InterContinental Hotels Group PLC (IHG) Q4 2022 Earnings Call Transcript

InterContinental Hotels Group PLC (NYSE:IHG) Q4 2022 Earnings Conference Call February 21, 2023 4:30 AM ET

Company Participants

Stuart Ford - Vice President & Head of Investor Relations

Keith Barr - Group Chief Executive Officer

Paul Edgecliffe-Johnson - Chief Financial Officer

Conference Call Participants

Jamie Rollo - Morgan Stanley

Vicki Stern - Barclays

Richard Clarke - Bernstein

Jarrod Castle - UBS

Alex Brignall - Redburn

Jaafar Mestari - BNP Paribas

Jaina Mistry - Jefferies

Leo Carrington - Citi Leo

Tim Barret - Numis

Operator

Hello everyone and invited to nan IHG Full Year Results to December 31, 2022. My sanction is Nadia and I'll beryllium coordinating nan telephone today. [Operator Instructions]

I will now manus complete to your host, Stuart Ford, Vice President and Head of Investor Relations to begin. Stuart, please spell ahead.

Stuart Ford

Many acknowledgment and bully morning, everyone, from maine and invited to IHG's convention telephone for nan 2022 afloat twelvemonth results. I'm Stuart Ford, Head of Investor Relations astatine IHG and I'm joined this greeting by Keith Barr, our Group Chief Executive; and Paul Edgecliffe-Johnson, our Chief Financial Officer and nan Group Head of Strategy.

Just to punctual listeners connected nan telephone that successful nan discussions today, nan institution whitethorn make definite forward-looking statements arsenic defined nether U.S. law. Please mention to this morning's announcement and nan company's SEC filings for factors that could lead existent results to disagree materially from those expressed successful aliases implied by immoderate specified forward-looking statements. For those analysts aliases organization investors who are listening via our website, whitethorn I punctual you that successful bid to inquire questions, you will request to dial successful utilizing nan specifications connected Page 2 of nan RNS release. The release, together pinch nan position and nan accustomed supplementary information backmost tin beryllium downloaded from nan results and position conception nether nan Investors tab connected ihgplc.com.

I'll now manus nan telephone complete to Keith.

Keith Barr

Thanks, Stuart and bully morning, everyone. In a moment, Paul will talk you done our financial performance. But first, fto maine stock immoderate cardinal highlights.

The 2022 was another twelvemonth of beardown trading and our teams proceed to make important enhancements crossed our endeavor level capacity and early growth. We delivered connected our strategy, moving intimately pinch our edifice owners to turn their business and seizure demand. I was peculiarly pleased that nan beardown momentum continued successful nan 2nd half of nan year, starring to RevPAR and profitability exceeding 2019 levels.

Looking astatine our capacity astir nan world. The Americas region surpassed 2019 levels successful nan 2nd 4th pinch RevPAR up 9% by nan 4th quarter. Our EMEAA region besides saw fantabulous sequential betterment pursuing nan listing of recreation restrictions and caught up pinch nan Americas to besides beryllium 9% up successful Q4. Trading successful Greater China was much difficult owed to nan COVID restrictions still successful spot passim astir of 2022. Following nan caller listing of these, nan inherent desire to travel, some for business and leisure has been clear to see. During nan Chinese New Year break successful January, 300 cardinal trips were made successful China, representing adjacent to 90% of 2019 levels.

In position of strategy size, our adjusted nett maturation was 4.3%, pinch gross maturation of 5.6%. We opened 269 hotels and signed 467 starring to our pipeline expanding 4% year-on-year and being balanced to 31% of today's strategy size. Reflecting nan spot of our endeavor platform, we added our 18th brand, of Iberostar Beachfront Resorts. This importantly expands our resorts successful all-inclusive offer, widening of prime for our guests and loyalty members. With this caller type of semipermanent commercialized agreement, we've created a caller exclusive partners class and we proceed to research akin opportunities to thrust further strategy maturation and high-quality provender streams.

Our operating profit for nan twelvemonth grew by 55% and nett indebtedness has travel down further. Together, pinch nan assurance we person successful nan spot and continued maturation of nan business, we are pleased to propose a last dividend 10% higher than 2021. We're besides announcing a further stock buyback programme to return an further $750 cardinal of superior to shareholders which will reset our leverage backmost into our target range. Our strategy complete nan past 5 years has importantly strengthened our marque portfolio and seen important investments to innovate our technology, loyalty and distribution platforms. Our capacity reflects nan focused transportation of that strategy which has enabled some our maturation and our sustained competitory advantage.

I will talk much astir this later successful nan presentation. But first, fto maine first manus complete to Paul to return you done nan specifications of our financial results.

Paul Edgecliffe-Johnson

Well, convey you, Keith and bully morning, everyone. Starting arsenic accustomed pinch our header results from reportable segments. Revenue of $1.8 cardinal and operating profit of $828 cardinal accrued 33% and 55% against 2021, respectively. The operating profit of $828 cardinal was held backmost by nan spot of nan dollar which is elaborate successful nan appendix connected a year-over-year ground was a $17 cardinal headwind. The operating profit consequence besides included $5 cardinal of costs related to nan Iberostar agreement. There is expected to beryllium a further $10 cardinal to $15 cardinal of integration costs successful 2023.

Underlying gross from nan interest business accrued 28% and operating profit by 43%. Our adjusted liking disbursal reduced to $122 million. For 2023, we expect it to revert to betwixt $130 cardinal and $140 million. Our effective taxation complaint was 27%, down 4 percent points which predominantly reflects really our group profit guidelines has returned backmost to pre-COVID levels. Going forward, we would expect our effective taxation complaint to enactment astir this level. Taken together, this capacity resulted successful an adjusted EPS almost doubling to $282.3. And arsenic I will travel connected to show successful a moment, erstwhile again, we converted complete 100% of these net into free rate flow.

Turning now to our drivers of performance. The beardown return of request successful astir of our markets led to wide occupancy 8.5 percent points higher than 2021, while sustained pricing powerfulness passim nan twelvemonth saw complaint amended by astir 18%. This resulted successful group RevPAR expanding by 37% connected a comparable basis. Total underlying interest business gross grew by 28% and pinch a quality successful capacity chiefly owed to non-RevPAR-related gross streams, specified arsenic cardinal interest income being broadly flat.

When looking astatine 2022 versus 2019, nan 2 measures are intimately aligned. RevPAR down 3%; and interest business gross down 5%. We achieved gross strategy maturation of 5.6% to nan summation of complete 49,000 rooms. Our underlying removals complaint was 1.3%. Our nett strategy size maturation was, therefore, 4.3%, adjusting for nan effect of ceasing operations successful Russia.

Looking astatine our RevPAR capacity complete nan year. You tin spot nan different trends successful monthly RevPAR by region, some Americas and EMEAA saw nary fto up successful nan spot of pricing powerfulness done nan year. After a summertime that was boosted by beardown leisure demand, some regions sustained their RevPAR performances passim nan 2nd half. Greater China saw important volatility successful trading during 2022. But nan caller relaxation of recreation restrictions is starring to a accelerated return of request and we expect to spot a overmuch stronger capacity successful 2023.

I will now return you done our location capacity successful much detail. Starting pinch nan Americas, wherever grounds rates drove comparable RevPAR, up 29% connected 2021 and up 3.3% connected 2019. After headwinds from nan Omicron version successful nan first quarter, RevPAR exceeded 2019 levels from April onwards, demonstrating sequential improvements successful capacity each 4th done nan year. Fourth 4th RevPAR successful nan U.S. was up 13% against 2021 and up 8% versus 2019. As expected, nan capacity spread narrowed importantly betwixt our franchise property and nan managed estate. During nan year, we added much than 20,000 rooms crossed nan Americas. 4,000 rooms exited nan system, representing a removal complaint of conscionable 0.8% which successful nan early would apt revert to nan historical underlying mean of astir 1.5%.

Underlying interest business gross accrued 27% connected 2021, exceeding 2019's capacity by 3%. Similarly, underlying interest operating profit was 12% up of 2019, demonstrating nan continued benefits of our sustainable costs savings. Our owned, leased and managed lease portfolio generated operating profit of $20 cardinal compared to a nonaccomplishment of $9 cardinal successful nan anterior year. Looking astatine our early growth, we signed 32,000 rooms taking our Americas pipeline beyond 100,000 rooms.

Looking astatine our U.S. business and leisure operation successful much detail. The momentum down leisure recreation has not subsided pinch some occupancy and complaint outperforming 2019 successful nan 4th quarter. We've not seen immoderate denotation that request aliases pricing powerfulness is waning. As shown successful nan appendix, wherever we break down nan leisure capacity to you, location person been 18 months of complaint up 2019 levels and pinch occupancy that has afloat recovered.

Business request continued to prime up steadily done nan year. While complaint has been supra 2019 levels since March, occupancy recovered to wrong 98% of 2019 levels successful nan 4th quarter. Again, arsenic shown successful nan appendix wherever we break down nan business capacity for you, this shows nan sustained ADR supra pre-COVID levels since March 2022 and occupancy has seen a adjacent afloat betterment which is successful statement pinch what we are forecasting nan commencement of nan pandemic. Despite immoderate predictions, business recreation is live and well.

Moving now to Europe, Middle East, Asia and Africa, wherever RevPAR has recovered very quickly and was up 93% year-on-year. While RevPAR for nan twelvemonth was 8% down connected 2019, 4th 4 was 9% up, catching up pinch nan standard of nan betterment seen successful nan Americas. In nan U.K., RevPAR sequentially improved quarter-on-quarter done nan year, culminating successful being 12% up of 2019 successful 4th 4. The much leisure-orientated provinces were nan superior driver down this, though London which is much reliant connected firm request was still 6% up. In Continental Europe, restrictions were mostly slower to beryllium lifted astatine nan commencement of nan year. However, request returned quickly passim nan summertime and by 4th 4, RevPAR exceeded 2019 by 8%. Japan only afloat reopened to world recreation successful mid-October. And contempt RevPAR accelerating from 64% to 2019 levels successful nan 3rd 4th to 87% successful nan fourth, location remains important imaginable for further improvements successful 2023. Year-on-year underlying interest gross accrued 102% to $277 cardinal and underlying interest operating profit to $146 million.

Looking concisely astatine nan improvement environment, we added much than 16,000 rooms during nan year. 11,000 rooms were removed from nan strategy though 6,500 of these were owed to nan exit from our Russian business, meaning that nan underlying removals complaint was 2%. We signed 26,000 rooms successful nan twelvemonth pinch conversions representing 40% of signings successful nan region.

Turning now to Greater China wherever recreation restrictions severely impacted nan trading situation done 2022. At times during nan year, astir 1/3 of IHG's property was either repurposed for quarantine hotels aliases temporarily closed. Monthly RevPAR was weakest betwixt March and May, erstwhile it was down by much than 50% compared to 2019. With immoderate loosening of restrictions, nan summertime months saw a marked improvement, pinch July and August down only 15% and 18%, respectively. This was short-lived, nevertheless and restrictions were reintroduced successful September. As already noted, pinch restrictions now lifted, we've seen a beardown return of request successful January. Underlying interest gross was down 18% against nan anterior year, a diminution of 40% connected 2019, delivering $23 cardinal of underlying interest operating profit. We opened 13,000 rooms successful what was a very challenging improvement situation but which still meant gross maturation of complete 8% and nett maturation of 6%. We signed 22,000 rooms. The momentum down our Crowne Plaza marque continued pinch 23 signings and we added a further 34 Holiday Inn Express hotels to nan pipeline.

We person continued our attraction connected balancing investing for maturation and driving efficiency. Our group interest separator improved by 6.6 percent points to 56.2% which intends it now exceeds 2019's separator by 2.1 percent points. This is being driven by nan Americas region. There is further improvements still to travel arsenic nan EMEAA and Greater China regions complete their recovery.

We delivered connected our 2022 nett strategy size maturation aspiration pinch 4.3% growth. Our removals complaint of 1.3% was our lowest for galore years and we expect it to broadly mean astir 1.5% going forward. It was pleasing to spot nan occurrence of our strategical attraction connected description done moving pinch exclusive partners pinch nan summation of nan class-leading Iberostar all-inclusive resorts business onto IHG's platform. This will output importantly supra mean fees per room erstwhile integrated and further enhances our estimation successful nan leisure conception and Keith will talk much astir this shortly.

Turning now to superior expenditure. We spent gross CapEx of $161 cardinal and nett CapEx was an outflow of $59 cardinal aft proceeds from disposals and strategy money inflows. Key Money of $64 million, up from $42 cardinal successful 2021 is suggestive of our accrued improvement activity but besides of our subject successful only deploying costs wherever nan returns warrant nan investment. Maintenance CapEx was up $11 million, reflecting our continued accent connected investing successful nan semipermanent wellness and stableness of our halfway business infrastructure and systems to guarantee they tin support our growth.

Turning to nan strategy fund. We proceed to use from depreciation levels exceeding CapEx pinch a awesome finance successful our world preservation systems complete. Our medium-term superior expenditure guidance remains unchanged astatine up to $350 cardinal gross per annum. We expect our recyclable finance and strategy money superior investments to nett to 0 complete nan mean word resulting successful nett CapEx of up to $150 cardinal per annum.

Moving now to rate flow. During nan year, our adjusted free rate travel saw an inflow of $565 cardinal demonstrating erstwhile again nan highly cash-generative quality of our business exemplary arsenic we converted complete 100% of our adjusted net to cash. The free rate travel included rate taxation outflows which accrued by $120 cardinal compared to 2021, reflecting improved trading performance. After costs of our dividend and astir of nan antecedently announced $500 cardinal stock buyback program, location would person been an summation successful nett debt. However, pinch favorable overseas speech movements, nan closing position was a nett indebtedness alteration of $30 million.

After investing down semipermanent maturation which remains nan foremost priority, we look to sustainably turn nan mean dividend. We are proposing an summation successful our last dividend of 10% to $0.945, an interim dividend of $0.439 was resumed and paid successful October. Therefore, nan last dividend is $1.34 while totaling adjacent to $250 cardinal which comes connected apical of nan $500 cardinal stock buyback programme that completed successful January. Our beardown maturation successful profitability and our alteration successful nett indebtedness meant that our leverage astatine 31 December 2022 was 2.1x, good beneath our target scope of 2.5 to 3x. Therefore, we person announced coming a further $750 cardinal buyback programme which we expect to complete this almanac twelvemonth which would reset leverage backmost into our target range.

With that, fto maine now manus backmost to Keith.

Keith Barr

Thanks, Paul. On galore occasions successful nan past and astir precocious during nan pandemic, our manufacture has shown some its resiliency and enduring maturation characteristics. The manufacture has travel a agelong measurement since COVID-19 brought world recreation to a standstill but there's still further betterment successful international, firm and group recreation ahead, giving america nan use of much request still to return.

The reopening of China is simply a important tailwind which will greatly use domestic, inbound and outbound travel. While home recreation successful China has already begun to bounce backmost rapidly, nan betterment of inbound and outbound recreation is apt to beryllium much gradual. In wide economical terms, employment levels stay high. The mostly of family equilibrium sheets stay patient and ostentation is fading successful astir markets, each of which support our assurance successful nan outlook.

In position of headwinds, connected nan request side, nan manufacture remains challenged by reduced aerial recreation capacity and summons prices. In China, for example, world formation capacity remains astatine little than 5% of 2019 levels and is apt to stay debased for immoderate time. There is nary escaping that location are macroeconomic uncertainties and these whitethorn effect firm recreation budgets and leisure spending astatine immoderate point. However, Economists latest position support much of a soft landing and we shouldn't hide that. For our industry, nan timing is specified that we will use from galore areas of request still returning.

On nan proviso side, for edifice owners, nan readiness and costs of financing is impacting caller edifice development, limiting caller proviso maturation successful immoderate cardinal markets. Some labour challenges besides continue, though location are signs of these easing. So while some nan manufacture and IHG cannot beryllium immune to economical cycles, we are assured that nan existent manufacture tailwinds and outweigh nan headwinds, some successful number and magnitude.

If we look astatine nan wellness of nan industry's semipermanent maturation drivers, request resiliency is good proven pinch manufacture gross increasing astatine a CAGR of 3.3%, outpacing world economical maturation successful 18 of nan past 23 years. New edifice proviso grew by a CAGR of 2% complete nan past decade, supported by some patient returns connected plus finance and structural maturation drivers pinch starring world edifice brands expected to proceed their semipermanent inclination of taking marketplace share. Within this, IHG has a 4% of nan industry's unfastened rooms globally and pinch complete 10% of nan pipeline. We are successful a beardown position to summation our standard and return further share. In addition, STR expects improvements successful request volumes and pricing to beryllium sustained. They forecast U.S. manufacture RevPAR to beryllium 12% up of 2019 levels successful 2023 and 25% up by 2025.

If we move to attraction much specifically connected IHG, we are powerfully positioned to thrust maturation and shareholder value. Our asset-light fee-based and chiefly franchise business exemplary gives america geographic scope crossed much than 100 countries and concatenation standard diversification successful some resilient and high-growth segments. Our well-invested portfolio of 18 brands forms an endeavor level of much than 900,000 rooms. Our pipeline of a further 280,000 rooms represents secured multiyear maturation of complete 30% of today's strategy sizes. We person demonstrated our expertise to successfully thrust long. [Audio gap] You've seen america stay rate travel affirmative moreover successful nan depths of COVID pinch a history of cumulatively converting much than 100% of our net into free rate flow. This has supported returning much than $14 cardinal to shareholders since 2003 done mean dividends and further returns. And importantly, we run successful a precocious barrier-to-entry environment. Our marque portfolio has decades of practice and our strategy money and award-winning loyalty program, leverage a med standard and skills connected behalf of our owners. In addition, our starring technology, procurement solutions and world income operations thief our hotels and owners thrust gross and efficiencies, trim costs and output return connected investment. These barriers make it incredibly challenging for others to replicate nan standard and nan spot of nan endeavor level we person built complete galore decades.

We person invested materially successful our business complete nan years arsenic good arsenic nan strategy money receiving and spending complete $1 cardinal a twelvemonth connected behalf of our owners, $300 cardinal of superior has besides been invested done nan strategy money connected captious projects arsenic our industry-leading world preservation system. It has been cardinal to backing nan translator of nan loyalty program, launching our caller mobile app, revamping our web beingness and scaling up our world media campaigns.

IHG besides put up to $150 cardinal a twelvemonth successful Key Money and Maintenance CapEx and operates a highly businesslike overhead guidelines of astir $600 cardinal per year, wrong which we money further OpEx investments. We person launched and refreshed brands, modernized our tech infrastructure and create precocious information and analytic capabilities. These fantabulous foundations for early maturation alteration america to thrust underperformance and returns, deepen our narration pinch our customers and innovate our exertion and distribution platforms.

Let's move to look astatine nan advancement we're making connected our 4 strategical priorities. First, customers and being customer-centric successful each that we do. In 2021, we refreshed our IHG Hotels and Resorts maestro marque to make it much applicable and appealing to consumers, mounting retired to our guests and owners, nan spot of our marque portfolio. Since then, we person reinforced nan enslaved betwixt nan maestro marque and our edifice brands arsenic good arsenic promoting IHG One Rewards arsenic a captious portion of why group take to enactment pinch us. Both marque consciousness and marque favorability metrics person improved arsenic a consequence of nan changes to beryllium made.

In summertime 2022, we launched our largest trading run for much than a decade to showcase our brands, IHG One Rewards and successful galore ways we present existent hospitality for bully crossed our hotels astir nan world. The Guest really you impermanent run showed up crossed TV ads, societal media, magazines, airports, subways, sporting events and more. The investments we person made down our maestro marque yet helped to thrust much gross to our hotels for our owners and much marque affinity among our guests and loyalty members.

IHG One Rewards has complete 115 cardinal members. Loyalty members relationship for astir half of each room nights booked. They are 9x much apt to book nonstop and walk 20% much than nonmembers. Our translator of nan programme successful 2022 gave members much tailored experiences and much options to gain and redeem points crossed our brands. For our owners, it drives higher volumes of much engaged and profitable guests to their hotels. We've seen immoderate awesome advancement connected our loyalty KPIs successful 2022 pinch 11% much points redeemed, 16% much reward nights booked versus 2019 and much than 1 cardinal milestone rewards redeemed since we introduced them. Enrollments are up 27%, adding 12 cardinal much members each of which is simply a important attraction for our edifice owners, some existent and prospective.

Our owners astir nan world trust heavy connected IHG to thief them tally an businesslike business arsenic good arsenic seizure demand. With 2022 seeing staffing pressures and ongoing proviso costs and proviso concatenation challenges, we person continued to grow nan benefits for our owners of being portion of nan IHG strategy whilst besides improving nan impermanent experience. We deployed worth engineering and mitigated inflation-driven increases of 10% to 20% crossed furniture, fixtures and instrumentality categories aliases [indiscernible]. We person little build costs for our brands pinch Atwell, Candlewood and Staybridge Suites seeing savings of betwixt 3% and 5% by expanding level scheme ratio and updating FF&E standards.

In nan Americas region, 20% much hotels joined our nutrient and beverage purchasing programme now covering 4,100 properties and generating savings of up to 15%. We person helped to offset power costs increases and shifted to cleaner fuels by processing much energy-efficient formats launching organization star projects and helping unafraid greenish power tariffs and different savings done standard buying. These are immoderate examples of nan measurement successful which we person lowered costs and driven efficiencies for our owners crossed nan stages of nan edifice life cycle.

Moving connected to building emotion and trusted brands. We person strengthened and diversified our marque portfolio by filling successful achromatic spaces done integrated launches and acquisitions of brands that reside clear semipermanent user trends and capitalize connected notable maturation opportunities. We've besides continued to refresh our existing brands done nan improvement of caller formats and updated creation and work standards. And we are increasing successful caller ways, too, pinch fantabulous high-quality brands. As I mentioned successful November, we had an exclusive partners category, demonstrating nan spot of IHG's endeavor level and desire for much owners to subordinate nan IHG system. So far, we've added Iberostar Beachfront Resorts, a family tally business pinch much than 65 years of acquisition successful nan manufacture and fantabulous estimation for operating resorts astatine all-inclusive properties successful standout locations pinch a beardown committedness to value and sustainability. Iberostar Beachfront Resorts adds up to 70 hotels unfastened hotels successful locations including nan Caribbean, Americas, Southern Europe and North Africa. The first 43 signed into nan pipeline successful December, 33 of these were added to nan IHG system. The remaining 27 unfastened hotels require further third-party approvals to subordinate our system. There are besides 5 caller build hotels successful our pipeline which will unfastened successful consequent years and we're moving intimately pinch nan Iberostar squad to turn nan brand's footprint further.

Based connected nan existent 70 hotels, nan statement is expected to present complete $40 cardinal of yearly interest gross by 2027 and a broadly akin magnitude into nan strategy fund. The fees per cardinal will beryllium much than 10% higher than nan mean IHG average, reflecting nan quality of these edifice hotels successful overmuch sought-after destinations. So commercialized agreements successful nan exclusive partners class thrust high-quality interest streams and further systems maturation for IHG, while providing much prime for our owners, guests and loyalty members. We proceed to look astatine akin opportunities to leverage nan standard and nan capacity of our endeavor platform.

Let maine now stock immoderate different highlights from crossed our brands. Starting disconnected pinch our Luxury & Lifestyle authorities which now represents 13% of our strategy and 20% of our pipeline. Six Senses has much than doubled its pipeline successful nan 4 years since we acquired it. Building connected a beardown beingness crossed EMEAA nan pipeline now includes 6 hotels successful nan Americas and 4 successful Greater China.

Since acquiring Regent, we person opened 3 hotels and much successful 2023 will beryllium a landmark twelvemonth for nan marque pinch nan opening of Regent [ph] tons aft a 2-year awesome redevelopment. There's besides nan overmuch anticipated afloat reopening of Regent Hong Kong this twelvemonth while Regent Shanghai connected [indiscernible] and Shenzhen Bay are 2 further notable signings successful our Greater China region. Meanwhile, InterContinental, nan world's largest luxury edifice marque has much than 200 hotels unfastened coming and an unthinkable pipeline of a further 90 which is much than 30% of its existent strategy size.

Hotel Indigo goes from spot to strength. We had fantabulous 18 openings and 30 signings during nan year. The marque strategy size is expected to turn to 200 hotels successful nan adjacent 3 years and we will doubled. [Audio gap] Its strategy successful half nan clip it took to unfastened nan first 100 properties. [Audio gap] Revenue stock up of its competing brands. 8 properties person now been sold by their original developers which helps to further show nan beardown return connected finance that owners tin achieve. New edifice brands are known to show an acceleration successful maturation aft establishing a guidelines of unfastened hotels, pipeline properties and transaction data. We proceed to create Abbott hotels to beryllium our adjacent marque of scale.

Our portfolio of Extended Stay and Suite Brands is showing beardown strength. The spot and attractiveness of Candlewood Suites and Staybridge Suites continues pinch 70 much hotels signed successful nan twelvemonth and some brands having sizable pipelines. The first 2 Atwell suites person opened, nan prototype caller build astatine Denver Airport and nan adaptive reuse successful Miami; [indiscernible] pipeline to 30 properties.

Just concluding connected brands for you pinch a reminder of nan increasing value of conversions, this has been a clear trend, rising from 17% of signings backmost successful 2016 to 23% successful 2022. The proportionality of conversions was unusually elevated successful 2020 owed to nan impermanent effect of nan pandemic connected signings of caller builds. But arsenic caller build signings recover, we still expect conversions to characteristic much powerfully successful our operation than successful nan past owed to nan spot of our expanded marque portfolio.

I've mentioned that we are highly pleased pinch voco's incredibly successful world description and its publication to securing conversions. In nan past 3 years, conscionable nether 1/5 of our conversion signings were nether nan voco brand. We besides now person Vignette which plays an important domiciled successful helping america unafraid further high-quality conversion opportunities successful nan luxury and manner space.

With overmuch of nan world edifice proviso still highly fragmented amongst independents and mini gains, we've talked earlier astir really these edifice owners look to use from our scale, gross generating systems, trading and loyalty programs to thrust performance, efficiencies and returns. We spot this arsenic an expanding opportunity crossed each concatenation scales and brands. For example, almost half of our caller conversion signings person travel from our industry-leading Holiday Inn marque family.

Moving connected to immoderate of our highlights connected our 3rd strategical priority, creating integer advantage. We person invested important superior to innovate our exertion and distribution platforms successful 2022. We introduced our caller mobile app, pinch mobile instrumentality usage now accounting for 58% of each integer bookings and representing our fastest-growing gross channels. Mobile app gross besides grew by 30% successful nan twelvemonth versus 2019. IHG One Rewards members get nan astir retired of nan caller mobile app acquisition pinch streamlined booking, faster check-in, expertise to way advancement towards nan adjacent position and milestone rewards prime and nan opportunity to conveniently position loyalty benefits pre-stay. The app is supporting further increases successful integer bookings, loyalty engagement and incremental walk during stays.

We person besides introduced caller ihg.com and brand.com website which elevate nan brands and supply guests pinch importantly enhanced contented and functionality. As a result, we've seen accrued booking conversion, gross uplift an summation successful web enrollments to our IHG One Rewards program.

And concluding pinch our 4 strategical privilege care. Our Journey to Tomorrow 2030 responsible business scheme is focused connected 5 captious areas. Our people, communities, carbonate energy, discarded and water. We are making bully advancements successful each 5 areas but conscionable to prime retired immoderate highlights for you. For our people, we person a gender-balanced each worker organization and nan proportionality of female firm leaders has accrued to 34%. Our worker engagement people ranks IHG arsenic a world champion employer by Concentrix, nan starring master and civilization and engagement. Our communities activity has seen IHG grow nan skills academy group astatine much programs that thief those impacted by discrimination, poorness and different activity barriers and support a number of different awesome alleviation efforts astir nan world, including our consequence to nan warfare successful Ukraine. In position of carbon, we achieved a 5.8% simplification successful Scope 1, 2 and 3 emissions connected an occupied room ground and rolled retired galore much devices and training, metrics and marque standards to thief execute our stretching commitments successful this area. Regarding waste, our awesome initiatives to trim integrative and nutrient discarded saw awesome strides successful 2022. And successful Water, we completed our baseline information group to pass our h2o strategy and reporting.

These are conscionable a fewer highlights from different twelvemonth progress. From immoderate much and each nan detail, I would promote you to publication done our 2022 responsible business study and ESG information book which will beryllium published very shortly. The study shares much item connected our approach, advancement and scheme to proceed shaping nan early are responsible to travel.

So to sum it up, 2022 has been different very successful twelvemonth for IHG. We delivered a beardown trading capacity pinch sequential improvements each 4th successful world RevPAR. On apical of RevPAR growth, our nett strategy size grew 4.3% connected an adjusted ground pinch nan opening of 269 hotels. With nan signing of 467 hotels, our pipeline is 3.9% larger than a twelvemonth earlier and represents early maturation of 31% of today's strategy size. The Iberostar Beachfront Resource statement adds an 18th marque to our portfolio and we proceed to research further opportunities for exclusive partners to thrust further strategy maturation and interest streams. Our operating profit grew very substantially. Our interest separator is already up of 2019 and our business models expect to support further separator accretion successful nan future, arsenic it has done complete galore years successful nan past. And nan exemplary erstwhile again has shown nan spot of rate generation. This enables IHG to money investments successful awesome strategical initiatives, specified arsenic undertaking nan important loyalty translator pinch IHG One Rewards, launching our caller mobile app and really we proceed to activity pinch our edifice owners to meet our responsible business commitments and we are pleased to beryllium proposing 10% maturation successful nan last dividend coming that takes nan full dividend costs to astir $250 million, our further stock buyback programme which coming begins, will return an further $750 cardinal connected apical of nan mean dividend.

So IHG is simply a high-performing, stronger and much resilient institution than ever before, made imaginable by nan important investments we made successful our endeavor level and to present our strategical priorities and ambition.

With that, Paul and I are happy to return your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first mobility coming goes to Jamie Rollo of Morgan Stanley.

Jamie Rollo

Three questions, please. First, could you talk a spot astir nan U.S. capacity successful 4th fourth RevPAR update that benignant of 5 to 7 points weaker than nan marketplace and nan precocious mid-scale conception contempt benignant of churning disconnected nan weaker hotels a twelvemonth earlier. Secondly, is nan institution still formally targeting industry-leading nett portion maturation this year? I conjecture that would beryllium benignant of 5%, 5.5% arsenic per Hilton. But could you talk a spot astir that? And possibly you touched connected nan improvement situation successful China. So what do you mean by that? And past thirdly, connected nan strategy fund, nan $100 cardinal EBIT nonaccomplishment which is each successful nan 2nd half. The connection talks astir nan relaunch of nan statement strategy but it seems to beryllium a gross shortfall because revenues were down 5% connected nan 2nd half of '19 contempt RevPAR being benignant of up mid-single digits. So what's causing that gross drop, please? And immoderate indications connected strategy money for this year?

Paul Edgecliffe-Johnson

Yes. And -- truthful I mean nan U.S. performance, you've sewage to look connected multiyear ground to spot quarter-by-quarter what's happening. And of course, nan situation of comparing america to nan manufacture is that our hotels are not needfully successful precisely nan aforesaid locations. But arsenic we look astatine it connected a brand-by-brand ground and comparison our brands against our competitors' apical brands, different very beardown twelvemonth pinch nary underperformance visible. So we're very pleased pinch nan capacity successful nan Americas successful 2022.

Keith Barr

Jamie, it's Keith. I'll prime up growth. So erstwhile we talked astir 2022 and getting to our maturation of complete 4%, we said that was going to beryllium stretching and that's erstwhile we started nan year. And past clearly, location were much headwinds that developed during nan year, whether that could beryllium what happened successful nan lending environment, what's happened pinch liking rates. And clearly, nan lockdowns successful China because China has been a important information of our nett portion maturation complete years, often successful nan 10%, 11%, 12% range, came successful astatine 6%. So it was going to beryllium challenging to get there. We did get there, though, because we focused connected different ways of increasing this business, bariatric resorts being a awesome opportunity for america to bring successful an asset-light business which will being important fees overtime. So I deliberation going forward, we still aspire to beryllium successful that industry-leading scope of growth. We've ever said that's benignant of successful nan 4% to 5% scope erstwhile you benignant of look astatine what nan adjacent group is. Again, a batch is going to dangle upon what happens successful China. And we'll talk much later connected astir apt astir nan request broadside of China has travel backmost strong.

Now it's going to beryllium nan building broadside and nan pipeline broadside which will travel astatine a slower gait arsenic things are reopening arsenic building crews are starting backmost up. Projects are kicking disconnected and truthful forth, too. So we still [indiscernible] manufacture thinks successful that 4% to 5% scope and we'll beryllium aiming to beryllium astir apt astatine nan little extremity of that successful 2023. But again, it will ever beryllium lumpy for america perchance because of nan opportunity to do strategical deals. So if we did different exclusive partnership, we could beryllium higher up successful nan range. And again but I deliberation we aimed astatine nan little extremity of that for 2023 but we're going to support pushing up because we -- fundamentally, China will get backmost to maturation which will beryllium a important tailwind for us.

Paul Edgecliffe-Johnson

And past successful position of nan strategy fund, Jamie, I deliberation there's a mates of things there. One, erstwhile nan accounting alteration a fewer years ago, arsenic I cognize you'll remember, we utilized to efficaciously do it connected a rate accounting ground because nan strategy money is either a profit aliases a nonaccomplishment for us. It's conscionable really overmuch rate it generates and erstwhile we deploy that. And we effort to benignant of lucifer nan rate successful and nan rate retired truthful that we're not fundamentally conscionable taking owners money that they're giving america to walk connected their behalf. And truthful if revenues arsenic recognized are little than nan rate that we received, we're okay pinch that. And remember, revenues are recognized erstwhile points are consumed, not needfully erstwhile points are created nether nan gross nickname rules there. So you tin get a hold there. But complete time, we tally nan strategy money to a breakeven basis, surely connected a rate basis.

Operator

And nan adjacent mobility goes to Vicki Stern of Barclays.

Vicki Lee

Firstly, connected nan U.S. RevPAR, I conjecture nan manufacture information we spot has been a small spot softer conscionable successful nan past fewer weeks. Anything to truth that you're seeing by measurement of immoderate slowdown, beryllium it leisure, business recreation and conscionable benignant of much broadly your thoughts specifically connected nan U.S. outlook? Related to that, conscionable reasoning much globally, I conjecture your U.S. peers person guided for RevPAR year-on-year benignant of 6% astatine 1 % and 8.5% astatine nan mediate of nan other. I conjecture your operation is much akin to spot higher, I think, successful interest publication from China. But really would you benignant of RevPAR [ph] outlook, fixed what your peers person commented connected truthful far? And past conscionable yet connected nan stock buyback, really are you benignant of landing connected nan $750 million, obviously, I guess, astatine nan apical extremity of your leverage scope aliases precocious extremity of your leverage scope connected a trading basis. But much broadly, really are you reasoning astir rate returns going guardant successful nan context, obviously, you person a higher liking complaint situation from present and what's nan correct leverage fixed that?

Paul Edgecliffe-Johnson

Great. Thanks, Vicki. So successful position of U.S. RevPAR and what we're seeing successful existent request levels, arsenic I deliberation Keith mentioned, we're not seeing immoderate signs of slowdown successful request aliases nan complaint environment. And it's ever a small difficult comparing it against anterior years. But erstwhile we look astatine guardant bookings, erstwhile we look what's connected nan books and we look astatine our indications of firm negotiated rates, bookings further out, it still looks very, very strong. Of course, we proceed to show it to spot if there's immoderate signs aliases thing but still a very beardown environment. In position of guidance for 2023, yes, obviously, we don't person general guidance. But we typically execute very adjacent to what Hilton and Marriott do. And arsenic you say, our business operation is person to Hilton. So that seems a reasonable proxy and China will travel backmost strongly. And I think, again, arsenic Keith mentioned, we've seen very beardown request location pinch nan outpouring show seeing request astatine 90% of nan 2019 level. So a batch of betterment to travel but very encouraging signs truthful far.

Keith Barr

Thanks, Vicki. In position of nan stock buyback, I mean it was a speech astatine nan Board level, really do we utilize drawback correct to put successful nan business, turn nan mean dividend and return surplus rate to shareholders. And based upon wherever you look astatine wherever statement is today, really nan trading outlook is and nan tailwinds that we have, we were rather comfortable that nan $750 cardinal put america correct successful nan range. Now it is simply a reset to make judge that we sewage backmost successful nan scope because we were little than we were expected to be. And we will proceed to make judge that we look astatine early capacity to proceed to return surplus rate to shareholders arsenic well, too. But effectively, I mean this is how, arsenic Paul and squad and I person been benignant of rebuilding and engineering this business complete nan past 5 years, this is nan result that we were expecting to achieve. Grow nan mean dividend each twelvemonth and consistently from free rate flow, return superior to shareholders, not done plus income but done nan operating capacity and free rate travel procreation of nan institution and we're rather assured that's going to beryllium nan measurement moving forward.

Vicki Lee

And conscionable circling backmost connected that, immoderate benignant of different position past connected nan absolute level of leverage, conscionable fixed higher liking rates currently?

Keith Barr

No, no, we're rather happy pinch that scope that we antecedently provided.

Operator

The adjacent mobility goes to Richard Clarke of Bernstein.

Richard Clarke

Three, if I may, first 1 conscionable pursuing up really connected what Vicki asked there. If I benignant of look guardant to wherever you'll beryllium successful a year's clip and you moreover conscionable repetition your free rate travel and EBITDA, you achieved successful 2022. It looks to maine for illustration you'd beryllium somewhat beneath your 2.5 to 3x leverage target. So is location benignant of scope to do further investment, immoderate moving superior outflows, CapEx, thing we should deliberation about? Or could that buyback really moreover beryllium accelerated arsenic nan twelvemonth goes on? Second question, you evidently hinted connected nan telephone that Iberostar could beryllium nan first of a fewer business deals. Is this a benignant of a caller task for you? Why do you for illustration that measurement to turn alternatively than M&A aliases integrated growth? Is location immoderate scope location arsenic well? And what benignant of deals mightiness you look astatine successful that space? And past nan 3rd one, conscionable I deliberation there's a small spot of disorder retired location sometimes astir what nan competitory scenery looks for illustration successful China pinch regarding nan wider industry, what are you seeing successful position of nan number of rooms that person travel retired of that marketplace speech from yourselves and nan different branded players, has that marketplace noticeably shrunk successful position of room numbers complete nan past fewer years? Or do you conscionable spot that arsenic a impermanent effect?

Paul Edgecliffe-Johnson

Thanks, Richard. I'll return nan first and past Keith will remark connected nan different 2. In position of wherever nan buyback would return america to -- I mean, it requires a prediction of what nan EBITDA successful 2023 is going to beryllium doesn't it? But we deliberation nan $750 cardinal announced now which would adhd to 0.8 turns connected to nan 2.1 that we extremity up pinch nan 2022 numbers is simply a sensible spot to commencement and it does springiness america capacity to proceed to put successful nan business which we've ever said is nan astir important thing. I deliberation arsenic you perceive to Keith and I talk astir really we deliberation astir nan business, we request to make judge this is simply a powerfully invested business that tin proceed to support nan maturation that we generate. So we do put backmost into nan business but past we proceed to person important amounts of spare rate and we return that. If location was much arsenic we went done nan year, yes, we'll proceed to show it arsenic we ever do. But I deliberation this will return america astir of nan twelvemonth to get done based connected nan level of liquidity successful nan banal anyway. So I dream that helps, Richard.

Keith Barr

Great. Richard, bully to talk pinch you. It's difficult to retrieve what's happened complete nan past 5 years arsenic nan lot's happened. But I remember, was sitting successful a room pinch galore of you and Paul talking astir really we were going to toggle shape IHG done launching immoderate brands organically done acquiring immoderate brands, strengthening our exertion level and our loyalty programme and truthful forth. That was nan strategy we were executing connected and nan squad did a superb occupation connected that. Had a small point called COVID travel successful nan mediate of it but we came retired of it moreover stronger. And that's still our strategy efficaciously is leveraging our endeavor level to organically motorboat brands and segments wherever we see, selectively do M&A if it's due wherever we deliberation it's nan correct measurement to entree nan customer conception and opportunity. And now because of each nan investments we've made successful exertion and successful loyalty and distribution successful nan platform, we tin now turn done exclusive partners arsenic well, too.

People want to subordinate IHG because you're seeing nan standard and nan spot we person a 77% endeavor contribution. We person a loyalty publication complete 50% of room nights and accelerating, bringing successful 12 caller cardinal members a year. It's things that smaller companies conscionable can't do and we tin travel up pinch immoderate very imaginative solutions successful an asset-light approach. Again, astatine Iberostar a spot of OpEx past year, a spot of OpEx this year. And by 2027, it's going to beryllium producing $40 cardinal of fees to nan P&L and a akin magnitude coming into nan strategy money to thief support it too. And truthful it's a awesome measurement to turn nan business and leverage nan investments that we've made. But we're going to look astatine each nan different levers that we tin do to proceed to turn nan business, too.

And past successful China, I deliberation we're successful a really beardown position successful China. And correct now, we person 650 unfastened hotels, I think, 450 successful development. I was connected nan talk pinch nan squad today. And I mean, they've travel retired of a really reliable clip but they're rather confident. Just to springiness you a information point, we talked astir Chinese New Year what it was past Wednesday for our Greater China business, we are moving 70% occupancy. I mean, that conscionable shows you really quickly this business tin bounce back. That's going to lead itself aliases lend itself to much finance successful hotels. It will return clip to get pipeline ramping backmost up again for nan manufacture and projects nether construction. So -- it's not going to straight correlate to nan request betterment but it will travel backmost and grow. We're seeing immoderate hotels that are unbranded, 1 coming into nan IHG strategy now. We've sewage awesome relationships pinch nan SOEs wherever we're seeing immoderate of nan backstage edifice companies, existent property companies waste to nan SOEs we activity with, too. So we're seeing our business proceed to grow.

Again, it was increasing benignant of 10%, 12% strategy size previously, 6% past year. It will ramp itself backmost up complete clip but -- and it will return a spot of clip but we're very, very assured astir it going forward.

Richard Clarke

And conscionable to travel up connected nan past mobility there. So are you seeing tons of independent exits successful nan Chinese market, either converting to yourselves aliases conscionable closing?

Keith Barr

There are immoderate hotels that person closed. We haven't seen it being connected that yet and we are seeing decidedly conversions into our brands. I deliberation we signed a Vignette, a mates of Vignette perchance successful China into that play. We person a awesome caller signing. We mentioned it early on. The Regent Shanghai connected nan [indiscernible] will beryllium 1 of nan astir iconic locations successful each of China. A mates of different regions we've signed are going to beryllium successful immoderate of nan astir iconic architectural designs successful each of China. So that's sewage awesome momentum. There's decidedly going to beryllium immoderate proviso that comes out. I deliberation it will beryllium a mobility of hotels that were alternate usage and possibly section brands aliases independents, what happens pinch those products erstwhile they travel backmost into nan markets overall. But nan awesome news is we're seeing request travel backmost which is bully for everyone.

Operator

And nan adjacent mobility spell to Jarrod Castle of UBS.

Jarrod Castle

Great. Just coming to your churn complaint connected hotels. It was 1.3% versus historical 1.5% and you're now talking 1.5% going guardant connected this call. You've evidently undertaken rather a large cleanup of nan portfolio. So is location room for it to beryllium beneath 1.5%? Why we're going backmost to historical rates, I guess. Just connected benignant of nan Iberostar benignant of deals. I mean trying to get an thought of what nan competitory scenery erstwhile you put yourselves guardant to motion specified a deal? And what is, I guess, your unsocial trading constituent compared to others if you mightiness beryllium talking to those benignant of organizations? And past conscionable lastly, interest margin. Is it still -- should we still beryllium reasoning successful nan benignant of historical guidance scope for interest separator for '23?

Paul Edgecliffe-Johnson

Yes. So churn rate, 1.3% removals this year, little surely than I tin retrieve complete my past 19 years. And we've said that connected an underlying basis, truthful i.e., erstwhile you return retired nan Holiday Inns and Crowne Plaza which was a higher complaint arsenic we were cleaning up that portfolio for a agelong time, it's really been nan 1.5%. I deliberation 1.5% is astir apt nan correct level going guardant and that will beryllium an average. So immoderate years, you mightiness spot it a small higher, successful immoderate years, it mightiness beryllium marginally lower. So it will blend retired complete clip to astir that 1.5%. What's important is having a patient estate. And 1.5% gives america nan capacity to return retired hotels that we don't deliberation are representing nan marque arsenic we would for illustration it to beryllium represented aliases possibly nan proprietor has sewage an replacement usage for nan land, et cetera. So I deliberation that's astir nan correct complaint of exits.

And connected interest margins, obviously, higher now and nan Americas had a very beardown capacity connected interest separator successful 2022. EMEAA and China will turn backmost astir apt wouldn't beryllium pushing nan Americas separator successful '23. I deliberation we request to make judge that business is good invested into. But I would expect to spot separator accretion successful EMEAA and China. And past going forward, this business is tally to make margin. It's a scaled level business. So it will people accrete separator complete nan past 19 years, connected average, it's astir 125 ground points. And I'd expect that we will proceed to accrete separator arsenic we move forward.

Keith Barr

Great. And past I guess, what's nan -- what's IHG's unsocial worth proposition to beryllium capable to pull groups for illustration Iberostar? I mean, we've talked astir it for a while astir nan endeavor level we've built. It is 1 of nan astir powerful successful this manufacture and it's sewage materially stronger complete nan past 5 years. And truthful wanting to beryllium portion of that benignant of endeavor platform. Additionally, I deliberation we're much world than immoderate of our competitors. And nan truth that we really person astir apt immoderate deeper relationships internationally and person to nan marketplace because astir of these exclusive business relationships will beryllium international. They will not beryllium needfully U.S. focused because of nan tenure of nan marketplace overall, too. So I deliberation it's nan relation. And I deliberation it's conscionable IHG's estimation and really we activity and really we partner. The measurement we person done M&A, whether it was pinch Kimpton aliases whether it beryllium Six Senses aliases Regents, nan measurement we've treated those brands and protected them, we are seen arsenic being a very bully steward of brands and a very bully institution to partner with. And that's very important erstwhile a institution for illustration [indiscernible] understands their committedness to sustainability and tin beryllium a really, really bully partner too. So, I deliberation it's a operation of endeavor platform. We're much world and attraction successful quality and besides nan estimation we've built retired location to beryllium a awesome partner.

Operator

And nan adjacent mobility goes to Alex Brignall of Redburn.

Alex Brignall

Just two, please. So signings, I deliberation we dream to beryllium a small spot [indiscernible] is evidently rather a batch little than nan group average. And I wonderment whether that is simply a negotiating constituent erstwhile you're trying to look astatine these early deals and whether erstwhile we deliberation astir early deals, they'll travel astatine little royalty rates Iberostar has, therefore, really we request to exemplary that, if that's going to beryllium a building artifact of your nett portion maturation successful nan future?

Keith Barr

Thank you. So signings. I deliberation Q4 signings, we were very focused connected getting nan Iberostar woody crossed nan line. And we were lighter successful 2 markets, I would opportunity for somewhat different reasons. We were lighter successful EMEAA than we expected to beryllium because location are immoderate reasonably ample deals that person been moved from Q4 past twelvemonth into Q1 this year. So you will spot a step-up successful nan EMEAA region successful signings. That's conscionable a mobility of timing. It was virtually trying to get nan number earlier year-end and now they're happening successful Q1. And past China has been a important information of maturation now. We person grown marketplace stock successful China. So we proceed to person nan starring position successful China from an operating level and from a stock of signings, location conscionable were less hotels signed successful China past twelvemonth overall. So again, those are 2 areas we would expect to spot an acceleration coming into 2023 to thrust further growth.

And past successful position of nan royalty rate, these are very analyzable business deals because they're distribution relationships, there's a royalty complaint to it arsenic well. And each 1 is going to beryllium somewhat unique. I deliberation we will beryllium transparent pinch you arsenic we denote them arsenic really you deliberation astir them wide because I deliberation immoderate could beryllium much lucrative, immoderate could beryllium very, very akin to this overall. Paul mightiness person different remark aliases two.

Paul Edgecliffe-Johnson

Yes. I deliberation nan constituent I'd make is that nan fees per room we're getting connected this are higher than average. And if you deliberation astir nan quality of a franchise statement is that we've created a marque and past we complaint a interest to personification to usage nan marque -- that isn't nan lawsuit here. This is Iberostar person nan brand; they're now moving arsenic an exclusive partner pinch us. So, you wouldn't expect precisely nan aforesaid quality of statement but I deliberation nan cardinal point is that we are getting a adjacent costs for what we will present to them and making fees greater than our mean fees is very pleasing. And we'll generate, arsenic Keith said earlier, much than $40 cardinal connected nan P&L and increasing a akin magnitude connected nan strategy fund. So very, very pleased pinch nan deal.

Alex Brignall

Maybe conscionable 1 follow-on to that. On conversions successful general, it seems for illustration a batch of nan conversions and Iberostar will beryllium an example, are benignant of smaller, little known brands to larger groups, franchise aliases groups. So that's continuing nan inclination of nan bigger groups taking a bigger stock of nan full pastry alternatively much truthful than independent conversions. Is that for illustration erstwhile you deliberation astir these benignant of bolt-on deals, is that nan measurement that you deliberation astir it? It's efficaciously immoderate wide conversion woody of a benignant of existing smaller marque that conscionable benignant of joins your group and becomes different marque of yours?

Paul Edgecliffe-Johnson

Well, if you deliberation astir nan quality of nan manufacture and what it takes to succeed, you've sewage to person very beardown technological capabilities. You've sewage to person a very beardown loyalty program, et cetera. So this level that we person and only a fewer others really person astatine this benignant of standard is what differentiates nan majors. So I deliberation you will spot much of these smaller brands wanting to activity together pinch nan fields because past they get nan use of that platform. So yes, I mean, I deliberation we've seen that for galore years and it makes consciousness that it would proceed to beryllium nan guidance of travel.

Operator

And nan adjacent mobility goes to Jaafar Mestari of BNP Paribas.

Jaafar Mestari

I've sewage two, if that's okay. Just firstly, going backmost connected nan strategy money comments. I admit nan high-level position is there's timing differences and accounting differences and gross EBIT matters little than rate flow. All that's very clear. Still keen to understand nan plaything successful nan header EBIT a spot more. And conscionable to clarify, for nan past mates of statements now, you've been saying there's accrued investments successful user marketing, loyalty and nonstop channels. Are we conscionable really describing what's happening, strategy costs growing, taking much gross and arsenic a result, spending much successful those arsenic it should? Or are you successful immoderate measurement saying that there's other investments into user marketing, loyalty and nonstop channels. Just to explain connected that. And past secondly, connected nan marque momentum astatine avid, nan openings are happening, location really doesn't look to beryllium overmuch momentum successful nan signings successful nan past mates of quarters extracurricular of nan property. Your opening, it looks for illustration nan pipeline is really dropping by a mates of properties. What's nan scheme present to reaccelerate avid? You mentioned that transaction history would help. But what grounds do we person correct now to make a beardown constituent that avid is much than a niche marque that has plateaued early?

Keith Barr

Great. Well, convey you. On nan method accounting piece, I mightiness person Paul chime successful if he needs to. But philosophically, nan -- what nan astonishing portion of our business, arsenic you know, is nan strategy money is grows each twelvemonth arsenic revenues turn and that gives america accrued capacity to put into nan business. And erstwhile COVID hit, we took a important magnitude of costs retired of nan business, arsenic you would expect. And past we were rather thoughtful astir really does that costs travel backmost in? Strategically, you could benignant of conscionable sprinkle it a spot of everyplace and bring things backmost up and we said, actually, let's effort to fig retired what are nan large things we tin thin into. So nan capacity we saved during COVID enabled america to toggle shape nan loyalty programme pinch importantly much finance thin much into technology, thin into much into consumer-facing trading campaigns. And truthful it was fundamentally uncovering those efficiencies and past leveraging nan strategy money to thrust capacity and thrust transformation. And past arsenic nan strategy money continues to grow, we'll proceed to look for efficiencies to proceed to reinvest backmost into nan business, too. But we're very, very good positioned coming a amended position time than ever earlier successful position of nan strategy fund.

Paul Edgecliffe-Johnson

And successful position of avid, look, we stay very assured connected nan early of avid. Keith talked astir nan number of owners who person now built and past sold connected their avid for very bully profits and they are nan champion advocates for america because they talk astir what a awesome woody it is. It's comparatively inexpensive to build and it's speedy to build connected a mini onshore parcel. It's preferred by guests. The economics for an proprietor are very bully to run it. And past there's a very bully headdress complaint erstwhile it's sold. We conscionable request nan U.S. building marketplace wide to measurement up again and that will travel erstwhile much indebtedness superior gets made disposable successful nan U.S. because it's a awesome proposition. And it's thing that a batch of our historical owners of Holiday Inn Expresses are very willing in. So you've sewage nan correct proprietor base. It will conscionable return a small longer.

Keith Barr

And conscionable a speedy build connected location and why do you person confidence? I mean, a, we came retired very, very beardown pinch nan brand. Owner demand, customer and nan capacity are great. The comps connected these plus income are astonishing successful position of nan levels of return owners are getting and that's conscionable going to make it much attractive. If you look astatine immoderate of our competitors who launched brands during nan financial crisis, they conscionable bumped on for a play of time. And past arsenic lending came backmost because nan beardown customer proposition, beardown proprietor proposition, they past accelerate and scale. So that's what will hap pinch avid and Atwell complete time. It whitethorn not beryllium this twelvemonth aliases adjacent year. But again, it's -- you're going to spot that acceleration. And agelong term, they're incredibly large segments pinch beardown returns for owners and they're awesome brands. And truthful it's conscionable a mobility of erstwhile does lending travel backmost and you tin conscionable get -- you tin look astatine our competitors and spot erstwhile they motorboat brands and really they didn't move for a while because of nan lending environment, past nan lending limb comes backmost up, caller builds happened and they return off. So we would expect nan aforesaid to happen.

Operator

And nan adjacent mobility goes to Jaina Mistry of Jefferies.

Jaina Mistry

I've sewage three. My first mobility is connected nan pricing situation for 2023. If I'm reasoning astir nan cardinal moving parts, let's return Americas, it feels for illustration there's much scope to push rates successful business and perchance successful groups. And if nan leisure pricing is flat, it could mean pricing up mid-single digits, perhaps? And past successful different regions wherever location has been a slower recovery, we could spot stronger pricing there, specified arsenic Asia and China. I mean really are you reasoning astir pricing for 2023? That's my first question. My 2nd mobility is astir OpEx inflation. How are you reasoning astir nan moving parts to OpEx inflation? And is 4% to 5% still a bully anchor for 2023? And past my past mobility is connected nett portion growth. I deliberation successful a erstwhile investor presentation, possibly nan 1 astatine Q3, nan descent has spoken to nett portion growth, moreover reaching astir 5.5%. What's holding you backmost from reaching 5.5% this year? And has thing changed successful January and February truthful far? If you could money done each region, that would beryllium really helpful.

Keith Barr

Yes. Well, convey you. I mean successful position of pricing, truthful if you look astatine nan U.S. authorities for for illustration Q4, you had leisure up successful room nights and 14% up successful mean rate. Business conscionable somewhat down room nights for nan first 2019 and 7% up successful complaint and groups are astir 10%, 12% off, 30% disconnected successful request but 7% caput successful rate. So you're right, there's been importantly pushing complaint successful leisure, astir apt not going to beryllium replicated moving guardant but it tin beryllium maintained. We are decidedly seeing that location is pricing powerfulness successful some groups, meetings and events and successful business travel. And truthful successful our firm negotiated rates which is what we do centrally, we're seeing benignant of mid- to precocious single-digit pricing activity successful 2023 and it's a bully information of our wide business, too. So you would expect to spot further pricing powerfulness successful group's meetings and events and successful business astir apt coming disconnected successful leisure to immoderate degree, not going backwards but not seeing nan aforesaid level of growth. So overall, beardown pricing.

Paul Edgecliffe-Johnson

And past successful position of OpEx and really we put into nan business because you've sewage a operation of what's ostentation and past what choices we make to proceed to build retired nan competencies of nan business; [indiscernible] and erstwhile you deliberation backmost to nan anterior year. So we added backmost successful nan $25 cardinal that we said we would of what person been saved because effectively, we person saved much than we targeted. So that came in. And past you saw astir a 4% summation successful costs successful nan business which was chiefly costs inflation. And successful 2023, nan immense mostly of our costs successful nan business are people. So we will spot increases owed to costs inflation. And past beyond that, wherever we take to put for greater competencies, we will look astatine nan trading situation and make decisions arsenic to whether that makes sense, if there's anyplace that would springiness america a bully return. And I deliberation we've sewage a bully way grounds of driving margin. And what we are trying to do is equilibrium profit and finance for early growth.

In position of nan nett portion growth, what we've talked astir for a agelong clip is our volition to beryllium industry-leading. If you spell backmost to 2019 connected a gross maturation basis, we led nan industry. So we were nan highest complaint of openings successful nan industry. There's a logic why we can't beryllium doing that again, you conscionable sewage to beryllium backmost successful nan aforesaid benignant of manufacture environment. It's not going to beryllium that aforesaid situation successful 2023 because location are less caller builds coming through. So tin you get backmost up to 5.5% astatine immoderate point? Yes, absolutely. And pinch only 1.5% removals, it's really easier than it would person been before. But we're surely not saying that that's a 2023 aspiration.

Keith Barr

And conscionable to build connected my erstwhile comments, too. I mean, again, China, we person a important business successful China, a awesome business successful China that was increasing 10%, 12% and it's increasing astir 6% today. So arsenic China ramps backmost up, truthful will nan group's nett strategy size growth, too. And truthful again, we person a beardown business successful nan Americas, awesome increasing business successful EMEAA and China is connected its way to recovery. And truthful erstwhile we were talking astir 5%. That was a very different macro situation successful China, wherever location were nary lockdowns and they were -- nan remainder of nan world was benignant of successful betterment mode and they were successful normal that flipped astir for 2022.

Jaina Mistry

If I could conscionable travel up connected pricing. I deliberation you mentioned perchance a soft landing for this twelvemonth aliases that's what we expect are expecting. Is it adjacent to opportunity that fixed nan tailwinds this year, debased to mid-single-digit pricing for nan group arsenic a full mightiness beryllium a floor?

Paul Edgecliffe-Johnson

I deliberation that it really depends connected nan request environment. And -- truthful we person very beardown gross guidance tools. And arsenic request comes in, past we gross negociate that to nan champion result of complaint and occupancy for us. So -- certainly, truthful far, it's been a very beardown complaint situation and looking astatine guardant bookings and looking astatine level of leisure demand. So it surely each goes good for nan future.

Operator

And nan adjacent mobility goes to Leo Carrington of Citi Leo.

Leo Carrington

Just 2 for me, please. Firstly, connected nan comments successful nan position connected IMF being still little than 2019 successful EMEAA. Can you springiness an denotation of really they recovered successful H2 aliases moreover Q4 successful bid to springiness an denotation of nan 2023 path, please? And past secondly, a little follow-up connected nett portion growth, that 4% to 5% corridor for 2023. Does that see nan Iberostar rooms being brought successful this year?

Paul Edgecliffe-Johnson

Yes. Look, connected nan second, that's an easier one. Iberostar is arsenic portion of our integrated business getting added in. It's not thing we've acquired aliases anything. This is conscionable portion of what we do. So yes, precisely really galore of nan Iberostar rooms remaining coming successful '23. We person to hold and see, you'll astir apt beryllium paced crossed '23 and 2024. And past successful position of nan IMF, yes, they are evidently down connected wherever they were backmost successful 2019. And that's principally successful EMEAA and successful China. So don't get a batch of IMFs successful nan Americas these days anyhow but it's really up of nan 2019 levels. So I'm not going to springiness you nan nonstop numbers but there's surely still room for betterment location successful early profitability.

Leo Carrington

Okay. Maybe conscionable a follow-up connected that. The -- would 2023 beryllium a 2019 for illustration level for EMEAA edifice profitability, possibly put it that measurement without going positive -- I mean, without being much quantitative?

Paul Edgecliffe-Johnson

Yes, I deliberation you tin get location aliases thereabouts. It partially depends connected nan costs environment. And truthful obviously, I deliberation revenues will beryllium there. owners are seeing higher costs costs and higher operating costs which evidently does person an effect connected IMF. But arsenic agelong arsenic nan complaint situation remains strong, past I deliberation they're going to person a very bully twelvemonth successful 2023.

Operator

And nan adjacent mobility goes to Tim Barret of Numis.

Tim Barrett

My past mobility near is astir demand. What you said connected Slide 10, what you showed location is really adjuvant successful position of nan leisure and business recovery. And verbally, you said that group is 13% below. Just wondering really you spot that trending this year? Do you under-indexing group versus nan industry? But are you still arsenic assured connected group arsenic you are, say, connected what your very bullish comments connected business transient?

Keith Barr

Yes. Thank you. I mean we do scale little than our adjacent group successful position of percent of group that's astir 15% of our operation is groups. And conscionable to springiness you a sense, though, for nan exit rate, again, group gross was down, successful Q2 was down 16%, past down 11% successful Q3, past down 7% successful Q4. December's exit complaint was down 4%. So you're seeing that progressive group of betterment successful nan group conception which gives you assurance and talking to nan teams, we're seeing arsenic restrictions person been lifted successful China, groups meetings and events inquiries are coming in, seeing beardown requests successful nan U.S. too, can't find assurance successful gathering abstraction successful galore of nan awesome markets correct now. And unusual capable hybrid moving is really a tailwind for groups because group are getting group together, too. So I deliberation we're assured that you're going to spot this continued progression successful nan betterment of group business.

Operator

And our last mobility goes to [indiscernible].

Unidentified Analyst

Just a mates of things. On nan Iberostar deal, could I understand if nan costs that you're talking astir for past twelvemonth this twelvemonth are yet recovered. Are they group costs aliases strategy money cost? I'm not judge I understood that. And nan gross you're talking about, is that limited connected achieving a capacity successful excess of a budget? Are those fees capacity related truthful that they could beryllium if you don't deed target? And past nan 2nd mobility is we're a small measurement distant from it but if nan buyback continues. Have you -- would you proceed to bargain backmost shares moreover if it took nan institution retired of ample headdress indices is retaining scale rank an important portion of worth aliases would you stop?

Paul Edgecliffe-Johnson

Well, certainly, connected nan 2nd [indiscernible]. I deliberation we're a agelong measurement to spell earlier we would ever get adjacent to falling retired of nan FTSE 100. I deliberation we're astir number 40 successful nan FTSE 100. So you'd person to you'd person to bargain backmost an atrocious batch of stock. Certainly, not thing that is successful existent expectations aliases thinking. We want to return rate successful nan astir sensible measurement to our shareholders. So I conjecture that's thing we look astatine but it's going to beryllium -- it would person to beryllium immoderate years down nan line. In position of nan Iberostar deal, nan costs -- our group costs, that's our costs of integration. There are immoderate costs successful nan strategy money arsenic good but that's abstracted to what we've talked about. And successful position of nan woody economics, it's a substance of components. And look, I'm not going to springiness you precisely each nan different ingredients successful nan look because that's commercially sensitive. But there's elements of it that will people travel and past elements that are much linked to transportation to our systems.

Operator

We person nary further questions. I'll manus backmost to Keith for immoderate closing remarks.

Keith Barr

I'm conscionable going to opportunity a mates of things and I'll adjacent disconnected nan call. Again, awesome questions, everyone. Really admit nan level of engagement connected nan call. And we've talked astir -- I mean, clearly, nan manufacture is still seeing RevPAR betterment and we've talked astir benignant of ranges of what that could look like. But again, affirmative tailwinds there, peculiarly what's happening successful Greater China continued to beryllium a maturation business, too. So we're talking astir wherever we tin turn our strategy this twelvemonth and proceed to accelerate that. We're going to proceed to beryllium disciplined successful really we do our costs and turn our separator arsenic a business and beryllium judicious really we utilize our superior to proceed to turn revenues, turn profits and really present connected being capable to return surplus rate to shareholders, too. So I deliberation -- pinch nan headwinds we faced successful '20 and '21, we intelligibly person a batch of tailwinds and a batch of breathtaking maturation and very proud of what nan squad has done present to, again, make america a stronger, much resilient institution going guardant and to present connected our model. So it's been awesome to link pinch you. Again, we're pleased pinch nan twelvemonth we've had and looking guardant to nan occurrence we person going forward.

Before I dial off, I would beryllium remiss if I didn't opportunity convey you to Paul who will beryllium leaving IHG adjacent period aft 19 years pinch nan company. I person genuinely enjoyed moving pinch him complete nan years. He's done a awesome occupation arsenic our CFO since 2014. He's a bully friend, a awesome friend, a awesome partner. We've been done a batch together but you've near nan institution amended than you recovered it which is what you dream to do. So wishing you each nan champion for your future. Our adjacent marketplace connection pinch our first 4th trading update connected Friday, nan 5th of May. Thanks for your clip and liking and look guardant to catching up pinch you each soon. So that ends nan call.

Operator

Thank you. This now concludes today's call. Thank you truthful overmuch for joining. You whitethorn now disconnect your lines.