1 00:00:02,960 --> 00:00:07,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,600 --> 00:00:10,400 Speaker 2: We'll just get you an update on what's happening with IHG. 3 00:00:10,520 --> 00:00:12,399 Speaker 2: The hotels groups want to see what the number is 4 00:00:12,440 --> 00:00:15,040 Speaker 2: before we talk to the CEO. Stock out of the 5 00:00:15,080 --> 00:00:16,959 Speaker 2: gate this morning, a little softer down by one point. 6 00:00:18,079 --> 00:00:20,680 Speaker 2: I want to put that in context. IHG has had 7 00:00:20,720 --> 00:00:24,120 Speaker 2: a huge run up over the last few months and 8 00:00:24,520 --> 00:00:27,800 Speaker 2: as a result of which I think the beating expectations 9 00:00:27,840 --> 00:00:31,320 Speaker 2: maybe maybe isn't enough. Let's find out. The IGCO Eli 10 00:00:31,400 --> 00:00:33,920 Speaker 2: Malouf joins us now to talk about the numbers. Great 11 00:00:33,920 --> 00:00:36,239 Speaker 2: to see you, Thanks very much in deeper saking some 12 00:00:36,320 --> 00:00:39,760 Speaker 2: time to join us this morning. Let's focus first in 13 00:00:39,800 --> 00:00:42,280 Speaker 2: on what we should be looking at here this morning. 14 00:00:42,840 --> 00:00:46,080 Speaker 2: What is it you've beaten? The numbers look good. The 15 00:00:46,159 --> 00:00:48,440 Speaker 2: market is clearly looking at that, but I think it's 16 00:00:48,479 --> 00:00:50,360 Speaker 2: maybe concerned as well about the fact that we're seeing 17 00:00:50,360 --> 00:00:52,560 Speaker 2: a little bit of a rev par roll off. Where 18 00:00:52,560 --> 00:00:54,800 Speaker 2: should we be focused this morning in terms of the 19 00:00:54,840 --> 00:00:56,680 Speaker 2: biggest tell on what is happening with the business? 20 00:00:56,960 --> 00:00:59,000 Speaker 3: Well, look, first, I want to thank our teams around 21 00:00:59,040 --> 00:01:01,480 Speaker 3: the world for delivering really was an excellent set of 22 00:01:01,520 --> 00:01:05,200 Speaker 3: results for twenty twenty three. You know, we saw a 23 00:01:05,280 --> 00:01:08,520 Speaker 3: strong demand around the world. Far was up sixteen percent 24 00:01:08,560 --> 00:01:10,920 Speaker 3: for the year, eight percent in the fourth quarter, and 25 00:01:10,959 --> 00:01:13,399 Speaker 3: we're still growing all of our brands. We opened two 26 00:01:13,520 --> 00:01:15,960 Speaker 3: hundred and seventy five hotels around the world. We signed 27 00:01:15,959 --> 00:01:19,200 Speaker 3: over five hundred and fifty into our pipeline. With one 28 00:01:19,240 --> 00:01:23,600 Speaker 3: of these strongest fourth quarters on record. Operating profit up 29 00:01:23,680 --> 00:01:26,640 Speaker 3: twenty three percent year over year for the first time, 30 00:01:26,720 --> 00:01:29,800 Speaker 3: over a billion EPs up thirty three percent. Put us 31 00:01:29,800 --> 00:01:32,360 Speaker 3: in a position a return a billion dollars to shareholders 32 00:01:32,400 --> 00:01:34,800 Speaker 3: last year between dividend and buy back, and we're going 33 00:01:34,800 --> 00:01:36,760 Speaker 3: to return over a billion this year. So really, I 34 00:01:36,800 --> 00:01:39,639 Speaker 3: think is a strong set of performance across the entire 35 00:01:39,720 --> 00:01:42,679 Speaker 3: set of results, but it really powered by we had 36 00:01:42,680 --> 00:01:47,000 Speaker 3: a strong business model, brand portfolio that's iconic, and a 37 00:01:47,040 --> 00:01:50,840 Speaker 3: strong innovative, leading enterprise that compounds growth for shareholders. 38 00:01:52,240 --> 00:01:55,320 Speaker 2: The thing is, and you'll get to know this, the 39 00:01:55,360 --> 00:01:57,160 Speaker 2: share price is run up a lot. The market is 40 00:01:57,200 --> 00:02:00,000 Speaker 2: now expecting a lot. It's seen how you can deliver. 41 00:02:00,480 --> 00:02:04,000 Speaker 2: It's priced that in. My question is you've just talked 42 00:02:04,040 --> 00:02:05,800 Speaker 2: about the great business model, you just talked about your 43 00:02:05,800 --> 00:02:09,720 Speaker 2: fantastic stuff. Can you sustain this kind of a growth 44 00:02:09,760 --> 00:02:13,040 Speaker 2: rate going forward from here? Should we be worried about 45 00:02:13,040 --> 00:02:15,799 Speaker 2: the consumer? Should we be worried about what's happening in China? 46 00:02:16,000 --> 00:02:18,680 Speaker 2: How sustainable is the performance you've delivered over the last 47 00:02:18,680 --> 00:02:21,080 Speaker 2: couple of years going into the next couple of years. 48 00:02:22,360 --> 00:02:24,440 Speaker 3: I think you have to look at the fundamentals. First 49 00:02:24,480 --> 00:02:26,920 Speaker 3: of all, what powers our industry. There's a growth of 50 00:02:26,960 --> 00:02:29,440 Speaker 3: GDP around the world and the growth of middle class 51 00:02:29,440 --> 00:02:32,360 Speaker 3: around the world, and that continues. If you look in 52 00:02:32,360 --> 00:02:35,600 Speaker 3: the United States, consumers still in very good shape. GDP 53 00:02:35,720 --> 00:02:41,280 Speaker 3: growth continues, wage growth continues, Job growth in January was double. 54 00:02:41,080 --> 00:02:42,000 Speaker 2: What was expected. 55 00:02:42,320 --> 00:02:46,360 Speaker 3: Government spending on Chips ACKed IRA, infrastructure act is strong, 56 00:02:46,680 --> 00:02:49,920 Speaker 3: and that's been powering travel. And there's still some tailwinds 57 00:02:49,960 --> 00:02:53,520 Speaker 3: that I'm into the United States from recovery of international travel, 58 00:02:53,919 --> 00:02:56,360 Speaker 3: and still some business and groups and meetings of recovery 59 00:02:56,360 --> 00:02:58,240 Speaker 3: to happen if you move over to China. And I'm 60 00:02:58,240 --> 00:03:01,520 Speaker 3: glad you raised the question over in China for over 61 00:03:01,600 --> 00:03:03,959 Speaker 3: fifty years. I was just there in September, spent a 62 00:03:04,000 --> 00:03:05,840 Speaker 3: whole week with our teams, got to look at the 63 00:03:05,840 --> 00:03:09,200 Speaker 3: fundamentals of a twenty trillion dollar economy. We just finished 64 00:03:09,200 --> 00:03:14,280 Speaker 3: the lunar year, you know, holiday it was a record 65 00:03:14,400 --> 00:03:18,160 Speaker 3: nineteen percent more travel than twenty nineteen. So while some 66 00:03:18,320 --> 00:03:21,320 Speaker 3: sectors in China we understand are taking a pause, travel 67 00:03:21,320 --> 00:03:24,120 Speaker 3: on hospitality is still very strong. Two key statistics you 68 00:03:24,120 --> 00:03:26,440 Speaker 3: got to keep in mind about China. First, over the 69 00:03:26,480 --> 00:03:29,560 Speaker 3: ten years, projections are for the middle class to expand 70 00:03:29,600 --> 00:03:32,520 Speaker 3: by two hundred million people. If you put in context 71 00:03:32,560 --> 00:03:35,200 Speaker 3: in the United States, the middle class is one hundred million. 72 00:03:35,440 --> 00:03:38,000 Speaker 3: This is two hundred million people growing into the middle class. 73 00:03:38,240 --> 00:03:42,360 Speaker 3: Second key statistic, rooms per capital The altair rooms per 74 00:03:42,360 --> 00:03:44,640 Speaker 3: capita in China is one seventh what it is in 75 00:03:44,640 --> 00:03:47,240 Speaker 3: the United States. When I joined the company ten years ago, 76 00:03:47,480 --> 00:03:49,760 Speaker 3: it was one tenth, so it's more than doubled. You 77 00:03:49,880 --> 00:03:52,640 Speaker 3: continue to close that gap as the middle class grows 78 00:03:52,640 --> 00:03:53,640 Speaker 3: and travels. 79 00:03:53,680 --> 00:03:56,680 Speaker 1: Well, Ellie Kriti Gupta in London here when you're talking 80 00:03:56,720 --> 00:03:59,320 Speaker 1: about that wage growth though, and how that factors into 81 00:03:59,320 --> 00:04:01,840 Speaker 1: the end consumer, where I imagine also eats into your 82 00:04:01,840 --> 00:04:04,080 Speaker 1: margins a little bit, talk to us about the wage story, 83 00:04:04,320 --> 00:04:07,200 Speaker 1: specifically in Europe where some of your revenue numbers are 84 00:04:07,240 --> 00:04:10,080 Speaker 1: actually coming in a little light. What's happening in this 85 00:04:10,120 --> 00:04:11,600 Speaker 1: part of the world. 86 00:04:11,120 --> 00:04:14,080 Speaker 3: We had a very strong year in rev bar growth 87 00:04:14,120 --> 00:04:17,400 Speaker 3: in Europe last year. And yes there's been some wage growth, 88 00:04:17,600 --> 00:04:20,679 Speaker 3: not just in Europe but also the United States. Those 89 00:04:20,720 --> 00:04:24,520 Speaker 3: things have frankly leveled off. You've seen inflation leveled off, 90 00:04:24,520 --> 00:04:27,080 Speaker 3: you've seen interest rates level off, but you've also seen 91 00:04:27,120 --> 00:04:30,440 Speaker 3: some strong rates, strong hotel rates, and from a hotel 92 00:04:30,520 --> 00:04:33,000 Speaker 3: operation point of view, and really that's the P and L. 93 00:04:33,000 --> 00:04:35,279 Speaker 3: At the hotel operator point of view, we don't hold 94 00:04:35,279 --> 00:04:37,520 Speaker 3: that P and l's IG is an asset light company. 95 00:04:37,680 --> 00:04:40,440 Speaker 3: But at the hotel operating level, you need about one 96 00:04:40,520 --> 00:04:43,680 Speaker 3: dollar of revenue growth for three dollars of cost. And 97 00:04:43,720 --> 00:04:46,400 Speaker 3: that strong, great growth that's happened in Europe and the 98 00:04:46,480 --> 00:04:49,120 Speaker 3: United States over the last couple of years has more 99 00:04:49,160 --> 00:04:52,000 Speaker 3: than made up really for the wage growth and other 100 00:04:52,040 --> 00:04:56,360 Speaker 3: inflationary measures. But I think we've seen inflation level off 101 00:04:56,400 --> 00:04:58,560 Speaker 3: in Europe. It never was a problem in China. It's 102 00:04:58,640 --> 00:05:01,359 Speaker 3: leveled off in the United States. So an environment has improved. 103 00:05:01,360 --> 00:05:03,400 Speaker 1: From that point of view, You're done in China a lot. 104 00:05:03,400 --> 00:05:06,600 Speaker 1: We're talking as well about kind of increases and strength 105 00:05:06,640 --> 00:05:08,680 Speaker 1: and or lack thereof, I should say, when it comes 106 00:05:08,680 --> 00:05:10,719 Speaker 1: to the Asia Pacific region, when it comes to hotel 107 00:05:10,800 --> 00:05:14,880 Speaker 1: things like construction, specifically hotel construction. Ellie, if we're talking 108 00:05:14,960 --> 00:05:18,800 Speaker 1: about this rates environment that is potentially increasing for the 109 00:05:18,800 --> 00:05:20,560 Speaker 1: hotel space in the last couple of years, how does 110 00:05:20,600 --> 00:05:24,160 Speaker 1: that translate to the construction business in terms of expansion. 111 00:05:25,279 --> 00:05:29,040 Speaker 3: When you had a period post pandemic, between supply chain issues, 112 00:05:29,400 --> 00:05:33,599 Speaker 3: interst rate increases, labor shortages that did drive construction costs 113 00:05:33,680 --> 00:05:38,000 Speaker 3: higher in most markets around the world, that's really leveled off. 114 00:05:38,200 --> 00:05:42,000 Speaker 3: Supply chain issues have been mostly resolved, inflation has leveled off, 115 00:05:42,040 --> 00:05:45,240 Speaker 3: interest rates have come down, but the stronger room rates 116 00:05:45,240 --> 00:05:47,240 Speaker 3: have made up for much of it. And so we've 117 00:05:47,279 --> 00:05:50,279 Speaker 3: seen if you look at our openings last year up 118 00:05:50,839 --> 00:05:54,039 Speaker 3: sixteen percent year every year, our signings up twenty six percent, 119 00:05:54,440 --> 00:05:57,080 Speaker 3: one of our strongest records of signings in the fourth quarter, 120 00:05:58,480 --> 00:06:01,360 Speaker 3: you know, fifty percent growth year over year and signings 121 00:06:01,400 --> 00:06:04,479 Speaker 3: in the fourth quarter. That's really demonstration of the confidence 122 00:06:04,480 --> 00:06:06,800 Speaker 3: that our owners and investors have and all of our 123 00:06:06,839 --> 00:06:09,760 Speaker 3: brands that are growing in our hospitality business and growing 124 00:06:09,760 --> 00:06:12,120 Speaker 3: with ig. So it was a little bit difficult coming 125 00:06:12,120 --> 00:06:14,920 Speaker 3: out of the pandemic, but the trajectory is improving. 126 00:06:15,360 --> 00:06:18,719 Speaker 2: Ellie, I'm listening to you you're painting a really positive picture. 127 00:06:19,160 --> 00:06:21,240 Speaker 2: Do you think the FED needs to cut rates right now? 128 00:06:21,279 --> 00:06:23,640 Speaker 2: If you look at the US economy and you look 129 00:06:23,680 --> 00:06:25,400 Speaker 2: at the strength that they're seeing, do you think this 130 00:06:25,440 --> 00:06:28,360 Speaker 2: is an economy that needs rate cuts. The consumer is 131 00:06:28,560 --> 00:06:33,080 Speaker 2: absolutely surging, particularly in the service space. Service inflation remains 132 00:06:33,200 --> 00:06:36,000 Speaker 2: very elevated. Is this an environment where you think we 133 00:06:36,120 --> 00:06:37,080 Speaker 2: need lower rates? 134 00:06:37,640 --> 00:06:40,320 Speaker 3: You know, we'll leave rate decisions to the FED and 135 00:06:41,200 --> 00:06:44,560 Speaker 3: to those experts. Okay, well, we look at the broad 136 00:06:44,600 --> 00:06:48,520 Speaker 3: strength of the US economy and the long term trends. 137 00:06:49,560 --> 00:06:52,320 Speaker 3: There's still a lot of whitespace to grow in that market. 138 00:06:52,400 --> 00:06:55,279 Speaker 3: We look at the look at the GDP growth, We 139 00:06:55,320 --> 00:06:58,120 Speaker 3: look at the wage growth, We look at the low unemployment, 140 00:06:58,440 --> 00:07:02,040 Speaker 3: the job growth that's being reported, and frankly, the strength 141 00:07:02,040 --> 00:07:06,320 Speaker 3: in the manufacturing, the technology industries, the services industries continue 142 00:07:06,320 --> 00:07:07,920 Speaker 3: to grow. You have some sectors that are going a 143 00:07:07,920 --> 00:07:09,920 Speaker 3: little bit slower. But the great thing about the US 144 00:07:09,960 --> 00:07:12,720 Speaker 3: economy is when some sectors grow get a little slower, 145 00:07:12,760 --> 00:07:16,120 Speaker 3: some other sectors pick up. Artificial intelligence is employing a 146 00:07:16,160 --> 00:07:19,000 Speaker 3: lot of people and growing productivity. So there are many 147 00:07:19,040 --> 00:07:21,680 Speaker 3: sectors that are driving the economy. When some slow down, 148 00:07:22,000 --> 00:07:25,080 Speaker 3: and really long term. The fundamentals for travel and hospitality 149 00:07:25,080 --> 00:07:28,560 Speaker 3: and that in the US economy are pretty healthy this year. 150 00:07:28,600 --> 00:07:31,520 Speaker 3: The forecasters are still expecting growth in travel and in 151 00:07:31,600 --> 00:07:34,320 Speaker 3: ref part of the United States, so we're generally optimistic. 152 00:07:35,040 --> 00:07:37,800 Speaker 2: Final quick question as well for me, any impact from 153 00:07:38,000 --> 00:07:40,920 Speaker 2: what we're seeing in the Red Sea. Any impact from 154 00:07:40,920 --> 00:07:45,240 Speaker 2: what we're seeing in terms of the Israeli Hamas conflict 155 00:07:45,400 --> 00:07:47,840 Speaker 2: that is currently on the way right now, it's feeding 156 00:07:47,840 --> 00:07:50,480 Speaker 2: out into the rest of the sector. Is that impacting 157 00:07:50,920 --> 00:07:52,840 Speaker 2: travel to the Middle East? Do you sing any impact 158 00:07:52,880 --> 00:07:56,040 Speaker 2: in Dubai or Raman or other places within the region now? 159 00:07:56,120 --> 00:07:58,320 Speaker 3: Well, first of all, look, it's a tragic situation. We 160 00:07:58,400 --> 00:08:03,680 Speaker 3: all hope for the hostilities into the suffering. Clearly, in 161 00:08:03,760 --> 00:08:06,720 Speaker 3: the immediate conflict areas where we have a few hotels 162 00:08:06,720 --> 00:08:09,400 Speaker 3: but not that many, we've seen an impact and thankfully 163 00:08:09,720 --> 00:08:13,080 Speaker 3: our colleagues and our guests have been held safe, and 164 00:08:13,120 --> 00:08:16,120 Speaker 3: that's really our primary concern. As you move to where 165 00:08:16,160 --> 00:08:18,440 Speaker 3: most of our businesses, which is closer to the Gulf, 166 00:08:19,280 --> 00:08:21,480 Speaker 3: we really haven't seen much of an impact. I'm going 167 00:08:21,520 --> 00:08:25,680 Speaker 3: there next month for a week visit, and our developments 168 00:08:25,720 --> 00:08:29,200 Speaker 3: continue to grow. Travelers continue. There was an initial you know, 169 00:08:29,760 --> 00:08:33,120 Speaker 3: concern and pause, but things have resumed in a positive direction. 170 00:08:33,800 --> 00:08:36,400 Speaker 3: We hope that the conflict subsides, but our business has 171 00:08:36,400 --> 00:08:38,480 Speaker 3: not really been fundamentally impacted so far 172 00:08:38,920 --> 00:08:41,400 Speaker 1: All right, I c CEO, Ellie Malouf, thank you so 173 00:08:41,480 --> 00:08:43,160 Speaker 1: much for joining the program.