Intercontinental Hotels Group PLC /New/ Q4 FY2024 Earnings Call

Hello, and welcome to IHG's 2024 Full Year Results Presentation. I'm Stuart Ford, Senior Vice President and Head of Investor Relations at IHG Hotels & Resorts. And shortly, you'll be hearing from Elie Maalouf, our Chief Executive Officer; and Michael Glover, our Chief Financial Officer. Before we proceed, I'm obliged to remind all viewers and listeners that the company may make certain forward-looking statements as defined under U.S. law. Please refer to the accompanying full year results announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. In addition, the presentation will refer to certain non-GAAP financial measures. Once again, please refer to the accompanying full year results announcement and the company's SEC filings for reconciliations of these measures to the most directly comparable line items within the financial results. The results release, together with the usual supplementary data pack as well as the presentation slides accompanying this webcast can all be downloaded from the Results and Presentations section under the Investors tab on ihgplc.com. I would also draw your attention to the two additional announcements that accompanied the 2024 full year results. Those were the announcement launching a new $900 million buyback program for 2025 and the announcement regarding our acquisition of the Ruby Urban Lifestyle brand. Both of those are summarized within the results announcement itself and with further details within their own individual announcements. Now over to the 2024 highlights reel, followed by Elie.

Hello, and welcome to IHG's 2024 Full Year Results Presentation. I'm Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. I'll kick things off in a moment by sharing highlights from 2024, a year of excellent delivery on our clear framework to drive value creation, a framework which we set out in detail at our strategic update event this time last year. Michael Glover, our Chief Financial Officer, will then provide a financial review, after which I'll share areas of progress on our strategic priorities. 2024 was a very strong year of financial performance, growth and important progress against a clear strategy that is unlocking the full potential of our business for all stakeholders. RevPAR grew by 3% for the year, driven by rate and occupancy gains, with good performance across groups, leisure and business, and a strong finish in Q4. We added 59,000 rooms to our system, taking our total estate to 987,000 rooms across more than 6,600 hotels. Gross system growth was 6.2% and net system growth was 4.3%, representing the third consecutive year of acceleration. We signed 106,000 rooms across 714 hotels, 34% ahead of 2023 levels and equivalent to almost 2 a day, driven by strong momentum across our brand portfolio. This takes our pipeline to more than 2,200 hotels. Our fee margin grew 190 basis points, contributing to a 10% increase in operating profit from reportable segments. Adjusted EPS grew 15%, supported by the $800 million share buyback program. Today, we launched a new $900 million share buyback, which together with growing ordinary dividend payments is expected to return over $1.1 billion to shareholders in 2025. We're also very excited to announce the acquisition of the Ruby brand for $116 million, extending our portfolio into the premium urban lifestyle segment. Now let me hand over to Michael, who will take you through the details of our financial results.

Thanks, Elie. I'm Michael Glover, Chief Financial Officer for IHG Hotels & Resorts. Let me take you through some more detail of the great set of results our teams have delivered through 2024. I'll start as usual with our reportable segments, which is the fee business together with the owned and leased portfolio of 16 hotels. Revenue was $2.3 billion, and EBIT was $1.124 billion, representing growth of 7% and 10%, respectively. Within this, fee business revenue increased 6%, and fee business operating profit increased 9%. On an underlying basis, which measures growth at constant currency, fee revenues were up 7%, and profit was up 11%. Fee margin increased by 190 basis points to 61.2%. Interest increased to $165 million, in line with guidance. This reflects higher average net debt due to returning capital to shareholders, a slightly increased blended interest rate following a bond refinancing, and the interest charged in the year on the System Fund cash position. The effective tax rate of 27% was also in line with guidance. Earnings per share included the accretion benefit from the $800 million share buyback program we completed in 2024 as well as the annualization of the previous year's $750 million program. Through this combination of strong trading performance, fee margin progression, and accretion from buybacks, earnings per share increased 15%. Moving on to a summary of RevPAR performance. The Americas finished the year strongly with Q4 RevPAR growth of 4.6%, leading to 2.5% for the full year. While ADR growth of 2% was the primary growth driver of this, the 0.3 percentage point uptick in occupancy demonstrates the robust demand patterns for the region. By subregion, economic stability in the U.S. pushed its RevPAR up 2% for the year, while Canada, Latin America, and the Caribbean saw growth of 9%. We delivered another very strong quarter of performance in the EMEAA region with RevPAR growth of 6.9%, contributing to a full year performance of 6.6%. By major geographic submarkets, 2024 saw growth of over 10% in East Asia and the Pacific, which included the benefit of inbound leisure travel from Greater China. There was 6% growth in both the Middle East and Continental Europe and 2% growth in the U.K. In Greater China, where RevPAR was down 4.8% for the year, as I explained at the last trading update, year-on-year comparatives were especially tough in Q3 with RevPAR down 10.3% as we lapped a particularly strong leisure performance in summer 2023. Normalization then occurred as we progressed through the remainder of the year with RevPAR easing to 2.8% down in Q4. Occupancy was actually up in the fourth quarter and for the year was pretty much flat. It was the rate decline that drove the RevPAR performance, and this was principally due to higher rate leisure activity in 2023 moving outbound in 2024. We remain very confident in the attractive medium and long-term growth outlook for Greater China, as reflected in the record level of hotel openings and signings seen in 2024.

Thank you, Michael. Now I'll share an update on our areas of strategic progress in 2024. I would group these into five areas. First, we grew our system size and saw very healthy development activity across our brands, and we continue to outperform competitors on externally measured guest satisfaction index scores. Second, we expanded further into priority growth geographies, driving increased development momentum in the U.S., delivering record hotel signings and openings in Greater China, transforming our footprint in Germany, bringing new brands to Japan, and expanding our pipelines in high-growth markets like Saudi Arabia and India. Third, we strengthened hotel owner returns, building on the commercial advantages of our industry-leading technology systems and overall enterprise platform. Fourth, we delivered a step change in the outlook for ancillary fee streams through our new arrangements on the sale of loyalty points to consumers and exciting new co-brand credit card agreements in the U.S. Finally, as Michael has already covered, our success in each of these four areas delivered increased profits, dividends, and the return of further surplus capital to shareholders. The progress made in these five areas drove an outstanding set of financial results, demonstrating the power of our growth algorithm. Together, 3% RevPAR growth, 4.3% net system growth, a step change in ancillary fees, and positive operating leverage drove a 10% increase in EBIT. And with the strength of our cash conversion, which funded the additional $800 million that we returned to shareholders through the buyback, we delivered adjusted EPS growth of 15% for the year. That performance is at the top end of what we laid out as the compound average that we are targeting for the business to achieve over the medium to long term. We are confident of continuing to deliver on this growth algorithm.

Yes, Jamie. I'll start with key money. Last year, we guided between $150 million and $200 million and ended up slightly ahead of that. This year, we're guiding for $200 million to $250 million. However, for total CapEx, we are still within the historical guidance of $350 million. I believe there are three main factors driving a significantly larger amount of key money as we transition into Premium and Luxury & Lifestyle. Nearly 40% of our openings this year were in those categories, which is a major contributing factor. Additionally, with NOVUM, we had an unusual opportunity to secure 17,000 rooms simultaneously, which also impacted key money and will have some effect next year. The third factor is our increasing number of conversions; those hotels will remain in the pipeline as long as historically associated with new builds, leading to an uptick in key money due to conversion activity. In terms of competitiveness, our per unit offerings remain stable, and we haven’t noticed any upward pressure in that regard. From a revenue standpoint, the increase in key money is not as significant as one might think, adding only about $5 million to $6 million to next year's fees, given that key money is amortized over the contract's lifespan. These contracts are generally long-term, so the annual impact is minimal.

Yes. Let me just build also. No, we’re confident in the outlook for our total capital guidance of $350 million. But within that, the key money is driven by the factors that Michael mentioned, Luxury & Lifestyle conversions, not really doing more key money per key or key money per deal, but it’s the mix of deals. And that’s good for our mix of fees, higher fees per key and good for accelerating fees into the business because those conversions open more quickly. So we plan to continue that, and it’s part of the mix that we’re growing. On the Americas beyond the fee margin, I’d emphasize that we had 60% more openings. We had 13% more ground breaks. We had 9% more applications. So our brands are really on the front foot, Garner, which we launched a little over a year ago, almost 120 hotels open pipeline around the world, strong signings in the Americas and going to now bring openings in because they’re conversion openings. So we think that’s going to bring fees in and clearly help the margin. Let me talk about China. I was – Michael and I were actually there about three weeks ago with our team, spent a week there with our teams, talked about 100 owners. I’m not kidding, Jamie, literally 100 owners, visited our properties, talked to our development team. We had a great year of signings in China last year. I mean you can look at the quarter-by-quarter, but we had nearly 30,000 signings, record number of hotel signings, record number of hotel openings. I was just on the call with our China team yesterday for a monthly review, and they’re seeing the same continue into 2025. We’re very optimistic about it. So it was a very strong Q2 last year. And I know sometimes the deals land where they land when you’re talking about big transactions, working with our owners there. But every single one of the owners that I met with to the person is enthusiastic about growing with IHG and felt pretty good. I know that some other sectors, some other industries in China aren’t doing as well like residential real estate, travel and tourism and IHG brands are doing quite well. So there’s nothing really to look at in the quarter-over-quarter. We think 2025 is going to be another strong year of signings and openings in China, confident in the high single-digit net unit growth in China for years to come, not just given the fundamentals. But given our position in China, we inaugurated our 800th hotel when I was there. We have 550 under development. We introduced our third Essentials and Suites brand Atwell Suites, which – where we’ve already signed a few deals for 2025, and we expect more. And when you look at it, out of our six Essentials and Suites brands, we only had two in China, Holiday Inn and Holiday Inn Express. So there’s more room for us to expand the map and grow even further.

Just firstly, I wanted to circle back on the key money question. Maybe stepping away from your specific guidance and the components you called out there that are driving that higher next year. Just more broadly in the industry, I think there seems to be a bit of anxiety that ultimately things are getting a bit more costly, a bit more competitive when it comes to key money. So just curious about the trends you're seeing. I think Marriott was talking about even in the low end now in the U.S., there's a bit more requirement for key money. Just what are you seeing out there, even if that's not specifically what's driving your key money higher next year? Second one is on fee growth. Marriott was also calling out one of the reasons for their lower fee growth guide next year being that lower expected IMFs coming through in China. So just curious sort of your perspective, I guess, firstly, on the RevPAR outlook for China and then your view on IMFs and whether those might be lower next year in '25 versus '24 for IHG? And then just lastly, on the broader RevPAR outlook, I guess your U.S. peers are guiding between 2% to 3% and 2% to 4%, your key U.S. peers for RevPAR in '25. Where are you thinking things might land? And if you could sort of give us a bit of a geographical lens on that.

Yes, it's great to hear from you, Vicki. I was recently in the U.S. for the ALIS Conference, and as you know, I frequently travel between here and there. We're not observing that trend in our mainstream brands within our Essentials and Suites. I previously mentioned Garner, and we haven't engaged in key money for Garner at all in the U.S., nor do we see a notable increase in it for our Essentials and Suites brand. The market has always been quite competitive, and it doesn't seem to have changed. While I won't focus on specific companies, if you're trying to enter a segment where you're not already established, you might feel the need to approach things differently or create new incentives. However, we are firmly established in the segments we compete in, specifically in Essentials and Suites in North America and the U.S., and we don't feel the necessity to invest more. Our signings, openings, ground breaks, and applications have all made progress without having to commit additional funds on key money. Our larger commitments by sector are in Luxury, Lifestyle, and Premium, which has been part of our strategy from the start. We're continuing this approach in the U.S., where we previously didn't have the same distribution of Luxury, Lifestyle, and Premium but have made significant advances, including opening prestigious properties like Regent Santa Monica and a new InterContinental in Seattle. These properties generate higher fees and are self-sustaining, which we find very satisfying. Therefore, we're not seeing the same trends as others, likely due to differences in current and future participation.

Yes, I think it aligns with what Elie is saying. If you look at our performance in 2024, we generated $178 million in IMFs, which is obviously much smaller than the company you mentioned. We are definitely more of a franchise business. However, when you consider outbound travel from China, the EMEAA region actually experienced an increase of $17 million in IMFs overall. A significant portion of that was driven by Southeast Asia, where we have managed hotels that helped us more than compensate for the approximately $7 million decline in IMFs in Greater China. As Elie noted, since January, Chinese travelers have been traveling well, particularly during Chinese New Year, which positively impacted outbound travel and led to strong RevPAR growth in January. We will need to monitor the progress, but as Elie mentioned, we are optimistic about the direction of China and its growth. From an IMF perspective, we are not concerned about any backward movement in fee growth, and we anticipate continued growth.

Yes. And Vicki, I think your last question was U.S. RevPAR compared to what’s out there from others and analysts. I think that you look at the projections from STR and others, they’re in the high 1s for this year for 2025. Frankly, we think 2025 can be as good in the U.S. or better. We obviously had a very strong fourth quarter in the U.S. at 4.1%, and we’re pleased to see an acceleration. And so we don’t give guidance. But if you look at the fundamentals that drive the U.S. travel business, got good GDP in Q4. Jobs report in January showed nearly record employment, unemployment coming down. Financial markets are strong. Consumer confidence is good. Supply isn’t high going into 2025. And so the fundamentals for another good year of RevPAR growth in the U.S. are there. And Michael can touch on it in some detail. But based on January and February, what we’re seeing is at or ahead of what we expected.

First question around net system growth, your pipeline, 33%. I think in the video, you said you're targeting around 4% net system growth. How are you thinking about that? And could we see that kind of increasing to, say, a higher level of 5% to 6%, is the first question. And then secondly, just on the cash return, the buyback is higher and you have 10% dividend growth. Your leverage is at 2.3x, which is below your target range. So how should we think about that buyback number growing and that dividend growing in the medium term? And then thirdly, on Ruby, you've talked about your expansion, I think, in the U.S. and Asia as well. Just in terms of the founder, what is the involvement going forward? And can you talk a bit about the incentive program you have there?

Thank you, Muneeba. I'll address the first question and then pass the share buyback discussion to Michael. We are very pleased with our net system growth in 2024 and its trajectory. This marks our third consecutive year of increasing signings, openings, and net system growth. We are confident in achieving at least 4% in 2025. While we do not provide specific guidance, we are comfortable with that expectation or better. The strength of the brands we are developing, launching, and acquiring, along with our solid signing performance, positions us well to continue this growth and aim even higher. We always aspire to do more, but as I've mentioned before, we want to grow thoughtfully and profitably. Our focus is on keys with fees. Whether through partnerships or new deals, or by entering new markets, we consider the entirety of the equation. We understand how net system growth influences RevPAR, which in turn drives fees and margin growth, ultimately leading to increases in EBIT and EPS, and we are performing at the upper end of our expectations for 2024. We are confident in maintaining this in 2025 with our current system growth and believe there is room for improvement. This brings me to Ruby; it is another tool in our strategy to expand in a sector we've been targeting but haven't yet entered. We already have a presence in urban and urban lifestyle markets with brands like Kimpton, Indigo, voco, and Vignette, but we are now focusing on the urban micro premium space. We believe this represents a long-term trend across many of our markets. We will definitely expand Ruby beyond Europe, where it is already well established. First, we will scale it up significantly in Europe, then we plan to enter the U.S., and as mentioned, we aim to be ready for development by the end of the year before moving east from there.

Thanks, Elie. And on the cash return, I think Elie and I have been very clear since we came in that we were going to return cash to shareholders. And if you look at what we’ve done in 2022, we did $500 million, in 2023, we did $750 million, in 2024, $800 million. Now we’ve announced a $900 million buyback. And so we’ve talked about being consistent with that and continuing to deliver that. And we plan on doing that in the future. And actually, if you talk about the future and you just look at where consensus sits today, consensus sits today at about $1.237 billion. We think that’s a little low right now because not all analysts have put in the effect of the co-brand credit card. In fact, I was talking with some of the analysts today that are around $1.270 million. I think that’s about right in what we think. And if you just look at kind of where that would take you based on our growth algorithm, you’re at $1,270 million. And if you look at the interest changes that we’ve talked about, all in, you’re probably looking at earnings per share growth in the 17% range. We’ve told you today that we feel comfortable in the cash conversion and getting back to 100%. Our net debt to EBITDA at the end of the year would be – at this year was 2.3x. With the Ruby acquisition and the $900 million share buyback, we’re talking about it being at the kind of low end of our target range. So if you take all that together, I think you could surmise that it’d be another year where we would continue to do share buybacks, assuming everything came in and the Board decided that’s what they wanted to do, but we feel confident in that. And if you look at that, that’s actually ahead of our mid- to long-term growth algorithm. So I think we feel really strong – feel good about coming into this year and what we potentially can deliver.

Maybe three topical kind of questions. I mean, firstly, just the U.S. situation. I mean, how are you thinking about potential impact, a, from what's going on with removing some of the migrants, firstly, is it potentially going to have an impact on employment costs or the ability for certain hotels to function, maybe they're not IHG hotels? And then secondly, obviously, related to that, also the tariffs, be it on GDP or procurement, how are you're thinking about that? I guess switching to Europe, just any thoughts on if there is peace Ukraine, Russia, would you look to push again in Russia? Just thoughts on opportunities. And then lastly, you touched on ESG aspects. But can you talk a bit about how you're thinking about disruption caused by climate change, specifically? I'm thinking about recent events in California, in Florida, parts of the Med, in terms of fires in Greece and floods, et cetera. I mean, how do you see that impacting your footprint both now and going forward in terms of how you're thinking about future signings?

Thank you, Jarrod. No, nothing casual about your topics today. So look, on the U.S., I would say we should all just take a deep breath and wait and see what actually happens, what are the final policy, what is the final status, what is the final effect. Clearly, there’s a lot of noise of what will be implemented, what won’t be implemented, what tariffs get applied and then they’re disapplied. And so I just think we should just take a breath, and it hasn’t been even 2 months. Actually, it hasn’t even been a month since inauguration. That’s in a couple of days. And let’s just see what actually happens. Generally, look, we’ve been in the U.S. 80 years. Almost every time there’s a new President from election, it is from the opposite party with very few exceptions, almost every time in the last 75 years. And so we’re used to a lot of change. Our business has prospered. It actually prospered under the previous administration from 2024. It prospered under the current administration, which was the previous administration between ‘16 and ‘20. And if I look at the fundamentals of the U.S. economy, they’re still pretty solid. And whether there are as many pro-growth policies implemented or not, I think the underlying drivers of the U.S. economy are less government-driven than they’re industry-driven. I mean the best technology in the world, highly educated population, strong infrastructure, strong financial markets, great propensity to travel, strong corporate sector. Those things have a propulsion of their own, and we’ll just have to wait and see what the final status of these policies. Also on migrants, let’s just really wait and see what happens. It’s a lot of talk, and we haven’t seen any effect in our hotels yet. And probably the wisest thing is to wait and see what actually happens, what changes in the context. There’s been a lot of conversation around migrants and migration for years. It never has really affected our business. We operate with documented workers. That’s our policy in our hotels, whether it’s managed or franchised. On the EU, we hope for peace. We hope for prosperity. We hope for growth in the EU. And in the U.K., we don’t have any plans to go back into Russia at this point, whatever the outcome is of that – those discussions. But hopefully, they bring a lasting piece. And disruptions from climate change, look, we watch it very closely. We take a very serious view on not just ESG, but climate policy. And unfortunately, there are natural disasters that occur frequently. We’re in 100 countries. And I have to tell you that there’s something unfortunately happening whether it’s a typhoon or a hurricane or a drought or an earthquake quite frequently and sadly in our regions at all times. It has not disrupted our overall business. Yes, it may disrupt business in one part until it recovers. But then our distribution, our – the 100 countries that we’re in, our diversification usually carries us through. And even this last year, despite the hurricanes in Florida, the fires in L.A., where I was just 2 weeks ago, typhoons in Asia, the net-net was not a disruption to our business. We’re not saying that we wish for these events. We’re just saying that we’ve got a lot of experience powering through them. And let’s not forget that hotels, in most cases, are a place of refuge and comfort. I was speaking to the – got a letter from Chief Executive of a major business in Los Angeles, who was very thankful that she and her colleagues could take refuge at the InterContinental Downtown L.A. when unfortunately, their homes were damaged in Pacific Palisades.

There's a question regarding the recently announced co-lending agreement with AVANA in the U.S. The announcement mentioned a total commitment of $250 million in construction loans for specific U.S.-based projects. Could you clarify what level you are expecting from the IHG side? Is it a 50-50 agreement, or are you anticipating something less or more? What timeline do you have in mind for when this capital will be drawn upon? Finally, do you see this as a temporary solution for specific brands in the U.S., or do you believe it could potentially be implemented as ongoing support for a broader range of brands to remain competitive in the market?

Okay. Let me take that, and then I'll let Elie work on that or add on to whatever if I miss anything. First of all, it was something that Elie and I actually were working on in the Americas. And we've been trying to work it for some time as we think it's a unique way to help owners grow. Unfortunately, Elie and I weren't able to do it there, and the great team there now has been able to get it done once we left. So good on them. And what I would really say to and the way to look at it is we're partnering with them. The vast majority of capital that goes out will be part of the AVANA team and their capital; we will provide support, but it would be no more than what we would do with key money for any property. And so I would treat it within that $200 million to $250 million of capital guidance we've given. That was where it would sit. So we're very comfortable with that and that approach. It doesn't put us at any further risk because we'll be limited in our risk, but that's how I would think about it. And Elie, maybe you can just add on.

I mean, as you know, coming out of the pandemic and then you had inflation, you had interest rate increases, it was harder for our owners to get projects financed. And we’ve always helped them put together financing packages, telling the story to their lenders, describing the strength of the IHG brands and their enterprise, and that’s been a very important source of help. We partner very closely with our owners on getting through all the processes. And we thought this was an incremental thing we could do. Yes, the financial markets are improving, falling out for new development in the U.S. We see that ticking up. And I’ve said for now a couple of years, it’s going to tick up. It’s not going to soar up. It’s just going to tick up, and it is ticking up as inflation and interest rates have stabilized, maybe not gone down as much as people would have liked, but they’ve stabilized at least. And so while we’re sort of grinding up in new development financing, this could be a bit of an accelerator for certain properties and certain owners that we think we can support. But we don’t think we’re taking any material risk here, and it’s well within our guidance for capital.

Three very short follow-up, if I may. First one on Ruby acquisition, which seems to be pretty attractive. Is there a magic number in terms of brands? You are now at 20. If I compare you to Marriott, Accor, they are well above that number. But what is the idea behind that? And what is the optimized number of brands you can manage? Second question about leverage. You were mentioning that you would probably be close to 2.5x net debt to EBITDA at the end of '25. Do you think about any change in your midterm guidance? Or do you still remain on the same number? And last question, if I may, about tax rate. You've been guiding on 27%. If we listen to what Donald Trump has been saying, he was thinking about lowering the tax rate in the U.S. Do you have an idea or quantification that we could anticipate? Or is it still early stage?

Thank you, Andre. I'll take the first question on the brand portfolio. I mean, look, if the mere number of brands that somebody had was the measure of success then valuations in the industry will be different than what they are. What really matters is having brands that are relevant to guests and to owners that you can scale in segments that are attractive. So we think we have a very powerful portfolio today, and even before that addresses the main segments that we want to grow in. But we also know it's a dynamic industry, right? It's not a static industry. So your strategy can't be static. Ten years ago, we had ten brands. But in ten years, things change. People's travel preferences change and owners' desires to invest capital in different segments change, and we have to adapt with those, but going to those segments where there's an intersection. And the intersection is where there's strong demand by travelers and strong interest from owners to build. And where there's that intersection, we want to be at that intersection. If we're not, then we want to go there. We're not at the intersection of uber luxury where many of our own InterContinental and Kimpton travelers were sometimes wanting something even more exclusive and going. So we went in with Six Senses and Regent very successfully, not because we wanted two more brands and tried to catch up with anybody else that was adding brands, but because there was shareholder value to create and we have, and we have a lot with Six Senses and with Regent.

Yes. I think as we go to the net debt-EBITDA question and the change to the medium- to long-term algorithm, I just go back to our uses of capital remain unchanged. We're going to invest in the business. We've done that consistently, whether that's launching new brands or acquiring new brands like we've just done with Ruby. We intend to sustainably grow the ordinary dividend and then return excess cash back to shareholders. And the model is allowing us to do that and do that consistently, and we'll continue to do that. As I mentioned earlier, if you look at, again, where is consensus and where we think it could move to and what that looks like from an earnings per share growth perspective, certainly, the co-brand credit card at $40 million that we've talked about being incremental this year and the $25 million from the point sales is pushing that to the top end and above those earnings per share targets that we laid out in that medium- to long-term growth algorithm. But we think about this business for the long term. And so as you think about the medium- to long-term growth algorithm, we feel like that's the right place to be. Now obviously, there will be some ups and downs. It is a medium- to long-term growth algorithm. The credit card and the point sales is going to push us over that kind of guidance. So that's a great thing, and it's good for our shareholders.

In terms of tax, I wouldn't recommend making any assumptions or modeling just yet. We believe that using a tax rate of 27% is appropriate for now. Let's wait to see how things unfold and what gets approved. Once we have more clarity, we will inform you on how to adjust your modeling accordingly. Well, thank you, everyone. It's been really great to connect with you today, update you on our 2024 full year results and strategic priorities. We're very proud of what our teams accomplished in the past year, and we remain very confident in our ability to continue delivering on our strategy and driving shareholder value going forward. Our next market communication will be our first quarter trading update on Thursday, 8th of May. Thank you for your time and interest in IHG, and I look forward to catching up with you soon.