Executives: Catherine Dolton - Head of Investor Relations Paul Edgecliffe-Johnson - Chief Financial

Officer
Analysts: Richard Clarke - AB Bernstein Monique Pollard - Citi Tim Barrett - Numis Tim Ramskill - Credit Suisse Jaafar Mestari - Exane BNP Paribas Stuart Gordon - Berenberg Jamie Rollo - Morgan Stanley Jarrod Castle -

UBS
Operator: Ladies and gentlemen, welcome to the IHG Q3 results call. My name is Megan and I'll be coordinating your call today. [Operator Instructions] I'll now hand over to your host Catherine Dolton to begin. Catherine, please go ahead.

Catherine Dolton: Good morning everyone and thank you for joining us today for our third quarter trading update.

This is Catherine Dolton, Head of Investor Relations at IHG. I'm joined this morning by Paul Edgecliffe-Johnson, Chief Financial Officer. We no longer hold a separate call for US investors, but we do make the replay of this conference call available on our website. So, before I hand over to Paul, I need to remind you that in the discussions today, the company may make certain forward-looking statements as defined under US law. Please 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.

I'll now turn the call over to Paul. Paul Edgecliffe-Johnson: Thanks, Catherine and good morning, everyone. I'll begin with some highlights in the period before covering each of our regions in turns and then I'll open the call to questions. We delivered a good third quarter performance. Total RevPAR was up 1% with the US performance impacted by high levels of prior year demand from the 2017 hurricanes.

We drove net rooms growth of 5.1% and saw our best performance to signings and openings in a decade. We have continued to make good progress against the strategic priorities we set out in February, which will drive industry leading net system sales growth over the medium term. As a remainder, these initiatives are being funded by the savings realized from our comprehensive efficiency program, which remains on track to deliver $125 million of savings per annum by 2020. This progress from ongoing good performance has given the board the confidence to announce a special dividend of $500 million to be paid in the first quarter of 2019 completely share consolidation subject to shareholder approval. Looking now in more detail and turning first to system size.

We added 19,000 rooms to our system, up 70% year-on-year with a record third quarter performance in both our Greater China and Europe, Middle East, Asia and Africa regions. This was aided by the inclusion of rooms associated with the regions and acquisition on the UK principle deals both of which closed in the third quarter. Excluding these, our net rooms growth was still 4.6% continuing the acceleration we have driven in recent quarters. At the same time we remain focused on removing underperforming hotels, exiting 3,000 rooms. We continue to expect to be towards the top end of our 2% to 3% removals guidance for the full year.

Looking at our future growth, we signed 27,000 rooms into our pipeline, up almost 40% year-on-year. Our total group pipeline now stands at 267,000 rooms and with our share of the active global industry pipeline and three times our share of open rooms, we remain well set up for future organic growth. I'll now take some time to update you on the progress we've made against our strategic initiatives to drive industry leading rooms growth. Turning first to our luxury portfolio and the completion in July of our 51% acquisitions of the upper luxury brand, regent hotels and resorts added six properties to our system. Since then we've moved pace and just this week we announced a relaunch of the brand including new brand hallmarks and design philosophy.

A brand specific ethos and a striking new visual identity, which will allow us to continue to grow regions and help position it as a real leader within luxury hospitality. Alongside this we've signed also new hotels the Regent Kuala Lumpur. This will be situated next to the Tun Razak Exchange project which is set to become the next financial district of KL and an extension of the city's golden triangle. With numerous sites under discussion and the refurbishment of the Intercontinental Hong Kong, which when it reopens in 2021 will be rebranded as a regent hotel, we're well on track to accelerate the brand's growth in the $60 billion luxury hotel brand. In the UK the rebranding of the portfolio of nine hotels to our luxury and upscale brands will give us representation for Kimpton in Manchester, Edinburgh, Glasgow and London.

Building on this momentum, we announced further signings for Kimpton in Barcelona, Tokyo and Bangkok in the third quarter. And our accelerated international expansion of the brand means we're now secured Kimpton representation in 14 countries around the world. Moving on to our upscale portfolio and our new brand in this space voco has enjoyed a strong start since its launch in June. The brand is sympathetic to a wide range of asset types and is really resonating with INS. We're seeing a great deal of interest for both conversion and new build properties.

In addition to the four hotels, which will rebrand to voco as part of the UK portfolio deal, we've signed a further six properties to date, including outside in Australia. We're due to open the first hotel in the fourth quarter and expect to have more than 15 signings in total by year end. This is ahead of our initial expectations for the brand and means that voco is well placed to grow to over 200 properties over the next 10 years. In the mainstream space, we've also achieved a significant milestone for avid hotels this quarter, with our first property now open less than one year after the brand was launched. The initial feedback has been overwhelmingly positive with guest commenting in particular on the Grab and Go Breakfast and the quality of the sleep experience.

We've signed 25 more properties in the third quarter, bringing our total pipeline to 150 hotels. We have a further three properties under construction and expect another nine hotels to break ground by the end of the year. We are also taking avid to new markets, announcing last week the launch of the brand in Europe. We signed a multiple development agreement with an existing partner, which will bring 15 avid hotels to the German market. This announcement builds on the strong growth momentum we've seen in Germany over recent years and creates a platform for avid to become a brand of scale in this key market for IHG.

Looking now to our initiatives to enhance revenue delivery, I'm pleased to say that the rollout of our guest reservation system and count based hotel technology platform IHG Concerto is substantially complete. We have over 95% of this to date migrated to the new platform with the remaining hotels expected to transition over the coming weeks, which means the first phase of the project has come in ahead of schedule and on budget. What's really encouraging is the huge amount of positive feedback we received from the hotels on the simplicity and ease of navigation of the new system. With post migration hotels with this faction survey is achieving an average score of nine out of ten. We had been planning to hold an investor and analyst event in December to showcase the system hosted by our Chief Commercial and Technology Officer, Eric Pearson who is leading the project.

Unfortunately Eric is having to take some time away from the business on short-term medical leave. So we decided to postpone the event for the time being. We will share more details on our planned feature enhancements to GRS at our full-year results in February. I'll now move on to talk about trading in each of our three regions. Looking first at the Americas where RevPAR was flat with the US, down 0.5%.

Commencing in the third quarter of 2017, we saw a significant demand generation from the displacement and recovery efforts following hurricanes Harvey and Irma. These tough comparables resulted in a mid single-digit occupancy decline in the third quarter of this year in the markets impacted by those hurricanes. Our overall RevPAR performance was in line with the industry to the upper midscale segment where more than two-thirds of our US rooms are positioned. While the industry will continue to lap strong comparables in the fourth quarter, the fundamentals for US lodging remained strong. With the hotel demand remaining at a record level, accelerating US GDP growth, continued wage growth and record low levels of unemployment.

Elsewhere in the region, RevPar in Canada was up 2% benefiting from continued strength in our market. In Latin America and the Caribbean, strong levels of demand in Colombia and Brazil help drive RevPAR growth of 7%, while in Mexico RevPAR was up 5% aided by soft comparables from the prior earthquake in the Mexico City area. Moving on now to our other regions, third quarter RevPAR for our Europe, Middle East, Asia and Africa region was up 2.5%. In continental Europe, RevPAR was up 4% as we continue to see market recovery in France of 10% with double-digit growth in Paris aided by the Ryder Cup and Paris Fashion Week. And more favorable trade fair calendar in Germany drove RevPAR up 2%.

And in Russia, double-digit RevPAR growth was aided by demand from the FIFA World Cup. In the UK, RevPAR was up 1%. With strong demand in London from the Farnborough Airshow and Middle East and leisure business driving RevPAR growth of 4%, offsetting softer occupancy in the provinces while RevPAR marginally down. Elsewhere in the region, we saw a low single-digit RevPAR decline in the Middle East and Australia due to new supply coming into the market, while Japan saw low single-digit growth with key cities performing well. Finally, moving to Greater China, where RevPAR was up 4.8% in the quarter.

As expected, this is lower than the growth we achieved in the first half of the year, due to the lacking of strong comparables, which commenced in the third quarter of 2017. In Mainland China, RevPAR was up 4.5% with mid-single digit growth in Tier 1 anted Tier 2 cities. This was driven by continued strong levels of transient and corporate demand, offsetting some adverse impact from Typhoon Mangkhut in September, and a change in timing of the mid-autumn festival. Tier 3 and Tier 4 cities saw a slight RevPAR decline due to new supply coming into Sanya and difficult trading conditions in Changbaishan; excluding these locations, Tier 3 and Tier 4 cities also saw mid-single digit RevPAR growth. Hong Kong and Macau were up 5% and 4%, respectively.

Showing and expected moderation from the exceptional levels we've seen in recent quarters. I have spoken before about the sense of opposition in greater China. There is significant long-term potential for IHG in this region and we're continuing to deliver a market leading performance. We grew our net system size by 17% year-on-year in the third quarter and opened 32 hotels compared to 13 in the same period last year, our best ever quarter for openings. The region is on track to deliver a record performance for both signings and openings for the full-year.

Turning now to capital returns, as I've said out today, we're making strong progress against our initiatives to drive growth, and this is what gives the Board the confidence to announce today the special dividends of $500 million with share consolidation. This will be subject to shareholder approval and will be paid in the first quarter of 2019. This will bring our total shareholder cash return since 2013 to $13.5 billion with over $5.5 billion coming from our operational cash flows. This underlying the highly cash generative nature of our business, and our commitment to our well established strategy of returning surplus cash to shareholders. So to summarize, we have delivered a strong third quarter.

Our net rooms growth continue to accelerate as we focus on driving industry leading growth over the medium term and we've delivered good RevPAR growth across the group, despite the impact of strong prior year comparables in the US and Greater China. We continue to make good progress against our new strategic initiatives that underpin our growth ambition, particularly in relation to optimizing our brand portfolio and our comprehensive efficiency program is on track to deliver the savings to reinvest behind our growth initiatives. Looking ahead, the fundamentals for our industry are strong. We have the right strategy to deliver industry-leading growth and we remain confident in our outlook for the remainder of the year. With that, Megan, let's open up the call for questions, please.

Operator: [Operator Instructions] We currently have a question from Richard Clarke, AB Bernstein. And Richard, your line is now open. Please go ahead.

Richard Clarke: Good morning, Paul. I had two questions for me really, the first one is just - I kind of understand there hurricane effect here, the worst performing brand in the US has been - has been Crown Plaza, I think minus 1.9%, I mean, is that a hurricane effect or is that some sort of weaker performance and therefore where are we with the turnaround of that brand? And then secondly, upper midscale is not just underperforming the rest of your units in the US, but it seems to be underperforming in every geography, Europe - Europe everywhere it seems to be seeing some underperformance in the upper midscale.

Is there anything structural you're seeing there? Budget hotels getting a little bit better, people sort of moving away from the sort of slightly more cookiecutter brands towards more boutique brands, anything you can sort of see that's happening that maybe seeing Holiday Inn Express is not being the great brand that it once was historically?
Paul Edgecliffe-Johnson: Thanks, Richard. So let's go on the second one, and coming back - I'll just come back and Crowne Plaza afterwards. Well, on the second one, our performance in the States in upper midscale was bang on with the upper midscale segment. So if you look at what happened in that segment and the list - data has just come out and got released overnight. You see that we're absolutely in line with that.

If you look across geographies, it really is the - the mid and the upper midscale segment that is still being preferred by anybody developing hotels because of the best return, so that's where the greatest growth opportunities are. And that does mean in some territories and you are seeing a greater level of supply coming into that. So whenever you think about what's going on in the RevPAR numbers, you of course got to look at demand and supply [indiscernible] in some quarters, in some markets of the world you'll find they aren't, the example will be Sydney this year where we and others have found that - all though it's a very good market, demands that more people have built hotels to tap into that demand. So I absolutely wouldn't say that this is to do with consumers not wanting to stay at midscale hotels or not preferring our brands. We have no data that suggests that indeed the opposite that the affiliation to our brand is improving.

And so I'm very confident around that. In terms of Crowne Plaza, Crowne Plaza is being on a journey, in the US the Crowne Plaza accelerate program, we've been removing products, but the performance you're seeing there is much more orientated towards what's going on with hurricanes and you have a few large hotels in markets like Dallas and Houston would have been badly hit and you'll see an out sized impact on the overall state from that, so nothing structural at that point.

Richard Clarke: Okay, great. Thanks very much. Paul Edgecliffe-Johnson: Thanks Richard.

Operator: We have a second follow up question from Monique Pollard of Citi. Monique your line is now open. Please go ahead.

Monique Pollard: Hi, good morning everyone. Just a couple of questions for me, firstly, on China RevPAR - Hong Kong RevPAR price, could you strip out for us what it would have been excluding any impact from the typhoon, did that have a material impact in the quarter.

And then secondly, now that Conchester is rolled out and operational in 95% of the hotels, obviously you're seeing initial feedback is good. Can you give us a timeline for the roll out of some of the more advanced features such as the attribute, pricing et cetera? And then finally, when we think about going into the fourth quarter obviously that is where the Americas RevPAR comp gets particularly tough, so should we sort of think about it in terms of a three year run rate, is it reasonable to assume that the US RevPAR from here gets weaker still?
Paul Edgecliffe-Johnson: Okay, thanks very much Monique and good to hear from you. So look in China there is some - a little bit of impact in Hong Kong, it's really difficult to isolate it. It was probably a little bit of a drag, but I'm not going to call it particularly - I mean, if I've got 5% growth in the market, I'm still reasonably happy with that, I mean nothing exercised [ph] tougher comp. So I wouldn't call as is anything material.

In terms of the next phase of JRF that one I guess that we'd always hope to get the system rolled out by the end of this year, possibly in the first quarter of next year, so I'm pleased that it's going a little ahead of schedule. It's always good when technology projects get brought in on budget, so it's a bit of a relief if I'm honest that it's still going so smoothly. And we're now working on the next iteration and the next functionality, of course the BUCs that we now - or the system we now have is power based, so you could just deliver the validation of functionality down over the internet and remove hotels often do not have a system with additional functionality. So we don't necessarily have to do the big bang approach that all hotels don't have the system. We can try it in different brands and do different things, but we're going to be starting piloting that and the new features next year.

It is more likely to be a phased approach, so you won't suddenly see everybody get everything at the same time because I think that the benefit of some of the functionalities is going to be greater. And for example, Intercontinental in Crowne Plazas are on attributes and regions where we have more different room types to merchandize than it is perhaps in an average, so we will just be - we'll be thoughtful about that. And we will come back to prelims and talk about that in more detail. In the fourth quarter comps, it is quite complicated looking at what we're lapping. If you look at - if you go back to 2016 and look at Q3 in the Sates that, that was a strong - that was a strong quarter, I mean not a strong quarter in 2017 with some benefits from the hurricanes.

And then –so then if you're looking at what the fourth quarter in the Americas going to look like and particularly in the US, clearly there was benefit throughout the quarter from the hurricanes. My best read on it, overall, it is not going to be dissimilar in performance to what we saw in the third quarter and the results there, it might vary a little bit around, but I don't see any material change in that outcome.

Monique Pollard: Great, thanks very much. Paul Edgecliffe-Johnson: Thanks, Monique.

Operator: We have another question from Tim Barrett of Numis.

Tim, your line is now open. Please go ahead.

Tim Barrett: Good morning, everyone. I had two things please. And on the special dividend, I guess it's fairly clear, but we can't see a balance sheet at this point.

And can you therefore talk around the size and adding another 0.5 turn on net debt. Are you confident that you weren't going above 2.5 times or you just saying that you've got a medium term tolerance of that level? And then the second thing if you've got time, can you give early thoughts for next year in terms of what you're seeing very early on in terms of meetings and events and long lead time bookings? Thanks a lot. Paul Edgecliffe-Johnson: Thanks, Tim. Yes So, look in terms of leverage multiples, et cetera or an awfully a long time that 2 to 2.5 times net debt-to-EBITDA is what I'm comfortable at and to being towards the top end of that and current economic conditions not remain the same. So now I'm not going to give an exact number because that will now give I guess for an EBITDA target, but expectation is that it would take us towards the upper end of the range, based on consensus but not for the top end of that range and certainly not over it.

Obviously, that get paid out in the first quarter of '19 and that's based on the trading 2018 number, which is I think the best given - paid in January [ph] of every time, the best comparative to use. And then, look, on 2019, it's always difficult, I mean, in our business that we have on the books, because we're not a big group house, so we don't have anything like the amount of big groups in houses and helping with that. But it's still favourable out there, as I talked about the drivers of demand, there are no unemployment in the U.S., good economic growth, wage growth still good, ledger spending is still good and these are all the things that drive demand. So if I look at our business in the non-hurricane markets it's still good, you're right, we're still up. Group bookings are up slightly for Q 4.

So, there's a lot of positive data that we have that economic and within the business that shows that we're still in a good environment when you still got hurricane impact. And then looking at here more broadly across the business, China is still strong, there's a lot of demand and supply and demand are in equilibrium in the Tier I markets we're still seeing low levels of supply, so our RevPAR is very strong, Tier 2 and Tier 3 there is a little bit more supply coming in but demand remaining very strong and then the markets around EMEA and they are as always they bid next. The Middle East is still tough, because the amount of new supply coming in. And as I mentioned, Sydney is a little bit tougher particularly because of the supply coming in that. Most of the other markets are in good shape and so there's nothing I'd call out on those today.

Tim Barrett: Okay. And you also pointed earlier that supply in - for midscale and midscale, are you seeking anything different in 2019 or just more of the same?
Paul Edgecliffe-Johnson: No. So, it's really, Tim, if you get to the market where a lot of people are opening a lot of hotels all at the same time, you may just see some that supplies got to be soaked up by the demand growth, so that's really all that I'm flagging, that if it's a question as to is it about consumers not providing the brand? Absolutely not, I think none of our data shows that. It's simply the amounts of new hotels coming in. And that if you look at the STR data, I think that would demonstrate that as well.

Tim Barrett: Okay. Thanks a lot. Paul Edgecliffe-Johnson: Thanks, Tim.

Operator: And we have a follow-up question from Tim Ramskill of Credit Suisse. Tim, your line is now open.

Please go ahead.

Tim Ramskill: Thanks. Good morning, Paul. I've got three questions, I'm going to tell them one at a time. So the first is again just around the cash, cash return, your comments about being comfortable with leverage at the upper end of your target in current economic circumstances.

I mean just help us think about how to interpret that I mean the way I would sort of add some color is I guess you can pay down leverage quite quickly, if you stop doing cash returns, probably by the best part of 0.5 of a turn. So, is it therefore just the case that you just carry on happy at the top end and only when it becomes very apparent that the economic circumstances are different, would you take a different approach?
Paul Edgecliffe-Johnson: So, obviously, as you said, the business is highly cash generative, and it always has been and that's what's allowed us to return some of those cash to shareholders over the year together with the asset disposals from the rest estate we used to own. And that doesn't change. I'm not going to get tied into an exact algorithm as you'll expect us to exactly at this point. We then pay back because they aren't special.

And board will have to evaluate what's the right timing and what's the right quantum. But effectively if I'm comfortable to continue to run at the top end of that range, then yes it would mean that the money will come back in due course, it's more the timing of it that I think is the factor that we'll just keep under wraps for now.

Tim Ramskill: Okay, great. Second question is around kind of how you think about managing the business in a more difficult economic circumstance, so clearly there's a lot of concern in the market about we're at in the cycle. You'd be well aware about given the questions you face.

But if we go back to the crisis, you cut roughly 10% out of the cost base, at that point in time relatively quickly. Just help us think about how again the flexibility you've got around costs if indeed the trading environment became more challenging. Obviously, I'm conscious that you're in the process of restructuring costs quite material already within the business, but more redeployment rather than taking cost out. Paul Edgecliffe-Johnson: Yeah. And just to be clear, so I don't want anyone to misunderstand what I've said.

My view is actually that the trading environment is still good, in the U.S. the trading environment is still a very good trading environment for us for all the facts that I talked about low unemployment, good wage growth, corporate spending remains strong, so there's lots and lots of factors that. Just got to look beyond hurricanes in China, but we're continuing to see extremely strong growth. And in EMEA once take out the Middle East, the markets there are good. So that sort of put that to one side.

And I'll treat it as more of an abstract question, if that's right, Tim. The first natural hedge that you have, I guess, in our cost base is around bonuses. And if you do not hit your target, then naturally creates quite a bit of EBIT hedge without having to look at some anything else in the business. Beyond that you have discretionary spending, as every business does. on air travel et cetera And then beyond that, you get into your more fixed cost base of people, which 70%, 75% of our people and which we can go after there's always things that you can do there.

And the restructuring that were done has been more around moving people into the right area of the business, so taking cost out of, say, our finance back office to invest it into a new brand, the new brands that we've launched. It is also worth pointing out that it's not just cost. It's also the volatility of the revenue base, it is quite a different company than it was back in say 2009, we don't have any of the big owned hotels. We don't have the HPT guaranteed payout. We have more geographic diversity.

So, I think we're in very good shape.

Tim Ramskill: Okay, great. Thank you. And my last one was just perhaps the easiest of all, but the system growth organically that you're running at the 4.6, that's obviously sort of it probably going to end up better than you were talking about at the start of the year where you were sort of said might be four then will accelerate towards industry-leading levels later. What do you - would you describe as being the reasons why you've ended up doing a touch better than expected?0
Paul Edgecliffe-Johnson: So, yes, I am pleased with where we are at this point.

So the 5.1%, which if you then take out the Regent and the principal rooms takes you down to 4.6% is a good performance for us. If you look at last year, where we were doing sort of around 4%, but then included within that was 3,500 rooms from Makkah which were those rooms we talked about before that had very low fees. So it is quite a material step up and it's combination more hotels getting opened and this points in the first nine months of the year we've opened 40,000 rooms versus 33,000 rooms last year including the 3,000 in Makkah. And we're signing a lot more, we signed 74,000 rooms in the first nine months versus 51,000 last year. So the combination of the step up in signings that we're seeing over prior years now starting to come through into openings.

And some of the initiatives that we've been driving particular over China where, for example, Holiday Inn Express is growing very strongly, but a combination of factors.

Tim Ramskill: Okay. Great. Thanks a lot. Paul Edgecliffe-Johnson: Thanks, Tim.

Operator: We have another question from Jaafar Mestari from Exane BNP Paribas. Jaafar, your line is now open. Please go ahead.

Jaafar Mestari: Hi. Good morning.

I've got two questions please. First one, as a follow-up on the cost base, I appreciate your profile is fairly difference from the last cycle, exposure is very much topline, you have ongoing cost savings and precisely on that parts at the time where you're looking to add more resources for owner support, launching new brands, et cetera. How are you making sure the timing of that is right and you're not adding more costs before you're delivering them? As of H1, you were actually slightly ahead delivery versus investments, can you please comment on that? And whether that's something you will make sure remains the case for the next two years. And then separately on the new strategic initiative, so back in February, the two things you've announced where one adding new brands and two evolving the owner propositions who have seen many new brand initiatives, when can we expect to hear more on the owner support et cetera, maybe China franchise plus qualifies, for example, what about the US, more management resources, more portfolio deals et cetera?
Paul Edgecliffe-Johnson: Okay. Thanks Jaafar.

Look, in terms of the cost base and making sure that we are taking on costs or changing the cost base at the right time. But the first thing I'll say is that the business model is advantaged in this respect, of course, with the system fund, which means that we're not in the position, if there was ever a fiscal downturn, that a lot of other companies are aware, they're marketing all runs through their P&L. It's the first thing they turn to is cutting the on-P&L marketing. This is all paid for out of the owner's money, which remains constant because it's linked to revenues. Or it marginally might come off, but it's not unusual that happens.

So we are quite privileged from that respective. At the first half, we had spent I think a little less than we had saved at that point. My expectation by the end of the year is, I would like to have spent everything that we have saved, my guess is we will probably not quite manage yet all that money out the door. And I will point out what the benefit would be in the P&L from that point. So we'll try to make sure that it gets deployed because otherwise - we know it does create some noise in the numbers, but I think that will probably be a bit of an under spend against savings delivery.

In terms of the owner proposition, yeah, and there's plenty that we're doing around that and this is an area that we'll consider bringing out more at the prelim results back in February because there's certainly lots that we're doing to improve our owner support. And in terms of the portfolio deals et cetera in the US, you talk about there is not many of those around phase-in on the ground. If there are any, we will certainly talk about them. But around the owner proposition, yeah, we'll talk more about that in February.

Jaafar Mestari: All right, thank you very much.

Paul Edgecliffe-Johnson: Thanks, Jaafar.

Operator: We have another question from Stuart Gordon, Berenberg. Stuart, your line is now open. Please go ahead.

Stuart Gordon: Good morning.

Just one question just on the U.S. just so as I can understand the moving parts, I think last year was quite a complex, RevPAR movement, there was a lot of moving parts, hurricanes, group bookings being canceled, even solar eclipses. I mean I think all in all it was roundabout 30% to 40% basis point tailwind still in the last year. Would it be right and just assuming just for simplicity that there is a similar headwind and these numbers are - is there anything else we should be thinking about it? Thanks. Paul Edgecliffe-Johnson: Thanks, Stuart.

And look, as you say, it is quite complex and as I mentioned earlier, you have to look back at what was going on in 2016 and how strong that was but various factors as we start to think about the longer-term comparability. And I'm going to trying to avoid quarter-by-quarter trying to split out all the impact by basis point, because all of that I'll be pointing to, well, holiday shift is 5 basis point, eclipse is 5 basis points et cetera, et cetera, which I don't really think happens - helps us a great deal. I think things like the shifts in the Jewish observances and timing for Fourth of July, et cetera are sort of neutrals and I would say that all of the impact is around the hurricane. But as I say, I think we're going to continue to see some hurricane impact into the fourth quarter probably a similar level of drag. And then in first and second quarter of 2019, there will be an element of drag, but it sequentially reduces.

So hopefully that helps, Stuart, even I can't give you an exact number.

Stuart Gordon: Yeah. No, that's fine. And just as a follow up on that. I mean group bookings have I assume come back as you would have expected, there's nothing and year-on-year group bookings that changed?
Paul Edgecliffe-Johnson: Look, this is on the books for the fourth quarter.

Generally it's pretty good. So I'll say, look, I think we will still see an impact in the hurricanes in the fourth quarter. But the macro environment is good. Rate was still up in the quarter, is up by 110 basis points or so. And the bookings were up.

I mean the books were up. And so you want to take out the hurricane impact, then the fundamentals are still very positive.

Stuart Gordon: Yes. Thank you. Paul Edgecliffe-Johnson: Thanks, Stuart.

Operator: We have another question from Jamie Rollo of Morgan Stanley. Jamie, your line is now open. Please go ahead.

Jamie Rollo: Thank you. First question is on the big increase in signings, could you remind us what the financial impact is, because you get the upfront fee, don't you, and so year-on-year, that will be at least 25,000 plus extra, extra rooms.

Secondly, removals, you're still guiding towards 3% but you were half at the nine month stage. So it sounds a lot to leave in the fourth quarter, I was just wondering about the degree of consensus and that. And finally in terms of recommending cash returns, that mean there's no more sort of M&A that we should expect. Thank you.
Paul Edgecliffe-Johnson: Thanks, Jamie.

Okay, so just on the cash return doesn't mean there's no more M&A. Well, I think if you look at the M&A that we've done certainly over the last 15years of our history, almost all of the M&A has gone the way of selling stuff. Very little has been buying stuff which is the nature of the industry, so we bought Kimpton, what was that 2014 for around the $400 million mark, when we bought Regent in the cash out of the door that is all from our ordinary Cap Ex utilizations, so there's no usage of longer term shareholder money if you like. There are still some small opportunities out in the industry, but there's not very many and we're not in the business of wall adjusting [ph], but you shouldn't read that there is nothing that we would never be able to do anything. If the right opportunity comes up at the right price then we'd certainly have a look at it.

In terms of removals, yes, it is there to light and we said this is the half year and we'll we get right up to the 3% level by the end of the year, but we might, if I had to guess, we might be into a little bit lights on that, so I'd expect it to be in the upper half of that two to three. It might be in the midpoint of that rather than the top end, but it depends. If we can actually get - bring a few hotels out because some of these it is that we're working with the owner to get the hotel out. They want to keep the brand, we wanted to go, but if we get the hotel out then we will. We will just have to wait and see how that results itself.

And in terms of signing phase they vary by - obviously by region and by brand on Intercontinental's you get large because there's some –technical services is a very complex build and we'll very involved with the owner on that to make sure that it's builds appropriately to brand standards et cetera. Holiday Inn Express and avid near very much lower fees. If there's any big impact and we'll certainly pull it out in the full year results and make that clear as we historically will do, but not guiding right now to what the number would be.

Jamie Rollo: Thank you. Paul Edgecliffe-Johnson: Thanks, Jaime.

Operator: And we have a last question from Jarrod Castle of UBS. Jarrod your line is now open. Please go ahead.

Jarrod Castle: Thank you and good morning. Two for me please, one, I think some of your competitors are talking more positively about the oil state, so just want to get your views going into next year, how you're feeling about that.

And then secondly, obviously the pipelines are growing very well and I'm just wondering, is there any kind of hesitation from kind of - in particular the US investors given the fact that we're starting to see kind of interest rates go up now or do they focus more on the demand environment at the moment when deciding to invest in your brand? Thanks. Paul Edgecliffe-Johnson: Thanks, Jarrod. So, yeah, I mean, the oil market's done a lot better than they were. Permian basin is a good market for us, but there's some ups and some downs, there's no material impact actually as we look at it at the moment at the group level, but we're not certainly negative on them, there's just nothing that I'll pull out making material impact on the numbers. In terms of the returns the owners are getting from the hotels, I think it's - there are puts and calls in this and that construction costs over recent years have increased.

You've seen some increase in raw material cost particularly having to import from China, interest rates going up a little, so investors are certainly getting more selective and we're seeing more and more owners looking for the highest ROI opportunities, which is things like Holiday Inn Express, Staybridge and avid, which is driving a lot of our interest, but they're all very long-term investors. So if you build a hotel you're not thinking about what happens in the interest rate cycle in the next year, you're thinking about building, which is going to be there for 30 to 50 years. So it does tend to be more orientated towards what's the longer term return on investment you're going to make.

Jarrod Castle: Okay, thank you. Paul Edgecliffe-Johnson: Thanks, Jarrod.

Operator: There's no further questions on the line, Paul, I'll hand back to you for any further remarks. Paul Edgecliffe-Johnson: Excellent, thank you very much Megan and thank you everybody for dialing in and listening and we're happy as always to take any further questions, please do just give us a call and look forward to seeing you all soon. Thanks for your interest. Have a great day. Bye for now.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Have a lovely day.