Aug 6, 2013
Operator
Good afternoon, ladies and gentlemen. Welcome to the Intercontinental Hotel Group Interim Results Call.
[Operator Instructions] I will now hand over to Catherine Dolton to begin today's conference. Thank you.
Catherine Dolton
Thank you, good morning, everyone. This is Catherine Dolton, Head of Investor Relations.
I'm joined this morning by Richard Solomons, Chief Executive; and Tom Singer, Chief Financial Officer. Before I hand over to them for discussion of our results, I need to remind you that in the following discussion, the company may make certain forward-looking statements as defined under U.S.
law. Please check this morning's press release and the company's SEC filings for factors that could lead actual results to differ materially from any such forward-looking statement.
I will now turn the call over to Richard Solomons.
Richard Solomons
Thanks, Catherine, and good morning, everyone. Thank you for joining us today, and welcome to our 2013 half year results presentation.
In a moment, Tom will take you through the financial results in detail. But first, let me cover some highlights.
IHG has delivered a solid half of growth, but there is clearly some continuing noise in several of the markets we operate in around the world. One of IHG's many strengths is our global reach and in recent months, our good performance has been driven by our significant position in the U.S.
At the top line, our global RevPAR grew 3.7% driven by growing preference for our brand and decent levels of consumer demand around the world. Together with 1.7% net rooms growth, which is fueled increasingly by our expansion in developing markets, this drove up fees almost 4%.
Whilst investing to drive growth, we continually look to be efficient in our cost management, combined with our success in leveraging our scale, that allowed us to reinvest in the business, whilst delivering further growth in profit margins. Our announcement today of a $350 million special dividend, combined with a 10% increase in the interim dividend is the latest step in our long-standing commitment to deliver value to shareholders.
I'm now going to hand over to Tom, who'll talk in more detail about our financial performance in the first half, and I'll come back later to provide an update on some of the work we've been doing to create preferred brands. Tom?
Thomas D. Singer
Thank you, Richard, and good morning, everyone. We've had a good start for the year with group revenue up 2% and operating profit up 6% at constant exchange rates, and excluding the impact of $40 million of liquidated damages received in the half.
Profits were up 9% if you also adjust for the disposal of InterContinental London Park Lane. Interest of $36 million is higher than last year, reflecting the bond we issued in the fourth quarter of 2012.
Our effective tax rate was 2 percentage points higher at 31%, in line with our guidance. For the full year, we still expect the effective tax rate to be in the low 30s, and this should also be the case for 2014.
Profit after tax grew to $209 million and our adjusted earnings per share increased 25% to $0.782. This includes the lower average share count following good progress with our capital returns program, which I'll update you on later on.
Growth in fee revenue is an important metric for our asset-light business model. The key drivers of this are RevPAR, room growth and royalty rate.
Group fee revenues were up 3.9% in the half, led by our Americas and Greater China regions, up almost 7% and 5%, respectively. The Americas is a mature market, and our business model there is predominantly franchised.
This means that fee growth closely tracks our growth in RevPAR and net rooms. The dynamic is similar for Europe, albeit with a higher mix of managed hotels.
As I've said before, our geographic mix is changing with an increasing proportion of hotels opening in developing countries, which are predominantly in our Asia, Middle East and Africa, and the Greater China regions. This means that hotels are often opening at the same time as the sources of demand for rooms are being developed.
So they generally achieve lower absolute RevPARs, particularly in the early years. In our AMEA region, fee revenues declined primarily due to a $3 million negative impact in the half from a small number of long-standing contracts renewed on more current commercial terms.
This is part and parcel of normal commercial activity. We expect the full year impact from these renewals to be around $6 million with no further impact anticipated in 2014.
Greater China rooms revenue was up 9% and non-rooms revenue, which is predominantly food and beverage, was up 3%. In our comparable hotels, non-rooms revenue decreased 3% reflecting the slower trading conditions.
So let me now talk about our RevPAR growth in a little bit more detail. We reported 3.7% group RevPAR growth in the first half with 4% growth in the second quarter.
In the Americas, RevPAR grew by 4.5% in the half, including the U.S., up 4.7%. The demand has remained high and we are back to peak occupancy levels.
On the total RevPAR basis, growth in the U.S. for the half was 4.9%, with 5.1% in the second quarter.
This is on the same basis of the Smith Travel Research industry data and also excludes the impact of the 8 FelCor Holiday Inn hotels that left in March. Our growth was slower than the industry for the half, but we did slightly outperform in the second quarter, even with our mix towards upper midscale hotels.
All our brands continue to perform well in the U.S., including the Holiday Inn brand family, which commands an 8-point RevPAR premium to the segment, making it one of the most highly rated midscale brand families. In Europe, RevPAR increased 0.4% in the first half, with the second quarter benefiting from the timing of Easter, which fell in March this year and April last year.
Economic growth in Europe continues to be soft, however, trading was resilient in our key markets of the U.K., Germany and France. In AMEA, RevPAR growth was 6.2%, led by strong occupancy gains.
Our largest markets performed well, led by Southeast Asia and Japan, which reported high single digit growth. And finally, in Greater China, RevPAR was marginally down.
We still outperformed the industry by almost 6 percentage points. Trading in the second quarter was adversely affected by the Sichuan earthquake and its aftermath and the ongoing impact from the slower microeconomic conditions.
Let me now move back to the picture for the group as a whole. We opened 15,000 rooms in the half and exited 13,000 and drove 1.7% net system growth year-on-year.
Our pipeline remains strong and we added 32,000 rooms in the half. Signings and openings included 4,000 rooms on U.S.
Army bases. But even if we exclude these, the pace of signings is still up 25% on last year, reflecting the great relationship we have with our owners.
We consider our pipeline to be of the highest quality, with over 40% under construction, more than 50% in developing markets and around 70% financed. Let me turn now to the financial performance of each of our business models.
Underlying franchise profits grew 8% in the half to $285 million, led by the Americas. Our 86% franchised margins reflect the scalability of this model.
In our managed business, we converted a 2% decline in underlying revenues into a 1% underlying operating profit growth. This reflects the loss of fees relating to the 8 FelCor hotels and the EMEA contract renewals, offset by a benefit from favorable phasing of costs.
Our owned and leased business performed well, with rate-driven RevPAR growth in the Americas and Europe converting into almost 20% underlying profit growth. Let me now have a look at fee-based margins.
We've restated our 2012 accounts for the adoption of the IAS19 (Revised) pension accounting standard, and as result, our first half 2012 fee margin has been re-based down by 90 basis points to 42%. Increased scale and cost discipline have allowed us to drive up our 2013 first half margins by around 50 basis points on an underlying basis.
Reported 200 basis point gain to 44% was held by the favorable phasing of costs. As I mentioned at our full year results in February, we expect more modest levels of margin growth for the full year compared to previous years.
This is due to increased levels of reinvestments in fast developing markets, as well as supporting our brands to drive continued outperformance. We continue to manage our costs carefully, given the challenging trading conditions in some markets, prioritizing plans that drive long-term strategic growth.
We generated strong cash flows in the half with EBITDA of $378 million converting into free cash flow of $176 million. Net debt of our $861 million is up on the prior year, reflecting the progress we've made with $1 billion capital return announced last August.
I've talked on many occasions about our 3 uses of cash. The first of these is selectively using recycled capital to invest in the growth of the business.
We still expect to spend around $100 million to $200 million on growth CapEx each year into the medium term. Growth CapEx of $55 million in the half includes around $30 million on our first owned EVEN Hotel.
We received around $500 million cash from disposals in the first half, $368 million of which was from the sale of the InterContinental London Park Lane. Other amounts include the sale of our equity stake in Summit Hotels, and the disposal of a minority holding in InterContinental New Orleans.
Maintenance CapEx, we still expect to be around $150 million per annum over the medium term, with $59 million spent in the first half. Our second use of cash is sustainable growth in the ordinary dividend.
And the 10% increase in our interim dividend to $0.23 per share reflects our continuing confidence in IHG's prospects and the strength of our business model. Our third use of cash is making additional returns to shareholders.
The $350 million special dividend without share consolidation that we've announced today reinforces our commitment to an efficient balance sheet whilst maintaining an investment-grade credit rating. Both will make good progress with our ongoing share buyback program completing $243 million to date.
Before I hand over to Richard, a few words on current trading. Forward indicators are encouraging.
Overall booking pace is up year-on-year, with increases in both demand and rate. Travel intentions data collected from our guests show over 60% expect to travel more or the same for business over the next 12 months, with around 85% for leisure.
The travel industry continues to benefit from good long-term sustainable growth trends, and we are well-placed to capture these. You will notice that we didn't provide RevPAR data for July in this morning's release.
This is because our reporting date is now just too close to the end of the month for us to provide you with an accurate number. This will also be the case going forward with the exception of full year results when we will still be able to provide you with January trading data.
Having said this, early indications are that current trading trends are broadly in line with those in the first half. We continue to see good growth in the Americas and AMEA, with trading in the U.S.
supported by the continued favorable demand and supply dynamic and economic growth. In Europe, our key markets continue to show resilience, while conditions do remain challenging in some countries, for example, Turkey, where there've been recent political protests.
And in China, we continue to see an impact from the economic slowdown in the aftermath of the earthquake, aftershocks and landslides in the west of the country. However, we would expect some improvement in the quarterly trend as the year progresses, helped by softer prior year comparatives from September.
And with that, let me hand back to Richard.
Richard Solomons
Thanks, Tom. So we're now 10 years as a standalone company.
IHG has demonstrated consistent delivery gains that clearly defined strategy. We deliver preferred experiences for guests through our highly targeted brand propositions consistently delivered by talented people.
We establish and build on scale positions in specific markets and leverage these to create revenue and cost synergies. We have a strong portfolio of brand and an industry-leading loyalty program, which allows us to capture more guests and then grow our share of their wallets.
Having effective strategy which optimizes our delivery channels is a key way in which we deliver profitable revenue into hotels, and of course, providing a superior proposition for our owners is vital. The output of this model for IHG is growing cash flows and a high return on investment.
We'll talk to you in more depth about the work we're doing around some of these areas in an educational event that we plan to hold in London on the 19th of November. This will focus on, amongst other things, the guest segmentation work we've been doing and how we're tailoring our strategy and innovating to enable us to continue to win in key markets around the world.
So today, I want to provide an update on some of the work we've been doing to build preferred brands with more to come in November. Our focus is on creating genuinely-preferred consumer brands, which are at the heart of our business.
It's a simple concept but one that is hard to deliver unless you have the portfolio of brands, the scale and the expertise that IHG has. Our approach has always been to maximize the strength and scale potential of every brand that we own.
This has worked well for us. Although we have fewer brands than most of our global competitors, they are among the largest in the industry, ranking very highly in their respective segments.
Our rifle shot brand approach with a standalone loyalty program has been very effective, enabling us to better differentiate and grow our brand family without confusing our guests. Going forward, we're building on this foundation to create a family of brands under the IHG brand name.
So on the 1st of July, we've relaunched Priority Club Rewards as IHG Rewards Club and linked to it a broader range of benefits. We know that one of the biggest day-to-day dissatisfiers amongst guests is the internet service provided in hotels, especially when they have to pay for it.
So we've introduced free internet for Elite members, which will extend to all of our members during 2014. By launching IHG Rewards Club, we've made the IHG presence significantly stronger in our loyalty program.
The more opportunities guests have to spend their points, the more effective a loyalty program will be. With more than 4,600 hotels across nearly 100 countries, IHG offers an unparalleled choice for guests, which is a genuine competitive advantage for us.
IHG Rewards Club provides us with a platform to ensure that our guests recognize the scale and scope of our family of brands, something we know wasn't fully recognized before. It's enabled us to effectively launch IHG as the owner of a family of brands.
And by doing this, we'll grow share of our guests' wallets by maximizing the power of the combined system, through routes such as increased cross-selling. I will now spend a little time focusing on the work we've been doing to strengthen some of our hotel brands.
Holiday Inn is a hugely successful brand, with a 60-year heritage and a strong emotional connection with a wide range of guests around the world. A few years ago, we recognized we had an aging estate with varying levels of guest satisfaction and little brand differentiation.
To address this, we relaunched the brand, persuading our owners to invest some $1 billion to refresh the hotels. And the results of these actions speak for themselves.
As you heard from Tom, the brand family commands a significant premium to its segment, and we're delighted that Holiday Inn in the U.S. has been ranked best in guest satisfaction among midscale full service hotel chains by J.D.
Power and Associates for the third year running. This clearly demonstrates the very positive impact the relaunch has had on our guest perception of Holiday Inn.
So we're enjoying a lot of success, but we're not standing still as we know we can continue to leverage more growth opportunities. Our recent market segmentation work has helped us to clarify the position for each of the brands within the global Holiday Inn brand family.
During 2013, we're running advertising campaigns for both Holiday Inn and Holiday Inn Express in our key markets, designed to drive greater brand preference and awareness. In the U.S., in April, we reintroduced our award-winning Holiday Inn Express Stay Smart campaign after several years off air, and we're extremely pleased with the results to date.
The campaign is generating some great PR and a significant uplift in both Holiday Inn Express keyword searches and traffic to our direct websites. I've talked on several occasions about the global success of Crowne Plaza and the significant opportunity that exists for us to close the performance gap between the brand in the Americas and the rest of the world.
Phase 1 of our plan to address this, improving the overall quality of the estate, is delivering some great results. In the U.S.
in the first half of this year, we've seen some meaningful improvements in guest satisfaction, and the brand is continuing to show outperformance against the upscale segment. Whilst it's still early days in the overall repositioning program, we're extremely pleased with these initial results.
The remaining phases of the program are on track with the first new brand hallmarks pilots now rolled out in the U.S. and Europe, with further pilots being launched in the other 2 regions over the remainder of the year.
We still expect complete rollout of the new brand hallmarks by the end of 2015. Turning now to our newest brands, and starting with EVEN Hotels, industry's first wellness lifestyle brand at a mainstream price-point.
We launched this brand last year after we identified a gap in the market for a hotel designed for guests who find it hard to stay active and eat property when traveling. This brand will meet the needs of 17 million people in the U.S., equivalent to 40% of the mainstream traveling public.
It's obviously important that we get the right locations for the first few hotels, and we're focusing our development efforts on urban and suburban feeder markets with a high wellness-minded residents and traveler base. The 2-owned EVEN Hotels that we've announced today fit that brief perfectly.
They're strategically located in Rockville, Maryland and Norwalk, Connecticut, major feeder markets of Washington D.C. and New York City, respectively.
Both are existing hotels, which we will rebrand as EVEN Hotels early in 2014. These 2 hotels add to the 2 great new booked [ph] management contracts we've already signed for the brand in Manhattan.
This demonstrate that whilst we will be investing our own capital to secure several of the first sites, there's already very good momentum and interest from potential owners. We're also seeing great momentum for our new Chinese brand, HUALUXE Hotels and Resorts.
This brand will also fill an unmet consumer need this time for an international quality 5-star hotel, tailored for the domestic Chinese consumer, with the reassurance of quality and consistency that only an international hotel company can provide. We've been extremely pleased with the reception we've received from owners to date, with 19 management contracts now are signed and the first opening expected at the end of next year.
I know there are a number of questions being asked at the moment about the prospects for our 2 biggest markets, the U.S. and China.
So I thought it would be useful to share with you our perspective on this. As you know, the U.S.
industry has recovered well from the financial crisis and we've seen strong demand for rooms over the past couple of years. In the last 12 month, the U.S.
industry sold almost $1.1 billion room nights, a record high. On the other hand, industry supply due to the restricted financing environment, has been close to record lows for some time now, well below the long-term average of 2% per annum.
Levels of demand growth have been moderating, which you would expect, given the speed recovery from previous lows, and supply growth has started to pick up slightly although there is still a significant gap between the 2, which has been very positive for RevPAR. Third-party industry forecasters expect U.S.
demand growth to remain strong into 2014, driven by greater business confidence, lower levels of unemployment and high corporate cash reserves. Supply growth, whilst it's expected to be higher than it has been for the last couple of years, is still only forecast to be in the 1% 1.5% range for this year and next.
Overall, this favorable supply and demand dynamic continues to be very supportive for RevPAR. Now RevPAR is of course an important metric.
But for IHG as a brand owner, hotel revenues are far more relevant as this drives more than 85% of our fee revenues. Comparing relative volatility of U.S.
industry revenues by segment through the cycle, the upscale and upper midscale segments enjoy the highest peaks and shallowest troughs. And this is where IHG has the majority of our rooms, and clearly demonstrates that we're operating in the most robust and resilient part of the industry.
And this, combined with the premium our preferred brands generate over time, means that IHG performed significantly better than the industry as a whole and has a far higher quality income stream. Let's now move on and talk a little bit about China.
As you know, this is an economy which has seen double-digit GDP growth in recent years so it's not surprising that is now slowed, but this is still expected to be strong into the future. There'll inevitably be volatility in any emerging market economy growing at this pace and the broader slowdown having an impact on our business today.
Having said that, you'll be aware of the measures the Chinese government is taking to rebalance the economy away from investment and exports and towards consumption. We believe that these measures will drive long-term sustainable economic growth in China and as such, a positive for IHG.
China continues to experience rapid urbanization and growth of the wealthy and middle classes with high disposable incomes. This, combined with a RMB 9 trillion investment in transport infrastructure and the recognition that travel and tourism is a strategic part of the economic growth, will drive a significant demand for hotel rooms over the next decade.
Our business within China is extremely important. If you also factor in the significant growth expected in outbound travel, some 150 million visitors by 2020, this reinforces why China is so important to IHG.
And IHG is uniquely positioned to take advantage of this opportunity. We have 63,000 rooms open in Greater China, with a further 58,000 in the pipeline and a distinct lead over all of our main competitors.
Our business in the region has been growing fast with total revenues more than doubling in the past 3 years. However, Greater China still only represents some 9% of both our open rooms and our profits, including our own Intercontinental Hotel in Hong Kong.
Given almost 1/3 of our pipeline is in the region, this mix will change in the future. Our broad portfolio of brand appeal to a diverse range of guests and our focused development strategy into getting our hotels into the right locations.
We've built deep relationships with the largest, most established owners in our 30 years operation in China. And we have the most extensive infrastructure of people, more than 60,000 people work in our hotels in Greater China.
And we will have more than 400 employees across our corporate offices by the end of this year, most of whom are local. All this gives us confidence that we will continue to take share in what is a very attractive and important market.
So to sum up, the wider economy continues to be challenging in some of the markets we operate in, but we remain confident in our outlook. IHG has a broad geographic spread and resilient model, which has consistently delivered good results.
We've built a strong business over the past decade, established a leading position and good momentum in a global industry that is compelling long-term future demand drivers. We have a clearly defined strategy, which should deliver high-quality growth into the future.
And at the heart of this is our brands, which is some of the biggest and best in the world. Through our industry-leading consumer insight work, we're making our portfolio even stronger, refining propositions for our existing brands, as well as launching new ones to capture the growing demand for hotels around the globe.
We have a long track record of returning value to shareholders, and we're focused on continuing to do so into the future. Thank you.
And with that, Tom and I will be happy to take your questions.
Operator
[Operator Instructions] And we have a first question from the line of David Loeb with Baird.
David Loeb
Did you -- Richard, did you give a date for the London meeting? I'm not sure I caught that.
Richard Solomons
I did. 19th of November.
David Loeb
Great. Can you give a little more detail on how New York is going, the sale of the New York asset?
You referenced in the release that it was ongoing, but any more details on that?
Richard Solomons
Yes. No, it is progressing.
Let me ask Tom just to say couple of words on that.
Thomas D. Singer
Yes. David, I mean there's no concrete news at this point in time.
Obviously, we started the remarketing efforts in early May. We are still in active discussions with a number of interested parties.
We don't -- although it's been a longer period of time to sell than we would have ideally wished, we don't need to force the pace on this. And ultimately, we're very much focused on doing the right deal for shareholders, which means getting the right owner involved who really understand the InterCon brand as -- is prepared to invest in the asset for the longer term.
And if you look at the actual performance of the hotel, it's traded well through the year-to-date with RevPAR up 6%. So [indiscernible] we'll do the right deal for shareholders, and we're still working very hard on it.
David Loeb
New York asset prices seem to be firm to, if anything, up a little bit; cap rates really solid. Do you think that you will get more than you originally contemplated?
Thomas D. Singer
It's hard to tell. I mean it's a complicated deal.
As you know, there's a big refurbishment plan attaching to the hotel. It's not just also about the headline price, it's also about the management agreement that we put in place and also about getting the right investment plan agreed with any perspective owner.
So yes, I think the market probably has moved in our favor a little bit over the last 2 years whilst we've been talking about the transaction. But we're still working hard on it, and you'll have to wait and see in terms of the final shape of the deal that we're able to do.
David Loeb
Sure, that makes sense. And one more piece on that.
You've said some things about beginning that refurbishment plan. Does that mean that you, as the current owner, are putting the plans together essentially, but that would still be funded and executed by the buyer?
Thomas D. Singer
Yes. That's the intention.
We're having to make a minimal amount of CapEx investment in the hotel right now, but it's very much in the nature of maintenance CapEx. But in terms of the refurb plan, our intention is to work with a prospective purchaser on that and not to ultimately [ph] fund ourselves.
David Loeb
Okay. And one more topic on EVEN.
The first New York Hotel, it doesn't seem like there's a lot going on there, a lot of construction activity. Is that still on track?
Do you still expect the opening next year?
Richard Solomons
Yes. I don't think we've been specific about which hotel opens when.
But no, certainly that's -- they're all proceeding as we planned.
David Loeb
Okay. And on the $150 million target, with the owner acceptance growing for this, do you think that you'll be able to spend less than you originally thought?
Or do you think you will spend most of that $930 million?
Richard Solomons
No, we targeted spending that. And if we can spread it across more hotels, that would be good.
But if we don't have to spend it, we won't. But I think we're committed to getting the right hotels in the right places, so we'll put the capital that we need and then we'll recycle it as we've done in previous occasions.
Operator
Our next question comes from the line of Steven Kent with Goldman Sachs.
Steven E. Kent
2 questions. One, I guess Richard, when I think about what you said about China and some of the more macro issues, I guess I continue to struggle why wouldn't the pipeline of build start to follow if there's broader weakness?
And maybe you can just address that, if there are 2 different dynamics that we're missing on that. And then second, we've heard from another -- from some of the other leisure travel companies that the U.S.
consumer is acting weak or it's just weaker than it has been in the past few months. Is there anything that you see that gives you some comfort that at least near term, besides the July results, that August, September, October, November are going to act better?
Or any sense for that from talking to your franchisees or GMs?
Richard Solomons
Yes. Steve, we don't give formal guidance, as you know.
And given how much they'd moved it, you can probably can see why we don't. But no, I think, July trend is broad in line with the first half.
And we have specific visibility, as you know, that's relatively short because booking windows have got shorter. But I think overall, if you look at the [indiscernible] we've seen for the year, we've continued to grow, we've continued to gain share in many of the markets.
And I think it will really be down to confidence, GDP and disposable income. Those, as you know, are the key drivers.
It's very hard to predict, but I don't see anything out there now that necessarily changes trends, I have to say.
Thomas D. Singer
As far as China is concerned, I think the issue in China is sort of twofold. We take a long-term view on it, and the longer-term macro trends are very good in terms of GDP growth, this move towards, say, consumers spend.
There's huge investments in infrastructure. All of which will dictate, I think, that hotel demand will continue to grow.
In the shorter term, you've got winners and losers and we've been in the market 30 years. We're the biggest, as you know, by quite a long way of all the global companies.
And I think we do take a very careful approach when it comes to how we're growing this. So we really focused on picking the right owners, picking the right locations.
And we signed 9,000 rooms in the first half, which is significantly up on same period last year. So we've got a lot of owners, whether it's across the existing brands or the 19 deals that we signed on HUALUXE.
We're taking a very positive medium- and long-term view. And again, as I think you know, a lot of these developments are part of mixed-use; not in sort of U.S.
terms mixed-use, but city blocks, suburbs, cities being created. And the issue really is the demand drivers are being built at the same time as the physical hotels.
So I think it's quite -- it's sort of hard to compare exactly with how the development's been maybe in the U.S. or with some other developed markets.
But I think we've seen -- in these emerging markets, we've seen always, whatever they are, ups and downs. But I think you have to take a medium- and long term-view, which we do.
And I think -- also, I think we've been there long enough hopefully to understand what's going on. I think there are a few of our competitors who've been late to the game, who are just dashing for growth and I think signing a lot of deals, many of which may not open, and some of which may not be in the best locations.
And we're doing our best to avoid that. And with 70% of our pipeline under construction, I think we're in a decent place.
Does that answer your question?
Operator
Our next question comes from the line of Chris Jones with Telsey.
Christopher E. Jones
Just 2 quick questions. Just following up on the last one, can you just maybe focus specifically on the group business?
I think some of our -- of your competitors have actually called out group as an area and it seems to be a bit of a split in the U.S. as to what the prognosis is for that going forward there.
And secondly, we've heard some chatter out there about some franchise operators potentially raising fees. And I'm not sure if that is something that you guys are contemplating or something you would seize an opportunity as well?
Richard Solomons
Chris, I think on group, bookings are up for 2013, but we aren't as skewed to that group market as some of our other competitors who've reported, I think. So it's a much bigger issue for them.
We're much more broadly spread. And as I talk about the quality of our income stream, the breadth of our brands, the spread of our business, I do think we're less skewed to certain markets than they are.
So I don't think we see some any particular trends around group. As far as fees, I mean we upped Holiday Inn Express from the 5% fee to 6% fee some years ago.
And I think that worked very well for that brand at that point. I think right now, we don't see a lot of the short-term opportunity for moving fees.
I mean, I think, for us, it's about continuing to drive the top line and getting our share of revenues coming through and signing new deals. So we're not contemplating anything in the short term.
Operator
Thank you. Ladies and gentlemen, I will now hand back to your host for any concluding remarks.
Richard Solomons
Okay. Well, thank you, everybody.
I appreciate the questions, I appreciate your time. And obviously, if you've got any more things you'd like to ask, please contact us directly and we'll get back to you.
Thank you very much, indeed.
Operator
Thank you for joining today's conference. You may now disconnect your lines.