Good morning, everyone, from me. And welcome to IHG Hotels & Resorts Conference Call covering the 2025 First Quarter Trading Update. I'm Stuart Ford, Senior Vice President and Head of Investor Relations at IHG, and I'm joined this morning by Elie Maalouf, our Chief Executive Officer; and Michael Glover, our Chief Financial Officer. Just to remind listeners on the call that in discussions today, the company may make certain forward-looking statements as defined under U.S. law. Please do refer to this morning's announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. For those analysts or institutional investors who are listening via our website, may I remind you that in order to ask questions, you will need to dial in using the details on Page 3 of this morning's RNS release. The release, together with the usual supplementary data pack for the first quarter, can be downloaded from the Results and Presentations section under the Investors tab on ihgplc.com. Now over to Elie.

Thank you, Stuart, and good morning, everyone. I'd like to start today by thanking our teams for what has been a very busy and productive start to the year across our business and another period that has really demonstrated the attractiveness and strength of our globally diverse footprint, despite heightened macro volatility. RevPAR continued to grow and on a global basis was up 3.3%. This was driven by both ADR, which was up 2.2%, and occupancy which was up 0.6 percentage points. The growth was across all three drivers of stay occasions. Rooms revenue on a comparable hotels basis, for Leisure stays was up 2% globally. Business was up 3% and groups was strongest, up 5%. In terms of system growth, we opened 14,600 rooms across 86 hotels in the quarter, more than double the same period last year. And with increases delivered in each region, this produced 7.1% gross growth year-on-year and 4.3% net growth or 5%, excluding The Venetian removal. It is worth reminding that we typically experience seasonality in our system growth with relatively fewer openings and more removals in the first quarter of each calendar year. Year-to-date, net system growth was therefore flat, the same result as this time last year, but it was actually a growth of 0.7% when excluding The Venetian removal. We expect that growth to ramp up through the rest of 2025 as is typical with our phasing. Turning to signings. We added nearly 26,000 rooms into our pipeline in the quarter or over 20,000 when you exclude the Ruby acquisition. This level of signings was also well ahead of last year and led to a closing pipeline of 334,000 rooms, which is 9% more than a year ago and 3% more than the start of this year. Around 40% of organic signings were quicker-to-market conversions, reflecting the breadth and attractiveness of our brand and the benefits to owners of joining IHG's powerful enterprise. To point a few highlights for you. Garner, which we only launched around 18 months ago, has already reached 35 hotels open and a further 91 in the pipeline. There were also 10 openings across voco and Vignette in the quarter as well as another 18 signings for these two brands. These were part of our strong performance in conversions, which also saw more than 30 other conversion signings across the rest of our brand. Once again, there was a strong development performance across our six Luxury & Lifestyle brands with nearly 30 openings and signings combined. The InterContinental brand was seven of these. We opened in Indianapolis, U.S. and in Monterrey, Mexico. And the five signings were Nashville, two more in Greater China, and the two in EMEA were in Cambodia and India. This was another great quarter of performance for this truly iconic global brand as we continue to penetrate established and new growth markets. On the point of growth markets, Saudi Arabia had five openings and signings in the total quarter, India had six and Japan had seven. Great progress in each of these target markets. And then when I look at our powerhouse brands and Essentials, there were 24 openings for Express and 30 signings. This world-leading brand now has an estate of over 3,200 hotels and the pipeline to add over 600 more. Holiday Inn itself has over 1,500 open and pipeline hotels with another 11 openings and 22 signings achieved in the quarter. The final point I'd make on development is reminding you of our completion of the acquisition of the Ruby brand in the quarter, which added 30 hotels to our pipeline. We are very excited about the potential of this premium urban lifestyle brand, and we've actually achieved two more signings just since the acquisition. So the year has gotten off to a strong start for development activity as well as delivering a strong trading performance, even in a more volatile environment. And with that, let me now hand over to Michael, who will provide more color by region, and he will also detail for you that though we are at an early stage, we are on track to meet current full year consensus profit expectations.

Thanks, Elie. Starting with the Americas, where RevPAR was up 3.5%, which was also the growth rate for the U.S. Occupancy in the region was up 0.7 percentage points and pricing remained robust, with rate growing by 2.4%. In terms of demand types, Groups was the strongest with comparable rooms revenue up year-on-year by 6%. Leisure revenue was also ahead by 2%, and Business revenue was up by 4%. So as with the global performance, there was growth in all three stay occasions. In Q1 of this year, there was the benefit to March from the timing of Easter pulling forward some business travel, and this reversed in April. This is the opposite of the timing impacts of last year. When we take the last eight weeks in aggregate, RevPAR has been broadly flat. We've also noted in today's statement that the latest position of the on-the-books revenue for comparable hotels across the balance of Q2, i.e., for May and June is also broadly flat. Our confidence remains for growth beyond Q2, particularly when economic uncertainty subsides and when the industry's fundamental tailwinds prevail. And we already see on the books revenue ahead of last year for July and August. Going back to our performance for the first quarter compared to the U.S. industry, we are very satisfied when we look at it on a weighted chain scale basis. Taken together, this industry outperformance, combined with growth across all demand drivers, underlines our continued confidence of IHG's delivery in the region. In terms of system size in the Americas, we opened just over 4,000 rooms in Q1, a 30% increase on the same period last year. Albeit as we've noted, Q1 is a seasonally small quarter for openings, this included 12 hotels across the Holiday Inn Brand Family and there were also 12 more signed in the quarter. In total, we signed 4,500 rooms across the Americas, broadly in line with the first quarter of 2024. Further signings from Garner took the brand to almost 60 open and pipeline hotels in the region. Moving on now to our Europe, Middle East, Asia and Africa region, which had another strong quarter with RevPAR up 5%. As with the Americas, this too was driven by both pricing and demand with rate up 4% and occupancy up 0.6 percentage points. Looking at RevPAR performance across this diverse region, the U.K. was broadly flat with Continental Europe, which was up 5.6%, the Middle East up 6.2%, and East Asia and Pacific was up 6.8%. There was further benefit to the latter from inbound leisure travel from Greater China. This helped even stronger RevPAR performance within that subregion such as 11% in Thailand and 12% in Japan. Over 6,000 rooms were opened in the quarter, almost sixfold more than the same quarter a year earlier. Within the 30 hotels opened, there was 13 that were part of last April's NOVUM Hospitality agreement. Another notable opening was the voco Zeal Exeter Science Park, our first branded net-zero carbon hotel. 12,900 rooms were signed into the pipeline in the quarter, which included 5,700 rooms from the acquisition of the Ruby brand. Of those 30 Ruby hotels, 20 are open and will start to be added in the IHG's system from the second quarter. While 10 were in the Ruby pipeline at the time of acquisition, since then, a further two have already been signed, Copenhagen and Berlin. Within other signings, there were three more Garners, including a flagship for the brand in Edinburgh, Haymarket. And since the quarter end, we have also launched the brand in India, with the first two signings in that country. Q1 was also another strong development period in Saudi Arabia with four signs, a Regent, Vignette, voco and Holiday Inn. Finally, moving on to Greater China, where RevPAR was down 3.5%, which was similar to the previous quarter and an improvement on the 2024 overall RevPAR performance. From here, there's an easing in the strong comparatives from the prior resurgent return of post-COVID travel demand. Travel has been occurring in the same volumes as the prior year, which is reflected in the occupancy holding up, though rate is down year-on-year. This included further impact from the increased outbound leisure travel, leading to Tier 2 to 4 cities being down 5.7%, whereas 10 Tier 1 cities were closed to that. Record-breaking momentum in development activity has continued. 4,400 rooms were opened in the quarter, more than double the previous year. With the milestone of 800 hotels open achieved, there were 8,500 rooms signed in the quarter, also well ahead of last year. There's now three Atwell Suites in the pipeline since launching the brand a few months ago. Eight signings across Luxury & Lifestyle brands, and of course, Express Holiday Inn and Crowne Plaza, all powered ahead with 28 signings between those three brands. As we've noted in this morning's announcement, we remain encouraged of further improvement to come and of the continued attractiveness of the long-term drivers for the region, which are fueling development activity. Last week, the Investors Relation team issued our eighth episode of IHG Checks In On. And this one featured our Greater China CEO, Daniel Aylmer, and Chief Development Officer for the region, Kent Sun, talking more about the huge strengths and further opportunities for IHG in Greater China. Now to update you on the share buyback, we are currently 36% of the way through the $900 million program announced in February. To date, this has reduced our share count this year by a further 1.9%. In concluding with some comments on consensus. As we said in the statement, whilst we are at an early stage in the financial year, we are on track to meet our current full-year profit expectations. We published details of consensus on our website based on the Visible Alpha data service. This currently sees consensus for operating profit from reportable segments as $1.251 billion. Whilst RevPAR expectations may well come down a little from the current consensus of 2.3% growth for the year, we remain comfortable with the profit consensus. One thing to remind is that in 2025, we have the step-up in ancillary fee streams as previously described. The incremental profit from loyalty point sales and from the new U.S. co-brand credit card agreements should add around 130 basis points to our fee margin expansion. And then on top of that, there would be further margin progress from the positive operating leverage, given we expect fee revenues to be growing in excess of where we are controlling overhead growth. The profit consensus implies growth of 11% on 2024's results and the adjusted earnings per share consensus, which is $4.97 implies growth of 15%. This would result in another year of IHG delivering on our growth outlook. With that, I'll hand back to Elie for closing comments.

Thank you, Michael. We included in today's statement a short section of additional comments regarding current trading conditions. Michael has covered that. Though early at an early stage, we are on track to meet full year consensus. As we see it, our on-the-books revenue for comparable hotels is still ahead of Q2. Michael set out that it is looking broadly flat for Americas, whereas the EMEAA region is still showing stronger levels of growth and improvements are expected in Greater China as comparatives start to ease now that we are beyond the first quarter of the year. We are very clear that the attractive long-term structural growth drivers for both demand and supply are unaltered. And we also set out reminders as to IHG's many points of continued strength. So in summary, we had a strong start to 2025, both in our trading performance and development activity, despite increased volatility, and we remain confident for more progress ahead. And with that, I'll now pass it back to the operator to open up the call for your questions.

Our first question comes from Jamie Rollo with Morgan Stanley.

Three questions, please. First, thanks for the commentary on the U.S. outlook. Could you please give us a little bit more flavor maybe on government spending and also international visitors? What are you seeing in those two buckets? And also what's your exposure to those two in the U.S.? Secondly, very strong openings in Q1, as you know, particularly in EMEA. Is there any sort of phasing in there? And I note that nearly half the new rooms were in the other brand bucket. So it doesn't appear to be NOVUM. So what is behind that? And how are you feeling about full year consensus net unit growth in the sort of high 3% for the group? And then finally, you've not mentioned currency, but it's been quite a big depreciation in the dollar and your annual report hopefully gives the sensitivities. But it looks like there's probably something like a 5% profit boost marking to market that weakness for the rest of the year. Is that why you're happy with consensus EBIT despite the talking down the RevPAR numbers?

Thank you, Jamie. I will cover the U.S. government international, EMEA openings, and net system size growth projections, leaving foreign exchange for Michael. In the U.S., government revenue, including state, federal, and local, constitutes less than 5% of our total revenues, with federal accounting for 3.5% or less. As many in the U.S. market noticed, there was a decline in federal revenue starting in March and likely continuing into April due to government cuts in spending, costs, and travel; however, this is a minor segment of our business. Interestingly, state government travel saw an increase. While federal government impacts have been felt in Q1 and are expected to persist, we managed to perform well despite this influence, and our outlook remains steady, factoring in continued federal government impacts. It's worth noting that government business is generally lower-rated, which helps mitigate the overall effect. International revenue represents 5% of our total in the U.S., with Canada and Mexico contributing 1.5%. In March and April, we observed a decline in inbound travel from Canada, although we likely compensated for some of that with travelers coming from Mexico and Europe. Nevertheless, total international inbound travel to the U.S. was positive throughout the quarter, and as Michael mentioned, we anticipate a positive global outlook for Q2. We believe we are in a good position to capture any shifts in international travel. Our net system size growth for the year looks promising, with consensus at 4.3%, excluding The Venetian, a property we indicated earlier was nonprofitable. We've made notable progress; historically, our net system size growth in Q1 was nearly flat or zero, but this year, excluding The Venetian, it stands at 0.7%, supported by double the openings we achieved last year. Part of the 1,500 new rooms came from NOVUM, and we saw strong openings overall with a 30% increase in the U.S. and Americas and double openings in China without any specific transactions. In the Middle East, we opened a couple of large properties and are optimistic about continued growth in signings and openings there for the rest of the year. While I’m not suggesting we will double our progress every quarter, I am confident about our consensus outlook.

I'll take the currency one now, Elie, if you don't mind. If you look at the currency profit expectations and us being comfortable with the currency profit expectations, that does not include any benefit from currency impact. In fact, I think at the full year announcement, we said that roughly, we expected about a $12 million negative impact on currency. As we start at the end of Q1, that was roughly an $8 million that had reduced to an $8 million impact. Now it can move throughout the year. As we all know, the dollar has weakened a bit against some currencies, but remember, we're a very broad and large, largely distributed company. So there will be some currencies where it hasn't done that. And so if you think about how it looks at the average of last year and then compares today's results against that average of last year. So as we sit right now, there's no currency positive impact expected in our full-year confidence in hitting consensus.

Jamie, I think you've got a specific question about the other line in the EMEA system size. Just to clarify on that, given the high proportion of conversion openings, what occurs is if we have a hotel joining our system, but before it's formally transferred over to one of our brands, if it's in our system counts and on our platform, then it gets included into other. And then what you end up seeing, and it comes through in the column of internal rebrand, you'll see movements either between brands or out of other into one of those brands when it's officially lit with one of our brands. Hope that makes sense.

Three questions, if I may. First, Hilton, one of your competitors, indicated that their guidance suggests the U.S. market will remain flat for the rest of this year and that China will also return to flat growth. Can you confirm if this aligns with your assumptions regarding the consensus projections? Additionally, if we were to experience a recession—which is not factored in—how much could you manage to offset and maintain profitability given your reference to an agile cost structure? For my second question, I noticed that Holiday Inn Express achieved 3.2% RevPAR growth in the Americas, while Hampton only recorded 0.7%. This marks the widest gap we’ve seen between these two brands. Could you shed some light on why Holiday Inn Express seems to be outperforming its peers in this regard? Lastly, several investors have inquired about the proposed Americas Job and Investment Act, which would introduce staggered 5% tax increases on foreign companies operating in the U.S., similar to the digital service taxes implemented by the U.K. Is this something you have considered, do you believe you would fall under this legislation, and does this bring up the ongoing discussion about potentially listing your company in the U.S. rather than the U.K.?

Thank you, Richard. I'll address all three points, and then Michael will provide details on taxes and our viewpoint. I want to talk about our overall engagement with the U.S. government. I won’t comment on Hilton's guidance or strategies since you can find that information directly from them. Our perspective aligns with what Michael mentioned earlier, and the SCA as we look into Q2 is encouraging given our positive global bookings. It's flat for Q2, both in the U.S. and the Americas. However, as you know, the booking window is short, with 50% of our bookings happening in the last week. There’s potential for improvement here, and recent trends have been promising. Looking ahead to the summer months of July and August, our bookings remain positive globally and in the Americas, indicating steady growth. Regarding China, we consistently mentioned last year that we believed the market was nearing a bottom, and recent results support that view. Our RevPAR in Q1 was comparable to Q4, showing improvement over the same period last year. Demand is strong; specifically, occupancy rates in China showed a slight increase. While rates were impacted, a significant portion of that was due to strong outbound travel from China to Asia Pacific countries, where we experienced double-digit growth in nations like Vietnam, Japan, South Korea, and Thailand. The recent May holiday showed exceptional travel numbers, with a 6% increase in travelers compared to last year, alongside an 8% rise in travel spending. Despite the prevalent bearish outlook surrounding China, we perceive a steadying trend. We could see flat RevPAR in China this year, and as we progress into Q2, Q3, and Q4 with improving comparisons, I'm optimistic about this possibility. On another note, confidence in China remains strong due to our doubled openings and robust signings in Q1, which could lead to another record-breaking year for signings and openings in the region. Concerning our U.S. RevPAR and brands like Holiday Inn Express, I won’t make comments on competitor performance but am pleased with our teams' achievements. Globally, we’ve achieved a 3.3% RevPAR, with the Americas and the U.S. seeing increases of 3.5%, despite ongoing uncertainties. We reported positive RevPAR across all brands in the Americas and EMEA, though not in China as there is some leveling off there. Holiday Inn Express is performing exceptionally well, with 3,200 hotels opened and 600 more in development. Our IHG One Rewards program is showing significant growth, reaching 60% globally and over 70% in the U.S., which is a notable improvement over the past five years. This performance is benefiting both our guests and owners. Our new AI-driven revenue management system, which we've implemented in over 4,000 hotels, is also enhancing hotel performance. Along with our effective marketing strategies and reservation system, I believe various factors are contributing to our success, and this is just the beginning. We're also moving forward with new property management and CRM systems, indicating more advancements for our brands in the U.S. Regarding tax matters, we maintain close engagement with both the U.S. and U.K. governments. Michael and I are actively advocating for our industry's interests. We're encouraged by recent news indicating that the U.S. and U.K. are close to reaching a trade deal and are hopeful for a positive resolution regarding tax uncertainties. However, we will need to wait and see how that develops as we continue to advocate for our business.

It's very early in the process, but the conversations have been quite constructive. Honestly, I think we were ahead of the curve on this. Our tax and government affairs teams were well aware of the developments, which enabled us to bring this to the attention of the right people in both governments. We have been working diligently on this, and our Board has been involved to ensure it reaches the appropriate individuals. While it's still in the early stages, there appears to be positive momentum towards preventing this from becoming an issue in the future.

I mean, look, as you can see in the current sort of negotiations, a lot gets put on the table and then where things eventually settle in the end state can be very different than what's on the table. And so I think we just have to be patient, but we're heavily engaged, as Michael said. I myself have met with the U.S. government, with the Chairman of the House and Ways and Means Committee that is working on the tax bill in the U.S. We've met with the leaders here in the U.K., and I think we're making some constructive progress.

I have two, if I may. First question is, are you seeing any changes to the development environment, particularly in the U.S. since Liberation Day? And then my second question is, actually, it relates to Richard's question earlier. If there is a downturn, do you see scope to drive further cost savings and cost efficiencies within the business?

Good, Jaina. Let me address your questions, and Michael will support as always. We are very close to our hotel investors, owners, and partners globally, not just in the U.S. I would say that I spend nearly half my time engaging with them and meeting them personally, as does our entire leadership team. We have a good understanding, especially in the U.S., where I spend a considerable amount of time. Yes, there has been quite a bit of turbulence in the news since March and into early April, but we are seeing improvements. Recently, the news has been more positive. We have shifted from trade tensions to trade negotiations, and there is a bit more clarity on policies. Financial markets that reacted negatively have mostly stabilized, and the U.S. has recovered most, if not all, of the losses from the lowest point of the quarter. The dollar and interest rates have also stabilized. While there is still some uncertainty, we are moving toward more clarity and less turbulence, which is encouraging. Our owners, who tend to be optimistic, are closely watching these developments. They want to build and develop, and that is reflected in the signings and openings we’ve seen this quarter compared to last year. Excluding the Ruby acquisition, 60% of our signings were new builds, which require more courage than conversions, yet our owners are committed to these projects. They remain optimistic while keeping an eye on market trends. We haven’t observed any noticeable change in behavior, but everyone is monitoring the situation closely. If the recent positive trends continue—such as more resolution, constructive negotiations, and less volatility—I believe their mood will improve as well. So far, they have shown their confidence by investing in new hotels and opening those they committed to.

I think from a cost growth perspective and what we would potentially do in a recessionary scenario, I think IHG has demonstrated over the years, we have the ability to flex. Most recently in COVID and during that time period, you've seen us flex our cost base. In fact, we were largely cash positive during that period. And even in more recent times, even if you look at last year, we grew fee revenue by 6% last year with overhead costs only growing at 1%. And that we constantly look at our cost and work diligently to make sure we're growing revenues faster than we're growing our cost. And you heard in my statement today about the opportunity to continue to grow margin based on operating leverage and cost discipline. So we will continue to do that and look at that. And obviously, our biggest risk as a company is not capturing the growth in the future. And we want to make sure that we're balanced and we're really going after and grabbing that growth. But as we need to, we will obviously manage those costs. But we take a very disciplined approach every single day. We look at ways to increase our efficiencies and effectiveness and building those into our day-to-day operations.

I mean, Jaina, if you go back to 2019 and compare our fee margin today, we're up 700 points. So yes, we went into the pandemic in 2020. We emerged very strongly, but we emerged a stronger, more profitable, more efficient business. So we've maintained a lot of those gains, while still growing the business. So we don't feel at this time there's anything in particular we need to do other than to maintain the strong discipline that we've brought that allowed us to have solid growth last year, but good cost containment, and that's the approach we've taken going into this year that allows us to stay disciplined, but also capture the upside.

Just one on the full year guide, if it's possible. At the full year results, you kind of signposted EBIT of $1.25 billion to $1.3 billion. So if we kind of think of the midpoint that it's come down, say, $25 million. And then the FX is about $12 million, which I think I understood your answer earlier to be that it was going to be a $12 million headwind and now you're assuming no benefit. But please tell me if I'm wrong there. And I think, again, at the full year results, you signposted RevPAR growth to be kind of 2% to 4%, which was you sort of said like our peers at 2% to 4% and now 2%. So is that sensitivity about right? I would have thought that the sensitivity of EBIT would be slightly less than that. You said it's about $11 or so million historically. But it feels like where you're sort of suggesting EBIT today versus where it was suggested at the full year is slightly more of a reduction than what you're suggesting on RevPAR. If you could just kind of talk through that, that would be great.

Okay. Let me begin, and then we can discuss a few points I would like to clarify. First, regarding foreign exchange, when we announced our full year results, we anticipated a $12 million headwind. Currently, at the end of Q1, this has shifted to an $8 million headwind. Within the $1.251 billion we mentioned, there is no positive impact from foreign exchange; the $8 million headwind is accounted for in that figure. Although we do not provide guidance, at the time of our full year results consensus was around the $1.250 billion mark, while we noted a few indicators suggesting it could be in the $1.270 billion range, which we considered reasonable. Presently, with consensus at $1.251 billion, we remain comfortable with that estimate. Additionally, the current consensus RevPAR stands at around 2.3%. Some high-performing markets may decrease, which is why we think the consensus RevPAR might dip slightly. However, given our strong cost control and increases in ancillary fees, we believe there’s no significant reason for the consensus to decline further from its current position. That's how we view the situation. In terms of sensitivities, one point of RevPAR translates to approximately $11.5 million in franchise and managed fees, as noted on our website. Hence, the expected decrease in RevPAR does not indicate a significant drop in fees. I hope this addresses your question thoroughly, as there was quite a bit to unpack in it.

That's really helpful. As a follow-up, it's been interesting to observe the peer reporting season and the shifts in expectations. There's a significant dynamic related to the timing of reports. For instance, Wyndham reduced their guidance by 300 basis points, while Marriott cut theirs by 50 basis points, specifically regarding RevPAR. My question is whether you believe this reflects the passage of time over the last couple of weeks, which seem to have improved slightly. Additionally, many hotels, including Marriott, have indicated that high-end demand has remained resilient compared to low-end demand. This suggests that high-end hotels might not be experiencing as severe a downturn recently, and therefore, they're not reducing guidance as much. However, historically, in 2009, low-end hotels outperformed, so it's not entirely logical to expect high-end hotels to consistently outperform if we become more cautious about the macroeconomic environment. Could you discuss your expectations regarding the developments over the past couple of weeks that may have influenced this guidance? Also, what are your thoughts on how high-end versus low-end hotels are likely to perform in a more cautious macro environment?

This is Elie. It's important to note that while it might seem easier to view all hotel companies as similar and expect them to react alike to events, that's not the reality. Although we all belong to the same industry, the businesses can differ significantly. Factors such as distribution, location, geographic makeup, and chain scale play a crucial role. Furthermore, the way we operate and drive performance also varies widely. Over an extended period, similar companies may perform within a comparable range, but performance can fluctuate over multiple quarters for structural reasons. This doesn't imply that one business is better or worse than another. We believe we have a strong business, but I won't speak for the others or their guidance. We analyze all the data meticulously, but we understand there are fundamental differences among our businesses. We have created a business model we believe is robust, considering geographic and chain scale distribution and segmentation, supported by a structure that enables us to perform steadily through various cycles and volatility, achieving higher milestones as we progress. I'm confident that we'll make gains. I don't think what we're saying now differs from what has been communicated recently; it really comes down to time. You may need to ask them for clarification. For us, it's not merely about time; this reflects how our business is operating and its performance indicators. Much of our performance this year is driven by the structural elements we've established over time that don't change with short-term fluctuations. We are optimistic about our earnings outlook for the year, as Michael mentioned, and we are confident about our system size outlook as well. We acknowledge the recent turbulence and volatility, but we believe we are entering a phase of clearer conditions, and I can assure you of that. While circumstances can shift quickly, that's the general trend. If these conditions continue, we remain cautiously optimistic for the rest of the year. Yes. I don’t believe we should stereotype how a segment will perform. Historically, there's been a notion that the mid-scale segment always outperforms during downturns. However, over the past two decades, the upper class has expanded, and wealthier individuals are living longer, healthier lives and traveling more. There remains a portion of the population that is not affected by economic downturns and continues to travel. We observed strong performance from our luxury segment in Q1, and it performed well even during the pandemic. The challenge was that while many hotels could remain open, those that were open saw high demand. Therefore, what was commonly accepted wisdom 10, 15, or 20 years ago may need to be reevaluated over time. We believe the upper luxury segment is quite resilient due to its insensitivity to economic shifts, and our mid-scale segment remains strong because of essential travel. During the pandemic, Holiday Inn Express maintained occupancy above 50%, despite restrictions on movement. Our extended stay brands also stayed above 60% occupancy, showing the necessity of travel. Each segment has its strengths and can succeed for different reasons, not being affected in the same manner as previously thought.

Could I ask two questions, please? Firstly, on the ancillaries and the new credit card agreement. Why hasn't the slowdown in your RevPAR and your expectations since last year changed the potential fee income for FY '25? I'm thinking actually both credit card agreement and the point sales. And secondly, I think it's interesting that between your acquisition of Ruby and Marriott, acquiring systems, the urban micro hotel concept seems very popular and very valuable. Is there space elsewhere in your portfolio and your group of brands for another similar concept, but perhaps pitched at a different price point?

I’ll address both questions. Michael, feel free to chime in anytime. Regarding the ancillaries, we are pleased with the performance so far this year in points and credit card activity. We believe the outlook remains strong and stable. While changes can always happen, we are confident that we will meet the expectations we set last year for doubling our credit card P&L revenue from 2023 by 2025 and for the additional $25 million in point sales. We are on track to achieve that. Travel continues to thrive, and as long as more people are traveling, they engage more with our brands and IHG, fostering a sense of loyalty that encourages participation in our credit card program to earn more points. Additionally, we are relaunching our partnership with Chase and Mastercard, which is enhancing our marketing efforts, engagement, and promotion of our cards, resulting in impressive performance. Our credit card partners have expressed satisfaction with the results, and we are equally pleased. Thus, the current trajectory looks promising, and we are happy with it.

I think also there may be a misconception that the credit card performance is tied to RevPAR. It's not. The way we're compensated on that is tied to really usage of the credit card and acquisitions of the credit card, and the credit card is performing very well. And in fact, we've heard from our partners, they're very impressed with what our relaunch has done and what we've offered. So there's multiple components to that, and it's not just hotel spends in which we earn some profit from that. So I think just to be clear on that. And then the point sale is actually performing extremely well in line or ahead of expectations as guests look for maybe different ways to purchase their rooms.

On your question about Ruby and could there be other similar brands in our portfolio. We're very pleased with Ruby, just since the acquisition, the interest from owners, from customers has been very, very pleasing. And I'm confident the brand will be a great success in our portfolio, not just in Europe but globally. I won't predict whether there's room or something similar there, but we really like the lifestyle space. We've been leaders in lifestyle. I mean I joined the company in 2015, which was right when we were acquiring Kimpton. And that really broke us into Lifestyle and then growing Indigo and adding voco and Vignette and purchasing Six Senses and Regent and now Ruby. I think we've been early pioneers in differentiating ourselves in Lifestyle, Luxury & Lifestyle. And so this is more accessible. Luxury, they call it sort of the urban premium urban micro, accessible, a sense of luxury and accessible price. Here in London, you've got three hotels that are just amazing to do very well. We think there's room for Ruby to grow a lot, and there's something that is similar, but not the same. We're always looking.

I have two questions, please. I mean the first one, just to come back on the quarters ahead. I mean simplistically, you seem to be still relatively optimistic on the Americas in Q3 onwards after a slightly softer period from, say, March to May. My question is, what are the key elements driving your confidence given the still limited visibility ahead? And the second one is on the U.K. market. You mentioned broadly flat RevPAR in the U.K. in the release. I mean could you just provide some color on what we see there in terms of demand trends potential, I don't know, consumer weakness? Or are you just seeing a continuation of the trends we saw last year?

In the Americas, we had a strong first quarter, which we’re pleased about. Our brands and commercial systems are performing well. We experienced an Easter effect that balanced out between March and April, similar to last year. Our on-the-books figures are also flat with about 7 to 8 weeks remaining in the quarter. It's important to note that half of our bookings occur in the final week, so there’s potential for more growth if conditions stay favorable. Looking ahead to July and August, our on-the-books business is positive. Our confidence stems from data rather than speculation; we are committed to being data-driven at IHG and focus on what the numbers indicate. We acknowledge that there has been some sentiment impact from the turbulence in March and April, but we believe today’s news is more promising. The economic data does not indicate a downturn in the U.S.; job reports for February and March exceeded expectations, and unemployment remains low. Although the GDP report for March showed a decline, this was largely due to importing ahead of anticipated tariffs, while consumer spending and private investment have both increased. Hiring remains robust, and thus far, the data does not suggest any changes. While we have limited visibility, what we can see indicates positivity moving forward. For the summer, we expect flat performance for the remainder of the quarter, which leads us to feel cautiously optimistic about the rest of the year and confident in our consensus EBIT.

Yes. As we look at the U.K., the U.K. was broadly flat. But London within that was a small negative. And I think outside of London, we were slightly positive. So in London, if you look at London, roughly was down low single digits year-over-year. And that was really driven by the number of events that were in London in the first quarter relative to last year. And I'd just say, we have really a quite broad portfolio across all kinds of chain scale segments within the U.K. And so we saw some really strong performance. But I think London is really the reason we were dragged down in the U.K. a little bit, and that's mainly driven from events that were held last year versus this year.

And just to put in perspective, while I love here being in London, it's a great place. The U.K. totals 5% of our rooms globally. So it's unlikely anything happening in the U.K. is a big swinger to our results in either direction.

Firstly, regarding tariffs and construction costs, are you experiencing any pressure? Elie, you mentioned an increase in imports coming into the U.S. How much of the products made in China actually make it to hotels? Is it items like linen, beds, or furniture? Secondly, can you provide any insights into the financing market? It seems quite active with new builds being signed. Lastly, how is outbound international travel performing right now? I was surprised to see that U.S. travel to Europe is increasing. Although international travel isn't the majority of your business, it is significant. How are you observing the outbound international travel markets?

Thank you, Jarrod. Let me address these points. Regarding tariffs, we need to be patient to understand the ultimate outcome. There has been much speculation about potential tariffs, their implications, and the parties involved. Discussions are ongoing between the U.K. and U.S., as well as the EU and U.S., and China and the U.S. are back in talks. The final scenario differs from what's been suggested, and we don't yet know its implications. The impact on hotel development in the U.S. is uncertain, and I acknowledge that. Regarding the cost of building a hotel, excluding land, 10% of construction costs in the U.S. are related to furnishings, materials, and other consumable items. The remaining 90% consists of construction expenses like labor and materials, most of which are sourced locally. Determining how much of that 10% is influenced by China can be complex. During the pandemic, we began to diversify our supply chain away from China to reduce reliance, although we will still source from there when necessary. I don't see material risk from these trade tensions since we have alternative sourcing options. General inflation poses a larger risk; if we experience widespread inflation like in 2022 and 2023, that will be more significant than the origin of specific materials. Clarity on these issues may increase by the end of the summer and year. Concerning the financing market, improvements will not be sudden but gradual, with some pause due to recent volatility. Owners are securing financing for quality projects with IHG, albeit more slowly and with greater equity contributions. We're also seeing strong performance in conversions, which supports our growth globally. Lastly, on international outbound travel, I'm assuming you're referring to travel between any global destinations, not just from the U.S. to Europe or vice versa. I sit on the Executive Committee of the World Travel and Tourism Council, and we recently had a meeting where we reviewed the latest updates. Last year, international travel reached a record level, and this year is expected to see another record, albeit with slower growth. It's important to note that IHG has deliberately structured its business model to be a strong domestic player in major markets while also having a global presence. In the U.S., for instance, our operations are 95% domestic, over 80% in China, and primarily domestic in Europe. In the EMEA region, we are also mostly focused on domestic travel. While we do have exposure to international travel, our strategy positions us as significant domestic players in key countries or regions. You’re right that some international travel routes have seen declines, like the Canada-U.S. route, but Canadians are shifting their travel patterns, visiting places like Mexico, Europe, and notably London. Travel from China to the Asia Pacific is up by double digits compared to last year, and Asia's inbound travel to Europe is also increasing. The Middle East remains strong. Overall, this indicates resilience in the market, which is encouraging. I believe that our central belief is that, in the mid- to long term, GDP growth and the expansion of the middle class will positively impact travel. The industry experiences cycles, with fluctuations, but tends to reach higher peaks and recover from lows. We are currently in a phase that supports this belief.

And I've got two questions, please. Just on forward bookings in the Americas, they're flat for Q2 and then growth in July and August. I'm just curious if there's some color you could share on price versus occupancy in those figures. And then on industry pricing in the U.S., obviously, the industry has shown a great amount of price discipline in the last five years, much more discipline than expected, I guess, at the time. But as you alluded to earlier, during lockdown, people were physically prevented from traveling. You could not just entice them with a discount and then see if it works. Right now, if people are just uncomfortable traveling because of the noise and the uncertainty, someone could try a discount and see if it works. So my question is, are you seeing competitors in the U.S. selectively use more promotions? Are you seeing some of your franchises in the U.S. being a bit more open to use promotions in your managed hotels where you have pricing sovereignty? Are you tactically using or exploring more promotions, maybe not lowering headline prices, but allocating a bit more to discount channels? And what has been the feedback from many of those explorations, please?

Yes. Thank you, Jaafar. Year-to-date, last year and even the year before, our RevPAR growth has been primarily driven by rate, with some contribution from occupancy growth. This trend is consistent globally and in the Americas. Therefore, we are not experiencing any price resistance or noticeable downshifting from higher-end brands to lower-priced options. Occupancy remains strong, and our bookings are either stable or increasing, indicating no decline in travel demand. Supply has been low in the U.S., which may not be beneficial for unit growth, although we are gaining market share through conversions and other methods. This limited supply is actually beneficial for RevPAR, as many cities and destinations are undersupplied relative to demand. We are not observing any new promotional strategies within the industry, and we are maintaining our steady approach as we had previously.

I believe that some of the new systems we've implemented using AI and large language models to analyze data have significantly reduced the emotional aspects of pricing. This rollout in our hotels across the Americas has positively impacted our performance, and I am confident it will assist owners in making better decisions regarding rate settings. The environment has changed considerably since the post-financial crisis period, where rates typically declined while occupancy improved, followed by a rise in rates. Currently, the situation is quite different, although there is still a possibility that history could repeat itself. However, the advancements in technology are helping owners make more rational pricing decisions.

That's a great point because typically, when we make irrational pricing decisions, it's due to fear influencing human choices. Machines, on the other hand, operate without fear and maintain perfect rationality. While it might sound humorous, it's true that the fear factor can affect behavior as a deadline approaches, causing individuals to make irrational choices even when keeping some unsold inventory is actually the best strategy for long-term revenue, profit, and pricing integrity. However, humans do not process that the same way machines do. As we continue to integrate high-quality, AI-driven systems into our operations, I believe we'll see improved pricing integrity and enhanced performance for our franchisees and ourselves.

Most of them were already answered, but I just wanted to come back on the demand in general. You mentioned that public sector was down, which was not a surprise. But could you give us some more granularity about the split between corporate and leisure part? And if you've seen significant change during the past few weeks, months in terms of booking and the way people are booking?

So what we have seen is that federal government travel has declined, not a surprise to anybody. And now that federal government travel is less than 3.5% of our U.S. business, so less than 2% of our global business has declined in the 10% range. State travel has been higher. It's a smaller piece of the business. State travel has been up even more than that on a percentage basis, but...

20%.

The overall government travel has decreased, but we've compensated with growth in other segments. The group segment has performed well, while leisure and business transient segments have remained stable. We anticipate that federal government travel will continue to decline for some time. Looking ahead, we are pleased that the second quarter appears relatively flat, with the potential for a pickup in the next several weeks due to short booking windows. Looking into the summer, we see positive signs. Currently, our group business is approximately 7 percent above last year, which helps offset the decline in government travel. Moreover, while government business used to be consistent, it is generally lower in rates, meaning we don't need equivalent increases in leisure, business, or group segments to make up for government losses, as those rates are typically capped at lower levels with minimal additional spending. Although the government is pursuing efficiency measures, they were already operating efficiently with each trip.

Okay, when you talk about the Groups, you include the MICE segment in it, I guess?

It's corporate MICE business. For us, it's probably a 50-50 split between corporate, group, and other segments.

Okay. Okay. And no slowdown on the MICE segment?

We haven't detected anything different, really. I mean it's all part of Group, and it's not a very, very big segment in and of itself. But you don't hear that from also big conference destinations like Las Vegas or Orlando. Conferences are still very popular. At this point, that's the data we have. That's the view we have.

Thank you very much. We currently have no further questions. So I will hand back over to Elie for any closing remarks.

Thank you to all of you on the call today. Just want to remind you that our second quarter update and financial results for the first half of 2025 will be announced on Thursday, the 7th of August. Look forward to speaking to you then. Goodbye.