tim just asked on Business Travel. I guess there's a couple of ways that I'll ask it. The first was other industry operators have talked about permanent business reduction in places and maybe in international travel. If you talk about consistency and kind of where you are operating, but there are permanent reductions at higher levels, Is it fair to assume that deflation in higher end hotels dropped through to deflation in lower end hotels? It tends to be the case historically. I guess the second way of maybe asking the question is, if we look at airline capacity expectations, my Aerospace analyst tells me confidently that expectations for 2024 airline capacity globally are 20% below what was anticipated pre COVID, largely driven by business capital expectations. So I'm just trying to reconcile that, which is Lower Construction by Airbus and Boeing with what you're telling me, which is that business will be as it was in the future. Thank you so much. Thanks, Alex. So I mean in terms of RevPAR and mix impact, We've always provided all the data per brand, per region. So I think that's actually relatively straightforward to just model through. And yes, You do see the fact that they when you open up a new express in China, which obviously we open an awful lot of them, then they do have a lower RevPAR, certainly at the moment, although they are growing at a fast click, and we're opening up many, many of them. So I think that just goes through on a fairly linear basis. In terms of churn in the system, I'll just sort of Go back to my earlier comments around the removals rate, which we think if you look on the underlying basis over the last 5 years And your student holiday in Crowne Plaza has been around the 1.5%. And obviously, we had our brand standards in place then. And Our brand standards will come back in place. I don't think that we will see any increase beyond that sort of 1.5% structural level once we dealt with Holiday Inn and Crowne Plaza. And in terms of permanent business travel. And well, I mean, Keith, I think, has explained well why we think that there won't be a reduction there. I think perhaps When you think about what your airline analyst has been talking about, he may have been looking globally. A lot of our business travel is actually domestic, remember? So it might be better to look at short haul routes. And certainly, when I look at the orders that have come from some of the U. S. Airlines, they are Significantly increasing their fleet to take the additional demand that's coming in. So also, I'm not sure that we have seen That deflationary impact, certainly, I think we're seeing inflation in most parts of The economy and you tend to see a correlation between that and CPI and Rates and RevPAR. So I actually think we'll see that continue to come through. So Look, it's crystal ball gazing as to what might happen 4 or 5 years ago. 4 or 5 years in the future is pretty hard. So no certainties there, Alex. Fantastic. Thank you for the explanation. Thanks, Alex. Ben, great to connect with you all. Again, we are really, really pleased with the first half. The team has done an exceptional job, I think, of steering the business through the pandemic, positioned us well for accelerating our growth coming into 2022 and 2023, addressing some really key strategic priorities, excited about launching the new brand and looking forward to better times ahead for the travel and tourism industry, but we're definitely seeing things moving in the right direction. So