##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934orþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file
    number: 1-10409
  InterContinental Hotels Group
    PLC
 (Exact name of registrant as
    specified in its charter)
 England and Wales
 (Jurisdiction of incorporation
    or organization)
  Broadwater Park,
 Denham, Buckinghamshire UB9 5HR
 (Address of principal executive
    offices)
    Title of each class

Name of each exchange on which registeredAmerican Depositary Shares

New York Stock ExchangeOrdinary Shares of
    1329/47
    pence each

New York Stock Exchange*     *
    
    Not for trading, but only in
    connection with the registration of American Depositary Shares,
    pursuant to the requirements of the Securities and Exchange
    Commission.  Securities registered or to be
    registered pursuant to Section 12(g) of the Act:
    None
  Securities for which there is a
    reporting obligation pursuant to Section 15(d)of the
    Act:
    None
   Indicate the number of outstanding shares of each of the
    issuers classes of capital or common stock as of the close
    of the period covered by the annual report:
  Ordinary Shares of
    1329/47
    pence each

285,552,193   þ o
  o þ
  þ o
  Rule 12b-2
  þ o o
    o þ
  Rule 12b-2
 o þ
    US
    GAAP o

International Reporting Standards as issued by
    the International Standards Accounting
    Board þ

Other  o




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##### Table of Contents





TABLE OF
    CONTENTS
  PageIntroduction

4Cautionary Note Regarding Forward-Looking
    Statements

5PART IItem 1.

Identity of Directors, Senior Management and
    Advisors

7Item 2.

Offer Statistics and Expected Timetable

7Item 3.

Key Information

7Selected Consolidated Financial Information

7Risk Factors

11Item 4.

Information on the Company

14Summary

14Segmental Information

18Hotels

20Soft Drinks

37Trademarks

37Organizational Structure

37Property, Plant and Equipment

39Environment

39Item 4A.

Unresolved Staff Comments

40Item 5.

Operating and Financial Review and Prospects

40Critical Accounting Policies

40Operating Results

42Liquidity and Capital Resources

51Item 6.

Directors, Senior Management and Employees

53Directors and Senior Management

53Compensation

56Board Practices

57Employees

60Share Ownership

61Item 7.

Major Shareholders and Related Party
    Transactions

62Major Shareholders

62Related Party Transactions

62Item 8.

Financial Information

62Consolidated Statements and Other Financial
    Information

62Significant Changes

63Item 9.

The Offer and Listing

63Plan of Distribution

64Selling Shareholders

64Dilution

64Expenses of the Issue

64 2




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PageItem 10.

Additional Information

64Memorandum and Articles of Association

64Material Contracts

66Exchange Controls

69Taxation

69Documents on Display

73Item 11.

Quantitative and Qualitative Disclosures About
    Market Risk

73Item 12.

Description of Securities Other Than Equity
    Securities

74PART IIItem 13.

Defaults, Dividend Arrearages and
    Delinquencies

75Item 14.

Material Modifications to the Rights of Security
    Holders and Use of Proceeds

75Item 15.

Controls and Procedures

75Item 16.

[Reserved]

75Item 16A.

Audit Committee Financial Expert

75Item 16B.

Code of Ethics

75Item 16C.

Principal Accountant Fees and Services

76Item 16D.

Exemptions from the Listing Standards for Audit
    Committees

76Item 16E.

Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers

76Item 16F.

Change in Registrants Certifying
    Accountant

77Item 16G.

Summary of Significant Corporate Governance
    Differences from NYSE Listing Standards

77PART IIIItem 17.

Financial Statements

78Item 18.

Financial Statements

79Item 19.

Exhibits

79   3




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INTRODUCTION    
    board refers to the board of directors of
    InterContinental Hotels Group PLC or, where appropriate, the
    board of InterContinental Hotels Limited or Six Continents
    Limited;
    Britvic refers to Britannia Soft Drinks Limited for
    the period up to November 18, 2005, and thereafter,
    Britannia SD Holdings Limited (renamed Britvic plc on
    November 21, 2005) which became the holding company of
    the Britvic Group on November 18, 2005;
    Britvic Group refers to Britvic and its subsidiaries
    from time to time;
    Company refers to InterContinental Hotels Group PLC,
    InterContinental Hotels Limited or Six Continents Limited or
    their respective board of directors as the context requires;
    Group refers to InterContinental Hotels Group PLC
    and its subsidiaries or, where appropriate, InterContinental
    Hotels Limited or Six Continents Limited and their subsidiaries
    as the context requires;
    Hotels or IHG Hotels refers to the
    hotels business of the Group;
    IHG refers to InterContinental Hotels Group PLC or,
    where appropriate, its board of directors;
    IHL refers to InterContinental Hotels Limited,
    previously InterContinental Hotels Group PLC, former parent
    company of the Group and re-registered as a private limited
    company on June 27, 2005;
    ordinary share or share refers, before
    April 14, 2003, to the ordinary shares of 28 pence each in
    Six Continents Limited; following that date and until
    December 10, 2004 to the ordinary shares of £1 each in
    IHL; following that date and until June 27, 2005 to the
    ordinary shares of 112 pence each in IHL; following that date
    and until June 12, 2006 to the ordinary shares of 10 pence
    each in IHG; following that date until June 4, 2007 to the
    ordinary shares of
    113/7
    pence each in IHG; and following June 4, 2007 to the
    ordinary shares of
    1329/47
    pence each in IHG;
    Six Continents refers to Six Continents Limited;
    previously Six Continents PLC and re-registered as a private
    limited company on June 6, 2005;
    Soft Drinks and Britvic business refer
    to the soft drinks business of InterContinental Hotels Group
    PLC, which the Company had through its controlling interest in
    Britvic and which the Company disposed of by way of an initial
    public offering effective December 14, 2005; and
    VAT refers to UK value added tax levied by HM
    Revenue and Customs on certain goods and services.      Form 20-F
 4




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page F-19.
         CAUTIONARY
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Form 20-F
  Form 20-F
 5




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6




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PART I  ITEM 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS    ITEM 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    ITEM 3.
    KEY
    INFORMATION SELECTED
    CONSOLIDATED FINANCIAL INFORMATION  Summary
     7




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Consolidated
    Income Statement Data
  Years ended December 31,2008


2007


2006


2005


2004$


$


$


$


$(in millions, except per share and ADS amounts)Revenue:Continuing operations


1,854



1,771



1,446



1,274



1,107Discontinued operations


43



79



319



2,212



2,9121,897



1,850



1,765



3,486



4,019Total operating profit before exceptional operating items:Continuing operations


535



474



367



321



228Discontinued operations


14



17



57



298



403549



491



424



619



631Exceptional operating items:Continuing operations


(132
)


60



48



(27
)


(44
)Discontinued operations














(13
)


(45
)(132
)


60



48



(40
)


(89
)Total operating profit:Continuing operations


403



534



415



294



184Discontinued operations


14



17



57



285



358417



551



472



579



542Financial income


12



18



48



54



128Financial expenses


(113
)


(108
)


(68
)


(115
)


(188
)Profit before tax


316



461



452



518



482Tax:On profit before exceptional items


(101
)


(90
)


(97
)


(161
)


(102
)On exceptional items


17







(11
)






40Exceptional tax


25



60



184



15



294(59
)


(30
)


76



(146
)


232Profit after tax


257



431



528



372



714Gain on disposal of assets, net of tax


5



32



226



605



34Profit for the year


262



463



754



977



748Attributable to:Equity holders of the parent


262



463



754



942



699Minority equity interest














35



49Profit for the year


262



463



754



977



748Earnings per ordinary share:Continuing operations:Basic


86.4¢



131.3¢



126.5¢



40.7¢



66.2¢Diluted


83.8¢



127.7¢



123.3¢



39.8¢



65.5¢Total operations:Basic


91.3¢



144.7¢



193.8¢



180.8¢



105.4¢Diluted


88.5¢



140.7¢



189.0¢



176.7¢



104.2¢  8




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##### Table of Contents



Consolidated
    Balance Sheet Data
  December 31,2008


2007*


2006


2005


2004$


$


$


$


$(in millions)Goodwill and intangible assets


445



556



516



411



397Property, plant and equipment


1,684



1,934



1,956



2,340



3,716Investments and other financial assets


195



253



251



267



235Retirement benefit assets


40



49











Current assets


544



710



892



1,220



1,154Non-current assets classified as held for sale


210



115



98



481



3,523Total assets


3,118



3,617



3,713



4,719



9,025Current liabilities


1,141



1,226



1,261



1,370



1,786Long-term debt


1,334



1,748



594



707



2,230Net assets


1



98



1,346



1,905



3,739Share capital


118



163



129



84



1,395IHG shareholders equity


(6
)


92



1,330



1,870



3,513Number of shares in issue at period end (millions)


286



295



356



433



622     *
    
    Restated in relation to IFRIC 14
    (see page F-11).  Dividends
      Ordinary
    dividend
  Pence per ordinary share


$ per ADSInterim


Final


Total


Interim


Final


TotalYear ended December 312004


4.30



10.00



14.30



0.077



0.191



0.2682005


4.60



10.70



15.30



0.081



0.187



0.2682006


5.10



13.30



18.40



0.096



0.259



0.3552007


5.70



14.90



20.60



0.115



0.292



0.4072008


6.40



20.20



26.60



0.122



0.292



0.414  9




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##### Table of Contents



Special
    Dividend
  Pence perordinary share


$ per ADSJune 2006


118.00



2.17June 2007


200.00



4.00   Return of
    Capital
  Pence perordinary share


$ per ADSJune 2005


165.00



2.86  10




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RISK
    FACTORS  Form 20-F
  and/or
  The
    Group is reliant on the reputation of its brands and the
    protection of its intellectual property rights
  and/or
      The
    Group is exposed to a variety of risks related to identifying,
    securing and retaining management and franchise
    agreements
       11




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The
    Group is exposed to the risks of political and economic
    developments
  and/or
    The
    Group requires organizational capability to manage changes in
    key personnel and senior management
    The
    Group is exposed to the risk of events that adversely impact
    domestic or international travel
    The
    Group is reliant upon its proprietary reservations system and is
    exposed to the risk of failures in the system and increased
    competition in reservations infrastructure
     12




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The
    Group is exposed to certain risks in relation to technology and
    systems
    The
    Group is exposed to the risks of the hotel industry supply and
    demand cycle
    The
    Group may experience a lack of selected development
    opportunities
    The
    Group is exposed to risks related to corporate
    responsibility
    The
    Group is exposed to the risk of litigation
  and/or
  The
    Group may face difficulties insuring its business
    The
    Group is exposed to a variety of risks associated with its
    ability to borrow and satisfy debt covenants
   13




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The
    Group is required to comply with data privacy
    regulations
    The
    Group is exposed to the risks related to information
    security
      The
    Group is exposed to funding risks in relation to the defined
    benefits under its pension plans
  wound-up,
    ITEM 4.
    INFORMATION
    ON THE COMPANY SUMMARY  Group
    Overview
       14




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Group
    History and Recent Developments
        Acquisitions
    and Dispositions
           15




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##### Table of Contents



FIGURE
    1
  Asset disposal program detail

Number of hotels


Proceeds


Net book value($ billion)Disposed since April 2003


183



5.5



5.2Remaining owned and leased hotels as of December 31, 2008


16







1.7   Return
    of Funds
         16




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FIGURE
    2
  Return of funds program

Timing


Total return


Returned to
    date(i)


Still to be returned£501 million special dividend


Paid in December 2004



£501m



£501m



NilFirst £250 million share buyback


Completed in 2004



£250m



£250m



Nil£996 million capital return


Paid in July 2005



£996m



£996m



NilSecond £250 million share buyback


Completed in 2006



£250m



£250m



Nil£497 million special dividend


Paid in June 2006



£497m



£497m



NilThird £250 million share buyback


Completed in 2007



£250m



£250m



Nil£709 million special dividend


Paid in June 2007



£709m



£709m



Nil£150 million share buyback


Deferred



£150m



£120m



£30mTotal






£3,603m



£3,573



£30m   (i)
    
    As of March 23, 2009.  Hotels
    Soft
    Drinks
   17




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SEGMENTAL
    INFORMATION  Geographic
    Segmentation
    Year ended December 31,2008


2007


2006($ million)Revenue(1)Americas


920



902



778Europe, the Middle East and Africa


518



492



363Asia Pacific


290



260



204Central(4)


126



117



101Continuing operations


1,854



1,771



1,446Americas


43



62



74Europe, the Middle East and Africa






17



245Discontinued
    operations(3)


43



79



319Total


1,897



1,850



1,765Operating profit before exceptional operating
    items(1)(2)Americas


451



440



395Europe, the Middle East and Africa


171



134



69Asia Pacific


68



63



52Central(4)


(155
)


(163
)


(149
)Continuing operations


535



474



367Americas


14



16



12Europe, the Middle East and Africa






1



45Discontinued
    operations(3)


14



17



57Total


549



491



424     Footnotes on page 19.
  18




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Year ended December 31,2008


2007


2006(%)RevenueAmericas


48.5



48.8



44.0Europe, the Middle East and Africa


27.3



26.5



20.6Asia Pacific


15.3



14.1



11.6Central


6.6



6.3



5.7Continuing operations


97.7



95.7



81.9Americas


2.3



3.4



4.2Europe, the Middle East and Africa






0.9



13.9Discontinued operations


2.3



4.3



18.1Total


100.0



100.0



100.0Operating profit before exceptional operating itemsAmericas


82.1



89.6



93.1Europe, the Middle East and Africa


31.1



27.3



16.3Asia Pacific


12.4



12.8



12.3Central


(28.2
)


(33.2
)


(35.1
)Continuing operations


97.4



96.5



86.6Americas


2.6



3.3



2.8Europe, the Middle East and Africa






0.2



10.6Discontinued operations


2.6



3.5



13.4Total


100.0



100.0



100.0     (1)
    
    The results of operations have been
    translated into US dollars at the average rates of exchange for
    the period. In the case of the pound sterling, the translation
    rate is $1 = £0.55 (2007 $1 = £0.50, 2006 $1 =
    £0.54). In the case of the euro, the translation rate is $1
    = 0.68 (2007 $1 = 0.73, 2006 $1 =
    0.80).(2)
    
    Operating profit before exceptional
    operating items does not include exceptional operating items for
    all periods presented. Exceptional operating items (charge
    unless otherwise noted) by region are the Americas
    $99 million (2007 credit of $17 million, 2006
    credit of $44 million); Europe, the Middle East
    and Africa $21 million (2007 credit of $21 million,
    2006 credit of $4 million); Asia Pacific $2 million
    (2007 credit of $17 million, 2006 $nil); and Central
    $10 million (2007 credit of $5 million, 2006 $nil).(3)
    
    Discontinued operations were all
    owned and leased hotels.(4)
    
    Central revenue primarily relates
    to Holidex (IHGs proprietary reservation system) fee
    income. Central operating profit includes central revenue less
    costs related to global functions. 19




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HOTELS  Overview
                
    change in demographics  as the population ages and
    becomes wealthier, increased leisure time and income encourages
    more travel and hotel visits; younger generations are
    increasingly seeking work/life balance, with positive
    implications for increased leisure travel;
    increase in travel volumes as low-cost airlines grow rapidly;
    globalization of trade and tourism;
    increase in affluence and freedom to travel within emerging
    markets, such as China; and
    increase in the preference for branded hotels amongst consumers. 20




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FIGURE
    3
  2007 branded hotel rooms by region as a percentage of the
    total marketUnited States


69
%Europe, Middle East and Africa (EMEA)


33
%Asia Pacific


29
%                 Operations
    franchised
  managed
 21




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##### Table of Contents



owned and leased (O & L)
      Managementcontracts and jointOwned or leased


ventures


Franchised


TotalNo. of


No. of


No. of


No. of


No. of


No. of


No. of


No. ofhotels


rooms


hotels


rooms


hotels


rooms


hotels


rooms2008


16



5,644



585



148,240



3,585



465,967



4,186



619,8512007


18



6,396



539



134,883



3,392



443,815



3,949



585,0942006


25



8,460



512



125,214



3,204



422,572



3,741



556,246     Strategy
      
    Total Shareholder Returns  for the three-year period
    of 2006 to 2008, IHG was third among its peers;
    Rooms Growth  rooms added to our brands at a rate
    faster than competitors. In 2008 we grew by 5.9% against an
    average of 4.3% for our main competitors; and
    Key Performance Indicators  a basket of specific key
    performance indicators (KPIs) aimed at delivering our core
    purpose, cascaded to the hotel level.        
    where IHG chooses to compete; and
    how the Group will win when it competes.   22




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Where we compete
  
    To accelerate profitable growth of its core business in the
    largest markets where the Group currently has scale and also in
    key global cities. Seek opportunities to leverage our scale in
    new business areas.  How we win
  
    Financial returns:  To generate higher returns
    for owners and IHG through revenue delivery and improved
    operating efficiency.
    Our people:  To create a more efficient
    organization with strong core capabilities.
    Guest experience:  To operate a portfolio of
    brands attractive to both owners and guests that have clear
    market positions and differentiation in the eyes of the guest.
    Responsible business:  To take an active stance
    on environment and community issues in order to drive increased
    value for IHG, owners and guests.  (15-25
    
    a strong brand portfolio across the major markets 
    IHGs brands achieved revenue per available room
    (RevPAR) growth premiums within respective key
    market segments during 2008;
    market coverage  a presence in nearly 100 countries;
    scale  4,186 hotels, and 619,851 rooms;
    global reservations channels  delivering
    $7.6 billion of global system room revenue in 2008,
    including $2.6 billion from the internet;
    Priority Club Rewards  a loyalty program,
    contributing $5.9 billion of global system room revenue in
    2008; and
    a strong web presence  holidayinn.com is one of the
    industrys most visited sites, with around 87 million
    total site visits per annum. 23




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Segmental
    Results by Activity
    Year endedDecember 31,2008


2007


2006($ million)Continuing
    revenue(1)AmericasOwned and leased


257



257



192Managed


168



156



143Franchised


495



489



443920



902



778EMEAOwned and leased


240



244



169Managed


168



167



131Franchised


110



81



63518



492



363Asia PacificOwned and leased


159



145



131Managed


113



99



65Franchised


18



16



8290



260



204Central(3)


126



117



101Total


1,854



1,771



1,446Continuing operating profit before exceptional operating
    items(1)(2)AmericasOwned and leased


41



40



22Managed


51



41



50Franchised


426



425



382Regional overheads


(67
)


(66
)


(59
)451



440



395EMEAOwned and leased


45



33



(7
)Managed


95



87



68Franchised


75



58



44Regional overheads


(44
)


(44
)


(36
)171



134



69Asia PacificOwned and leased


43



36



31Managed


55



46



39Franchised


8



6



5Regional overheads


(38
)


(25
)


(23
)68



63



52Central(3)


(155
)


(163
)


(149
)Total


535



474



367     Footnotes on page 25.
  24




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Year ended December 31,2008


2007


2006(%)Continuing revenueAmericasOwned and leased


13.9



14.5



13.3Managed


9.0



8.8



9.9Franchised


26.7



27.6



30.649.6



50.9



53.8EMEAOwned and leased


12.9



13.8



11.7Managed


9.1



9.4



9.0Franchised


5.9



4.6



4.427.9



27.8



25.1Asia PacificOwned and leased


8.6



8.2



9.0Managed


6.1



5.6



4.5Franchised


1.0



0.9



0.615.7



14.7



14.1Central


6.8



6.6



7.0Total


100.0



100.0



100.0Continuing operating profit before exceptional operating itemsAmericasOwned and leased


7.7



8.4



6.0Managed


9.5



8.6



13.6Franchised


79.6



89.7



104.0Regional overheads


(12.5
)


(13.9
)


(16.0
)84.3



92.8



107.6EMEAOwned and leased


8.4



7.0



(1.9
)Managed


17.8



18.4



18.5Franchised


14.0



12.2



12.0Regional overheads


(8.2
)


(9.3
)


(9.8
)32.0



28.3



18.8AsiaOwned and leased


8.0



7.6



8.5Managed


10.3



9.7



10.6Franchised


1.5



1.3



1.4Regional overheads


(7.1
)


(5.3
)


(6.3
)12.7



13.3



14.2Central


(29.0
)


(34.4
)


(40.6
)Total


100.0



100.0



100.0     (1)
    
    The results of operations have been
    translated into US dollars at the average rates of exchange for
    the period. In the case of the pound sterling, the translation
    rate is $1 = £0.55 (2007 $1 = £0.50, 2006 $1 =
    £0.54). In the case of the euro, the translation rate is $1
    = 0.68 (2007 $1 = 0.73, 2006 $1 =
    0.80).(2)
    
    Operating profit before exceptional
    operating items does not include exceptional operating items for
    all periods presented. Exceptional operating items (charge
    unless otherwise noted) by region are the Americas
    $99 million (2007 credit of $17 million, 2006 credit
    of $44 million); Europe, the Middle East and Africa
    $21 million (2007 credit of $21 million, 2006  credit
    of $4 million); Asia Pacific $2 million (2007 credit
    of $17 million, 2006 $nil); and Central $10 million
    (2007 credit of $5 million, 2006 $nil).(3)
    
    Central revenue primarily relates
    to Holidex (IHGs proprietary reservation system) fee
    income. Central operating profit includes central revenue less
    costs related to global functions. 25




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##### Table of Contents



Global
    System
    Priority Club Rewards:
  Central Reservation System Technology:
  Reservations Call Centers:
  Internet:
    Sales
    and Marketing
      
    adding further locations and improving guest satisfaction for
    its brands;
    continuing the focus on enrolments in Priority Club Rewards and
    increasing their share of the total hotel spend;
    continuing to improve the direct channels; and
    improving pricing structure. 26




---



##### Table of Contents



Global
    Brands
  Brands
    Overview
    December 31, 2008Brands

Room numbers


HotelsInterContinental


54,736



159Crowne Plaza


93,382



342Holiday Inn


249,691



1,353Holiday Inn Express


173,794



1,932Staybridge Suites


16,644



152Candlewood Suites


20,641



204Hotel Indigo


2,702



22Other


8,261



22Total


619,851



4,186   InterContinental
  Americas

Americas

EMEA

EMEA

Asia Pacifictotal

O & L

total

O & L

totalAverage room rate
    $(1)


180.07



259.21



205.52



476.45



199.09Room
    numbers(2)


18,502



1,914



20,836



1,293



15,398     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable InterContinental hotels.(2)
    
    As at December 31, 2008.      Crowne
    Plaza
  Americas

EMEA

Asia Pacifictotal

total

totalAverage room rate
    $(1)


113.32



168.80



111.80Room
    numbers(2)


51,124



20,729



21,529     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Crowne Plaza hotels.(2)
    
    As at December 31, 2008.   27




---



##### Table of Contents



Holiday
    Inn
  Americas


Americas


EMEA


Asia Pacifictotal


O & L


total


totalAverage room rate
    $(1)


100.72



111.00



133.96



93.15Room
    numbers(2)(3)


171,189



1,358



53,039



27,875     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Holiday Inn hotels.(2)
    
    As at December 31, 2008.(3)
    
    The Americas total includes Holiday
    Inn Club Vacations (2,412 rooms).        Holiday
    Inn Express
  Americas


EMEA


Asia Pacifictotal


total


totalAverage room rate
    $(1)


99.90



115.37



59.79Room
    numbers(2)


146,024



21,564



6,206     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Holiday Inn Express hotels.(2)
    
    As at December 31, 2008.      Staybridge
    Suites
  Americas


EMEAtotal


totalAverage room rate
    $(1)


107.62



Room
    numbers(2)


16,372



272     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Staybridge Suites
    hotels.(2)
    
    As at December 31, 2008. 28




---



##### Table of Contents



Candlewood
    Suites
  AmericastotalAverage room rate
    $(1)


72.12Room
    numbers(2)


20,641     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Candlewood Suites hotels.(2)
    
    As at December 31, 2008.      Hotel
    Indigo
  Americas


EMEAtotal


totalAverage room rate
    $(1)


120.55



Room
    numbers(2)


2,638



64     (1)
    
    For the year ended
    December 31, 2008; quoted at constant US$ exchange rate.
    Average room rate is for comparable Hotel Indigo hotels.(2)
    
    As at December 31, 2008.  24-hour
    Geographical
    Analysis
   29




---



##### Table of Contents



Americas


EMEA


Asia Pacific(% of total)Room
    numbers(1)


69



19



12Regional operating profit (before central overheads and
    exceptional operating
    items)(2)


65



25



10     (1)
    
    As at December 31, 2008.(2)
    
    For the year ended
    December 31, 2008.    Owned and leased


Managed


Franchised


TotalHotels


Rooms


Hotels


Rooms


Hotels


Rooms


Hotels


RoomsAmericasInterContinental


4



1,914



25



9,156



26



7,432



55



18,502Crowne Plaza










18



6,474



169



44,650



187



51,124Holiday Inn


4



1,358



30



9,777



886



157,642



920



168,777Holiday Inn Express










1



252



1,721



145,772



1,722



146,024Staybridge Suites


2



233



43



5,339



105



10,800



150



16,372Candlewood Suites










79



9,512



125



11,129



204



20,641Hotel Indigo










3



405



18



2,233



21



2,638Holiday Inn Club Vacations


















1



2,412



1



2,412Total


10



3,505



199



40,915



3,051



382,070



3,260



426,490EMEAInterContinental


3



1,293



53



17,297



8



2,246



64



20,836Crowne Plaza










24



6,380



65



14,349



89



20,729Holiday Inn










86



15,542



246



37,497



332



53,039Holiday Inn Express


1



153



13



1,491



172



19,920



186



21,564Staybridge Suites










2



272











2



272Hotel Indigo


















1



64



1



64Other










1



203











1



203Total


4



1,446



179



41,185



492



74,076



675



116,707Asia PacificInterContinental


1



495



31



12,523



8



2,380



40



15,398Crowne Plaza










61



19,642



5



1,887



66



21,529Holiday Inn


1



198



85



25,218



15



2,459



101



27,875Holiday Inn Express










22



5,931



2



275



24



6,206Other










8



2,826



12



2,820



20



5,646Total


2



693



207



66,140



42



9,821



251



76,654TotalInterContinental


8



3,702



109



38,976



42



12,058



159



54,736Crowne Plaza










103



32,496



239



60,886



342



93,382Holiday Inn


5



1,556



201



50,537



1,147



197,598



1,353



249,691Holiday Inn Express


1



153



36



7,674



1,895



165,967



1,932



173,794Staybridge Suites


2



233



45



5,611



105



10,800



152



16,644Candlewood Suites










79



9,512



125



11,129



204



20,641Hotel Indigo










3



405



19



2,297



22



2,702Holiday Inn Club Vacations


















1



2,412



1



2,412Other










9



3,029



12



2,820



21



5,849Total


16



5,644



585



148,240



3,585



465,967



4,186



619,851  30




---



##### Table of Contents



Americas
    EMEA
    Asia
    Pacific
    Room Count
    and Pipeline
    best-in-class
     31




---



##### Table of Contents



Americas
      EMEA
      Asia
    Pacific
     32




---



##### Table of Contents



FIGURE
    4
  Hotels


RoomsChange








ChangeGlobal hotel and room count at December 31

2008


2007


over 2007


2008


2007


over 2007Analyzed by brand:InterContinental


159



149



10



54,736



50,762



3,974Crowne Plaza


342



299



43



93,382



83,170



10,212Holiday Inn


1,353



1,381



(28
)


249,691



256,699



(7,008
)Holiday Inn Express


1,932



1,808



124



173,794



156,531



17,263Staybridge Suites


152



122



30



16,644



13,466



3,178Candlewood Suites


204



158



46



20,641



16,825



3,816Hotel Indigo


22



11



11



2,702



1,501



1,201Holiday Inn Club Vacations


1







1



2,412







2,412Other


21



21







5,849



6,140



(291
)Total


4,186



3,949



237



619,851



585,094



34,757Analyzed by ownership type:Owned and leased


16



18



(2
)


5,644



6,396



(752
)Managed


585



539



46



148,240



134,883



13,357Franchised


3,585



3,392



193



465,967



443,815



22,152Total


4,186



3,949



237



619,851



585,094



34,757  33




---



##### Table of Contents



FIGURE
    5
  Hotels


RoomsChange








ChangeGlobal pipeline at December 31

2008


2007


over 2007


2008


2007


over 2007Analyzed by brand:InterContinental


71



62



9



21,884



20,013



1,871Crowne Plaza


133



118



15



41,469



36,362



5,107Holiday Inn


387



365



22



64,261



56,945



7,316Holiday Inn Express


719



712



7



70,270



70,142



128Staybridge Suites


166



157



9



18,109



17,150



959Candlewood Suites


242



207



35



21,790



18,605



3,185Hotel Indigo


56



52



4



7,212



6,565



647Other


1



1







90



90



Total


1,775



1,674



101



245,085



225,872



19,213Analyzed by ownership type:Owned and leased


1







1



185







185Managed


300



247



53



87,941



71,814



16,127Franchised


1,474



1,427



47



156,959



154,058



2,901Total


1,775



1,674



101



245,085



225,872



19,213   Seasonality
    Competition
    Key
    Relationships
       34




---



##### Table of Contents



RevPAR
  year-on-year
   35




---



##### Table of Contents



Owned & leased


Managed


FranchisedChange vs








Change vs








Change vs2008


2007


2007


2008


2007


2007


2008


2007


2007AmericasInterContinentalOccupancy


80.8
%


80.9
%


(0.1
)%pts


68.6
%


70.8
%


(2.2
)%pts


63.7
%


63.2
%


0.5
%ptsAverage daily rate

$
259.21


$
257.53



0.7
%

$
184.03


$
178.18



3.3
%

$
142.98


$
135.40



5.6
%RevPAR

$
209.35


$
208.42



0.4
%

$
126.18


$
126.18



0.0
%

$
91.14


$
85.56



6.5
%Crowne PlazaOccupancy














70.5
%


72.4
%


(1.9
)%pts


60.6
%


63.0
%


(2.4
)%ptsAverage daily rate













$
120.31


$
115.52



4.1
%

$
112.07


$
109.15



2.7
%RevPAR













$
84.86


$
83.58



1.5
%

$
67.96


$
68.76



(1.2
)%Holiday InnOccupancy


70.0
%


72.4
%


(2.4
)%pts


69.4
%


68.3
%


1.1
%pts


60.2
%


63.3
%


(3.1
)%ptsAverage daily rate

$
111.00


$
105.01



5.7
%

$
111.34


$
107.42



3.6
%

$
99.79


$
96.84



3.0
%RevPAR

$
77.71


$
76.02



2.2
%

$
77.28


$
73.34



5.4
%

$
60.07


$
61.26



(1.9
)%Holiday Inn ExpressOccupancy














77.8
%


75.8
%


2.0
%pts


65.3
%


67.9
%


(2.6
)%ptsAverage daily rate













$
156.37


$
148.58



5.2
%

$
99.75


$
95.37



4.6
%RevPAR













$
121.71


$
112.67



8.0
%

$
65.13


$
64.72



0.6
%Staybridge SuitesOccupancy


72.5
%


73.7
%


(1.2
)%pts


73.7
%


74.2
%


(0.5
)%pts


71.4
%


71.5
%


(0.1
)%ptsAverage daily rate

$
103.24


$
100.56



2.7
%

$
112.30


$
109.31



2.7
%

$
103.88


$
101.83



2.0
%RevPAR

$
74.83


$
74.12



1.0
%

$
82.79


$
81.12



2.1
%

$
74.19


$
72.83



1.9
%Candlewood SuitesOccupancy














71.4
%


74.4
%


(3.0
)%pts


67.4
%


65.8
%


1.6
%ptsAverage daily rate













$
71.80


$
69.94



2.7
%

$
72.77


$
71.83



1.3
%RevPAR













$
51.24


$
52.01



(1.5
)%

$
49.06


$
47.30



3.7
%Hotel IndigoOccupancy














67.5
%


68.4
%


(0.9
)%pts


60.3
%


55.0
%


5.3
%ptsAverage daily rate













$
141.66


$
142.78



(0.8
)%

$
110.46


$
106.34



3.9
%RevPAR













$
95.56


$
97.72



(2.2
)%

$
66.56


$
58.53



13.7
%   Owned & leased


Managed


FranchisedChange vs








Change vs








Change vs2008


2007


2007


2008


2007


2007


2008


2007


2007EMEAInterContinentalOccupancy


74.3
%


81.7
%


(7.4
)%pts


67.7
%


66.9
%


0.8
%pts


60.1
%


63.4
%


(3.3
)%ptsAverage daily rate

$
476.45


$
470.48



1.3
%

$
181.90


$
165.51



9.9
%

$
317.57


$
269.56



17.8
%RevPAR

$
354.22


$
384.37



(7.8
)%

$
123.17


$
110.65



11.3
%

$
190.94


$
170.82



11.8
%Crown PlazaOccupancy














78.0
%


79.7
%


(1.7
)%pts


67.5
%


69.2
%


(1.7
)%ptsAverage daily rate













$
190.65


$
174.52



9.2
%

$
157.48


$
148.99



5.7
%RevPAR













$
148.68


$
139.02



6.9
%

$
106.33


$
103.05



3.2
%Holiday InnOccupancy














73.0
%


73.3
%


(0.3
)%pts


65.5
%


67.4
%


(1.9
)%ptsAverage daily rate













$
142.96


$
140.23



1.9
%

$
129.65


$
123.82



4.7
%RevPAR













$
104.37


$
102.79



1.5
%

$
84.89


$
83.45



1.7
%Holiday Inn ExpressOccupancy


68.4
%


72.5
%


(4.1
)%pts


63.4
%


67.3
%


(3.9
)%pts


71.8
%


72.9
%


(1.1
)%ptsAverage daily rate

$
102.64


$
85.73



19.7
%

$
100.49


$
90.69



10.8
%

$
116.39


$
112.51



3.4
%RevPAR

$
70.20


$
62.15



13.0
%

$
63.74


$
61.00



4.5
%

$
83.54


$
82.00



1.9
%   36




---



##### Table of Contents



Owned & leased


Managed


FranchisedChange vs








Change vs








Change vs2008


2007


2007


2008


2007


2007


2008


2007


2007Asia PacificInterContinentalOccupancy


69.0
%


69.9
%


(0.9
)%pts


71.2
%


74.7
%


(3.5
)%pts


66.0
%


73.2
%


(7.2
)%ptsAverage daily rate

$
408.50


$
375.91



8.7
%

$
180.30


$
170.54



5.7
%

$
222.69


$
197.79



12.6
%RevPAR

$
281.74


$
262.85



7.2
%

$
128.43


$
127.33



0.9
%

$
146.92


$
144.85



1.4
%Crowne PlazaOccupancy














70.2
%


73.4
%


(3.2
)%pts


79.8
%


81.2
%


(1.4
)%ptsAverage daily rate













$
110.52


$
103.36



6.9
%

$
119.85


$
118.74



0.9
%RevPAR













$
77.59


$
75.83



2.3
%

$
95.59


$
96.39



(0.8
)%Holiday InnOccupancy


84.3
%


76.7
%


7.6
%


67.4
%


71.3
%


(3.9
)%pts


70.6
%


73.2
%


(2.6
)%ptsAverage daily rate

$
138.86


$
135.13



2.8
%

$
93.30


$
84.98



9.8
%

$
86.83


$
79.63



9.0
%RevPAR

$
117.01


$
103.71



12.8
%

$
62.90


$
60.56



3.9
%

$
61.32


$
58.32



5.1
%Holiday Inn ExpressOccupancy














67.4
%


64.1
%


3.3
%pts


59.8
%


55.4
%


4.4
%ptsAverage daily rate













$
60.06


$
58.23



3.1
%

$
56.20


$
54.78



2.6
%RevPAR













$
40.49


$
37.30



8.6
%

$
33.60


$
30.34



10.7
%OtherOccupancy














73.0
%


78.9
%


(5.9
)%pts


72.2
%


75.1
%


(2.9
)%ptsAverage daily rate













$
123.31


$
127.92



(3.6
)%

$
93.26


$
92.90



0.4
%RevPAR













$
90.04


$
100.92



(10.8
)%

$
67.29


$
69.73



(3.5
)%   Regulation
   SOFT
    DRINKS       TRADEMARKS   ORGANIZATIONAL
    STRUCTURE  Principal
    operating subsidiary undertakings
   37




---



##### Table of Contents



a
  a
  b
  b
  b
  b
  c
  d
    (a)
    
    Incorporated in Great Britain and
    registered in England and Wales.(b)
    
    Incorporated in the United States.(c)
    
    Incorporated in Hong Kong.(d)
    
    Incorporated in France. 38




---



##### Table of Contents



PROPERTY,
    PLANT AND EQUIPMENT    Europe,the Middle EastNet book value as at December 31, 2008

and Africa

Americas

Asia Pacific

Total($ million)Land and buildings


532



415



319



1,266Fixtures, fittings and equipment


171



151



96



418703



566



415



1,684        ENVIRONMENT      
    developments in global environmental policy;
    how it establishes management responsibility and accountability
    for environmental performance;
    how it evaluates and manages the Groups hotels
    environmental footprint;
    new projects and developments; and
    performance benchmarking against best practice.        
    implementation of systems in all our owned and managed hotels to
    track the consumption of energy and water as well as waste;
    development of the Green Engage energy management system (patent
    pending); 39




---



##### Table of Contents




    extensive consumer research to quantify green
    opportunity with consumers; and
    refinement of the Groups corporate responsibility approach.        ITEM 4A.
    UNRESOLVED
    STAFF COMMENTS    ITEM 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS  INTRODUCTION
  Business
    and Overview
      Operational
    Performance
       CRITICAL
    ACCOUNTING POLICIES   40




---



##### Table of Contents



Revenue
    recognition
              Goodwill,
    intangible assets, and property, plant and
    equipment
       41




---



##### Table of Contents




    Property, plant and equipment  $12 million in
    respect of a North American hotel;
    Goodwill  $63 million relating to the Americas
    managed operations cash-generating unit; and
    Intangible assets  $21 million relating to
    capitalized management contracts in the EMEA region.  Income
    taxes
      Loyalty
    program
    Pensions
    and other post-employment benefit plans
   OPERATING
    RESULTS  Accounting
    Principles
      42




---



##### Table of Contents



Year ended


Year ended


Year endedDecember 31,


December 31,


December 31,2008


2007


2006($ million)GROUP RESULTSRevenue:Continuing operations


1,854



1,771



1,446Discontinued operations


43



79



319Total revenue


1,897



1,850



1,765Operating profit before exceptional operating items:Continuing operations


535



474



367Discontinued operations


14



17



57Total operating profit before exceptional operating items


549



491



424Exceptional operating items


(132
)


60



48Operating profit


417



551



472Net financial expenses


(101
)


(90
)


(20
)Profit before tax


316



461



452Tax


(59
)


(30
)


76Profit after tax


257



431



528Gain on disposal of assets, net of tax


5



32



226Profit available for the year


262



463



754Earnings per ordinary share:Basic


91.3¢



144.7¢



193.8¢Adjusted


120.9¢



97.2¢



78.9¢Adjusted  continuing operations


117.8¢



93.8¢



69.7¢   Year
    ended December 2008 compared with year ended December
    2007
           43




---



##### Table of Contents



Exceptional
    operating items
    
    $35 million in relation to the Holiday Inn relaunch;
    $19 million of cost savings-related severance costs;
    $96 million of non-cash asset impairment reflecting the
    poorer trading environment expected in 2009; and
    other items including gains on asset sales, which netted to an
    $18 million credit    Net
    financial expenses
      Taxation
        Earnings
    per share
   44




---



##### Table of Contents



Highlights
    for the year ended December 31, 2008
    Continuing
    Hotels Results
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Revenue:Americas


920



902



2.0EMEA


518



492



5.3Asia Pacific


290



260



11.5Central


126



117



7.71,854



1,771



4.7Operating profit before exceptional operating items:Americas


451



440



2.5EMEA


171



134



27.6Asia Pacific


68



63



7.9Central


(155
)


(163
)


4.9535



474



12.9     Americas
  Continuing
    Americas Results
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Revenue:Owned and leased


257



257



Managed


168



156



7.7Franchised


495



489



1.2920



902



2.0Operating profit before exceptional operating items:Owned and leased


41



40



2.5Managed


51



41



24.4Franchised


426



425



0.2518



506



2.4Regional overheads


(67
)


(66
)


(1.5
)Total


451



440



2.5    45




---



##### Table of Contents



46




---



##### Table of Contents



Europe,
    Middle East and Africa
  Continuing
    EMEA Results
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Revenue:Owned and leased


240



244



(1.6
)Managed


168



167



0.6Franchised


110



81



35.8518



492



5.3Operating profit before exceptional operating items:Owned and leased


45



33



36.4Managed


95



87



9.2Franchised


75



58



29.3215



178



20.8Regional overheads


(44
)


(44
)


Total


171



134



27.6            47




---



##### Table of Contents



Asia
    Pacific
  Continuing
    Asia Pacific Results
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Revenue:Owned and leased


159



145



9.7Managed


113



99



14.1Franchised


18



16



12.5290



260



11.5Operating profit before exceptional operating items:Owned and leased


43



36



19.4Managed


55



46



19.6Franchised


8



6



33.3106



88



20.5Regional overheads


(38
)


(25
)


(52.0
)Total


68



63



7.9              48




---



##### Table of Contents



Central
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Revenue


126



117



7.7Gross central costs


(281
)


(280
)


(0.4
)Net central costs


(155
)


(163
)


4.9     System
    Funds
  Year ended


Year endedDecember 31,


December 31,2008


2007


Change($ million)


%Assessments


990



930



6.5         Highlights
    for the year ended December 31, 2007
    Group
    results
    Americas
     49




---



##### Table of Contents



(year-on-year
          Europe,
    Middle East and Africa
           50




---



##### Table of Contents



Asia
    Pacific
              Central
   LIQUIDITY
    AND CAPITAL RESOURCES  Sources
    of Liquidity
             51




---



##### Table of Contents



Cash
    From Operating Activities
      Cash
    From Investing Activities
    Cash
    Used in Financing Activities
      Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
    Total amounts


Less than








Aftercommitted


1 year


1-3 Years


3-5 years


5 years($ million)Long-term
    debt(i)


1,153



5



502



646



Finance lease
    obligations(ii)


3,460



16



32



32



3,380Operating lease obligations


548



56



97



73



322Agreed pension scheme contributions


28



28











Capital contracts placed


40



40











5,229



145



631



751



3,702     (i)
    
    Repayment period classified
    according to the related facility maturity date.(ii)
    
    Represents the minimum lease
    payments related to the 99 year lease on the
    InterContinental Boston.     52




---



##### Table of Contents



Pension
    Plan Commitments
          ITEM 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES DIRECTORS
    AND SENIOR MANAGEMENT      Directors
  Initially


Date of nextappointed to


reappointmentName

Title

the board


by
    shareholders(4)Andrew Cosslett

Director and Chief Executive


2005



2011David
    Kappler(1)

Director and Senior Independent Director


2004



2011Ralph
    Kugler(1)

Director


2003



2011Jennifer
    Laing(1)(2)

Director


2005



2009Jonathan
    Linen(1)(2)

Director


2005



2009Richard
    Solomons(3)

Director and Finance Director


2003



2009David Webster

Director and Chairman


2003



2010Ying
    Yeh(1)(4)

Director


2007



2011     (1)
    
    Non-executive independent director.(2)
    
    Required, under the Companys
    Articles of Association, to stand for re-election at the 2009
    Annual General Meeting.(3)
    
    Standing for re-election at the
    2009 Annual General Meeting on a voluntary basis.(4)
    
    Under the Companys Articles
    of Association. 53




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##### Table of Contents



Officers
  Initially appointedName

Title

to positionJim Abrahamson

President, The Americas


2009Tom Conophy

Executive Vice President and Chief Information Officer


2006Peter Gowers

President, Asia Pacific


2007Kirk Kinsell

President, EMEA


2007Tracy Robbins

Executive Vice President, Global Human Resources


2005Tom Seddon

Executive Vice President and Chief Marketing Officer


2007George Turner

Executive Vice President, General Counsel and Company Secretary


2009   Former
    Directors and Officers
    Directors
    and Officers
  David
    Webster, Non-Executive Chairman
    Andrew
    Cosslett, Chief Executive
    Richard
    Solomons, Finance Director
     David
    Kappler, Senior Independent Non-Executive Director
   54




---



##### Table of Contents



Ralph
    Kugler, Non-Executive Director
    Jennifer
    Laing, Non-Executive Director
    Jonathan
    Linen, Non-Executive Director
    Ying Yeh,
    Non-Executive Director
    Other
    members of the Executive Committee
  Jim
    Abrahamson, President, The Americas
    Tom
    Conophy, Executive Vice President and Chief Information
    Officer
    Peter
    Gowers, President, Asia Pacific
   55




---



##### Table of Contents



Kirk
    Kinsell, President, EMEA
    Tracy
    Robbins, Executive Vice President, Global Human
    Resources
    Tom
    Seddon, Executive Vice President and Chief Marketing
    Officer
  ® e-commerce,
  George
    Turner, Executive Vice President, General Counsel and Company
    Secretary
       COMPENSATION      Share
    Plans
    Annual
    Bonus Plan
   56




---



##### Table of Contents



Long Term
    Incentive Plan
    Executive
    Share Option Plan
    Sharesave
    Plan
    Options
    and Ordinary Shares held by Directors
   BOARD
    PRACTICES  Contracts
    of Service
    12-month
 57




---



##### Table of Contents



Directors
    Contracts
  Contract


Unexpired term/Directors

date


notice periodAndrew Cosslett


2.3.05



12 monthsStevan Porter


4.15.03



n/a
(1)Richard Solomons


4.15.03



12 months     (1)
    
    Stevan Porter passed away on
    August 7, 2008.      Payments
    on Termination
      Committees
    Executive
    Committee
    Audit
    Committee
   58




---



##### Table of Contents




    review the Groups public statements on internal control
    and corporate governance compliance prior to their consideration
    by the Board;
    review the Groups processes for detecting and addressing
    fraud, misconduct and control weaknesses and to consider the
    response to any such occurrence, including overseeing the
    process enabling the anonymous submission of concerns;
    review reports from management, internal audit and external
    audit concerning the effectiveness of internal control,
    financial reporting and risk management processes;
    review with management and the external auditor any financial
    statements required under UK or US legislation before submission
    to the Board;
    establish, review and maintain the role and effectiveness of the
    internal audit function, including overseeing the appointment of
    the Head of Internal Audit;
    assume responsibility for the appointment, compensation,
    resignation, dismissal and the overseeing of the external
    auditor, including review of the external audit, its cost and
    effectiveness;
    pre-approve non-audit work to be carried out by the external
    auditor and the fees to be paid for that work along with the
    monitoring of the external auditors independence; and
    oversee the Groups Code of Ethics and Business Conduct and
    associated procedures for monitoring adherence.      Remuneration
    Committee
    Nomination
    Committee
   59




---



##### Table of Contents



Corporate
    Responsibility Committee
    Disclosure
    Committee
    General
    Purposes Committee
     EMPLOYEES      EMEA


Americas


Asia Pacific


Central


Total2008


2,012



3,570



1,481



1,271



8,3342007


2,249



3,761



1,514



1,150



8,6742006


3,940



3,771



1,252



1,023



9,986            60




---



##### Table of Contents



SHARE
    OWNERSHIP    Ordinary shares


% of sharesof
    1329/47
    pence


outstandingDirectorsAndrew Cosslett


359,927



0.13David Kappler


1,400



N/ARalph Kugler


1,169



N/AJennifer Laing


3,373



N/AJonathan
    Linen(1)


7,343



N/ARichard Solomons


322,743



0.11David Webster


32,839



0.01Ying Yeh


Nil



N/AOfficersJim Abrahamson


Nil



N/ATom Conophy


79,140



0.03Peter Gowers


226,771



0.08Kirk Kinsell


74,187
(2)


0.03Tracy Robbins


68,035



0.02Tom Seddon


39,452
(3)


0.01George Turner


Nil



N/A     (1)
    
    Held in the form of American
    Depositary Shares (ADS).(2)
    
    637 of which are held as ADSs.(3)
    
    24,000 of which are held as ADSs.    page F-39.
   61




---



##### Table of Contents



ITEM 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS MAJOR
    SHAREHOLDERS    March 23, 2009


March 14, 2008


March 16, 2007Number of


Percent


Number of


Percent


Number of


PercentIdentity of person or group

shares/ADSs


of class


shares/ADSs


of class


shares/ADSs


of classEllerman Corporation Limited


29,921,742



10.00
%


29,921,742



10.00
%


25,286,950



7.13
%Morgan Stanley Investment Management Limited


16,494,690



5.60
%


16,494,690



5.60
%


N/A



N/ACedar Rock Capital Limited


14,923,417



5.07
%


14,923,417



5.07
%


N/A



N/AMorgan Stanley Institutional Securities Group & Global
    Wealth Management


N/A



N/A



13,551,634



4.60
%


N/A



N/ALegal & General Group Plc


11,416,590



3.99
%


12,179,257



4.09
%


11,927,715



3.37
%Lloyds TSB Group Plc*


13,619,563



3.84
%


13,619,563



3.84
%


13,619,563



3.84
%     *
    
    Now called Lloyds Banking Group plc.       RELATED
    PARTY TRANSACTIONS    ITEM 8.
    FINANCIAL
    INFORMATION CONSOLIDATED
    STATEMENTS AND OTHER FINANCIAL INFORMATION  Financial
    Statements
    Legal
    Proceedings
    Dividends
   62




---



##### Table of Contents



SIGNIFICANT
    CHANGES    ITEM 9.
    THE
    OFFER AND LISTING      £ perordinary share


$ per ADSYear ended December 31

High


Low


High


Low2004


6.91



4.79



13.09



8.702005


8.42



6.12



14.53



11.492006


12.65



8.07



26.27



14.40   £ perordinary share


$ per ADSYear ended December 31

High


Low


High


Low2007First quarter


13.42



12.06



30.81



27.17Second
    quarter(1)


14.20



12.41



32.59



24.78Third quarter


13.16



9.19



26.59



18.52Fourth quarter


11.20



8.73



23.34



17.372008First quarter


8.84



6.44



17.40



13.26Second quarter


8.65



6.68



16.80



13.15Third quarter


7.87



6.16



14.76



11.53Fourth quarter


6.75



4.48



12.08



6.522009First quarter (through March 23, 2009)


6.22



4.46



9.33



6.04     (1)
    
    Prices adjusted for the share
    consolidation effective June 4, 2007. Unadjusted prices for
    the quarter were £14.13 and £12.16 and $28.18 and
    $24.17 respectively. £ perordinary share


$ per ADSMonth ended

High


Low


High


LowSeptember 2008


7.87



6.70



14.25



11.53October 2008


6.75



4.72



12.08



7.26November 2008


5.86



4.48



9.30



6.52December 2008


5.75



4.96



9.02



7.17January 2009


6.22



5.17



9.33



7.04February 2009


5.59



4.54



8.27



6.39March 2009 (through to March 23, 2009)


5.59



4.46



8.25



6.04  63




---



##### Table of Contents



PLAN OF
    DISTRIBUTION   SELLING
    SHAREHOLDERS   DILUTION   EXPENSES
    OF THE ISSUE    ITEM 10.
    ADDITIONAL
    INFORMATION MEMORANDUM
    AND ARTICLES OF ASSOCIATION        Principal
    Objects
    Directors
   64




---



##### Table of Contents



Rights
    Attaching to Shares
        Voting
    Rights
  29 47
  
    the chairman of the meeting;
    at least five shareholders present in person or by proxy and
    entitled to vote at the meeting;
    any shareholder or shareholders representing in the aggregate
    not less than one-tenth of the total voting rights of all
    shareholders entitled to vote at the meeting; or
    any shareholder or shareholders holding shares conferring a
    right to vote at the meeting on which there have been
    paid-up sums
    in the aggregate equal to not less than one-tenth of the total
    sum paid up on all the shares conferring that right.        
    an ordinary resolution, which includes resolutions for the
    election of directors, the approval of financial statements, the
    cumulative annual payment of dividends, the appointment of
    auditors, the increase of authorized share capital or the grant
    of authority to allot shares;
    a special resolution, which includes resolutions amending the
    Companys memorandum and articles of association,
    disapplying statutory pre-emption rights or changing the
    Companys name; and 65




---



##### Table of Contents




    an extraordinary resolution, which includes resolutions
    modifying the rights of any class of the Companys shares
    at a meeting of the holders of such class or relating to certain
    matters concerning the Companys winding up.            Variation
    of Rights
    Rights
    in a
    Winding-up
    
    after the payment of all creditors including certain
    preferential creditors, whether statutorily preferred creditors
    or normal creditors; and
    subject to any special rights attaching to any class of shares;  paid-up
  Limitations
    on Voting and Shareholding
   MATERIAL
    CONTRACTS   66




---



##### Table of Contents



IHG
    Facility Agreement
        Disposal
    to Hospitality Properties Trust
      and/or
  UK
    Hotels Disposal
     67




---



##### Table of Contents



Australasian
    Hotels Disposals
      Disposal
    to Dabicam SAS
    Britvic
    Underwriting Agreement
    Disposal
    to Westbridge
         68




---



##### Table of Contents



Disposal
    to Morgan Stanley Real Estate Funds
       EXCHANGE
    CONTROLS       TAXATION    
    certain financial institutions;
    insurance companies;
    dealers and traders in securities or foreign currencies;
    persons holding ordinary shares or ADSs as part of a hedge,
    straddle, conversion transaction, integrated transaction or
    similar transaction;
    persons whose functional currency for US federal income tax
    purposes is not the US dollar;
    partnerships or other entities classified as partnerships for US
    federal income tax purposes;
    persons liable for the alternative minimum tax;
    tax-exempt organizations;
    persons who acquired our ADSs or ordinary shares pursuant to the
    exercise of any employee stock option or otherwise as
    compensation;
    holders that, directly or indirectly, hold 10% or more of the
    Companys voting stock.   69




---



##### Table of Contents



Investors should consult their own tax advisors regarding the
    US federal, state and local, the UK and other tax consequences
    of owning and disposing of shares and ADSs in their particular
    circumstances.
  Taxation
    of Dividends
  United
    Kingdom Taxation
      United
    States Federal Income Taxation
     70




---



##### Table of Contents



Taxation
    of Capital Gains
  United
    Kingdom Taxation
      United
    States Federal Income Taxation
    PFIC
    Rules
   71




---



##### Table of Contents



Additional
    Tax Considerations
  United
    States Backup Withholding and Information Reporting
    United
    Kingdom Inheritance Tax
    United
    Kingdom Stamp Duty and Stamp Duty Reserve Tax
    (SDRT)
           72




---



##### Table of Contents



DOCUMENTS
    ON DISPLAY  Form 20-F 1-800-SEC-0330
  ITEM 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Exchange
    and Interest Rate Risk, and Financial Instruments
    Treasury
    Risk Management
    Credit
    Risk
    Interest
    Rate Risk
          Currency
    Risk
   73




---



##### Table of Contents



Quantitative
    Information about Market Risk
  Interest
    Rate Sensitivity
    At
    December 31, 2008
  Expected to mature before December 31,2009


2010


2011


2012


Thereafter


Total


Fair
    value(i)($ million, except percentages)Long-Term Debt:Fixed Rate lease debt (US dollar)


















202



202



168Average dollar interest rate


















9.7
%


9.7
%Variable Rate bank debt (various currencies)


5



502











646



1,153



1,153Average interest rate


7.8
%


1.5
%










2.6
%


2.1
%   (local currency million, except percentages)Interest Rate Swaps:Principal (US dollar)


250











100







350



(2
)Fixed rate payable


2.9
%










2.0
%






2.6
%Variable rate receivable


1.3
%










1.3
%






1.3
%Principal (euro)


75







75











150



(5
)Fixed rate payable


3.9
%






5.3
%










4.6
%Variable rate receivable


2.7
%






2.7
%










2.7
%Principal (sterling)


75



















75



(3
)Fixed rate payable


6.1
%


















6.1
%Variable rate receivable


2.2
%


















2.2
%     (i)
    
    Represents the net present value of
    the expected cash flows discounted at current market rates of
    interest.  ITEM 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES   74




---



##### Table of Contents



PART II  ITEM 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    ITEM 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS    ITEM 15.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(c) 15d-15(e)).
  Managements
    Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
  page F-1
  page F-2
  Changes
    in Internal Control Over Financial Reporting
  Form 20-F
  ITEM 16.
    [RESERVED]  ITEM 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT    ITEM 16B.
    CODE
    OF ETHICS   75




---



##### Table of Contents



ITEM 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Year Ended December 31,2008


2007($ million)Audit Fees


3.3



5.6Audit Related Fees


3.2



2.8Tax Fees


1.0



0.8Total


7.5



9.2         ITEM 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES    ITEM 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS  (d) Maximum(c) Total number


number (orof shares (or


approximate dollar(b) Average


units) purchased


value) of shares (or(a) Total number


price paid


as part of publicly


units) that may yet beof shares (or


per share


announced plans


purchased under thePeriod of fiscal year

units) purchased


(or unit)


or programs


plans or programsMonth 1 (no purchases in this month)


0



0.00



0.



39,144,754Month 2 (no purchases in this month)


0



0.00



0



39,144,754Month 3 3.3.08  3.31.08


1,718,026



7.69



1,718,026



37,426,728Month 4 (no purchases in this month)


0



0.00



0



37,426,728Month 5 5.9.08  5.29.08


2,138,424



8.36



2,138,424



35,288,304Month 6 6.2.08  6.30.08


5,362,875



7.25



5,362,875



38,694,043Month 7 (no purchases in this month)


0



0.00



0



38,694,043Month 8 (no purchases in this month)


0



0.00



0



38,694,043Month 9 (no purchases in this month)


0



0.00



0



38,694,043Month 10 (no purchases in this month)


0



0.00



0



38,694,043Month 11 (no purchases in this month)


0



0.00



0



38,694,043Month 12 (no purchases in this month)


0



0.00



0



38,694,043    76




---



##### Table of Contents



ITEM 16F.
    CHANGE
    IN REGISTRANTS CERTIFYING ACCOUNTANT    ITEM 16G.
    SUMMARY
    OF SIGNIFICANT CORPORATE GOVERNANCE DIFFERENCES FROM NYSE
    LISTING STANDARDS      Basis of
    regulation
    Independent
    Directors
    Chairman
    and Chief Executive
    Committees
   77




---



##### Table of Contents



Non-Executive
    Director Meetings
    Shareholder
    approval of Equity Compensation Plans
    Compliance
    Certification
   PART III  ITEM 17.
    FINANCIAL
    STATEMENTS   78




---



##### 



ITEM 18.
    FINANCIAL
    STATEMENTS     
 PageManagements Report on Internal Control over
    Financial Reporting


F-1Report of Independent Registered Public
    Accounting Firm on Internal Control over Financial Reporting


F-2Report and Consent of Independent Registered
    Public Accounting Firm


F-3Financial StatementsConsolidated Income Statement for the years ended
    December 31, 2008, 2007 and 2006


F-5Consolidated Statement of Recognized Income and
    Expense for the years ended December 31, 2008, 2007 and
    2006


F-6Consolidated Balance Sheet for the years ended
    December 31, 2008 and 2007


F-7Consolidated Statement of Changes in
    Shareholders Funds for the years ended December 31,
    2008, 2007 and 2006


F-8Consolidated Cash Flow Statement for the years
    ended December 31, 2008, 2007 and 2006


F-10Notes to the Financial Statements


F-11Schedule for the years ended December 31, 2008, 2007, 2006
    and 2005Schedule II  Valuation and
    Qualifying Accounts


S-1EXHIBIT 1EXHIBIT 4(a)(i)EXHIBIT 8EX-12.AEX-12.BEX-13.A    ITEM 19.
    EXHIBITS    Exhibit 1

Memorandum and Articles of Association of IHGExhibit 4(a)(i)

$2,100 million Facility Agreement dated May 2, 2008
    among Bank of America N.A., Bank of
    Tokyo-Mitsubishi
    UFJ Ltd., Barclays Capital, HSBC Bank plc, Lloyds TSB Bank plc,
    The Royal Bank of Scotland plc, Société
    Générale Corporate & Investment Banking and
    West LB AGExhibit 4(b)(i)

Sale and Purchase Agreement dated March 10, 2006 among BHR
    Luxembourg S.à.r.l., Others, Cooperatie Westbridge Europe
    I.U.A., Others and Westbridge Hospitality Fund L.P.
    relating to a portfolio of certain companies and businesses in
    continental Europe (incorporated by reference to
    Exhibit 4(b)(viii) of the InterContinental Hotels Group PLC
    Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated March 31, 2006)Exhibit 4(b)(ii)

Sale and Purchase Agreement dated July 13, 2006 between BHR
    Holdings BV and MSREF VI Danube BV relating to the sale of
    certain companies and businesses in continental Europe and Side
    Letter dated September 5, 2006 (incorporated by reference
    to Exhibit 4(b)(ix) of the InterContinental Hotels Group
    PLC Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated March 30, 2007)Exhibit 4(c)(i)

Richard Solomons service contract dated February 12,
    2003 (incorporated by reference to Exhibit 4(c)(iv) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated April 8, 2004)Exhibit 4(c)(ii)

Richard Solomons letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(vi) of
    the InterContinental Hotels Group PLC Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated March 31, 2006)Exhibit 4(c)(iii)

Andrew Cossletts service contract dated December 13,
    2004 (incorporated by reference to Exhibit 4(c)(v) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated May 3, 2005) 79




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##### Table of Contents



Exhibit 4(c)(iv)

Andrew Cossletts letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(viii)
    of the InterContinental Hotels Group PLC Annual Report on
    Form 20-F
    (File
    No. 1-10409)
    dated March 31, 2006)Exhibit 8

List of SubsidiariesExhibit 12(a)

Certification of Andrew Cosslett filed pursuant to 17 CFR
    240.13a-14(a)Exhibit 12(b)

Certification of Richard Solomons filed pursuant to 17 CFR
    240.13a-14(a)Exhibit 13(a)

Certification of Andrew Cosslett and Richard Solomons furnished
    pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C.1350Exhibit 15(a)

Consent of Ernst & Young LLP (included on
    page F-4)  80




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##### Table of Contents



MANAGEMENTS
    REPORT ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING   Rule 13a-15(f) 15d-15(f)
           F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMON INTERNAL CONTROL OVER FINANCIAL REPORTING





To the Board of Directors and Shareholders of InterContinental
    Hotels Group PLC:



We have audited InterContinental Hotels Group PLCs
    internal control over financial reporting as of
    December 31, 2008, based on criteria established in
    Internal Control-Integrated Framework issued by the Committee of
    Sponsoring Organizations of the Treadway Commission (the
    COSO criteria). InterContinental Hotels Group
    PLCs management is responsible for maintaining effective
    internal control over financial reporting, and for its
    assessment of the effectiveness of internal control over
    financial reporting included in the accompanying
    Form 20-F.
    Our responsibility is to express an opinion on the Groups
    internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether effective internal control
    over financial reporting was maintained in all material
    respects. Our audit included obtaining an understanding of
    internal control over financial reporting, assessing the risk
    that a material weakness exists, testing and evaluating the
    design and operating effectiveness of internal control based on
    the assessed risk, and performing such other procedures as we
    considered necessary in the circumstances. We believe that our
    audit provides a reasonable basis for our opinion.



A groups internal control over financial reporting is a
    process designed to provide reasonable assurance regarding the
    reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with
    generally accepted accounting principles. A groups
    internal control over financial reporting includes those
    policies and procedures that (1) pertain to the maintenance
    of records that, in reasonable detail, accurately and fairly
    reflect the transactions and dispositions of the assets of the
    group; (2) provide reasonable assurance that transactions
    are recorded as necessary to permit preparation of financial
    statements in accordance with generally accepted accounting
    principles, and that receipts and expenditures of the group are
    being made only in accordance with authorizations of management
    and directors of the group; and (3) provide reasonable
    assurance regarding prevention or timely detection of
    unauthorized acquisition, use, or disposition of the
    groups assets that could have a material effect on the
    financial statements.



Because of its inherent limitations, internal control over
    financial reporting may not prevent or detect misstatements.
    Also, projections of any evaluation of effectiveness to future
    periods are subject to the risk that controls may become
    inadequate because of changes in conditions, or that the degree
    of compliance with the policies or procedures may deteriorate.



In our opinion, InterContinental Hotels Group PLC maintained, in
    all material aspects, effective internal control over financial
    reporting as of December 31, 2008, based on the COSO
    criteria.



We also have audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States), the
    accompanying Consolidated Balance Sheets of InterContinental
    Hotels Group PLC as of December 31, 2008 and 2007, and the
    related Consolidated Income Statements, Consolidated Statements
    of Recognized Income and Expense, Consolidated Statements of
    Changes in Shareholders Funds and Consolidated Cash Flow
    Statements for each of the three years in the period ended
    December 31, 2008, and the financial statement schedule
    listed in the Index at Item 18. Financial
    Statements, and our report dated April 6, 2009
    expressed an unqualified opinion thereon.



ERNST & YOUNG LLP



London, England



April 6, 2009



F-2




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##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 F-3




---



##### Table of Contents



CONSENT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  (Form F-3 No. 333-108084 Form S-8 333-01572, 333-08336, 333-99785, 333-104691 333-126139) (Form 20-F)
     F-4




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##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  CONSOLIDATED
    INCOME STATEMENT
  Year ended December 31,


Year ended December 31,


Year ended December 31,2008


2007


2006Before


Exceptional





Before


Exceptional





Before


Exceptionalexceptional


items





exceptional


items





exceptional


itemsFor the year ended December 31, 2008

items


(Note 5)


Total


items


(Note 5)


Total


items


(Note 5)


Total($ million)Revenue (Note 2)


1,854







1,854



1,771







1,771



1,446







1,446Cost of sales


(823
)






(823
)


(825
)






(825
)


(653
)






(653
)Administrative expenses


(400
)


(59
)


(459
)


(377
)


(14
)


(391
)


(331
)






(331
)Other operating income and expenses


14



25



39



16



70



86



7



44



51645



(34
)


611



585



56



641



469



44



513Depreciation and amortization (Note 2)


(110
)


(2
)


(112
)


(111
)


(2
)


(113
)


(102
)






(102
)Impairment (Note 2)






(96
)


(96
)






6



6







4



4Operating profit (Note 2)


535



(132
)


403



474



60



534



367



48



415Financial income (Note 6)


12







12



18







18



48







48Financial expenses (Note 6)


(113
)






(113
)


(108
)






(108
)


(68
)






(68
)Profit before tax


434



(132
)


302



384



60



444



347



48



395Tax (Note 7)


(96
)


42



(54
)


(84
)


60



(24
)


(76
)


173



97Profit for the year from continuing operations


338



(90
)


248



300



120



420



271



221



492Profit for the year from discontinued operations (Note 11)


9



5



14



11



32



43



36



226



262Profit for the year attributable to equity holders of the
    parent


347



(85
)


262



311



152



463



307



447



754Earnings per ordinary share (Note 9)Continuing operations:Basic










86.4¢











131.3¢











126.5¢Diluted










83.8¢











127.7¢











123.3¢Total operations:Basic










91.3¢











144.7¢











193.8¢Diluted










88.5¢











140.7¢











189.0¢    F-5




---



##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  CONSOLIDATED
    STATEMENT OF RECOGNIZED INCOME AND EXPENSE
  Year ended


Year ended


Year endedDecember 31,


December 31,


December 31,2008


2007 restated*


2006($ million)Income and expense recognized directly in equity(Losses)/gains on valuation of available-for-sale assets


(4
)


8



29(Losses)/gains on cash flow hedges


(14
)


(2
)


2Exchange differences on retranslation of foreign operations


(57
)


23



152Actuarial (losses)/gains on defined benefit pension plans, net
    of asset restriction


(50
)


8



(4
)(125
)


37



179Transfers to the income statementOn cash flow hedges: financial expenses


2



(2
)


(2
)On disposal of foreign operations: gain on disposal of assets










(3
)On disposal of available-for-sale assets: other operating income
    and expenses


(17
)


(20
)


(26
)(15
)


(22
)


(31
)TaxTax on items above taken directly to or transferred from equity


22



11



7Tax related to share schemes recognized directly in equity


2



(4
)


4824



7



55Net (expense)/income recognized directly in equity


(116
)


22



203Profit for the year


262



463



754Total recognized income and expense for the year attributable
    to the equity holders of the parent


146



485



957     *
    
    Restated for IFRIC 14 (see
    page F-11).   F-6




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##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  CONSOLIDATED BALANCE SHEET
  December 31,December 31,


20072008


restated*($ million)ASSETSProperty, plant and equipment  (Note 10)


1,684



1,934Goodwill  (Note 12)


143



221Intangible assets  (Note 13)


302



335Investment in associates  (Note 14)


43



65Retirement benefit assets  (Note 3)


40



49Other financial assets  (Note 15)


152



188Total non-current assets


2,364



2,792Inventories  (Note 16)


4



6Trade and other receivables  (Note 17)


412



472Current tax receivable


36



109Cash and cash equivalents  (Note 18)


82



105Other financial assets  (Note 15)


10



18Total current assets


544



710Non-current assets classified as held for sale 
    (Note 11)


210



115Total assets (Note 2)


3,118



3,617LIABILITIESLoans and other borrowings  (Note 20)


(21
)


(16
)Trade and other payables  (Note 19)


(746
)


(784
)Current tax payable


(374
)


(426
)Total current liabilities


(1,141
)


(1,226
)Loans and other borrowings  (Note 20)


(1,334
)


(1,748
)Retirement benefit obligations  (Note 3)


(129
)


(112
)Trade and other payables  (Note 19)


(392
)


(279
)Deferred tax payable  (Note 25)


(117
)


(148
)Total non-current liabilities


(1,972
)


(2,287
)Liabilities classified as held for sale 
    (Note 11)


(4
)


(6
)Total liabilities (Note 2)


(3,117
)


(3,519
)Net assets


1



98EQUITYEquity share capital


118



163Capital redemption reserve


10



10Shares held by employee share trusts


(49
)


(83
)Other reserves


(2,890
)


(2,918
)Unrealized gains and losses reserve


9



38Currency translation reserve


172



233Retained earnings


2,624



2,649IHG shareholders equity


(6
)


92Minority equity interest  (Note 26)


7



6Total equity


1



98     *
    
    Restated for IFRIC 14 (see
    page F-11).   F-7




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##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  CONSOLIDATED
    STATEMENT OF CHANGES IN SHAREHOLDERS FUNDS
  Retained earnings and other reservesSharesShare Capital











held by


UnrealizedNumber of








Capital





employee


gains and


Currency





Total IHGordinary


Ordinary


Share


redemption


Other


share


losses


translation


Retained


shareholdersshares(i)


shares(i)


premium(ii)


reserve(ii)


reserves(iii)


trusts(iv)


reserve(v)


reserve(vi)


earnings


equity($ million, except per ordinary share amounts)At January 1, 2006


433



74



10



2



(2,906
)


(38
)


40



60



4,628



1,870Total recognized income and expense for the year


























14



149



794



957Issue of ordinary shares


4



1



36



























37Repurchase of shares


(28
)


(6
)


























(472
)


(478
)Share capital consolidation


(53
)


































Transfer to capital redemption reserve














6



















(6
)


Purchase of own shares by employee share trusts






















(86
)














(86
)Release of own shares by employee share trusts






















96











(68
)


28Equity-settled share-based cost


































33



33Equity dividends paid


































(1,031
)


(1,031
)Exchange adjustments






11



3







(8
)


(5
)


(1
)










At December 31, 2006


356



80



49



8



(2,914
)


(33
)


53



209



3,878



1,330Total recognized income and expense for the year


























(16
)


24



477



485Issue of ordinary shares


4



1



31



























32Repurchase of shares


(8
)


(2
)


























(160
)


(162
)Share capital consolidation


(57
)


































Transfer to capital redemption reserve














2



















(2
)


Purchase of own shares by employee share trusts






















(138
)














(138
)Release of own shares by employee share trusts






















89











(80
)


9Equity-settled share-based cost


































60



60Equity dividends paid


































(1,524
)


(1,524
)Exchange adjustments






2



2







(4
)


(1
)


1











At December 31, 2007


295



81



82



10



(2,918
)


(83
)


38



233



2,649



92Total recognized income and expense for the year


























(29
)


(61
)


236



146Issue of ordinary shares










2



























2Repurchase of shares


(9
)


(3
)


























(136
)


(139
)Transfer to capital redemption reserve














3



















(3
)


Purchase of own shares by employee share trusts






















(24
)














(24
)Release of own shares by employee share trusts






















39











(53
)


(14
)Equity-settled share-based cost


































49



49Equity dividends paid


































(118
)


(118
)Exchange adjustments






(21
)


(23
)


(3
)


28



19















At December 31, 2008


286



57



61



10



(2,890
)


(49
)


9



172



2,624



(6
)     At December 31, 2005 the
    authorized share capital was £160,050,000 comprising
    1,600,000,000 ordinary shares of 10 pence each and one
    redeemable preference share of £50,000.
   F-8




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##### Table of Contents



(i)
    
    The Company was incorporated and
    registered in England and Wales with registered number 5134420
    on May 21, 2004 as a limited company under the Companies
    Act 1985 with the name Hackremco (No. 2154) Limited.
    On March 24, 2005 Hackremco (No. 2154) Limited
    changed its name to New InterContinental Hotels Group Limited.
    On April 27, 2005 New InterContinental Hotels Group Limited
    re-registered as a public limited company and changed its name
    to New InterContinental Hotels Group PLC. On June 27, 2005
    New InterContinental Hotels Group PLC changed its name to
    InterContinental Hotels Group PLC.During 2004 and 2005, the Company
    undertook to return funds of up to £750 million to
    shareholders by way of three consecutive £250 million
    share repurchase programs, the third of which was completed in
    the first half of 2007. In June 2007, a further
    £150 million share repurchase program commenced.
    During the year, 9,219,325 (2007 7,724,844, 2006
    28,409,753) ordinary shares were repurchased and canceled under
    the authorities granted by shareholders at Extraordinary General
    Meetings held on June 1, 2006 and 2007 and at the Annual
    General Meeting held on May 30, 2008.On June 1, 2006, shareholders
    approved a share capital consolidation on the basis of seven new
    ordinary shares for every eight existing ordinary shares. This
    provided for all the authorized ordinary shares of 10 pence each
    (whether issued or unissued) to be consolidated into new
    ordinary shares of
    113/7
    pence each. The share capital consolidation became effective on
    June 12, 2006.On June 1, 2007, shareholders
    approved a share capital consolidation on the basis of 47 new
    ordinary shares for every 56 existing ordinary shares. This
    provided for all the authorized ordinary shares of
    113/7
    pence each (whether issued or unissued) to be consolidated into
    new ordinary shares of
    1329/47
    pence each. The share capital consolidation became effective on
    June 4, 2007.Whilst the authorized share capital
    comprises one redeemable preference share of £50,000,
    following its redemption in September 2005, this redeemable
    preference share has not been re-issued.The authority given to the Company
    at the Annual General Meeting on May 30, 2008 to purchase
    its own shares was still valid at December 31, 2008. A
    resolution to renew the authority will be put to shareholders at
    the Annual General Meeting on May 29, 2009.At December 31, 2008, the
    authorized share capital was £160,050,000, comprising
    1,175,000,000 ordinary shares of
    1329/47
    pence each and one redeemable preference share of £50,000.(ii)
    
    The share premium reserve and
    capital redemption reserve are not distributable. The share
    premium reserve has a balance of $61 million (2007 $82
    million, 2006 $49 million) representing the amount of
    proceeds received for shares in excess of their nominal value.
    The capital redemption reserve records the nominal value of
    equity share capital repurchased and canceled.(iii)
    
    Other reserves comprises the merger
    and revaluation reserves previously recognized under UK GAAP,
    together with the reserve arising as a consequence of the
    Groups capital reorganization in June 2005. Following the
    change in presentational currency to the US dollar (see
    page F-11), this reserve also includes exchange differences
    arising on the retranslation to period-end exchange rates of
    share capital, share premium, the capital redemption reserve and
    shares held by employee share trusts.(iv)
    
    The shares held by employee share
    trusts comprises $49.2 million (2007 $82.6 million,
    2006 $33.0 million) in respect of 3.0 million (2007
    3.4 million, 2006 1.7 million) InterContinental Hotels
    Group PLC ordinary shares held by employee share trusts, with a
    market value at December 31, 2008 of $25 million (2007
    $60 million, 2006 $41 million).(v)
    
    The unrealized gains and losses
    reserve records movements to fair value of available-for-sale
    financial assets and the effective portion of the cumulative net
    change in the fair value of the cash flow hedging instruments
    related to hedged transactions that have not yet occurred. The
    fair value of cash flow hedging instruments outstanding at
    December 31, 2008 was a $10 million liability (2007
    $3 million liability, 2006 $2 million asset).(vi)
    
    The currency translation reserve
    records the movement in exchange differences arising from the
    translation of the financial statements of foreign operations
    and exchange differences on foreign currency borrowings and
    derivative instruments that provide a hedge against net
    investments in foreign operations. On adoption of IFRS,
    cumulative exchange differences were deemed to be $nil as
    permitted by IFRS 1.During the year ended
    December 31, 2008, the impact of hedging net investments in
    foreign operations was to reduce the amount recorded in the
    currency translation reserve by $96 million (2007
    $14 million, 2006 $7 million). The fair value of
    derivative instruments designated as hedges of net investments
    in foreign operations outstanding at December 31, 2008 was
    $nil (2007 $nil, 2006 $7 million net asset).   F-9




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##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  CONSOLIDATED
    CASH FLOW STATEMENT
  Year ended


Year ended


Year endedDecember 31,


December 31,


December 31,2008


2007


2006($ million)Profit for the year


262



463



754Adjustments for:Net financial expenses


101



90



20Income tax charge/(credit)


59



30



(76
)Impairment


96



(6
)


(4
)Other exceptional operating items


34



(56
)


(44
)Gain on disposal of assets, net of tax


(5
)


(32
)


(226
)Depreciation and amortization


112



116



118Equity-settled share-based cost, net of payments


31



48



26Other non-cash items


3



(4
)


Operating cash flow before movements in working capital


693



649



568Decrease/(increase) in trade and other receivables


42



(30
)


(57
)Increase/(decrease) in trade and other payables


81



52



18Retirement benefit contributions, net of charge


(27
)


(66
)


Cash flows relating to exceptional operating items


(49
)






Cash flow from operations


740



605



529Interest paid


(112
)


(84
)


(61
)Interest received


12



18



44Tax received/(paid) on operating activities


1



(74
)


(79
)Net cash from operating activities


641



465



433Cash flow from investing activitiesPurchases of property, plant and equipment


(53
)


(114
)


(160
)Purchases of intangible assets


(49
)


(40
)


(42
)Investment in associates and other financial assets


(6
)


(32
)


(15
)Acquisition of subsidiary, net of cash acquired










(11
)Disposal of assets, net of costs and cash disposed of


25



97



1,140Proceeds from associates and other financial assets


61



114



228Tax paid on disposals


(3
)


(64
)


(11
)Net cash from investing activities


(25
)


(39
)


1,129Cash flow from financing activitiesProceeds from the issue of share capital


2



32



37Purchase of own shares


(139
)


(162
)


(478
)Purchase of own shares by employee share trusts


(22
)


(138
)


(86
)Proceeds on release of own shares by employee share trusts


2



21



35Dividends paid to shareholders


(118
)


(1,524
)


(1,031
)Dividends paid to minority interests










(2
)(Decrease)/increase in borrowings


(316
)


1,108



(316
)Net cash from financing activities


(591
)


(663
)


(1,841
)Net movement in cash and cash equivalents in the year


25



(237
)


(279
)Cash and cash equivalents at beginning of the year


105



351



559Exchange rate effects


(48
)


(9
)


71Cash and cash equivalents at end of the year


82



105



351    F-10




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##### Table of Contents



Note 1 
    Accounting Policies  General
    information
    Summary
    of significant accounting policies
  Basis
    of preparation
        Change
    in presentational currency
      Basis
    of consolidation
      Foreign
    currencies
   F-11




---



##### Table of Contents



Derivative
    financial instruments and hedging
          Property,
    plant and equipment
          Buildings

lesser of 50 years and unexpired term of lease; andFixtures, fittings and equipment

three to 25 years.        F-12




---



##### Table of Contents



Goodwill
      Intangible
    assets
  Software
    Management
    contracts
    Other
    intangible assets
        Associates
      Financial
    assets
   F-13




---



##### Table of Contents



Financial
    liabilities
    Inventories
    Trade
    receivables
    Cash
    and cash equivalents
        Assets
    held for sale
        Trade
    payables
    Loyalty
    program
     F-14




---



##### Table of Contents



Self
    insurance
    Provisions
    Bank
    and other borrowings
      Retirement
    benefits
  Defined
    contribution plans
    Defined
    benefit plans
         F-15




---



##### Table of Contents



Taxes
  Current
    tax
    Deferred
    tax
        Revenue
    recognition
            Share-based
    payments
         F-16




---



##### Table of Contents



Leases
      Disposal
    of non-current assets
    
    has a continuing managerial involvement to the degree associated
    with asset ownership;
    has transferred the significant risks and rewards associated
    with asset ownership; and
    can reliably measure and will actually receive the proceeds.  Discontinued
    operations
    Exceptional
    items
    Use of
    accounting estimates and judgments
      
    Impairment  the Group determines whether goodwill is
    impaired on an annual basis or more frequently if there are
    indicators of impairment. Other non-current assets, including
    property, plant and equipment, are tested for impairment if
    there are indicators of impairment. Impairment testing requires
    an estimate of future cash flows and the choice of a suitable
    discount rate and, in the case of hotels, an assessment of
    recoverable amount based on comparable market transactions.
    Retirement and other post-employment benefits  the
    cost of defined benefit pension plans and other post-employment
    benefits is determined using actuarial valuations. The actuarial
    valuation involves making assumptions about discount rates,
    expected rates of return on assets, future salary increases,
    mortality rates and future pension increases. F-17




---



##### Table of Contents




    Tax  provisions for tax accruals require judgments on
    the interpretation of tax legislation, developments in tax case
    law and the potential outcomes of tax audits and appeals. In
    addition, deferred tax assets are recognized for unused tax
    attributes to the extent that it is probable that taxable profit
    will be available against which they can be utilized. Judgment
    is required as to the amount that can be recognized based on the
    likely amount and timing of future taxable profits, taking into
    account expected tax planning. Deferred tax balances are
    dependent on managements expectations regarding the manner
    and timing of recovery of the related assets.
    Loyalty program  the future redemption liability
    included in trade and other payables is estimated using
    actuarial methods based on statistical formulae that project the
    timing of future point redemptions based on historical levels to
    give eventual redemption rates.
    Trade receivables  a provision for impairment of
    trade receivables is made on the basis of historical experience
    and other factors considered relevant by management.
    Other  the Group also makes estimates and judgments
    in the valuation of management and franchise agreements acquired
    on asset disposals, the valuation of financial assets classified
    as available-for-sale, the outcome of legal proceedings and
    claims and in the valuation of share-based payment costs.  New
    standards and interpretations
    IFRS 2

Share-based Payment (Amendment)
    Effective from January 1, 2009IFRS 3R

Business Combinations
    Effective from July 1, 2009IFRS 5

Non-current Assets Held for Sale and Discontinued Operations
    (Amendment)
    Effective from July 1, 2009IFRS 8

Operating Segments
    Effective from January 1, 2009IAS 1

Presentation of Financial Statements (Amendment)
    Effective from January 1, 2009IAS 23

Borrowing Costs (Amendment)
    Effective from January 1, 2009IAS 27R

Consolidated and Separate Financial Statements
    Effective from July 1, 2009.IFRIC 13

Customer Loyalty Programmes
    Effective from July 1, 2008.IFRIC 16

Hedges of a Net Investment in a Foreign Operation
    Effective from October 1, 2008.    F-18




---



##### Table of Contents



Note 2 
    Exchange Rates and Segmental Information
  Exchange
    Rates
      Segmental
    Information
              Franchised
    Managed
    Owned
    and leased
     F-19




---



##### Table of Contents



Segmental
    Information
  Year
    ended December 31, 2008
  Revenue
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Owned and leased


257



240



159







656Managed


168



168



113







449Franchised


495



110



18







623Central














126



126Continuing operations


920



518



290



126



1,854Discontinued operations  owned and leased


43















43963



518



290



126



1,897   Segmental
    result
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Owned and leased


41



45



43







129Managed


51



95



55







201Franchised


426



75



8







509Regional and central


(67
)


(44
)


(38
)


(155
)


(304
)Continuing operations


451



171



68



(155
)


535Exceptional operating items


(99
)


(21
)


(2
)


(10
)


(132
)Operating profit


352



150



66



(165
)


403Discontinued operations  owned and leased


14















14366



150



66



(165
)


417   Continuing


Discontinued


Total($ million)Operating profit before exceptional items


535



14



549Exceptional operating items


(132
)






(132
)Operating profit


403



14



417Net finance costs


(101
)






(101
)Profit before tax


302



14



316Tax


(54
)


(5
)


(59
)Profit after tax


248



9



257Gain on disposal of assets, net of tax






5



5Profit for the year


248



14



262  F-20




---



##### Table of Contents



Year
    ended December 31, 2008
  Assets
    and liabilities
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Segment assets


1,031



957



613



189



2,790Non-current assets classified as held for sale


209



1











2101,240



958



613



189



3,000Unallocated assets:Current tax receivable


















36Cash and cash equivalents


















82Total assets


















3,118Segment liabilities


(638
)


(470
)


(159
)






(1,267
)Liabilities classified as held for sale


(4
)














(4
)(642
)


(470
)


(159
)






(1,271
)Unallocated liabilities:Current tax payable


















(374
)Deferred tax payable


















(117
)Loans and other borrowings


















(1,355
)Total liabilities


















(3,117
)   Other
    segmental information
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Continuing operations:Capital
    expenditure(i)


12



7



13



76



108Additions to:Property, plant and equipment


43



2



10



36



91Intangible assets


7







2



40



49Depreciation and
    amortization(ii)


31



35



26



20



112Impairment losses


75



21











96Reversal of previously recorded impairment     (i)
    
    Comprises purchases of property,
    plant and equipment, intangible assets and associates and other
    financial assets and acquisitions of subsidiaries as included in
    the Consolidated Cash Flow Statement.(ii)
    
    Included in the $112 million
    of depreciation and amortization is $32 million relating to
    administrative expenses and $80 million relating to cost of
    sales. F-21




---



##### Table of Contents



Segmental
    Information
  Year
    ended December 31, 2007
  Revenue
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Owned and leased


257



244



145







646Managed


156



167



99







422Franchised


489



81



16







586Central














117



117Continuing operations


902



492



260



117



1,771Discontinued operations  owned and leased


62



17











79964



509



260



117



1,850   Segmental
    result
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Owned and leased


40



33



36







109Managed


41



87



46







174Franchised


425



58



6







489Regional and central


(66
)


(44
)


(25
)


(163
)


(298
)Continuing operations


440



134



63



(163
)


474Exceptional operating items


17



21



17



5



60Operating profit


457



155



80



(158
)


534Discontinued operations  owned and leased


16



1











17473



156



80



(158
)


551   Continuing


Discontinued


Total($ million)Operating profit before exceptional items


474



17



491Exceptional operating items


60







60Operating profit


534



17



551Net finance costs


(90
)






(90
)Profit before tax


444



17



461Tax


(24
)


(6
)


(30
)Profit after tax


420



11



431Gain on disposal of assets, net of tax






32



32Profit for the year


420



43



463  F-22




---



##### Table of Contents



Year
    ended December 31, 2007*
  Assets
    and liabilities
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Segment assets


1,233



1,216



672



167



3,288Non-current assets classified as held for sale


115















1151,348



1,216



672



167



3,403Unallocated assets:Current tax receivable


















109Cash and cash equivalents


















105Total assets


















3,617Segment liabilities


(562
)


(477
)


(136
)






(1,175
)Liabilities classified as held for sale


(6
)














(6
)(568
)


(477
)


(136
)






(1,181
)Unallocated liabilities:Current tax payable


















(426
)Deferred tax payable


















(148
)Loans and other borrowings


















(1,764
)Total liabilities


















(3,519
)   Other
    segmental information
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Continuing operations:Capital
    expenditure(i)


57



41



40



46



184Additions to:Property, plant and equipment


32



28



28



20



108Intangible assets


9



9



6



26



50Depreciation and
    amortization(ii)


33



35



22



23



113Reversal of previously recorded impairment










6







6Discontinued operations:Capital
    expenditure(i)


1



1











2Depreciation and
    amortization(ii)


1



2











3     *
    
    Restated for IFRIC 14 (see
    page F-11).  (i)
    
    Comprises purchases of property,
    plant and equipment, intangible assets and associates and other
    financial assets as included in the Consolidated Cash Flow
    Statement.(ii)
    
    Included in the $116 million
    of depreciation and amortization is $35 million relating to
    administrative expenses and $81 million relating to cost of
    sales. F-23




---



##### Table of Contents



Segmental
    Information
  Year
    ended December 31, 2006
  Revenue
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Owned and leased


192



169



131







492Managed


143



131



65







339Franchised


443



63



8







514Central














101



101Continuing operations


778



363



204



101



1,446Discontinued operations  owned and leased


74



245











319852



608



204



101



1,765   Segmental
    result
  Americas


EMEA


Asia Pacific


Central


Total($ million)Owned and leased


22



(7
)


31







46Managed


50



68



39







157Franchised


382



44



5







431Regional and central


(59
)


(36
)


(23
)


(149
)


(267
)Continuing operations


395



69



52



(149
)


367Exceptional operating items


44



4











48Operating profit


439



73



52



(149
)


415Discontinued operations  owned and leased


12



45











57451



118



52



(149
)


472   Continuing


Discontinued


Total($ million)Operating profit before exceptional items


367



57



424Exceptional operating items


48







48Operating profit


415



57



472Net finance costs


(20
)






(20
)Profit before tax


395



57



452Tax


97



(21
)


76Profit after tax


492



36



528Gain on disposal of assets, net of tax






226



226Profit for the year


492



262



754  F-24




---



##### Table of Contents



Year
    ended December 31, 2006
  Other
    segmental information
  AsiaAmericas


EMEA


Pacific


Central


Total($ million)Continuing operations:Capital
    expenditure(i)


62



90



31



28



211Additions to:Property, plant and equipment


213



97



16



7



333Intangible assets


18



57



2



20



97Depreciation and
    amortization(ii)


28



31



19



24



102Reversal of previously recorded impairment






4











4Discontinued operations:Capital
    expenditure(i)


2



15











17Additions to property, plant and equipment






7











7Depreciation and
    amortization(ii)


7



9











16Impairment of assets held for sale


5















5     (i)
    
    Comprises purchases of property,
    plant and equipment, intangible assets and other financial
    assets and acquisitions of subsidiaries as included in the
    Consolidated Cash Flow Statement.(ii)
    
    Included in the $118 million
    of depreciation and amortization is $39 million relating to
    administrative expenses and $79 million relating to cost of
    sales.  Note 3 
    Staff costs and Directors emoluments
  Staff
  Year ended December 31,2008


2007


2006($ million)Costs:Wages and salaries


588



586



553Social security costs


55



61



70Pension and other post-retirement benefits:Defined benefit plans


8



8



11Defined contribution plans


30



25



20681



680



654     Year ended December 31,2008


2007


2006(Number)Americas


3,570



3,761



3,771EMEA


2,012



2,249



3,940Asia Pacific


1,481



1,514



1,252Central


1,271



1,150



1,0238,334



8,674



9,986    F-25




---



##### Table of Contents



Retirement
    benefits
      Post-Pension plans


employmentUK


US and other


benefits


TotalRecognized in administrative expenses

2008


2007


2006


2008


2007


2006


2008


2007


2006


2008


2007


2006($ million)Current service costs


9



10



9



1























10



10



9Interest cost on benefit obligation


30



30



24



10



10



9



1



1



2



41



41



35Expected return on plan assets


(32
)


(34
)


(26
)


(11
)


(9
)


(7
)














(43
)


(43
)


(33
)7



6



7







1



2



1



1



2



8



8



11     Pension plans


Post-employmentUK


US and other


benefits


TotalActuarial gains and losses

2008


2007*


2006


2008


2007


2006


2008


2007


2006


2008


2007*


2006($ million)Actual return on plan assets


(25
)


28



39



(27
)


9



11















(52
)


37



50Less: expected return on plan assets


(32
)


(34
)


(26
)


(11
)


(9
)


(7
)














(43
)


(43
)


(33
)(57
)


(6
)


13



(38
)






4















(95
)


(6
)


17Other actuarial gains and losses


55



31



(22
)


3











1







1



59



31



(21
)Total actuarial gains and losses


(2
)


25



(9
)


(35
)






4



1







1



(36
)


25



(4
)Asset restriction**


(14
)


(17
)






























(14
)


(17
)


(16
)


8



(9
)


(35
)






4



1







1



(50
)


8



(4
)   * Restated for IFRIC 14
    (see page F-11).
  ** Relates to tax that would
    be deducted at source in respect of a refund of the surplus.
 F-26




---



##### Table of Contents



Post-Pension plans


employmentUK


US and other


benefits


Total2008


2007*


2008


2007


2008


2007


2008


2007*($ million)Schemes in surplusFair value of plan assets


437



611



16



15











453



626Present value of benefit obligations


(377
)


(550
)


(13
)


(10
)










(390
)


(560
)Surplus in schemes


60



61



3



5











63



66Asset restrictions**


(23
)


(17
)


















(23
)


(17
)Retirement benefit assets


37



44



3



5











40



49Schemes in deficitFair value of plan assets










96



129











96



129Present value of benefit obligations


(34
)


(47
)


(172
)


(174
)


(19
)


(20
)


(225
)


(241
)Retirement benefit obligations


(34
)


(47
)


(76
)


(45
)


(19
)


(20
)


(129
)


(112
)Total fair value of plan assets


437



611



112



144











549



755Total present value of benefit obligations


(411
)


(597
)


(185
)


(184
)


(19
)


(20
)


(615
)


(801
)   * Restated for IFRIC 14
    (see page F-11).
  ** Relates to tax that would
    be deducted at source in respect of a refund of the surplus.
    Assumptions
    Pension plans


Post-employmentUK


US


benefits2008


2007


2006


2008


2007


2006


2008


2007


2006(%)Wages and salaries increases


4.5



4.9



4.6















4.0



4.0



4.0Pensions increases


3.0



3.4



3.1























Discount rate


5.6



5.5



5.0



6.2



5.8



5.8



6.2



5.8



5.8Inflation rate


3.0



3.4



3.1























Healthcare cost trend rate assumed for next year


























9.5



10.0



10.0Ultimate rate that the cost trend rate trends to


























5.0



5.0



5.0     Pension plansUK


US2008


2007


2006


2008


2007


2006(Years)Current pensioners at 65 
    male(i)


23



23



23



18



18



18Current pensioners at 65 
    female(i)


26



26



26



20



20



20Future pensioners at 65 
    male(ii)


24



24



24



18



18



18Future pensioners at 65 
    female(ii)


27



27



27



20



20



20     (i)
    
    Relates to assumptions based on
    longevity (in years) following retirement at the balance sheet
    date.(ii)
    
    Relates to assumptions based on
    longevity (in years) relating to an employee retiring in 2028. F-27




---



##### Table of Contents



Sensitivities
    UK


USHigher/


Increase/


Higher/


Increase/(lower)


(decrease)


(lower)


(decrease)pension cost


in liabilities


pension cost


in liabilities($ million)Discount rate  0.25% decrease


0.6



21.7







4.8Discount rate  0.25% increase


(0.4
)


(20.5
)






(4.6
)Inflation rate  0.25% increase


1.3



20.4







Inflation rate  0.25% decrease


(1.2
)


(19.2
)






Mortality rate  one year increase


0.6



7.9







6.1     Post-Pension plans


employmentUK


US and other


benefits


TotalMovement in benefit obligation

2008


2007


2008


2007


2008


2007


2008


2007($ million)Benefit obligation at beginning of year


597



585



184



175



20



20



801



780Current service cost


9



10



1















10



10Members contributions


1



1



















1



1Interest expense


30



30



10



10



1



1



41



41Benefits paid


(12
)


(13
)


(12
)


(11
)


(1
)


(1
)


(25
)


(25
)Reclassification(i)










5



10











5



10Actuarial gain arising in the year


(55
)


(31
)


(3
)






(1
)






(59
)


(31
)Exchange adjustments


(159
)


15



















(159
)


15Benefit obligation at end of year


411



597



185



184



19



20



615



801Comprising:Funded plans


377



550



141



139











518



689Unfunded plans


34



47



44



45



19



20



97



112411



597



185



184



19



20



615



801     (i)
    
    Relates to the recognition of the gross assets and obligations
    of the Netherlands (2007 Hong Kong) pension scheme.  F-28




---



##### Table of Contents



Post-Pension plans


employmentUK


US and other


benefits


TotalMovement in plan assets

2008


2007


2008


2007


2008


2007


2008


2007($ million)Fair value of plan assets at beginning of year


611



527



144



111











755



638Company contributions


30



54



3



20



1



1



34



75Members contributions


1



1



















1



1Benefits paid


(12
)


(13
)


(12
)


(11
)


(1
)


(1
)


(25
)


(25
)Reclassification(i)










4



15











4



15Expected return on plan assets


32



34



11



9











43



43Actuarial loss arising in the year


(57
)


(6
)


(38
)














(95
)


(6
)Exchange adjustments


(168
)


14



















(168
)


14Fair value of plan assets at end of year


437



611



112



144











549



755     (i)
    
    Relates to the recognition of the gross assets and obligations
    of the Netherlands (2007 Hong Kong) pension scheme.      2008


2007


2006Long-term





Long-term





Long-termrate of





rate of





rate ofreturn





return





returnexpected


Value


expected


Value


expected


Value(%)


($ million)


(%)


($ million)


(%)


($ million)UK pension plansLiability matching investment funds


3.9



192















Equities


7.9



87



7.9



219



7.9



251Bonds


3.9



140



4.8



360



4.6



241Other


7.9



18



7.9



32



7.9



35Total market value of assets






437







611







527US pension plansEquities


9.5



37



9.5



77



9.5



67Fixed income


5.5



55



5.5



52



5.5



43Total market value of assets






92







129







110    F-29




---



##### Table of Contents



UK pension plans

2008


2007


2006


2005


2004($ million)Fair value of plan assets


437



611



527



431



907Present value of benefit obligations


(411
)


(597
)


(585
)


(473
)


(1,158
)Surplus/(deficit) in the plans


26



14



(58
)


(42
)


(251
)Experience adjustments arising on plan liabilities


55



31



(22
)


(122
)


(109
)Experience adjustments arising on plan assets


(57
)


(6
)


13



86



26   US and other pension plans

2008


2007


2006


2005


2004($ million)Fair value of plan assets


112



144



111



106



107Present value of benefit obligations


(185
)


(184
)


(175
)


(176
)


(172
)Deficit in the plans


(73
)


(40
)


(64
)


(70
)


(65
)Experience adjustments arising on plan liabilities


3











(5
)


(11
)Experience adjustments arising on plan assets


(38
)






4



(2
)


2   US post-employment benefits

2008


2007


2006


2005


2004($ million)Present value of benefit obligations


(19
)


(20
)


(19
)


(20
)


(21
)Experience adjustments arising on plan liabilities


1







1



1



(1
)     Post
    balance sheet event
   F-30




---



##### Table of Contents



Policy
    on remuneration of Executive Directors and senior
    executives
    Total
    level of remuneration
    
    attract and retain high-quality executives in an environment
    where compensation levels are based on global market practice;
    drive aligned focus and reward the achievement of key strategic
    objectives;
    support equitable treatment between members of the same
    executive team; and
    facilitate global assignments and relocation.  asset-light
  Key
    developments
  2008
      2009
          three-year
 F-31




---



##### Table of Contents



Remuneration
    structure
        Base salary and benefits
      
    size  turnover, profits and the number of people
    employed;
    diversity and complexity of businesses;
    geographical spread of businesses; and
    relevance to the hotel industry.  Executive
    Directors salaries for 2009 remain unchanged as shown
    below:
  2009 Salary


2008 SalaryAndrew Cosslett


£802,000



£802,000Richard Solomons


£510,000



£510,000   Annual Bonus Plan
     F-32




---



##### Table of Contents



Long Term Incentive Plan
    
    IHGs TSR relative to the Dow Jones World Hotels index
    (index); and
    growth in adjusted EPS over the period.    For the 2008/10 LTIP cycle,
    
    20% of the TSR award will be released if TSR compound annual
    growth is equal to the index (threshold performance);
    100% of the TSR award will be released if TSR compound annual
    growth exceeds the index by 8% or more.    
    20% of the EPS award will be released if compound annual growth
    in adjusted EPS is 6% (threshold performance);
    100% of the EPS award will be released if compound annual growth
    in adjusted EPS is 16% or more (maximum performance).  For the 2009/11 LTIP cycle,
    
    20% of the TSR award will be released if TSR compound annual
    growth is equal to the index (threshold performance);
    100% of the TSR award will be released if TSR compound annual
    growth exceeds the index by 8% or more.    
    0% of the EPS award will be released if compound annual growth
    in adjusted EPS is 0% (threshold performance);
    100% of the EPS award will be released if compound annual growth
    in adjusted EPS is 10% or more (maximum performance).   F-33




---



##### Table of Contents



Executive Share Options page F-39.
  Share capital
  Share Ownership
    Policy
    on external appointments
      Contracts
    of service
  a)
    Policy  12-month
      b)  Directors
    contracts
  Contract(1)


Unexpired term/Director

effective date


notice periodAndrew Cosslett


02.03.05



12 monthsStevan Porter


04.15.03



n/a(2
)Richard Solomons


04.15.03



12 months     (1)
    
    Each of the Executive Directors
    signed a letter of appointment, effective from completion of the
    June 2005 capital reorganization of the Group incorporating the
    same terms as their original service agreements.(2)
    
    Stevan Porter passed away on
    August 7, 2008. F-34




---



##### Table of Contents



Policy
    regarding pensions
  Top-Up
      Policy
    on remuneration of Non-Executive Directors
      Role

FeeChairman


£390,000Senior Independent Director & Chairman of Audit
    Committee


£95,000Chairman of Remuneration Committee


£80,000Other Non-Executive Directors


£60,000  F-35




---



##### Table of Contents



Directors
    emoluments
  Total emoluments excludingpensionsBase salaries


Performance





Jan 1, 2008 to


Jan 1, 2007 toand fees


payments(1)


Benefits(2)


Dec 31, 2008


Dec 31, 2007(£ thousands)Executive DirectorsAndrew Cosslett


787



495



25



1,307



1,276Stevan
    Porter(3)


503



593



5



1,101



677Richard
    Solomons(4)


561



401



18



980



771Non-Executive DirectorsDavid Webster


390







2



392



392David Kappler


95











95



95Ralph
    Kugler(5)


72











72



60Jennifer Laing


60











60



60Robert C Larson


60











60



60Jonathan Linen


60











60



60Sir David
    Prosser(6)


33











33



80Ying
    Yeh(7)


60











60



5Former
    Directors(8)










1



1



1,124Total


2,681



1,489



51



4,221



4,660       (1)
    
    Performance payments comprise cash
    payments in respect of participation in the ABP but exclude
    bonus payments in deferred shares, details of which are set out
    in the ABP table on page F-37.(2)
    
    Benefits incorporate all tax
    assessable benefits arising from the individuals
    employment. For Messrs Cosslett and Solomons, this relates in
    the main to the provision of a fully expensed company car and
    private healthcare cover. For Stevan Porter, benefits related in
    the main to private healthcare cover and financial counselling.(3)
    
    Amounts reported for Stevan Porter
    reflect his contractual service during the year and include
    amounts which were paid to his estate related to accrued
    vacation, a pension allowance, health cover and a pro-rated
    payment in respect of participation in the ABP through his
    contractual service period reflective of financial and
    individual performance from January 1, to June 30,
    2008.(4)
    
    In respect of his additional duties
    as interim President of the Americas region, Richard Solomons
    received a salary supplement of £10,000 per month and
    participated in a special cash bonus plan. The cash bonus plan
    was linked to ensuring the successful ongoing performance of the
    Americas Region for 2008. The target bonus award was 115% of the
    six-month salary supplement (£60,000), in line with our
    normal annual bonus plan structure. The maximum bonus was 200%
    of the salary supplement. This element of his bonus paid at 109%
    of target and is included in performance payments.(5)
    
    Ralph Kuglers fee was
    increased, pro-rata, from June 1, 2008 when he became
    Chairman of the Remuneration Committee.(6)
    
    Sir David Prosser retired as a
    Director and Chairman of the Remuneration Committee on
    May 31, 2008.(7)
    
    Ying Yeh was appointed as a
    Director on December 1, 2007.(8)
    
    Richard Hartman retired as a
    Director on September 25, 2007. His emoluments include
    salary and benefits for 2007 and ABP payments made in 2008, in
    respect of the 2007 financial year. Sir Ian Prosser retired as a
    Director on December 31, 2003. However, he had an ongoing
    healthcare benefit of £1,150 during the year. F-36




---



##### Table of Contents



Long-term
    reward
  Annual
    Bonus Plan
    Valuebased onABP shares

















shareABP awards





Market


vested





Market





ABP





price ofduring





price


during





price





awards





562 penceABP awards


the year





per share


the year





per share


Value


held at


Planned


at Dec 31,held at


Jan 1, 2008


Award


at award


Jan 1, 2008 to


Vesting


at vesting


at vesting


Dec 31,


vesting


2008Directors

Jan 1, 2008


to Dec 31, 2008


date


(pence)


Dec 31, 2008


date


(pence)


(£)


2008


date


(£)Andrew Cosslett


28,877(2
)






3.8.06



853.67p



28,877



3.10.08



780p



225,241



28,878(2
)






3.8.06



853.67p



















28,878



3.8.09



162,29455,870(3
)






2.26.07



1235p



















55,870



2.26.10



313,98971,287(4
)


2.25.08



819.67p



















71,287



2.25.11



400,633Total


































156,035







876,916Stevan Porter


26,978(1
)






3.16.05



653.67p



26,978



3.17.08



735p



198,288
(7)


18,531(2
)






3.8.06



853.67p



18,531



3.10.08



780p



144,542
(7)


18,530(2
)






3.8.06



853.67p



18,530



11.7.08
(6)


542.5p



100,525



29,778(3
)






2.26.07



1235p



29,778



11.7.08
(6)


542.5p



161,546



35,743(5
)


2.25.08



819.67p



35,743



11.7.08
(6)


542.5p



193,906



Total


































Richard Solomons


29,021(1
)






3.16.05



653.67p



29,021



3.17.08



735p



213,304



18,459(2
)






3.8.06



853.67p



18,459



3.10.08



780p



143,980



18,459(2
)






3.8.06



853.67p



















18,459



3.8.09



103,74035,757(3
)






2.26.07



1235p



















35,757



2.26.10



200,95445,634(8
)


2.25.08



819.67p



















45,634



2.25.11



256,463Total


































99,850







561,157Former DirectorsRichard Hartman


29,447(1
)






3.16.05



653.67p



29,447



3.17.08



735p



216,435



17,698(2
)






3.8.06



853.67p



17,698



3.10.08



780p



138,044



17,696(2
)






3.8.06



853.67p



17,696



3.28.08
(9)


772.5p



136,702



51,281(3
)






2.26.07



1235p



51,281



3.28.08
(9)


772.5p



396,146



Total


































     (1)
    
    This award was based on 2004
    financial year performance where the performance measures were
    related to EPS, EBIT and personal performance. Total shares held
    include matching shares.(2)
    
    This award was based on 2005
    financial year performance where the performance measures were
    related to EPS, EBIT and personal performance. Total shares held
    include matching shares.(3)
    
    This award was based on 2006
    financial year performance where the performance measures were
    related to EPS and EBIT. Total shares held include matching
    shares.(4)
    
    This award was based on 2007
    financial year performance where the performance measures were
    related to Group EBIT and net annual rooms additions. The bonus
    target was 50% of base salary. Andrew Cosslett was awarded 33%
    for Group EBIT performance and 19.5% for net annual rooms
    additions. Andrew Cossletts total bonus was therefore
    52.5% of his base salary. One matching share was awarded for
    every two bonus shares earned.(5)
    
    This award was based on financial
    year 2007 performance where the performance measures were
    related to Americas EBIT and net annual rooms additions.
    The bonus target was 50% of base salary. Stevan Porter was
    awarded 25.75% for Americas EBIT performance and 19.5% for
    net annual rooms additions. Stevan Porters total bonus was
    therefore 45.25% of his base salary. One matching share was
    awarded for every two bonus shares earned. Stevan Porter also
    received a cash payment of £3,550.52 in lieu of dividends
    relating to bonus shares.(6)
    
    In accordance with Plan rules,
    Stevan Porters ABP shares held at January 1, 2008 and
    awarded during 2008 (in respect of 2007 performance), and which
    were due to vest from 2009 onwards, vested early at the
    discretion of the Remuneration Committee, following his F-37




---



##### Table of Contents



death on August 7, 2008. The
    value of these entitlements was calculated as at
    November 7, 2008. A cash payment of £1,525.06 in lieu
    of dividends relating to bonus shares was paid to his estate.
    The shares will be released to Mr Porters estate following
    completion of UK probate in due course.(7)
    
    The value of Stevan Porters
    shares at vesting includes £31,130 that was chargeable to
    UK income tax.(8)
    
    This award was based on 2007
    financial year performance where the performance measures were
    related to Group EBIT and net annual rooms additions. The bonus
    target was 50% of base salary. Richard Solomons was awarded 33%
    for Group EBIT performance and 19.5% for net annual rooms
    additions. Richard Solomons total bonus was therefore
    52.5% of his base salary. One matching share was awarded for
    every two bonus shares earned.(9)
    
    At the discretion of the
    Remuneration Committee, all of Richard Hartmans shares
    vested six months after his retirement date of
    September 25, 2007.  Long Term
    Incentive Plan (LTIP)
      Maximum


ExpectedMaximum








LTIP shares














value


valueLTIP shares








vested














based on


based onawarded








during














share


shareduring





Market


the year


Market








Maximum


price of


price ofMaximum


the year





price


Jan 1, 2008


price





Actual/


LTIP awards


562 pence


562 penceLTIP awards


Jan 1, 2008





per share


to


per share


Value


planned


held at


at Dec 31,


at Dec 31,held at


to Dec 31,


Award


at award


Dec 31,


at vesting


at vesting


vesting


Dec 31,


2008


2008Directors

Jan 1, 2008


2008


date


(pence)


2008


(pence)


(£)


date


2008


(£)


(£)Andrew Cosslett


276,200
(1)






6.29.05



706p



152,738



827p



1,263,143



2.20.08



200,740
(2)






4.3.06



941.5p















2.18.09



200,740



1,128,159



978,114
(5)159,506
(3)






4.2.07



1256p















2.17.10



159,506



896,424253,559
(4)


5.19.08



854p















2.16.11



253,559



1,425,001Total


































613,805



3,449,584Stevan Porter


174,900
(1)






6.29.05



706p



96,719



827p



799,866
(6)


2.20.08



132,240
(2)






4.3.06



941.5p



125,628



542.5p



681,532
(7)


11.7.08



92,667
(3)






4.2.07



1256p



17,811



542.5p



96,625
(7)


11.7.08



147,209
(4)


5.19.08



854p



28,029



542.5p



152,057
(7)


11.7.08



Total


































Richard Solomons


176,550
(1)






6.29.05



706p



97,632



827p



807,417



2.20.08



128,470
(2)






4.3.06



941.5p















2.18.09



128,470



722,001



625,975
(5)102,109
(3)






4.2.07



1256p















2.17.10



102,109



573,853161,241
(4)


5.19.08



854p















2.16.11



161,241



906,174Total


































391,820



2,202,028Former DirectorsRichard Hartman


196,964
(1)






6.29.05



706p



108,921



827p



900,777



2.20.08



85,230
(2)






4.3.06



941.5p















2.18.09



85,230



478,993



415,287
(5)28,432
(3)






4.2.07



1256p















2.17.10



28,432



159,788Total


































113,662



638,781     (1)
    
    This award was based on performance
    to December 31, 2007 where the performance measure related
    to both the Companys TSR against a group of seven other
    comparator companies and the CAGR of rooms in the IHG system
    relative to a group of five other comparator companies. The
    number of shares released is graded, according to a) where
    the Company finished in the TSR comparator group, with 50% of
    the award being released for first or second position and 10% of
    the award being released for median position; and
    b) relative CAGR of rooms with 50% of the award being
    released for 3.4% (upper quartile) CAGR and 10% of the award
    being released for 2.4% (median) CAGR. The Company finished in
    fourth place in the TSR group and achieved a relative CAGR of
    3.1%. Accordingly, 55.3% of the award vested on
    February 20, 2008. F-38




---



##### Table of Contents



(2)
    
    This award is based on performance
    to December 31, 2008 where the performance measure relates
    to both the Companys TSR against a group of eight other
    comparator companies and the CAGR of rooms in the IHG system
    relative to a group of eight other comparator companies. The
    number of shares released is graded, according to a) where
    the Company finished in the TSR comparator group, with 50% of
    the award being released for first or second position and 10% of
    the award being released for median position; and
    b) relative CAGR of rooms with 50% of the award being
    released for 3.9% (upper quartile) CAGR and 10% of the award
    being released for 3.3% (median) CAGR.(3)
    
    This award is based on performance
    to December 31, 2009 where the performance measure relates
    to both the Companys TSR against a group of eight other
    comparator companies and the compound annual growth rate in
    adjusted EPS over the performance period.(4)
    
    This award is based on performance
    to December 31, 2010 where the performance measure relates
    to both the Companys TSR relative to the Index and the
    compound annual growth rate in adjusted EPS over the performance
    period.(5)
    
    The Company finished in third place
    in the TSR group and achieved CAGR of rooms of 4.9%.
    Accordingly, 86.7% of the award will vest on February 18,
    2009.(6)
    
    The value of Stevan Porters
    shares at vesting included £96,953 that was changeable to
    UK income tax.(7)
    
    In accordance with Plan rules,
    Stevan Porters LTIP shares granted in 2006, 2007 and 2008
    were pro-rated to reflect his contractual service during the
    applicable performance periods. The Remuneration Committee
    calculated the value of these entitlements as at
    November 7, 2008 at which point they vested. The shares
    will be transferred to Mr Porters estate following
    completion of UK probate in due course.  Share
    options
    WeightedOrdinary shares under option


averageOptions held


Granted


Lapsed


Exercised


Options


option


Optionat Jan 1,


during


during


during


held at


price


priceDirectors

2008


the year


the year


the year


Dec 31, 2008


(pence)


(pence)Andrew Cosslett


157,300157,300
(1)






619.83Total


157,300















157,300



619.83Stevan Porter


321,630225,260
(2)






494.1796,370
(2)






619.83Total


321,630















321,630
(2)


531.82Richard Solomons


334,639230,320
(1)






494.17100,550
(1)






619.833,769
(3)






420.50Total


334,639















334,639



531.10     (1)
    
    Options are exercisable at
    December 31, 2008. Executive share options granted in 2004
    are exercisable up to April 2014. Executive share options
    granted in 2005 are exercisable up to April 2015.(2)
    
    Following Stevan Porters
    death in August 2008, his outstanding vested executive share
    options are all exercisable by his personal representatives
    until August 6, 2009.(3)
    
    Sharesave options granted in 2003.
    These are exercisable between March and August 2009.     F-39




---



##### Table of Contents



Directors
    pensions
  Top-Up
  1 30
      Directors
    pension benefits
  Increase intransfer value


AbsoluteDirectors


Transfer value of


over the year,


increase in


Increase


Accruedcontributions


accrued benefits


less Directors


accrued


in accrued


pension atAge at


in the
    year(1)


Jan 1, 2008


Dec 31, 2008


contributions


pension(2)


pension(3)


Dec 31,
    2008(4)Directors

Dec 31, 2008


(£)


(£)


(£)


(£)


(£ pa)


(£ pa)


(£ pa)Andrew Cosslett


53



36,600



1,184,200



2,028,600



807,800



31,700



28,600



102,600Richard Solomons


47



23,400



2,371,600



3,430,800



1,035,800



28,600



21,300



197,300   (1)
    
    Contributions paid in the year by
    the Directors under the terms of the plans. Contributions were
    5% of full pensionable salary.(2)
    
    The absolute increase in accrued
    pension during the year.(3)
    
    The increase in accrued pension
    during the year, excluding any increase for inflation.(4)
    
    Accrued pension is that which would
    be paid annually on retirement at 60, based on service to
    December 31, 2008.    Directors contribution to


Company contribution toDCP


401(k)


DCP


401(k)(£)


(£)


(£)


(£)Stevan Porter


78,000



6,200



62,700



5,000  F-40




---



##### Table of Contents



Note 4 
    Auditors Remuneration paid to Ernst & Young
    LLP
  Year ended December 31,2008


2007


2006($ million)Audit fees


1.7



2.8



3.5Audit fees in respect of subsidiaries


1.5



2.6



2.6Tax fees


1.0



0.8



1.2Interim review fees


0.4



0.4



0.4Other services pursuant to legislation


0.1



0.2



0.2Corporate finance fees










0.2Other


2.8



2.4



1.57.5



9.2



9.6      F-41




---



##### Table of Contents



Note 5 
    Exceptional Items
  Year ended December 31,2008


2007


2006($ million)Continuing operationsExceptional operating items:Administrative expenses:Holiday Inn brand
    relaunch(i)


(35
)






Office
    reorganizations(ii)


(5
)


(14
)


Severance
    costs(iii)


(19
)






(59
)


(14
)


Other operating income and expenses:Gain on sale of associate investments


13



22



Gain on sale of other financial assets


14



36



Gain on sale of investment in FelCor Lodging Trust, Inc.










44Loss on disposal of hotels (Note 11)*


(2
)






Office
    reorganizations(ii)






1225



70



44Depreciation and amortization:Office
    reorganizations(ii)


(2
)


(2
)


Impairment:Property, plant and equipment (Note 10)


(12
)


6



Goodwill (Note 12)


(63
)






Intangible assets (Note 13)


(21
)






Investment in associates (Note 14)










4(96
)


6



4(132
)


60



48Tax:Tax on exceptional operating items


17







(11
)Exceptional tax
    credit(iv)


25



60



18442



60



173Discontinued operationsGain on disposal of assets (Note 11);Gain on disposal of hotels**






40



237Tax charge


5



(8
)


(11
)5



32



226(85
)


152



447     *
    Relates to hotels classified as continuing operations.**
    Relates to hotels classified as discontinued operations.    (i)
    Relates to costs incurred in support of the worldwide relaunch
    of the Holiday Inn brand family that was announced on
    October 24, 2007.(ii)
    Relates to costs incurred on the relocation of the Groups
    head office and the closure of its Aylesbury facility. F-42




---



##### Table of Contents



(iii)
    Severance costs relate to redundancies arising from a review of
    the Groups cost base in light of the current economic
    climate.  (iv)
    Relates to the release of provisions which are exceptional by
    reason of their size or nature relating to tax matters which
    have been settled or in respect of which the relevant statutory
    limitation period has expired, together with, in 2006, a credit
    in respect of previously unrecognized losses.  Note 6 
    Finance costs
  Year ended December 31,2008


2007


2006($ million)Financial incomeInterest income


11



15



39Fair value gains


1



3



912



18



48Financial expensesInterest expense


95



90



61Finance charge payable under finance leases


18



18



7113



108



68      F-43




---



##### Table of Contents



Note 7 
    Tax
  Year ended December 31,2008


2007


2006($ million)Income taxUK corporation tax at 28.5% (2007 30.0%, 2006 30.0%):Current period


13



45



29Benefit of tax reliefs on which no deferred tax previously
    recognized






(1
)


(18
)Adjustments in respect of prior periods


(28
)


(33
)


(7
)(15
)


11



4Foreign
    tax(i):Current period


130



200



132Benefit of tax reliefs on which no deferred tax previously
    recognized


(6
)


(15
)


(2
)Adjustments in respect of prior periods


(63
)


(100
)


(173
)61



85



(43
)Total current tax


46



96



(39
)Deferred tax:Origination and reversal of temporary differences


26



(67
)


49Changes in tax rates


(1
)


(4
)


(7
)Adjustments to estimated recoverable deferred tax assets


(4
)


5



(24
)Adjustments in respect of prior periods


(13
)


8



(44
)Total deferred tax


8



(58
)


(26
)Total income tax charge/(credit) on profit for the year


54



38



(65
)Further analyzed as tax relating to:Profit before exceptional items


101



90



97Exceptional items (Note 5):Exceptional operating items


(17
)






11Exceptional tax
    credit(ii)


(25
)


(60
)


(184
)Gain on disposal of assets


(5
)


8



1154



38



(65
)The total tax charge/(credit) can be further analyzed as
    relating to:Profit on continuing operations


54



24



(97
)Profit on discontinued operations


5



6



21Gain on disposal of assets


(5
)


8



1154



38



(65
)     (i)
    
    Represents corporate income taxes
    on profit taxable in foreign jurisdictions, a significant
    proportion of which relates to the Groups US subsidiaries.(ii)
    
    Represents the release of
    provisions which are exceptional by reason of their size or
    nature relating to tax matters which have been settled or in
    respect of which the relevant statutory limitation period has
    expired, together with, in 2006, a credit in respect of
    previously unrecognized losses. F-44




---



##### Table of Contents



Reconciliation of tax charge/(credit) on total profit,
    including gain on disposal of assets
  Year ended December 31,2008


2007


2006(%)UK corporation tax at standard rate


28.5



30.0



30.0Non-deductible expenditure and non-taxable income


8.7



5.6



3.7Net effect of different rates of tax in overseas businesses


10.1



1.8



3.5Effect of changes in tax rates


(0.2
)


(1.0
)


(1.0
)Benefit of tax reliefs on which no deferred tax previously
    recognized


(1.7
)


(3.3
)


(3.0
)Effect of adjustments to estimated recoverable deferred tax
    assets


(1.1
)


1.3



(0.2
)Adjustment to tax charge in respect of prior periods


(23.5
)


(11.0
)


(6.9
)Other


(0.8
)


0.4



0.4Exceptional items and gain on disposal of assets


(2.9
)


(16.3
)


(36.1
)17.1



7.5



(9.6
)   Tax
    paid
      Tax
    risks, policies and governance
      Note 8 
    Dividends paid and proposed
  Year ended December 31,2008


2007


2006


2008


2007


2006(cents per share)








($ million)Paid during the year:Final (declared in previous year)


29.2



25.9



18.7



86



92



84Interim


12.2



11.5



9.6



32



35



33Special interim






400.0



217.0







1,397



91441.4



437.4



245.3



118



1,524



1,031Proposed (not recognized as a liability at December 31):Final


29.2



29.2



25.9



83



86



92    F-45




---



##### Table of Contents



Note 9 
    Earnings per ordinary share
        Year ended December 31,2008


2007


2006Continuing





Continuing





Continuingoperations


Total


operations


Total


operations


TotalBasic earnings per ordinary shareProfit available for equity holders ($ million)


248



262



420



463



492



754Basic weighted average number of ordinary shares (millions)


287



287



320



320



389



389Basic earnings per ordinary share (cents)


86.4



91.3



131.3



144.7



126.5



193.8Diluted earnings per ordinary shareProfit available for equity holders ($ million)


248



262



420



463



492



754Diluted weighted average number of ordinary shares (millions)


296



296



329



329



399



399Diluted earnings per ordinary share (cents)


83.8



88.5



127.7



140.7



123.3



189.0   2008


2007


2006(millions)Diluted weighted average of ordinary shares is calculated as:Basic weighted average number of ordinary shares


287



320



389Dilutive potential ordinary shares  employee share
    options


9



9



10296



329



399   Year ended December 31,2008


2007


2006Continuing





Continuing





Continuingoperations


Total


operations


Total


operations


TotalAdjusted earnings per ordinary shareProfit available for equity holders ($ million)


248



262



420



463



492



754Adjusting items (Note 5):Exceptional operating items ($ million)


132



132



(60
)


(60
)


(48
)


(48
)Tax on exceptional operating items ($ million)


(17
)


(17
)










11



11Exceptional tax credit ($ million)


(25
)


(25
)


(60
)


(60
)


(184
)


(184
)Gain on disposal of assets, net of tax ($ million)






(5
)






(32
)






(226
)Adjusted earnings ($ million)


338



347



300



311



271



307Basic weighted average number of ordinary shares (millions)


287



287



320



320



389



389Adjusted earnings per ordinary share (cents)


117.8



120.9



93.8



97.2



69.7



78.9Adjusted earnings ($ million)


338



347



300



311



271



307Diluted weighted average number of ordinary shares (millions)


296



296



329



329



399



399Adjusted diluted earnings per ordinary share (cents)


114.2



117.2



91.2



94.5



67.9



76.9  F-46




---



##### Table of Contents



Note 10 
    Property, Plant and Equipment
  Land


Fixtures,and


fittings andbuildings


equipment


Total($ million)Year ended December 31, 2007Cost:At January 1, 2007


1,610



993



2,603Additions


10



98



108Reclassifications


31



(41
)


(10
)Net transfers to non-current assets classified as held for sale


(77
)


(88
)


(165
)Disposals


(14
)


(38
)


(52
)Exchange and other adjustments


46



31



77At December 31, 2007


1,606



955



2,561Depreciation:At January 1, 2007


(160
)


(487
)


(647
)Provided


(12
)


(66
)


(78
)Net transfers to non-current assets classified as held for sale


33



31



64Reversal of impairment






6



6On disposals


14



36



50Exchange and other adjustments


(4
)


(18
)


(22
)At December 31, 2007


(129
)


(498
)


(627
)Net book value at December 31, 2007


1,477



457



1,934Year ended December 31, 2008Cost:At January 1, 2008


1,606



955



2,561Additions


6



85



91Net transfers to non-current assets classified as held for sale


(119
)


(60
)


(179
)Disposals


(15
)


(24
)


(39
)Exchange and other adjustments


(112
)


(56
)


(168
)At December 31, 2008.


1,366



900



2,266Depreciation:At January 1, 2008


(129
)


(498
)


(627
)Provided


(11
)


(61
)


(72
)Net transfers to non-current assets classified as held for sale


37



37



74Impairment charge


(12
)






(12
)On disposals


15



25



40Exchange and other adjustments






15



15At December 31, 2008


(100
)


(482
)


(582
)Net book value at December 31, 2008


1,266



418



1,684Net book value at January 1, 2007


1,450



506



1,956    F-47




---



##### Table of Contents



Note 11 
    Assets sold, held for sale and discontinued operations
  Hotels
      Year ended December 31,2008


2007


2006($ million)Net assets of hotels soldProperty, plant and equipment


28



70



1,191Net working capital






2



(40
)Cash and cash equivalents


8







57Loans and other borrowings










(18
)Deferred tax










(215
)Minority equity interest






(12
)


(24
)Groups share of net assets disposed of


36



60



951ConsiderationCurrent year disposals:Cash consideration, net of costs paid


34



94



1,155Deferred consideration










18Management contract value






6



55Other










(26
)34



100



1,202Net assets disposed of


(36
)


(60
)


(951
)Provision against deferred consideration










(18
)Other, including impairment of held for sale asset










4Tax


5



(8
)


(11
)Gain on disposal of assets, net of tax


3



32



226Analyzed as:Continuing operations


(2
)






Discontinued operations


5



32



2263



32



226Net cash inflowCurrent year disposals:Cash consideration, net of costs paid


34



94



1,155Cash disposed of


(8
)






(57
)Prior year disposals


(1
)


3



4225



97



1,140Assets and liabilities held for saleNon-current assets classified as held for sale:Property, plant and equipment


210



115



78Associates










20210



115



98Liabilities classified as held for sale:Deferred tax


(4
)


(6
)


(4
)  F-48




---



##### Table of Contents



Year endedDecember 31,2008


2007


2006($ million)Results of discontinued operationsRevenue


43



79



319Cost of sales


(29
)


(59
)


(246
)14



20



73Depreciation and amortization






(3
)


(16
)Operating profit


14



17



57Tax


(5
)


(6
)


(21
)Profit after tax


9



11



36Gain on disposal of assets, net of tax (Note 5)


5



32



226Profit for the year from discontinued operations


14



43



262   2008


2007


2006cents


cents


centsper ordinary


per ordinary


per ordinaryshare


share


shareEarnings per ordinary share from discontinued operationsBasic


4.9



13.4



67.3Diluted


4.7



13.0



65.7   Year ended December 31,2008


2007


2006($ million)Cash flows attributable to discontinued operationsOperating profit before interest, depreciation and amortization


14



20



73Investing activities






(2
)


(17
)Financing activities










(45
)     Note 12 
    Goodwill
  At December 31,2008


2007($ million)At January 1


221



214Impairment charge


(63
)


Exchange and other adjustments


(15
)


7At December 31


143



221    F-49




---



##### Table of Contents



At


AtDecember 31,


December 31,2008


2007($ million)Americas managed operations


78
*


141Asia Pacific managed and franchised operations


65



80143



221     *
    
    $141 million before impairment
    charge.      Years 2 to 5 growth rates


Perpetual growth rates


Discount rates2008


2007


2008


2007


2008


2007%


%


%


%


%


%Americas managed operations


1.0 - 4.0



4.0



2.7



2.7



12.5



10.0Asia Pacific managed and franchised operations


2.5 - 10.0



15.0



4.0



4.0



16.0



11.0      F-50




---



##### Table of Contents



Note 13 
    Intangible assets
  Management


OtherSoftware


contracts


intangibles


Total($ million)Year ended December 31, 2007Cost:At January 1, 2007


85



229



71



385Additions


26



10



14



50Reclassification


10











10Disposals


(1
)






(1
)


(2
)Exchange and other adjustments






10



2



12At December 31, 2007


120



249



86



455Amortization:At January 1, 2007


(45
)


(14
)


(24
)


(83
)Provided


(19
)


(12
)


(7
)


(38
)Disposals


1







1



2Exchange and other adjustments










(1
)


(1
)At December 31, 2007


(63
)


(26
)


(31
)


(120
)Net book value at December 31, 2007


57



223



55



335Year ended December 31, 2008Cost:At January 1, 2008


120



249



86



455Additions


40







9



49Disposals


(2
)










(2
)Exchange and other adjustments






(29
)


(2
)


(31
)At December 31, 2008


158



220



93



471Amortization:At January 1, 2008


(63
)


(26
)


(31
)


(120
)Provided


(20
)


(12
)


(8
)


(40
)Impairment charge






(21
)






(21
)Disposals


2











2Exchange and other adjustments






9



1



10At December 31, 2008


(81
)


(50
)


(38
)


(169
)Net book value at December 31, 2008


77



170



55



302Net book value at January 1, 2007


40



215



47



302      F-51




---



##### Table of Contents



Note 14 
    Investment in associates
    At


AtDecember 31,


December 31,2008


2007($ million)Share of associates balance sheetCurrent assets


5



6Non-current assets


65



104Current liabilities


(20
)


(16
)Non-current liabilities


(7
)


(29
)Net assets


43



65Share of associates revenue and profitRevenue


30



32Net profit






2Related party transactionsRevenue from related parties


5



6Amounts owed by related parties


2



2     Note 15 
    Other Financial Assets
  At


AtDecember 31,


December 31,2008


2007($ million)Non-currentEquity securities available-for-sale


64



93Other


88



95152



188CurrentEquity securities available-for-sale


6



Other


4



1810



18    F-52




---



##### Table of Contents



At


AtDecember 31,


December 31,2008


2007($ million)At January 1


(9
)


(41
)Provided


(2
)


Recoveries






3Disposals






5Amounts written off against the financial asset






24At December 31


(11
)


(9
)     Note 16 
    Inventories
  At


AtDecember 31,


December 31,2008


2007($ million)Finished goods


2



3Consumable stores


2



34



6   Note 17 
    Trade and other receivables
  At


AtDecember 31,


December 31,2008


2007($ million)Trade receivables


318



362Other receivables


49



59Prepayments


45



51412



472      F-53




---



##### Table of Contents



At


AtDecember 31,


December 31,2008


2007($ million)Americas


208



231Europe, the Middle East and Africa


109



141Asia Pacific


50



49367



421     At December 31, 2008


At December 31, 2007Gross


Provision


Net


Gross


Provision


Net($ million)Not past due


254



(13
)


241



286



(2
)


284Past due 1 to 30 days


61



(1
)


60



74



(3
)


71Past due 31 to 180 days


63



(5
)


58



77



(15
)


62Past due more than 180 days


99



(91
)


8



80



(76
)


4477



(110
)


367



517



(96
)


421     At


AtDecember 31,


December 31,2008


2007($ million)At January 1


(96
)


(85
)Provided


(28
)


(23
)Amounts written off


14



12At December 31


(110
)


(96
)   Note 18 
    Cash and cash equivalents
  At


AtDecember 31,


December 31,2008


2007($ million)Cash at bank and in hand


32



53Short-term deposits


50



5282



105    F-54




---



##### Table of Contents



Note 19 
    Trade and other payables
  At


AtDecember 31,


December 31,2008


2007($ million)CurrentTrade payables


111



100Other tax and social security payable


31



39Other payables


322



345Accruals


272



297Derivatives


10



3746



784Non-currentOther payables


392



279         Note 20 
    Loans and other borrowings
  At December 31, 2008


At December 31, 2007Current


Non-current


Total


Current


Non-current


Total($ million)Secured bank loans


5



2



7







7



7Finance leases


16



186



202



16



184



200Unsecured bank loans






1,146



1,146







1,557



1,557Total borrowings


21



1,334



1,355



16



1,748



1,764Denominated in the following currencies:Sterling






152



152







553



553US dollars


16



873



889



16



854



870Euro






224



224







243



243Other


5



85



90







98



9821



1,334



1,355



16



1,748



1,764   Secured
    bank loans
   F-55




---



##### Table of Contents



Finance
    leases
    At December 31, 2008


At December 31, 2007Minimum


Present


Minimum


Presentlease


value of


lease


value ofpayments


payments


payments


payments($ million)Less than one year


16



16



16



16Between one and five years


64



48



64



47More than five years


3,380



138



3,396



1373,460



202



3,476



200Less: amount representing finance charges


(3,258
)






(3,276
)


202



202



200



200     Unsecured
    bank loans
    Facilities
    provided by banks
  At December 31, 2008


At December 31, 2007Utilized


Unutilized


Total


Utilized


Unutilized


Total($ million)Committed


1,161



946



2,107



1,564



757



2,321Uncommitted






25



25







50



501,161



971



2,132



1,564



807



2,371   At December 31,2008


2007($ million)Unutilized facilities expire:within one year


25



150after one but before two years






657after two but before five years


946



971



807  F-56




---



##### Table of Contents



Note 21 
    Financial risk management policies
  Overview
      Market
    risk exposure
            Liquidity
    risk exposure
       F-57




---



##### Table of Contents



Credit
    risk exposure
          Capital
    risk management
    Hedging
  Interest
    rate risk
      Foreign
    currency risk
    Hedge of
    net investment in foreign operations
     F-58




---



##### Table of Contents



Note 22 
    Financial Instruments
  Liquidity
    risk
    Less than


Between 1 and


Between 2 and


More thanDecember 31, 2008

1 year


2 years


5 years


5 years


Total($ million)Secured bank loans


2



8











10Finance lease obligations


16



16



48



3,380



3,460Unsecured bank loans


1,156















1,156Trade and other payables


737



101



113



277



1,228Derivatives


6



4



3







13   Less than


Between 1 and


Between 2 and


More thanDecember 31, 2007

1 year


2 years


5 years


5 years


Total($ million)Secured bank loans


2



2



8







12Finance lease obligations


16



16



48



3,396



3,476Unsecured bank loans


1,570















1,570Trade and other payables


781



127



100



110



1,118Derivatives


12















12     Credit
    risk
    At


AtDecember 31,


December 31,2008


2007($ million)Equity securities available-for-sale


70



93Loans and receivables:Cash and cash equivalents


82



105Other financial assets


92



113Trade and other receivables, excluding prepayments


367



421611



732  F-59




---



##### Table of Contents



Interest
    rate risk
    Repricing analysisTotal





Between


Between


BetweenEffective


carrying


Less than


6 months


2 and 3


3 and 4


More thanAs at December 31, 2008

interest rate


amount


6 months


and 1 year


years


years


5 years(%)


($ million)Cash and cash equivalents


0.0-2.8



(82
)


(82
)














Secured bank loans


6.1



7



7















Finance lease obligations*


9.7



202



















202Unsecured bank loans:Euro floating rate


3.4



224



224















 effect of euro interest rate swaps*


1.8







(105
)






105







US dollar floating rate


1.5



687



687















 effect of US dollar interest rate swaps*


1.0







(250
)


100







150



Sterling floating rate


2.8



152



152















 effect of sterling interest rate swaps*


3.9







(109
)


109











HK dollar floating rate


2.9



83



83















Net debt






1,273



607



209



105



150



202     *
    
    These items bear interest at a
    fixed rate.  Repricing analysisTotal





Between


BetweenEffective


carrying


Less than


6 months


1 and 2


More thanAs at December 31, 2007

interest rate


amount


6 months


and 1 year


years


5 years($ million)(%)Cash and cash equivalents


0.0-5.9



(105
)


(105
)










Secured bank loans


8.2



7



7











Finance lease obligations*


9.7



200















200Unsecured bank loans:Euro floating rate


5.3



243



243











 effect of euro interest rate
    swaps*


(0.6
)






(111
)






111



US dollar floating rate


5.5



670



670











 effect of US dollar interest rate swaps*


(0.4
)






(100
)


100







Sterling floating rate


6.9



553



553











 effect of sterling interest rate swaps*


0.0







(151
)






151



HK dollar floating rate


4.5



91



91











Net debt






1,659



1,097



100



262



200     *
    
    These items bear interest at a
    fixed rate.   F-60




---



##### Table of Contents



Fair
    values
    At December 31, 2008


At December 31, 2007Carrying





Carryingvalue


Fair value


value


Fair value($ million)Financial assetsEquity securities available-for-sale (Note 15)


70



70



93



93Loans and receivables:Cash and cash equivalents (Note 18)


82



82



105



105Other financial assets (Note 15)


92



92



113



113Trade and other receivables, excluding prepayments (Note 17)


367



367



421



421Financial liabilitiesBorrowings, excluding finance lease obligations (Note 20)


(1,153
)


(1,153
)


(1,564
)


(1,564
)Finance lease obligations (Note 20)


(202
)


(168
)


(200
)


(250
)Trade and other payables, excluding derivatives (Note 19)


(1,128
)


(1,128
)


(1,060
)


(1,060
)Derivatives (Note 19)


(10
)


(10
)


(3
)


(3
)   available-for-sale
  Note 23 
    Net debt
  At December 31,


At December 31,2008


2007($ million)Cash and cash equivalents


82



105Loans and other borrowings  current


(21
)


(16
)Loans and other borrowings  non-current


(1,334
)


(1,748
)Net debt


(1,273
)


(1,659
)   F-61




---



##### Table of Contents



Year ended


Year endedDecember 31,


December 31,2008


2007($ million)Movement in net debtNet increase/(decrease) in cash and cash equivalents


25



(237
)Add back cash flows in respect of other components of net debt:Decrease/(increase) in borrowings


316



(1,108
)Decrease/(increase) in net debt arising from cash flows


341



(1,345
)Non-cash movements:Finance lease liability


(2
)


(18
)Exchange and other adjustments


47



(33
)Decrease/(increase) in net debt


386



(1,396
)Net debt at beginning of the year


(1,659
)


(263
)Net debt at end of the year


(1,273
)


(1,659
)   Note 24 
    Share-based payments
  Annual
    Bonus Plan
    Long
    Term Incentive Plan
    Executive
    Share Option Plan
   F-62




---



##### Table of Contents



Sharesave
    Plan
    US
    Employee Stock Purchase Plan
    Former
    Six Continents Share Schemes
          Annual Bonus


Long TermPlan


Incentive PlanNumber of shares awarded in 2008


661,657



5,060,509  F-63




---



##### Table of Contents



Annual


Long Term2008

Bonus Plan


Incentive PlanValuation model

Binomial


Monte CarloSimulation andBinomialWeighted average share price (pence)


836.0



865.0Expected dividend yield


3.33
%


2.76
%Risk-free interest rate






4.78
%Volatility(i)






30
%Term (years)


3.0



3.0   Annual


Long Term2007

Bonus Plan


Incentive PlanValuation model

Binomial


Monte CarloSimulation andBinomialWeighted average share price (pence)


1,252.0



1,262.0Expected dividend yield


2.13
%


2.13
%Risk-free interest rate






5.40
%Volatility(i)






19
%Term (years)


3.0



3.0   Annual


Long Term2006

Bonus Plan


Incentive PlanValuation model

Binomial


Monte CarloSimulation andBinomialWeighted average share price (pence)


831.0



946.0Expected dividend yield






2.32
%Risk-free interest rate






4.90
%Volatility(i)






20
%Term (years)


2.0



3.0     (i)
    
    The expected volatility was
    determined by calculating the historical volatility of the
    Companys share price corresponding to the expected life of
    the share award. F-64




---



##### Table of Contents



Annual


Long TermBonus Plan


Incentive PlanNumber of shares


Number of shares(thousands)Outstanding at January 1, 2006


829



10,634Granted


607



4,277Vested


(328
)


(1,395
)Share capital consolidation


(50
)


Lapsed or canceled


(57
)


(2,191
)Outstanding at December 31, 2006


1,001



11,325Granted


675



3,539Vested


(418
)


(1,694
)Share capital consolidation


(68
)


Lapsed or canceled


(86
)


(1,707
)Outstanding at December 31, 2007


1,104



11,463Granted


662



5,061Vested


(472
)


(2,752
)Lapsed or canceled


(5
)


(2,619
)Outstanding at December 31, 2008


1,289



11,153Fair value of awards granted during the year (cents)At December 31, 2008


1,436.0



870.4At December 31, 2007


2,387.4



910.0At December 31, 2006


1,644.6



527.7Weighted average remaining contract life (years)At December 31, 2008


1.6



1.2At December 31, 2007


1.5



1.1At December 31, 2006


1.0



1.3     F-65




---



##### Table of Contents



Sharesave Plan


Executive Share Option PlanWeighted








WeightedNumber of


Range of


average


Number of


Range of


averageshares


option prices


option price


shares


option prices


option price(thousands)


(pence)


(pence)


(thousands)


(pence)


(pence)Outstanding at January 1, 2006


864



420.5



420.5



22,619



308.5-619.8



465.4Exercised


(389
)


420.5



420.5



(8,365
)


308.5-619.8



438.7Lapsed or canceled


(310
)


420.5



420.5



(175
)


345.6-619.8



404.6Outstanding at December 31, 2006


165



420.5



420.5



14,079



308.5-619.8



482.2Exercised


(101
)


420.5



420.5



(5,568
)


308.5-619.8



471.9Lapsed or canceled


(7
)


420.5



420.5



(317
)


438.0-619.8



526.8Outstanding at December 31, 2007


57



420.5



420.5



8,194



308.5-619.8



487.4Exercised


(3
)


420.5



420.5



(353
)


434.2-619.8



543.6Lapsed or canceled


(5
)


420.5



420.5



(206
)


349.1-593.2



431.3Outstanding at December 31, 2008


49



420.5



420.5



7,635



308.5-619.8



486.3Options exercisableAt December 31, 2008














7,635



308.5-619.8



486.3At December 31, 2007














6,583



308.5-619.8



455.0At December 31, 2006














6,002



308.5-619.8



430.2         Options outstandingWeightedaverage


WeightedNumber


remaining


averageoutstanding


contract life


option price(thousands)


(years)


(pence)Range of exercise prices (pence)Sharesave Plan420.5


49



0.3



420.5Executive Share Option Plan308.5 to 349.1


526



1.3



347.6422.8 to 494.2


5,574



4.3



462.7619.8


1,535



6.3



619.87,635



4.5



486.3    F-66




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##### Table of Contents



Note 25 
    Deferred tax payable
  OtherProperty,


Deferred











short-termplant and


gains on





Employee


Intangible


temporaryequipment


loan notes


Losses


benefits*


assets


differences**


Total($ million)At January 1, 2007


233



180



(175
)


(28
)


33



(84
)


159Income statement


3



(8
)


(6
)


7



6



(60
)


(58
)Statement of recognized income and expense














(11
)






54



43Exchange and other adjustments


12



3



(9
)






3



1



10At December 31, 2007


248



175



(190
)


(32
)


42



(89
)


154Income statement


(7
)






13



18



(8
)


(8
)


8Statement of recognized income and expense














(21
)






2



(19
)Exchange and other adjustments


(15
)


(33
)


36



2



(6
)


(6
)


(22
)At December 31, 2008


226



142



(141
)


(33
)


28



(101
)


121    AtDecember 31,2008


2007*($ million)Analyzed as:Deferred tax payable


117



148Liabilities classified as held for sale


4



6At December 31


121



154     *
    
    Restated for IFRIC 14 (see
    page F-11).**
    
    Other short-term temporary
    differences relate primarily to provisions and accruals and
    share-based payments.         F-67




---



##### Table of Contents



Note 26 
    Minority equity interest
  Year ended December 31,2008


2007($ million)At January, 1


6



16Disposal of hotels (Note 11)






(12
)Exchange and other adjustments


1



2At December, 31


7



6   Note 27 
    Operating leases
      AtDecember 31,2008


2007($ million)Due within one year


56



58One to two years


50



38Two to three years


47



32Three to four years


40



30Four to five years


33



22More than five years


322



218548



398       Note 28 
    Capital and other commitments
  AtDecember 31,2008


2007($ million)Contracts placed for expenditure on property, plant and
    equipment not provided for in the financial statements


40



20    F-68




---



##### Table of Contents



Note 29 
    Contingencies
  At December 31,2008


2007($ million)Contingent liabilities not provided for in the financial
    statements relating to guarantees


12



10           Note 30 
    Related party disclosures
    Year ended December 31,2008


2007


2006($ million)Total compensation of key management personnelShort-term employment benefits


18.4



18.9



17.5Post-employment benefits


0.7



0.9



0.9Equity compensation benefits


12.8



18.2



14.531.9



38.0



32.9    F-69




---



##### Table of Contents



Note 31 
    Acquisition of subsidiary
    Carryingvalues


Fairpre-acquisition


value($ million)Intangible assets


2



15Current assets (excluding cash and cash equivalents)


7



7Cash and cash equivalents


7



7Trade and other payables


(5
)


(5
)Current tax payable


(2
)


(2
)Deferred tax payable






(2
)9



20Minority interest






(6
)Net assets acquired






14Goodwill on acquisition






4Consideration, satisfied in cash (including costs of $4 million)






18Cash and cash equivalents acquired






(7
)Net cash outflow






(11
)    F-70




---



##### Table of Contents



INTERCONTINENTAL
    HOTELS GROUP PLC
  SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
  AdditionsBalance at


charged to








Balance atbeginning


costs and


Exchange





end ofof period


expenses


differences


Deductions


period($ million)Year ended December 31, 2008Provisions for bad and doubtful debts


96



28







(14
)


110Year ended December 31, 2007Provisions for bad and doubtful debts


85



23







(12
)


96Year ended December 31, 2006Provisions for bad and doubtful debts


81



29



2



(27
)


85Year ended December 31, 2005Provisions for bad and doubtful debts


83



25



(2
)


(25
)


81  S-1




---



##### Table of Contents



SIGNATURES
  Form 20-F
  
  By:
    /s/  Richard
    Solomons   Title:
    Finance Director