# EDGAR Filing Document

**Accession Number:** 0000858446
**File Stem:** 0001193125-23-057369
**Filing Date:** 2023-3
**Character Count:** 402502
**Document Hash:** 3a484fdf4d01b48e815b316b86e076ef
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-057369.hdr.sgml**: 20230302

**ACCESSION NUMBER**: 0001193125-23-057369

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20230302

**FILED AS OF DATE**: 20230302

**DATE AS OF CHANGE**: 20230302

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** INTERCONTINENTAL HOTELS GROUP PLC /NEW/
- **CENTRAL INDEX KEY:** 0000858446
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOTELS & MOTELS [7011]
- **IRS NUMBER:** 250420260
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-10409
- **FILM NUMBER:** 23696543

**BUSINESS ADDRESS:**
- **STREET 1:** 1 WINDSOR DIALS, ARTHUR ROAD, WINDSOR
- **CITY:** BERKSHIRE
- **STATE:** X0
- **ZIP:** SL4 1RS
- **BUSINESS PHONE:** 4045513500

**MAIL ADDRESS:**
- **STREET 1:** 1 WINDSOR DIALS, ARTHUR ROAD, WINDSOR
- **CITY:** BERKSHIRE
- **STATE:** X0
- **ZIP:** SL4 1RS

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SIX CONTINENTS PLC
- **DATE OF NAME CHANGE:** 19950531

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**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM 6-K** 

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**REPORT OF FOREIGN PRIVATE ISSUER** 

**PURSUANT TO RULE 13a-16 AND 15d-16 OF** 

**THE SECURITIES EXCHANGE ACT OF 1934** 

**For 2 March 2023** 

**Commission File Number: 1-10409** 

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## InterContinental Hotels Group PLC
**(Registrant's name)** 

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**Windsor Dials 1, Arthur Road, Windsor, Berkshire, SL4 1RS, United Kingdom** 

**(Address of registrant's principal executive offices)** 

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

If "Yes" is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): Not applicable

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EXHIBIT INDEX

99.1 Annual Financial Report dated as of 2 March 2023.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
|  **InterContinental Hotels Group PLC**<br> (Registrant) | **InterContinental Hotels Group PLC**<br> (Registrant) |
|  By: | /s/ Paul Edgecliffe-Johnson |
|  Name: | Paul Edgecliffe-Johnson |
|  Title: | Chief Financial Officer |
|  Date: | 2 March 2023 |

---

### Attached PDF Documents

**Attachment 1:** `d438614dex991.pdf`

IHG®
HOTELS & RESORTS

Exhibit 99.1

Annual Report and Form 20-F
2022

# True Hospitality
for Good

![img-0.jpeg](img-0.jpeg)

Welcome

# Our purpose is to provide True Hospitality for Good.

It brings our brands to life, shapes our culture and represents a commitment to make a difference to our people, guests and communities, and protect the world around us.

With strong stakeholder engagement, together we work towards common goals that help ensure we create shared value for all.

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

![img-4.jpeg](img-4.jpeg)

Contents

## Our presence

IHG® Hotels & Resorts is a global hospitality company, with 18 hotel brands, one of the industry's largest loyalty programmes, over 6,000 open hotels in more than 100 countries, and a further 1,800 hotels in our development pipeline.

See pages 16 to 21

## Our ambition

To deliver industry-leading growth in our scale, enterprise platform and performance, doing so sustainably for all stakeholders, including our hotel owners, guests and society as a whole.

See page 18

## Our strategy

To use our scale and expertise to create the exceptional guest experiences and owner returns needed to grow our brands in the industry's most valuable markets and segments. Delivered through a culture that retains and attracts the best people and embraces opportunities to positively impact the world around us.

See pages 18 to 37

## Our business model

By franchising our brands and managing hotels on behalf of third parties, we can focus on increasing fee revenues and fee margins, with limited capital requirements. We grow our business by ensuring our brands meet consumer demand and generate strong returns for hotel owners.

See pages 10 to 13

## What's inside

### Strategic Report

- 2 2022 in review
- 4 Chair's statement
- 6 Chief Executive Officer's review
- 8 Industry overview
- 10 Our business model
- 14 Trends shaping our industry
- 16 Our brands
- 18 Our strategy
- 38 Our stakeholders
- 40 Our culture
- 44 Our risk management
- 52 Viability statement
- 54 Task Force on Climate-related Financial Disclosures (TCFD)
- 62 Key performance indicators (KPIs)
- 66 Chief Financial Officer's review
- 67 Performance
- 67 Group
- 75 Americas
- 78 Europe, Middle East, Asia & Africa (EMEAA)
- 81 Greater China
- 84 Central
- 85 Key performance measures and non-GAAP measures

### Governance

- 90 Chair's overview
- 92 Our Board of Directors
- 96 Our Executive Committee
- 98 Governance structure
- 99 Board activities
- 100 Key matters discussed in 2022 and Section 172 statement
- 102 Our shareholders and investors
- 103 Director appointments and induction
- 104 Board development and effectiveness evaluation
- 105 Audit Committee Report
- 110 Responsible Business Committee Report
- 112 Nomination Committee Report
- 114 Directors' Remuneration Report
- 137 Statement of compliance

### Group Financial Statements

- 140 Statement of Directors' Responsibilities
- 141 Independent Auditor's UK Report
- 147 Independent Auditor's US Report
- 150 Group Financial Statements
- 157 Accounting policies
- 169 Notes to the Group Financial Statements

### Parent Company Financial Statements

- 218 Parent Company Financial Statements
- 220 Notes to the Parent Company Financial Statements

### Additional Information

- 226 Other financial information
- 235 Directors' Report
- 240 Group information
- 252 Shareholder information
- 259 Exhibits
- 260 Forward-looking statements
- 261 Form 20-F cross-reference guide
- 264 Glossary
- 266 Useful information

The Strategic Report on pages 2 to 88 was approved by the Board on 20 February 2023.

Nicolette Henfrey Company Secretary

IHG | Annual Report and Form 20-F 2022

1

Strategic Report

# 2022 in review

Recovery from the Covid-19 pandemic gathered pace in 2022, with demand returning strongly as restrictions lifted in most markets. Significant investments were made across our enterprise, including in our brands, loyalty offer, digital platforms and sustainability, as we continue to focus on enhancing the guest experience, growing our estate and driving owner returns.

## Financial performance

| Global RevPAR +36.6% 2021: +46.0% | Adjusted net system size growth a 4.3% 2021: -0.6% | Signings (rooms) 80,338 2021: 68,870 |
| --- | --- | --- |
| Total gross revenue in IHG's System b $25.8bn 2021: $19.4bn | Total revenue $3,892m 2021: $2,907m | Revenue from reportable segments c $1,843m 2021: $1,390m |
| Operating profit d $628m 2021: $494m | Operating profit from reportable segments e $828m 2021: $534m | Basic EPS 207.2¢ 2021: 145.4¢ |
| Adjusted EPS e 282.3¢ 2021: 147.0¢ | Dividend 138.4¢ 2021: 85.9¢ | Share buyback completed e $500m |

$^{a}$ Net system size growth of 3.6% unadjusted for removals related to ceasing operations in Russia in 2022; 2021 growth shown unadjusted.

$^{b}$ Definitions for key performance measures can be found in the Use of key performance measures and non-GAAP measures section, which can be found on pages 85 to 88.

$^{c}$ Use of Non-GAAP measures. In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 85 to 88, and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.

$^{d}$2022 operating profit shown after $105m System Fund reported loss and $95m net exceptional charges. See page 175 for details.

$^{e}$ Completed in January 2023.

## Regional growth (number of rooms)

| Americas Openings 20,568 2021: 15,739 | EMEA Openings 16,211 2021: 10,162 | Greater China Openings 12,664 2021: 18,057 |
| --- | --- | --- |
| Signings 32,464 2021: 17,647 | Signings 25,847 2021: 20,376 | Signings 22,027 2021: 30,847 |
| See page 75 | See page 78 | See page 81 |

![img-5.jpeg](img-5.jpeg)

![img-6.jpeg](img-6.jpeg)

![img-7.jpeg](img-7.jpeg)

![img-8.jpeg](img-8.jpeg)

![img-9.jpeg](img-9.jpeg)

2

IHG | Annual Report and Form 20-F 2022

## SHAREHOLDERS AND INVESTORS

**Our focus on building a stronger business for guests and owners, coupled with increasing demand, led to strong trading and shareholder returns delivered via our cash-generative business model.**

- Americas RevPAR +3.3% vs 2019; EMEAA -7.5%; Greater China -38.1%
- Surpassed 6,000 open hotels; +4.3% adjusted net system size growth (+2.9% excluding Iberostar Beachfront Resorts)
- Signings +17% YOY; conversions increased
- Long-term commercial agreement with Iberostar Hotels & Resorts boosting system size growth
- Fee margin 56.2%, 6.6%pts ahead of 2021
- Net cash from operating activities of $646m (2021: $636m), adjusted free cash flow of $565m (2021: $571m)
- Total dividend of 138.4¢ proposed alongside $500m 2022 share buyback. Share buyback launched for 2023 to return $750m
- Deanna Oppenheimer appointed Chair; Michael Glover appointed CFO

See information about our shareholders and investors on page 38 and 102 and our KPIs on pages 62 to 65.

## HOTEL OWNERS

**Owners choose to work with IHG based on trust in our brands, our ability to drive returns and the strength of our entire enterprise - underpinned by a focus on the cost to build, open and operate our hotels.**

- Launched Guest How You Guest, our biggest marketing campaign in over a decade, improving brand favourability measures
- Enterprise contribution of 77% of total room revenue, boosted by loyalty programme and mobile app enhancements
- Enhanced design, procurement and technology solutions developed
- Holiday Inn, Crowne Plaza refreshes driving up occupancy, rate and guest satisfaction
- Collaboration with governments to support owners and industry demand
- Introduced new payment solution in US and Canada to lower costs and improve options
- Developed new Digital Concierge to enable greater guest self-service
- Launched Demand Sensing Forecast model to help maximise owners' revenue

See information about our hotel owners on pages 20 to 25 and 39, and our net rooms supply, signings, gross revenue and enterprise contribution KPIs on pages 62 and 63.

## OUR GUESTS

**We're focused on driving demand and delivering great guest experiences through modern design, service, our loyalty offer and seamless technology.**

- Transformed IHG One Rewards loyalty programme to offer members greater benefits, choice and value
- Enrolled 12.2 million new members, with increases in loyalty contribution since launch
- New mobile app delivering richer customer experience and supporting increased direct bookings, loyalty engagement and incremental spend
- Iberostar Beachfront Resorts became IHG's 18th brand, boosting resort and all-inclusive offer
- Enhanced customer booking journey with new brand websites, simplified room rates and stay enhancements
- Holiday Inn named Leading Budget Hotel Brand and voco named Leading Premium Hotel Brand at World Travel Awards

See information about our guests on pages 22 to 27 and page 38 and our Guest Love KPI on page 64.

## OUR PEOPLE

**We champion an engaging, diverse and high-performance culture and focus on providing the tools, technology and working environment we need to succeed as individuals and as a business.**

- Employee engagement 86% (+1% on 2021). A Kincentric Global Best Employer
- New learning and HR platforms launched
- Continued progress to increase ethnic minority representation in US and UK corporate leadership roles
- Female corporate leadership representation (VP and above) at 34% globally
- Grew Employee Resource Groups to help foster diverse and inclusive culture
- Launched Room to Grow Week to support corporate career development
- 90 graduates of IHG's development programme designed to boost number of women in senior positions in managed hotels
- Fresh workspaces to support hybrid working, including new Global HQ

See information about our people on pages 28 to 33 and 39; our employee engagement KPI on page 65.

## OUR COMMUNITIES AND SUPPLIERS

**We want to improve millions of lives within our communities over the next decade through supporting disaster relief, tackling food poverty and providing skills training to help drive social and economic change.**

- Colleagues dedicated more than 57,000 hours to making a positive difference to over 100,000 people
- Supported charities providing aid following natural disasters and war in Ukraine
- Worked with Tent Partnership for Refugees charity to train and hire refugees in the US
- Expanded IHG Skills Academy to give more people free access to skills and training
- Partnered with US Historically Black Colleges and Universities to enhance our early careers pipeline
- Worked with leading organisations to help prevent human trafficking
- Introduced new supplier diversity programme, helping gain exposure to additional diverse business entities

See information about our communities and suppliers on pages 33, 34, 38 and 39 and our IHG® Academy KPI on page 65.

## PLANET

**We have set targets to reduce carbon, waste and water usage so we can operate and grow with our owners in ways that minimise our impact on the planet.**

- A 3.4% absolute reduction in carbon emissions compared with our 2019 baseline level from our franchised, managed, owned and leased hotels
- Secured bulk amenity supplier for over 4,000 hotels to reduce plastic usage
- Introduced global brand standards to reduce energy and water usage
- Refreshed scenario analysis and evaluated data collection processes in line with TCFD guidance
- Expanded renewable energy procurement in Europe and Americas
- Launched HERO tool training to help hotels cut energy, carbon and water use
- Launched global food waste training
- Developed a toolkit in EMEAA to help reduce plastic usage in hotels
- Helped secure tax credits in the US for hotel energy efficiency measures

See pages 35 to 37, 54 to 61, and 237 to 239 for our planet, TCFD and greenhouse gas emissions disclosures and our carbon footprint KPI on page 65.

2022 in review

IHG | Annual Report and Form 20-F 2022

3

Strategic Report

Strategic Report

# Chair's statement

![img-10.jpeg](img-10.jpeg)

Deanna Oppenheimer Non-Executive Chair

Final dividend

94.5¢

Final dividend proposed for 2022
(2021: 85.9¢)

Total dividend

138.4¢

Total dividend proposed for 2022
(2021: 85.9¢ (as no interim dividend
was paid in 2021))

Return of funds

$500m

Through share buyback programme
(completed in January 2023)

$750m

Surplus capital to be returned over
the course of 2023 through new
share buyback programme

It's a great privilege to be Chair of IHG,
a company with a rich history, a world-
class portfolio of trusted brands and
a track record of driving attractive returns
for both hotel owners and shareholders.
Since joining in June, I have spent time
gaining a deeper understanding of the
business - meeting with colleagues,
shareholders, guests and owners - and
I have been impressed by the purpose
and passion that runs through our hotels
and wider organisation, as well as the
desire to keep enhancing how we
operate and grow.

A clear focus on developing a portfolio
of distinct brands that deliver great guest
experiences and strong owner returns, allied
to an asset-light, fee-based, predominantly
franchised business model, has proven
successful over many years. This strategy
enables us to build global scale, attract
millions of guests and build long-standing
relationships with thousands of owners.
It makes the business more resilient during
challenging times too, with a regional
approach allowing us to adapt quickly by
market - something that has been important
in recovery from the Covid-19 pandemic.
Critically, it is a model that is highly cash
generative, and IHG has demonstrated an
ability to reinvest in key areas of its enterprise,
such as its brand portfolio, loyalty and
technology to enhance performance,
increase competitiveness and drive growth,
alongside delivering returns to shareholders.

This approach again supported a strong
financial performance in 2022, and while
group RevPAR and operating profit are still
slightly below pre-pandemic levels, they
continue on an upward trajectory, with the
opening and signing of more outstanding
hotels globally underlining demand for our
brands and strong growth prospects.

Seizing opportunities

In recent years, IHG has transformed its
business by investing in all aspects of its
enterprise, driven by a strategy that reflects
what is needed to succeed in today's
world while creating long-term value for
stakeholders. Four strategic priorities ensure
a focus on growing our brands and meeting
expectations around service and design,
prioritising what matters most to guests
and owners in a competitive marketplace,
creating space for innovation as we invest
in greater digitalisation, and operating in
ways that nurture our people, communities
and planet.

4

IHG | Annual Report and Form 20-F 2022

Building evidence

Hospitality is a unique industry, built upon a foundation of care with people at its heart, and IHG's purpose of providing True Hospitality for Good ensures that we not only look after those with whom we interact, but also make a positive difference to our communities and the world around us. Embedded within the organisation, our purpose, culture and strategy, is a clear understanding of the environmental, social and governance agenda. Our actions in this regard - captured through our 2030 Journey to Tomorrow responsible business plan - are key to meeting stakeholder expectations and our long-term growth. This commitment to operating inclusively with integrity and transparency is very much aligned to my own values and is something we must ensure runs deep throughout the business.

Through IHG's Colleague HeartBeat survey and other feedback forums, as well as the work of our designated Voice of the Employee Non-Executive Director, we can see that teams understand the strategic direction of the business and are engaged by the investments being made to build a stronger IHG. Feedback is carefully considered and steps are taken to address areas for improvement.

Clear priorities set for 2022 provided a focal point during a significant year for the business. The launch of IHG® One Rewards transformed loyalty for our guests and owners, powered by our new mobile app; our commercial agreement with Iberostar Hotels & Resorts added an 18th brand to our portfolio; and we made further progress against Journey to Tomorrow, including steps to reduce carbon emissions in our hotels and increasing the diversity of our corporate leadership. We know our owners also rely on IHG to help them run an efficient business, and in light of continued supply chain issues, labour shortages and cost pressures, we further strengthened operational and commercial support. This included close collaboration with the IHG Owners Association, as well as coming together at meetings where we can collectively listen and learn in the spirit of continued success and growth.

### The role of the Board

Amid an ever-changing global landscape, strong governance is fundamental to the success of any business, as is the flexibility to adapt thinking and plans while still progressing toward longer-term targets and ambitions. The role of the Board has been to support and constructively challenge the Executive Committee around how we prioritise, manage risk, grow and generate future value.

The effectiveness of this approach could be seen in how we navigated significant challenges in the year. The war in Ukraine saw us cease operations in Russia, consistent with evolving UK, US and EU sanctions regimes. Our approach to cybersecurity risk management also continued to be a principal feature on the Board's agenda, and significant time was dedicated to assessing the response to the criminal unauthorised access to our technology systems in September. This response has included further review of our security measures.

The Board has continued to evolve, with Patrick Cescau retiring in August, having served as Chair since 2013. We wish him a happy retirement and thank him for his invaluable contribution, and extend the same gratitude to both Jill McDonald and Ian Dyson, who also retired from the Board after nine years. During the year, we welcomed Byron Grote as Non-Executive Director, and following a review of Board Committee responsibilities, Byron takes up the position of Chair of the Audit Committee, with Graham Allan becoming Chair of the Responsible Business Committee and Arthur De Haast joining the Audit Committee.

Furthermore, Paul Edgecliffe-Johnson announced he will be stepping down from the Board and his role as Chief Financial Officer (CFO) and Group Head of Strategy in March 2023, after 19 years of service. Replacing Paul as CFO and on the Board on 20 March 2023 is Michael Glover, who has demonstrated his breadth of financial knowledge, global expertise and commitment to our purpose and values in his 18 years at IHG. Strong succession planning has been a hallmark of the business for many years and will remain a priority for the Board to ensure we have a breadth of skills, experience and backgrounds to navigate an evolving landscape.

### Shareholder returns

Following a strong financial performance this year, I am pleased to announce the Board is recommending a final dividend of 94.5 cents per ordinary share, an increase of 10% on the final dividend for 2021. An interim dividend of 43.9 cents was paid in October 2022, taking the total dividend for the year to 138.4 cents, representing an increase of 61% on 2021 (as no interim dividend was paid in the prior year). An additional $500m was also returned to shareholders through a share buyback programme (completed in January 2023), taking total returns to more than $14bn since 2003. The Board expects IHG's business model to continue its strong long-term track record of generating substantial capacity to enable our investment plans that drive growth, to fund a sustainably growing ordinary dividend and to return surplus capital to our shareholders, with a new $750m share buyback programme having been announced for 2023.

Looking ahead, we must remain alive to potential macroeconomic challenges, but our industry's future is a bright one, driven by factors such as a growing global economy, an expanding middle class and increasing demand for branded hotels - all of which will contribute to an expected one in three new jobs over the next decade coming from leisure and tourism. With strong leadership, talented people and a clear strategy, we will continue to focus on leveraging a well-invested and expanding enterprise to drive performance and growth.

It has been a pleasure getting to know so many colleagues and seeing the dedication, talent and commitment of our hotel and corporate teams. I would like to thank everyone for a warm welcome, as well as our hotel owners and investors for their continued confidence in IHG.

Non-Executive Chair

Chair's statement

IHG | Annual Report and Form 20-F 2022

5

Strategic Report

# Chief Executive Officer's review

![img-11.jpeg](img-11.jpeg)

Keith Barr Chief Executive Officer

## Key highlights in 2022

269

Hotels opened
(291 in 2021)

467

Hotels signed
(437 in 2021)

51%

Of total openings were for
our Holiday Inn® Brand Family

20%

Of our pipeline now
represented by Luxury
& Lifestyle brands

>10%

Proportion of pipeline
contributed by the six brands
added since 2017 (excluding
Iberostar Beachfront Resorts)

18

Iberostar Beachfront Resorts
becomes IHG's 18th brand

12.2m

Loyalty members added
year-on-year since launch
of IHG One Rewards

58%

The proportion of digital
bookings made with a mobile
device following the launch
of the new IHG app

In what was my 30th year at IHG - and
my fifth as CEO - I will remember 2022 as
one of significant achievements delivered
by our extraordinary colleagues around
the world. Supported by the strength of
our brands and enterprise platform, we
saw RevPAR move closer to pre-pandemic
levels, passed the milestone of 6,000 open
hotels, and continued the transformation
of our business to further enhance our
offer for guests, owners and colleagues.

People continue to prioritise travel, with
consumer surveys indicating travel to be
among the most resilient of discretionary
spending areas, even with inflationary
pressure. Leisure has led the way, with
business travel and group activity improving
steadily. Across our major markets, demand
returned quickly with the lifting of Covid-19
restrictions, and we saw strong average daily
rate growth as the year progressed. By Q4,
RevPAR versus 2019 in the Americas was
+9%, EMEA was +8.8% and, reflecting
stringent control measures that impacted
people's ability to travel, Greater China
was -42.1%. That said, whenever restrictions
have eased in Greater China, demand has
returned strongly, and we see positive signs
for 2023 as the region reopens.

The strength and scale of our brands and
wider enterprise platform continues to allow
us to capture demand for our hotels and
drive revenue, which, coupled with disciplined
cost management, supports profit growth.
Operating profit of $628m improved from
$494m in 2021. Operating profit from
reportable segments rose 55% to $828m.
Fee margin was also ahead of 2021 and 2019,
and we have been able to grow the dividend
for shareholders and carry out a $500m
share buyback programme.

Continued strong owner appetite for our
brands saw 269 properties open in 2022,
contributing to adjusted net system size
growth of 4.3%. This was achieved despite
global supply chain and construction
pressures, and restrictions constraining
development activity in Greater China.
The signing of 467 hotels took our global
pipeline to 1,859, which is 31% of today's
system size.

We can be proud of this performance,
which was achieved while responding to the
ongoing impact of the pandemic, especially
in Greater China, and other challenges.
In response to the war in Ukraine, we ceased
all operations in Russia, alongside supporting
our humanitarian charity partners and hotels
in providing shelter to those affected.

6

IHG | Annual Report and Form 20-F 2022

Strategic Report

Furthermore, IHG’s technology systems were subject to unauthorised criminal access in September - a constant threat that we and many companies must remain alive to in today’s world. In response, we activated recovery plans, and our teams and external specialists worked to support owners, hotels and guests.

### Strategic progress

While our industry must adapt to an evolving macroeconomic environment, its long-term growth fundamentals remain unchanged, including people’s desire to travel, a growing population and rising wealth in emerging markets. Oxford Economics expects global hotel room nights consumed to be back above 2019 levels by 2024 and to grow at a CAGR of +6% from 2022 through to 2032. Our strategy enables us to capitalise on this demand, with this year’s achievements illustrating our ability to strengthen returns and enhance our culture, operations and reputation with key stakeholders.

Our established brands remain a powerful growth engine, illustrated by our Holiday Inn Brand Family generating half of hotel openings in 2022. Cost-effective designs, service or food and beverage concepts were launched for Holiday Inn®, InterContinental® Hotels & Resorts, Hotel Indigo® and EVEN® Hotels, while our ongoing progress following our 2021 quality review will see two-thirds of the Americas Holiday Inn estate and three-quarters of the Crowne Plaza® Hotels & Resorts estate updated by 2025. We also celebrated Kimpton® Hotels & Restaurants’ first opening in Australia, 18 openings for Hotel Indigo, and won World Travel Awards for Holiday Inn, InterContinental and vocoTM hotels.

Momentum continued to build behind our newer brands, too, with the six we have added since 2017 (excluding Iberostar Beachfront Resorts) already contributing more than 10% of our total pipeline. In the Americas, we opened our first Atwell SuitesTM properties and our first avid® hotels property in Canada. Our voco brand recently achieved the milestone of 100 opened and signed hotels, and VignetteTM Collection secured its first 17 properties by the end of 2022. Highlights for our luxury brands included the reopening of the flagship Regent® Hotels Hong Kong and eight amazing resorts signed for Six Senses® Hotels Resorts & Spas.

Our strategy in recent years to build on our position in Luxury & Lifestyle has seen IHG transform its offer in a segment with high fee income and excellent growth prospects. Luxury & Lifestyle brands now represent

13% of our system size and 20% of our total pipeline, which is approaching twice the size it was five years ago.

Further evolving our portfolio, in 2022 we announced a long-term commercial agreement with Iberostar Hotels & Resorts to strengthen our presence in resort and all-inclusive destinations. Adding up to 70 properties to IHG’s system under the Iberostar Beachfront Resorts brand, the agreement is testament to how the transformation of IHG in recent years has enhanced our reputation as a valued partner. This brand sits in a newly created Exclusive Partners category, where we continue to explore further new opportunities to drive additional system growth.

### Transforming loyalty

Key to the success of our brands is the investment in the enterprise platform that supports them, with this year’s transformation of our loyalty programme at the forefront of our customer centric approach. Providing industry-leading value, richer benefits and greater choice for members to enhance their stays, our new IHG One Rewards programme added 12.2m loyalty members in 2022, and increased loyalty contribution and guest satisfaction. It also won multiple awards, including Best Hotel Loyalty Enhancement for 2022 from The Points Guy and Best Hotel Rewards Program from Global Traveler. Supporting it in driving demand was our biggest global marketing campaign in more than a decade, Guest How You Guest, which used our refreshed IHG Hotels & Resorts masterbrand to showcase our portfolio across TV, social media, cities and airports, and helped increase awareness and brand favourability measures.

Also powering IHG One Rewards was our new next-generation mobile app, which is at the heart of a transformed booking journey across our digital channels. Revenue driven by our mobile app for the Americas and EMEAA regions is at 30% higher levels than 2019 and mobile devices now account for 58% of all digital bookings. The app illustrates how our digital-first approach is creating richer experiences for guests, while producing cost efficiencies, maximising revenue opportunities, and delivering data and insights for owners. Another example is increased use of artificial intelligence in our reservation and customer care centres, which is helping handle calls more efficiently, improving guest satisfaction and freeing up busy on-property teams.

Whatever we are working on as a business, we are focused on reducing the cost to build, open and operate our hotels, collaborating with our owners and the IHG Owners Association.

In 2022, this included new or enhanced procurement programmes, streamlined housekeeping models and evolved brand standards to help mitigate inflation. Supporting the industry on a broader scale, important progress was also made alongside governments and trade bodies in addressing labour shortages, rising costs and travel restrictions.

### Growing responsibly

As we strengthen the business, it’s important we do so responsibly and sustainably for our people, communities and planet. In 2022, we developed innovative ways to reduce waste, plastic, energy and water usage in our hotels, including introducing new brand standards and a bespoke tool to reduce energy and costs. We were also there for our communities, responding to natural disasters and delivering thousands of volunteer acts of service through our Giving for Good month. Bringing our plans to life are our people, and we made progress on our commitment to increase the diversity of our corporate leadership and rolled out a new learning and development platform and training to support people in growing their careers. Maintaining an inclusive, engaging culture is fundamental to our success, so I was proud to see IHG once again recognised as a Kincentric Global Best Employer.

The critical investments we’ve made are holistically driving our growth as a business, not simply our net system size, but everything we need to successfully operate and grow our brands around the world, including how we grow responsibly and retain and attract talent. We are a stronger, more resilient business today than we’ve ever been, and I’m confident our strategy will guide us towards an even brighter future for owners, guests and colleagues.

I would like to thank the Board for its support on multiple fronts, with special recognition of Patrick Cescau for his leadership for the past decade as Chair, and Deanna for a smooth transition into the role. On behalf of the Executive Committee, I would also like to thank our colleagues for showing the world just what True Hospitality for Good means to us all at IHG, as well as our owners for their partnership and commitment to providing wonderful guest experiences as we look to drive success together.

Chief Executive Officer

Chief Executive Officer's review

IHG | Annual Report and Form 20-F 2022

7

Strategic Report

# Industry overview

We operate in an industry with high growth potential, underpinned by strong long-term fundamentals.

**T**he global hotel industry continued to demonstrate a high degree of resilience through the macroeconomic uncertainties of 2022. As we move into 2023, the capacity for long-term structural growth is clear.

The $550 billion hotel industry has compelling structural growth drivers, underpinned by factors including the inherent need and desire to travel for business and leisure purposes, population growth, and an expanding middle class in emerging markets with increasing disposable income. Spend on travel continues to be among the most resilient of discretionary areas for consumers, while demand for business travel remains robust, with hotels adapting to support flexible working trends in the post-Covid-19 environment. Though there are uncertainties within the wider economic outlook, a number of tailwinds may also persist through 2023, including the continued progress in returning to pre-Covid-19 levels of demand for group travel, as well as the ongoing reopening and recovery of several major international markets, such as Greater China and Japan.

In what is a relatively fragmented sector, with 55% of rooms affiliated with a global or regional chain, competitor pressures in the branded space remain intense as all major players pursue growth strategies through a combination of organic growth, partnering arrangements and acquisitions. Branded hotel penetration has steadily increased as a long-term trend, with this expected to continue to grow as consumers look to trusted brands to meet their evolving expectations, particularly when it comes to state-of-the-art technology and the skills, scale and resources required to provide guests with enjoyable, effective and sustainable stays.

While there have been short-term challenges impacting the completion and opening of new-build hotels, driven by supply chain and contractor constraints, financing availability, and lingering Covid-19 restrictions in certain markets, there remains a long-term need for new hotel supply to satisfy the demand drivers listed above. Global hotel room net new supply increased at a CAGR of 2.0% over the 10 years from 2012 to 2022, with forecasts indicating a similar rate into the future.

Cost remains a significant barrier to building a scale position in the global hotel industry, whether that's due to investment to build and maintain the properties, to establish strong loyalty programmes and technology platforms, or to develop and market leading brands. Hotel owners affiliated with a major global brand and enterprise system also tend to generate higher returns.

The hotel industry is cyclical: long-term fluctuations in RevPAR tend to reflect the interplay between industry demand, supply and the macroeconomic environment. At a local level, political, economic and other factors such as terrorism, oil market conditions, hurricanes and the ongoing pandemic response can also impact demand and supply.

Shorter-term economic challenges may therefore become more of a factor in 2023, and health-related travel restrictions could recur, which would lead to the volatility in demand seen in recent years. However, the attractive industry fundamentals that led to the sector outpacing global economic growth in 18 out of 23 years between 2000 and 2022 are anticipated to be fully restored in the longer term. For example, STR data shows that US industry RevPAR has already returned to 2019 levels during 2022 on a nominal basis, and STR's forecasts are for both occupancy and real ADR to exceed 2019 levels by 2025.

As a global business, with a footprint in over 100 countries, operating in the midst of change and uncertainty is something IHG is very used to and continues to be one of our greatest strengths. Our strategy of developing a strong brand portfolio and an industry-leading loyalty programme, together with our fee-based income streams and prevalent midscale positioning, means we remain resilient through varying economic cycles.

The hotel industry has attractive tailwinds...

US disposable personal income grew on average by

1.5%

per annum between 2000 and 2022

Source: Federal Reserve Economic Data (FRED)

Globally, middle income consumers spent

$44tn

in 2020, with this expected to increase to

$62tn

by 2030

Source: The Brookings Institution

Global hotel room net new supply grew

2%

per annum between 2012 and 2022

Source: STR

8

IHG | Annual Report and Form 20-F 2022

# with significant barriers to entry...

# The top five hotel groups* have increased their market share

Share of top five branded hotel groups as % of global rooms supply

![img-0.jpeg](img-0.jpeg)

* Includes IHG, Marriott International, Inc., Hilton Worldwide Holdings Inc., Wyndham Hotels & Resorts Inc., Accor S.A.

Source: STR

# With share expected to further expand

Branded share of global industry supply and share of global industry active pipeline

![img-1.jpeg](img-1.jpeg)

Source: STR

# Consumers value loyalty membership, which requires a large-scale enterprise to deliver

74%

Of consumers are more likely to recommend brands with good loyalty programmes

Source: Bond, in partnership with Visa

78%

Of loyalty members have a redemption goal for the programme

Source: Bond, in partnership with Visa

# and a track record of growth

# Industry RevPAR has shown resilience and recovery post-Covid-19

US Industry RevPAR growth, indexed to 2019

![img-2.jpeg](img-2.jpeg)

Source: STR

# Global industry RevPAR ($)

RevPAR movements are illustrative of lodging demand

![img-3.jpeg](img-3.jpeg)

Source: STR

# Global rooms supply (m rooms)

Supply growth reflects the attractiveness of the hotel industry

![img-4.jpeg](img-4.jpeg)

Source: STR

# Branded hotel business models

There are two principal business models:

• A fee-based, asset-light model:

- Franchised: owned and operated by parties distinct from the brand, who pay fees to the hotel company for use of its brand.
- Managed: operated by a party distinct from the hotel owner. The owner pays management fees and, if the hotel uses a third-party brand name, fees to that third-party, too.

• An owner-operated, asset-heavy model:

- Owned: operated and branded by the owner who benefits from all the income.
- Leased: similar to owned, except the owner-operator does not have outright ownership of the hotel but leases it from the ultimate owner.

Asset-heavy models generate returns on the real estate and centralise control over operations. Asset-light models typically enable faster growth and generate higher returns. This model tends to present lower risk to fluctuations in the economy.

Industry overview

IHG | Annual Report and Form 20-F 2022

9

Strategic Report

Strategic Report

# Our business model

We predominantly franchise our brands and manage hotels on behalf of third-party hotel owners. While we will continue to have a weighting towards Essentials, our pipeline shows an increasing proportion of growth in the Premium and Luxury & Lifestyle segments, as well as a more even geographical spread.

Total system size

911,627
rooms

Total development pipeline

281,468
rooms

Composition of rooms

![img-5.jpeg](img-5.jpeg)

Composition of rooms

![img-6.jpeg](img-6.jpeg)

![img-7.jpeg](img-7.jpeg)

![img-8.jpeg](img-8.jpeg)

![img-9.jpeg](img-9.jpeg)

![img-10.jpeg](img-10.jpeg)

* Includes Iberostar Beachfront Resorts, which joined IHG's system and pipeline as part of a long-term commercial agreement.

The growth of our business relies on two fundamental growth drivers: revenue per available room (RevPAR) and increasing the number of rooms in our system. RevPAR indicates the value guests ascribe to a given hotel, brand or market, and grows when they stay more often or pay higher rates. Room supply reflects how attractive the hotel industry is as an investment from an owner's perspective.

To drive growth, we have a portfolio of 18 brands across more than 100 countries in the Luxury & Lifestyle, Premium, Essentials, Suites and Exclusive Partners categories. Supported by a leading loyalty programme and powerful technology, our brands meet clear guest needs and generate strong returns for our owners, which in turn attracts further hotel investment and grows our system size.

IHG is an asset-light business and our focus is on growing fee revenues and fee margins, which we can do with limited capital requirements. This enables us to grow and invest in our business while generating high returns on invested capital and strong cash flow.

We generally franchise or manage hotels, with the decision largely driven by market maturity, owner preference and, in certain cases, the particular brand. Hotels in the Essentials category tend to be franchised, while Luxury & Lifestyle hotels are predominantly managed.

Our broad geographic spread and weighting towards essential business and domestic leisure travel has driven comparative resilience during times of economic downturn. Though this continues to be a core component of our business, we have made excellent progress in expanding our presence in the Luxury & Lifestyle segment, which generally generates higher fees per room. This category is currently 13% of IHG's system size, though comprises 20% of the future growth pipeline.

Our asset-light business model means we do not employ colleagues in franchise hotels, nor do we control their day-to-day operations, policies or procedures. That being said, IHG and our franchise hotels are committed to delivering a consistent brand experience, conducting business responsibly and sustainably so that we deliver our purpose of providing True Hospitality for Good.

10 IHG | Annual Report and Form 20-F 2022

Strategic Report

## How we generate revenue

### Franchised hotels

We receive a fixed percentage of rooms revenue when a guest stays at one of our hotels. This is our fee revenue.

![img-11.jpeg](img-11.jpeg)

### Managed hotels

From our managed hotels, we generate revenue through a fixed percentage of the total hotel revenue and a proportion of hotel profit.

### Exclusive partners

We receive marketing, distribution, technology and other fees for providing access to our enterprise platform.

![img-12.jpeg](img-12.jpeg)

### Owned, leased and managed lease hotels

For hotels which we own or lease, we record the entire revenue and profit of the hotel in our financial statements.

Our owned, leased and managed lease hotels have reduced from over 180 hotels 20 years ago to 16 hotels at 31 December 2022.

### System Fund

IHG manages a System Fund for the benefit of hotels within the IHG system and their third-party owners, who pay contributions into it. This includes a marketing and reservation assessment and a loyalty assessment.

The System Fund also benefits from proceeds from the sale of IHG One Rewards points under third-party co-branding arrangements.

Given the significant scale of the System Fund, IHG can make substantial investments in marketing brands, creating a leading loyalty programme and powerful technology, including revenue management systems, thereby strengthening the IHG enterprise.

![img-13.jpeg](img-13.jpeg)

a Excludes System Fund and hotel cost reimbursements.

Our business model

IHG | Annual Report and Form 20-F 2022

11

Strategic Report

# Our business model continued

## How we drive operating profit

Our asset-light business model requires a limited increase in IHG's own operating expenditure to support our revenue growth, which delivers operating profit and fee margin growth.

The benefit of operational efficiencies, along with brands and markets becoming more mature, has supported fee margin expansion on average by over 130bps a year between 2009-2019.

For franchised hotels, the flow through of revenue to operating profit is higher than it is at managed hotels, given our well-invested scale platform where limited resources are required to support the addition of an incremental hotel. This is most evident in our Americas region, where fee margins are the highest, reflecting our scale and over 90% of our hotels operating under our franchised model.

Across our managed hotels, the flow through of revenue to profit can be lower, given higher operating expenditure on operations teams supporting the hotel network.

### Fee margin* by region

#### Americas

![img-14.jpeg](img-14.jpeg)

#### EMEAA

![img-15.jpeg](img-15.jpeg)

#### Greater China

![img-16.jpeg](img-16.jpeg)

#### Total IHG

![img-17.jpeg](img-17.jpeg)

* Fee margin excludes owned, leased and managed lease hotels, significant liquidated damages and the results of the Group's captive insurance company and is stated at AER.

Our owned, leased and managed lease hotels tend to have significantly lower margins than our fee business. This is because we not only record the entire revenue of the hotel, but also the entire cost base, which includes staff and maintenance of the hotel.

## Capital allocation and dividend policy

### Consistent uses of cash

Our priorities for the uses of cash are consistent with previous years and comprise three pillars:

### Shareholder returns (2003-22) ($bn)

Source of returns

![img-18.jpeg](img-18.jpeg)

### 1

#### Invest in the business to drive growth

We look to strategically drive growth, while maintaining strict control on investments and our day-to-day capital expenditures.

### 2

#### Target sustainable growth in the ordinary dividend

IHG has a dividend policy where we would look to grow the ordinary dividend each year, while balancing all our stakeholder interests and ensuring our long-term success.

### 3

#### Return surplus funds to shareholders

The Group has a strong track record of returning surplus cash to shareholders. Since 2003, including the ordinary dividend, the Group has returned $14.3bn.

* Use of Non-GAAP measures. In addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on page 85 to 88 and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.

12

IHG | Annual Report and Form 20-F 2022

Strategic Report

## Capital expenditure

Spend incurred by IHG can be summarised as follows:

| Type | What is it? | Recent examples |
| --- | --- | --- |
| Maintenance capital expenditure and key money | Maintenance capital expenditure is devoted to the maintenance of our systems and corporate offices, along with our owned, leased and managed lease hotels. Key money is expenditure used to access strategic opportunities, particularly in high-quality and sought-after locations, when returns are financially and/or strategically attractive. | Examples of maintenance spend include investment in corporate technology and software, as well as office refurbishment and maintenance. Across our owned, leased, and managed lease hotels we invest in refurbishment of public spaces and guestrooms. Examples of key money include investments to secure representation for our brands in prime locations. |
| Recyclable investments to drive the growth of our brands and our expansion in priority markets | Recyclable investments are capital used to acquire real estate or investment through joint ventures or equity capital. This expenditure is strategic to help build brand presence. We would look to divest these investments at an appropriate time and reinvest the proceeds across the business. | Examples of recyclable investments in prior years include our EVEN® Hotels brand, where we used our capital to develop three hotel properties in the US to showcase the concept. These hotels were subsequently sold and now operate under a franchise agreement. |
| System Fund capital investments for strategic investment to drive growth at hotel level | The development of tools and systems that hotels use to drive performance. This is charged back to the System Fund over the life of the asset. | We continue to invest in a range of upgraded technology solutions, including the ongoing development of IHG's mobile app and IHG One Rewards Loyalty evolution. |

### Dividend policy and shareholder returns

The Board consistently reviews the Group's approach to capital allocation and seeks to maintain an efficient balance sheet and investment-grade credit rating. IHG has an excellent track record of returning funds to shareholders through ordinary and special dividends, and share buybacks. The ordinary dividend paid to shareholders increased at an 11% CAGR between 2004 and 2019.

Our asset-light business model is highly cash generative through the cycle and enables us to invest in our brands and strengthen our enterprise. When reviewing dividend recommendations, the Board looks to ensure that any recommendation does not harm the sustainable success of the Company and that there are sufficient distributable reserves to pay any recommended dividend. The Board

assesses the Group's ability to pay a dividend bearing in mind its responsibilities to its stakeholders and its objective of maintaining an investment-grade credit rating. One of the measures we use to monitor this is net debt:adjusted EBITDA and we aim for a ratio of 2.5-3.0x.

In February 2022, IHG announced that ordinary dividend payments would resume with an 85.9¢ proposed final dividend in respect of 2021. This reflected 2021's improved trading as the business continued to recover from the pandemic, strong cash flow, and significant reduction in net debt. The proposal was subsequently approved at the AGM and paid to shareholders on 17 May 2022.

In August 2022, IHG announced the resumption of the interim dividend, with a proposed payment of 43.9¢ per share,

representing growth of 10% on the 39.9¢ interim dividend paid in 2019. This was paid to shareholders on 6 October 2022. In addition to the interim dividend, a $500m share buyback programme was also announced. This commenced on 9 August 2022 and completed on 31 January 2023.

The Board is proposing a final dividend of 94.5¢ in respect of 2022, which is consistent with the 10% growth of the reintroduced interim dividend on the prior interim payment in 2019. The proposed total dividend for the year is therefore 138.4¢. Further, the Board have announced a share buyback programme to return an additional $750m of surplus capital in 2023.

Our business model

IHG | Annual Report and Form 20-F 2022

13

Strategic Report

# Trends shaping our industry

There is no question that the pandemic has had an unprecedented impact across travel and tourism, however, the last few years have reminded us of the power and resilience of our industry. In 2022, we saw the resurgence in travel continue - with guests looking to reconnect with their friends, families and colleagues both domestically and internationally.

**M**any markets returned to 2019 performance levels in terms of rates and occupancy, as strong leisure demand and the ongoing return of business and group travel continued around the world, helped by the easing of travel restrictions through the year.

With travel bouncing back, we've seen some trends become established, such as a shift to more sustainable operations and the continued integration of digital functionality into all aspects of the guest journey. As hotel brands and owners adapt to these shifts alongside positioning themselves to capture growing guest demand, they must also carefully navigate a global background of economic pressures and higher inflation, and the knock-on impact of the pandemic on critical areas such as labour and supply chains.

1

![img-19.jpeg](img-19.jpeg)

Travel's continued recovery

2

![img-20.jpeg](img-20.jpeg)

Sustainability gaining increasing importance

3

![img-21.jpeg](img-21.jpeg)

Evolving guest expectations

14

IHG | Annual Report and Form 20-F 2022

Strategic Report

2022 was a reminder that people love to travel for both leisure and business, and as demand returned, RevPAR was ahead of pre-pandemic levels in many markets. As we look ahead, we expect to see further momentum around travel's recovery, with sustained demand for leisure travel and further pick-up in international travel, as well as business and group demand. Inflationary pressures in most economies globally will likely mean that consumers will continue to pay closer attention to their spending. However, a recent survey by STR indicated that more than 80% of consumers plan to travel the same or more in 2023 than last year, underlining the resilience of travel spend.

As travel continues to chart its path to full recovery, the industry must navigate additional challenges such as labour shortages and geopolitical concerns. For hotel owners, this will mean remaining agile and alert to address concerns around staffing, higher construction costs, energy costs, interest rates and potential supply chain disruptions.

Looking longer term, projections from the World Travel & Tourism Council (WTTC) point to a strong decade of growth, with the travel and tourism sector on track to create an additional 126 million jobs by 2032 and outpace the growth of the overall economy during this time.

Our responses include:

- Capturing strong demand for our brands, with Global RevPAR close to 2019 levels, including ADR 8% ahead
- Continuing to invest behind our global marketing campaign Guest How You Guest
- Enhancing our global procurement offer, working closely with the IHG Owners Association and our teams to anticipate owners' needs and find more ways to leverage central purchasing and provide cost-effective solutions

See pages 2 to 7, and 39, for more information.

Guests are increasingly expressing a desire to travel more sustainably. A recent study by the WTTC found that nearly 60% of travellers have chosen sustainable options within the past few years, while other research shows that guests' buying decisions are shifting as a result: 71% of Americans stated that they would pay more to lower the carbon footprint of their vacation, and 33% would be prepared to pay up to $250 more, according to a survey from The Vacationer. In addition, business customers are increasingly requesting information about sustainable accommodation and meeting options to help make progress against their own targets. A recent Global Business Travel Association survey showed that 88% of the global business travel sector views addressing climate change as the top priority area for action.

As environmental concerns continue to grow, guests are likely to be more selective in choosing companies that prioritise environmentally sustainable practices, a fact outlined in Skift's 2022 Traveller survey, with 30% of travellers stating that they would go as far as making sustainable decisions at the cost of their own convenience. With stakeholders increasingly expecting businesses to operate and grow responsibly, the onus is on travel companies to respond to shifting stakeholder values and expectations and drive positive change through their products and experiences. This ambition will be challenging to implement given the proliferation of the asset-light model across the industry, and will require branded players to work with hotel owners of assets to drive positive change.

Our responses include:

- A 3.4% absolute reduction in carbon emissions compared with 2019 baseline level from our franchised, managed, owned and leased hotels
- Launching new tools, training and brand standards to support hotels and owners with improving energy efficiency
- Helped secure tax credits in the US for hotel energy efficiency measures

See pages 35 to 37, and 57, for more information.

See our Responsible Business Report (RBR) www.ihgplc.com/responsible-business/reporting

The experience of the pandemic has altered the way that we live, work and travel. Flexibility is at the centre of new working behaviours, and there is increasing evidence that the remote working trend has led to new travel accommodation demand called 'bleisure', where business and leisure trips are combined into longer stays. A 2022 study commissioned by IHG indicated that 60% of US travellers plan to add leisure days to future business trips. At the same time, the rising 'digital nomad' trend - people who embrace a location-independent, technology enabled lifestyle - could drive an increasing number of people to travel all year round, with around 16 million workers in the US describing themselves as digital nomads.

The pandemic has accelerated the role of technology in our lives, including our use of mobile devices, and this is set to continue with developments in technologies such as 5G and the internet of things (IoT). A recent study by Oracle Hospitality and Skift shows that 71% of guests want to use their mobile device to manage their hotel experience, demonstrating the importance of technology and digitalisation across all aspects of the guest journey.

Alongside new tech demands, in the near term, we expect to see a growing demand for luxury experiences. Recent research by Kantar Insight and Altiant reveals that 'experiential luxury', including luxury hotels, is one of the top categories for increased luxury spending in 2023, driven by pent-up demand and high savings.

Our responses include:

- Incorporating functional workspaces into guestrooms across new design prototypes, such as H5 for Holiday Inn, which also features a refreshed lobby to help encourage collaboration
- Launching next-generation IHG mobile app to give our guests more personal choice and unlock benefits of our transformed IHG One Rewards loyalty programme
- Transforming our brand portfolio to become one of the world's leading players in Luxury & Lifestyle

See pages 6 and 7, and 20 to 27, for more information.

Trends shaping our industry

IHG | Annual Report and Form 20-F 2022

15

Strategic Report

# A portfolio of brands for all occasions

Our strategic focus on having a diverse and attractive selection of distinct brands that meet the needs of a range of guests and owners has helped us transform our portfolio and grow our estate, which now stands at more than 6,000 hotels globally.

Alongside enhancing our established brands, we've added seven new ones in the past five years to rapidly expand our offer in every segment - further strengthening our industry-leading presence in midscale, growing our Suites collection, enhancing our resort and all-inclusive offer, and building an attractive Luxury & Lifestyle portfolio.

The brands we have added since 2017 already represent more than 10% of our pipeline, and our Luxury & Lifestyle portfolio now stands at 13% of our system size and 20% of our pipeline, reflecting our progress in diversifying and increasing our exposure to high fee income segments.

To drive growth across our portfolio, we've made key investments in our enterprise, including a transformed IHG One Rewards loyalty programme and a powerful IHG Hotels & Resorts masterbrand that together are growing awareness of our brands.

To help guests intuitively choose the right one for them, we have Luxury & Lifestyle, Premium, Essentials and Suites collections, and this year added a new Exclusive Partners category, following the addition of the resort and all-inclusive brand Iberostar Beachfront Resorts through a new long-term commercial agreement.

![img-22.jpeg](img-22.jpeg)

![img-23.jpeg](img-23.jpeg)

![img-24.jpeg](img-24.jpeg)

![img-25.jpeg](img-25.jpeg)

![img-26.jpeg](img-26.jpeg)

![img-27.jpeg](img-27.jpeg)

16

IHG | Annual Report and Form 20-F 2022

Strategic Report

# MASTERBRAND AND LOYALTY

![img-28.jpeg](img-28.jpeg)

![img-29.jpeg](img-29.jpeg)

# LUXURY & LIFESTYLE

![img-30.jpeg](img-30.jpeg)

19 open
38 pipeline

REGENT

9 open
10 pipeline

207 open
90 pipeline

3 open
7 pipeline

76 open
41 pipeline

143 open
119 pipeline

# PREMIUM

VOCO

45 open
39 pipeline

21 open
21 pipeline

403 open
111 pipeline

22 open
31 pipeline

# ESSENTIALS

3,091 open
617 pipeline

1,198 open
229 pipeline

59 open
145 pipeline

# SUITES

ATWELL SUITES

2 open
30 pipeline

314 open
162 pipeline

28 open
1 pipeline

![img-31.jpeg](img-31.jpeg)

368 open
124 pipeline

# EXCLUSIVE PARTNERS

![img-32.jpeg](img-32.jpeg)

33 open
15 pipeline

IHG system size includes 123 other and unbranded hotels, of which eight will be re-branded to voco and two will be re-branded to Vignette Collection.

IHG pipeline includes 29 other and unbranded hotels, of which six will be branded as voco and five will be branded as Vignette Collection.

A portfolio of brands for all occasions

IHG | Annual Report and Form 20-F 2022

17

Strategic Report

# Our strategy

**T**he strategic investments we have made in recent years have been critical in driving business performance, strengthening our enterprise and enhancing the appeal of our brands to owners and guests as we focus on growing in high-value markets and segments.

How we measure growth and success has evolved in many ways - not only net rooms growth, which remains vital, but also the growth of our brand portfolio, loyalty programme, guest satisfaction and market share, as well as how we grow responsibly and in ways that develop and attract great talent.

Reflecting this, in 2022 we evolved our ambition to be about the growth of our enterprise in its broadest sense, driven by strategic investment in the four priority areas set out in our strategy. Over the long term, with disciplined execution, this approach supports sustained growth in cash flows and profits, which can be reinvested in our business and returned to shareholders.

Our strategic priorities and the behaviours that drive them have been designed to put the expanded brand portfolio we have built in recent years at the heart of our business, and our owners and guests at the heart of our thinking. They recognise the crucial role of a sophisticated, well-invested digital approach, and ensure we meet our growing responsibility to care for and invest in our people, and to make a positive difference to our communities and planet.

Our plans and their execution reflect all we have learnt in recent years navigating an industry recovery from the Covid-19 pandemic and keeping pace with evolving trends and social and economic factors. They are also inspired and informed by our purpose of providing True Hospitality for Good, which is underpinned by our commitment to a culture of operating and growing in a responsible, ethical and inclusive manner. This sets the tone for how we do business, enabling us to focus on creating value for all stakeholders as we build an even stronger IHG.

- See how the Board considered strategic and operational matters on page 100 and 101.
- See pages 40 to 43 for more about Our Culture.

OUR PURPOSE

# True Hospitality for Good

OUR AMBITION

To deliver industry-leading growth in our scale, enterprise platform and performance, doing so sustainably for all stakeholders, including our hotel owners, guests and society as a whole.

OUR STRATEGY

To use our scale and expertise to create the exceptional guest experiences and owner returns needed to grow our brands in the industry's most valuable markets and segments. Delivered through a culture that retains and attracts the best people and embraces opportunities to positively impact the world around us.

PRIORITIES

Build loved and trusted brands

Customer centric in all we do

Create digital advantage

Care for our people, communities and planet

BEHAVIOURS

Move fast

Solutions focused

Think return

Build one team

18

IHG | Annual Report and Form 20-F 2022

# Strategic overview

Strategic Report

## Build loved and trusted brands

We have transformed our portfolio of trusted brands in recent years to offer guests more choice and drive greater returns for owners. That work continued apace in 2022, as we added the resort and all-inclusive brand Iberostar Beachfront Resorts to our portfolio, further enhanced our established brands and continued to scale up our newer ones, with our IHG Hotels & Resorts masterbrand sharpening the perception of our brands.

See pages 20 to 21.

**269**
Hotels opened in 2022

## Customer centric in all we do

Recognising the power of listening closely to our guests and owners, we are focused on providing tailored services and solutions that meet evolving expectations.

This year we've invested significantly in key elements of the stay experience, transformed our loyalty offer with IHG One Rewards and continued to deliver solutions that drive demand for our owners and more efficient ways of operating their hotels.

See pages 22 to 25.

**27%**
Rise in loyalty enrolment year-on-year since launch of IHG One Rewards

## Create digital advantage

Our digital-first approach is helping our customers stay connected and in control, and in 2022 we found more sophisticated, targeted ways to transform the guest experience and ensure our hotels operate ever more efficiently to manage demand and drive performance. Highlights included the launch of our new IHG mobile app and a transformed booking journey across our channels.

See pages 26 to 27.

**58%**
Of all digital bookings now driven by mobile

## Care for our people, communities and planet

### People

Our people are at the heart of our success, bringing our plans to life, creating deeper connections with guests and showing the world what True Hospitality for Good means to us all at IHG.

This year, we took further steps to empower them to do their best work by enhancing our diverse and inclusive culture, supporting their wellbeing, creating further opportunities for personal development and investing in our core technology and ways of working.

See pages 29 to 33.

**1,300**
Members of our employee resource groups, which help foster diversity and inclusion

### Communities

We are proud to be at the heart of thousands of communities, and in 2022 we built on what we have been doing in recent years to deliver lasting, positive change by providing support to those who need it most through skills training, being there in times of natural disaster and helping those facing food poverty.

See pages 33 to 34.

**>100,000**
People around the globe positively impacted through Giving for Good month

### Planet

Knowing we must take decisive, practical action to reduce our environmental impact for the benefit of our planet and the long-term success of our business, we continued working closely with our hotel owners and specialist partners to find innovative ways to reduce carbon emissions, waste and water usage across our global estate.

See pages 35 to 37.

**850**
Tonnes of plastic expected to be saved in the Americas region annually through our bathroom bulk amenity contracts

Strategic Overview

IHG | Annual Report and Form 20-F 2022

19

Strategic Report

# Our strategy continued

PRIORITY:

# Build loved and trusted brands

2022 at a glance

Surpassed

6,000

Open hotels globally

~33%

Of openings were conversions (excluding Iberostar Beachfront Resorts)

13%

Of system size made up of Luxury & Lifestyle brands, along with 20% of pipeline

Iberostar Beachfront Resorts becomes IHG's

18th

brand

Brand refreshes for Holiday Inn, InterContinental, Hotel Indigo and EVEN Hotels

1,859

Pipeline hotels, equivalent to 31% of today's system size

>40%

Of global pipeline under construction

17

Properties secured for Vignette Collection since launch in 2021

Holiday Inn

Holiday Inn voted World's Leading Budget Hotel Brand

![img-0.jpeg](img-0.jpeg)

We build love and trust for our brands by investing in an attractive portfolio that aims to consistently meet guest expectations for outstanding quality and experiences, and represents a leading choice for owners through a commitment to industry outperformance, effective hotel lifecycle management and strong returns.

Central to our growth strategy is developing a well-rounded collection of brands to meet the needs of a range of guests and owners. Adding seven brands in the past five years, we have transformed our portfolio, expanding our midscale offer, strengthening our Luxury & Lifestyle capabilities, providing a greater choice of resort locations and all-inclusive stays, and enhancing our ability to seal conversion deals. Alongside this, we have invested significantly in the quality, design, service and technology of our established brands, allowing us to keep pace with evolving consumer trends, build further trust with guests and increase owner returns.

We now have 18 brands grouped into five distinct collections to showcase the breadth of our offer, which leverage the power of our IHG Hotels & Resorts masterbrand and transformed IHG One Rewards loyalty programme to collectively enhance their performance, perception and growth.

# What we achieved in 2022

We opened 269 hotels during 2022 to surpass 6,000 globally, including our 600th in Greater China, while adding 467 hotels to our global pipeline. Our Essentials brands remain a powerful growth engine, with our Holiday Inn Brand Family generating half of hotel openings globally, illustrating its enduring appeal.

Important work this year included investment in our existing estate, with Holiday Inn, InterContinental, Hotel Indigo and EVEN Hotels all undergoing design, service or food and beverage refreshes to appeal to a new generation of guests. In its 70th anniversary year, Holiday Inn demonstrated why it remains so trusted by being voted Leading Budget Hotel Brand at the 2022 World Travel Awards. Ongoing progress following our 2021 quality review will see two-thirds of the Americas Holiday Inn estate and three-quarters of the Crowne Plaza estate updated by 2025. Recently renovated hotels are showing strong performance metrics across occupancy, room rate, revenue market share and guest satisfaction scores, enhancing the reputation, consistency and growth prospects of these two powerful brands.

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IHG | Annual Report and Form 20-F 2022

Strong progress has continued with our newer brands, too, with the six we've added since 2017 (excluding Iberostar Beachfront Resorts) already contributing more than 10% of our pipeline. We saw avid hotels reach 59 open properties, including its first in Canada, and opened our first two Atwell Suites hotels, alongside growing its pipeline to 30.

Work continues in accelerating our growth and performance in Luxury & Lifestyle. Underlining our progress, we celebrated more than 110 openings and signings in 2022, including a Six Senses hotel in the Bahamas and a Vignette Collection hotel in Thailand. Several halo hotels showcasing key brand elements were also secured, including the opening of the flagship Regent Hong Kong and the signing of iconic Regent properties in Shanghai and Cannes, and Kimpton's first resort hotel in Europe. Hotel Indigo achieved 18 openings in the year to reach 143 properties across more than 20 countries, while Kimpton's global expansion continued, including the brand's first hotel in Australia and a second in Greater China.

Our Luxury & Lifestyle pipeline now stands at 20% of our total global pipeline, which is approaching twice the size it was five years earlier, and we are investing in the capabilities, people and tailored strategies required to drive performance and growth.

Our strategic focus on accelerating conversion deals around the world has also continued to gain traction. Conversions represented around a quarter of signings and a third of openings in the year (excluding Iberostar Beachfront Resorts), thanks to a broader suite of brands to choose from than ever before and growing owner demand for access to our revenue-generating systems, marketing and loyalty programme.

![img-1.jpeg](img-1.jpeg)

voco Orchard, Singapore

![img-2.jpeg](img-2.jpeg)

Hotel Indigo Vienna - Naschmarkt

Our Luxury & Lifestyle conversion brand Vignette Collection has secured 17 properties since launch in 2021, and our upscale conversion brand voco recently achieved the milestone of 100 open and pipeline hotels and is achieving top satisfaction scores versus competing brands. The brand was also voted the World's Leading Premium Hotel Brand at the 2022 World Travel Awards.

Supporting our growth ambitions, in November 2022, IHG signed a long-term commercial agreement with Iberostar Hotels & Resorts for resort and all-inclusive hotels in the Caribbean, Americas, Southern Europe and North Africa. This agreement adds up to 70 hotels to our estate, with the first 33 properties going live on ihg.com by the end of December 2022, and is expected to boost our global system size by up to 3%. With the Iberostar Beachfront Resorts brand becoming the 18th in our portfolio, the agreement significantly increases our footprint in resort and all-inclusive hotels - a high-growth market segment where there is clear demand from guests and IHG One Rewards members. It joins IHG's system under a new Exclusive Partners category in our brand portfolio, where we will explore further new opportunities to drive additional system growth and high-quality fee streams.

## What's to come

Having strategically rounded out our portfolio to broaden its appeal to guests, alongside continued investment in our established brands, we have built a pipeline of more than 1,800 hotels, representing 31% of today's system size. This, together with the investments in our entire enterprise, lays the foundations for continued net system size growth in the years ahead.

Supporting this, we will continue to focus on the quality and consistency of our estate. This includes evolving key aspects of the design, service and operations of our Essentials brands to help assert their competitive advantage, including launching a new flagship breakfast for Holiday Inn in the Americas. A brand refresh for Holiday Inn Express® in Greater China will also help support its continued expansion in the region, where the brand has grown from 42 to 278 hotels in the past nine years.

Alongside the scaling up of our home-grown Essentials and Suites brands, including avid hotels and Atwell Suites, we will continue to drive growth in Luxury & Lifestyle, with openings in 2023 including the reopening of Carlton Cannes as a Regent following a two-year redevelopment. This will be a flagship property within a new generation of Regent hotels and resorts that will help drive growth across Europe.

With the new Iberostar Beachfront Resorts brand enhancing our all-inclusive capabilities, we will drive our competitive advantage by continuing to embed it in our systems and showcasing the breadth of our portfolio across our channels.

Our strategy | Build loved and trusted brands

IHG | Annual Report and Form 20-F 2022

21

Strategic Report

Strategic Report

# Our strategy continued

PRIORITY:

# Customer centric in all we do

![img-3.jpeg](img-3.jpeg)

# 2022 at a glance

Transformed loyalty programme with IHG One Rewards, adding

12.2m new members

IHG ONE REWARDS

Heightened focus on owner cost to build, open and operate our hotels

![img-4.jpeg](img-4.jpeg)

Launched Guest How You Guest, our biggest marketing campaign in over a decade

Guest how you guest

Enhanced food and beverage offer for guests

![img-5.jpeg](img-5.jpeg)

~4,100

Hotels now participate in Americas F&B purchasing programme to reduce costs

![img-6.jpeg](img-6.jpeg)

Supported owners through collaboration with governments and trade bodies

![img-7.jpeg](img-7.jpeg)

Increased guest choice by adding Exclusive Partner Iberostar Beachfront Resorts

![img-8.jpeg](img-8.jpeg)

![img-9.jpeg](img-9.jpeg)

Our success depends on going to the extra mile for our customers - keeping guests and owners at the heart of everything we do to meet evolving expectations and providing the right support at the right time. This mindset helps us to create unrivalled service, greater choice and personalised experiences for our guests, and compelling investment opportunities, fast and effective solutions and stronger returns for our owners.

From transforming our loyalty offer to major marketing investments, richer guest experiences, revenue-enhancing solutions and an agile procurement offer, we are focused on delivering the things that matter most to ensure IHG and our brands stand out as a preferred choice in the market.

# What we achieved in 2022

As our guests embark on a new era of travel, we launched a transformed loyalty offer in 2022 with IHG One Rewards providing more ways to earn and redeem points alongside richer, more tailored experiences. Our loyalty programme is critical to our business and future growth, with members responsible for more than half of all room nights globally and typically spending 20% more in our hotels than non-members.

Since launching IHG One Rewards, more than 12 million new members have been welcomed to the programme, with enhanced rewards including free breakfast for Diamond Elite members and the ability for guests to choose the rewards that matter to them most through the introduction of Milestone Rewards. The programme has gained notable industry recognition, including Best Hotel Rewards Program at the Global Traveler 2022 Awards. Helping deepen guest relationships and drive more business to our hotels, we have teamed up with major sporting events and music festivals to enable IHG One Rewards members to redeem points in exchange for unique experiences. We have also further strengthened our partnership with Mr & Mrs Smith by increasing the number of properties available and expanding the benefits to our IHG One Rewards members.

We continue to focus on enhancing all critical aspects of the guest experience. Recognising the role food and beverage plays in guest satisfaction, we have delivered new high-quality, cost-effective solutions across many of our brands, and we continue to modernise guestroom and public space designs, such as H5 for Holiday Inn, an efficient new prototype, which has been

22

IHG | Annual Report and Form 20-F 2022

developed for the same build cost as our previous H4 design. We have also made key digital enhancements to enrich the guest experience, including the launch of our next-generation mobile app, which is playing a central role in a transformed customer booking journey across our channels (see pages 26 and 27 to find out more).

For corporate guests, we are supporting organisations in how they are bringing their teams together to connect in today's world, incorporating seamless booking, hybrid solutions and customisable perks. In 2022, IHG was recognised at the Stella Awards for the second consecutive year with a gold medal for Best Hotel Chain for providing an exceptional meetings experience.

For our hotel owners, we remain focused on providing the operational and commercial support they need to strengthen performance and capture demand. Our investment in IHG One Rewards is playing an important role, with loyalty contribution increasing following launch and returning to 2019 levels by the end of 2022. Enrolments were up 27% year-on-year and Reward Night bookings were 16% ahead of 2019. Launched in phases to minimise impact on hotel teams,

with training for thousands of colleagues to bring it to life, the new programme's many benefits are being delivered by our new mobile app, which is driving loyalty engagement and direct bookings.

Underpinned by our loyalty programme, our IHG Hotels & Resort masterbrand marketing approach is helping to showcase the breadth of our offer to consumers in fresh and engaging ways. Our global Guest How You Guest campaign is our biggest in more than a decade, telling the world how we have a brand for every traveller in every market and using data to target key demographics. In addition, a new Demand Sensing Forecast model launched in 2022 helps our owners and hotel teams maximise revenue opportunities by using data and analytics such as web searches and airline bookings to forecast local transient demand. The model is now available for all hotels globally.

Underpinning all our work with owners is a heightened focus on the cost to build, open and operate our hotels, and we are focused on enhancing every aspect of the hotel lifecycle. This includes more efficient design prototypes for new-builds and renovations, and procurement solutions to speed up new

# Underpinning all our work with owners is a heightened focus on the cost to build, open and operate our hotels.

openings. Recognising that some markets face specific challenges in getting building projects off the ground, we are providing tailored solutions to boost development. In Greater China, we have connected owners to specialist financiers for them to provide a Supply Chain Financing Programme that offers deferred payment plans for hotel building materials. In Japan, Australasia and the Pacific, our first Hotel Procurement Service pilots for construction and refurbishment are helping owners achieve

![img-10.jpeg](img-10.jpeg)

Holiday Inn Ho Tram Beach, Vietnam

Our strategy | Customer centric in all we do

IHG | Annual Report and Form 20-F 2022

23

Strategic Report

Strategic Report

# Our strategy continued

## Customer centric in all we do continued

savings of 11% to 35% on goods and services during hotel build and opening phases of their projects.

We are also helping control energy costs through negotiating fixed rates, while around 4,100 hotels in the Americas region now participate in our F&B purchasing programme, with nearly 20% growth in the number of hotels joining in the US alone. This programme supports menu optimisation, helping owners mitigate inflationary pressures and achieve absolute savings.

We also continue to take steps to streamline operations while maintaining great guest experiences, including removing or relaxing some brand standards, and introducing a new housekeeping model to free up teams. To ensure we are doing all we can to strengthen owner returns in an environment of high inflation, we also launched a Think Owner Return global e-learning series for corporate colleagues during the year.

Recruiting and retaining talent to meet rising demand remains a challenge across the industry, so we are taking steps to reduce pressure on busy hotel teams and enhance customer service. We have hired more than 2,700 people in our Reservations and Customer Care (RCC) teams to help handle sales and service interactions, answering them in an average time of 25 seconds. We are also implementing workforce management tools and processes in each of our regions, leveraging technology to help owners optimise staffing levels.

Focused on supporting our owners in as many ways as possible, we continue to collaborate with governments, peers and trade bodies on a range of industry issues, from easing labour shortages to maximising use of available tax incentives. A new development website delivered in the year is also providing prospective owners and investors with everything they need to work together as efficiently as possible from the first conversation on potential projects with IHG.

### What's to come

To help ensure our IHG One Rewards loyalty programme continues to attract and retain more members through richer experiences and drive more direct bookings and repeat business for owners, we are focused on embedding a culture of loyalty in every hotel through further training and support. In addition, we will continue to optimise benefits and develop further programme enhancements, alongside a broader focus on delivering rich, relevant guest experiences and driving the commercial performance and growth of our brands.

Our focus on reducing the cost to build, open and operate our hotels remains, and we will continue to work closely with owners across all aspects of the hotel lifecycle. This includes delivering new low-cost hotel designs, speeding up renovations across our Americas estate, streamlining brand standards and providing more procurement solutions that allow owners to benefit from our scale.

![img-11.jpeg](img-11.jpeg)

Holiday Inn Ho Tram Beach, Vietnam

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IHG | Annual Report and Form 20-F 2022

Strategic Report

# Why hotel owners choose to work with IHG

Hotel owners choose to work with IHG because of the trust they have in our brands and our track record in delivering strong returns.

![img-12.jpeg](img-12.jpeg)

Our strategy | Customer centric in all we do

IHG | Annual Report and Form 20-F 2022

25

Strategic Report

Our strategy continued

PRIORITY:

# Create digital advantage

2022 at a glance

Launched
next-generation
mobile app

58%

Of all digital bookings are now made on our new mobile app

![img-13.jpeg](img-13.jpeg)

Commenced rollout
of next-generation
payments system

![img-14.jpeg](img-14.jpeg)

Redesigned brand
websites as part
of transformed
booking journey

![img-15.jpeg](img-15.jpeg)

Introduction of 24/7
customer care text
messaging service

![img-16.jpeg](img-16.jpeg)

20%

Of customer contacts shifted
to digital channels, reducing
pressure on hotel teams

![img-17.jpeg](img-17.jpeg)

![img-18.jpeg](img-18.jpeg)

We continue to invest significantly in our technology platforms, identifying and embedding solutions that create more seamless experiences for guests, unlock revenue opportunities for IHG and our owners, and support collaboration and the streamlining of processes within our teams.

In enhancing our digital capabilities, we are gaining access to deeper insights and increasing our ability to connect with guests across our platforms to raise awareness of our brands, while simplifying operations and strengthening performance for owners.

From forecasting demand to creating more personalised stays, our use of data and analytics is providing key insights for our teams across the business, enabling them to seize opportunities to enhance the guest and owner experience. With many of our apps and platforms now cloud-based, the infrastructure is already in place to test, pilot and launch new hotel products and services at pace and scale, saving time and money.

## What we achieved in 2022

This year we made important progress on multiple fronts, working closely with owners as demand increased in many markets. Launched in 2022, our next-generation mobile app is providing a richer customer experience, with streamlined booking that allows guests to check-in faster and powering IHG One Rewards to give members seamless access to their loyalty benefits, including the ability to choose and redeem Milestone Rewards. Other new features include filtering by room attributes and enriched maps functionality, while in the fourth quarter alone a further 60-plus enhancements were made to the booking process, supporting further increases in direct booking, loyalty engagement and incremental spend during stays.

With mobile our fastest-growing revenue channel, the app has driven revenue at 30% higher levels than 2019 in the Americas and EMEAA, and in recent months the further shift towards using mobile devices has seen it now account for 58% of all digital bookings.

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IHG | Annual Report and Form 20-F 2022

Our new mobile app is part of a wider transformation of the booking experience, which includes simpler-to-navigate brand websites featuring new photo galleries, improved technology to boost traffic and easier-to-manage content platforms.

We have simplified room rates, focusing on consistency across channels to encourage direct bookings that drive lower-cost revenue to our owners, while redesigned web pages that combine rooms and rates choices have contributed to increases in booking conversion of up to one percentage point and revenue uplift of up to 3%. This new web experience has also driven around a 30% increase in web enrolments to our IHG One Rewards programme.

Linked to this work is the piloting of attribute pricing, where guests can seamlessly select add-ons and tailor their stays while, in parallel, owners generate maximum value from their hotel's unique attributes. Having already completed the detailed room inventory assessments, these pilots will be scaling across more of the estate in 2023.

Further supporting owners in the merchandising of extras, we launched the IHG Mobile Mall platform in Greater China, which provides guests easy access to package deals in full-service hotels.

Our technology continues to elevate customer service, with further progress being made through artificial intelligence (AI). This enabled our Reservations and Customer Care (RCC) teams to shift 20% of our customer contacts through digital channels by the end of 2022, compared with just 4% at the start of the year.

This is part of an approach to use a blend of agents and AI to quickly meet our guests' needs and engage with them on their preferred channels. During the year, we launched asynchronous messaging as a 24/7 service, where customers can elect to contact us through SMS and popular messaging applications and respond in their own time. We handled more than 250,000 interactions in 2022, with the service receiving the highest satisfaction scores of all our channels.

We have also developed a new Digital Concierge for web and mobile, which enables greater guest self-service and reduces the burden on hotels by diverting call traffic. This handled millions of conversations during the year, further assisting customers across our platforms.

![img-19.jpeg](img-19.jpeg)

Holiday Inn Queenstown Remarkables Park, New Zealand

# Our powerful new mobile app is part of a wider transformation of the booking experience.

Our digital capabilities are enabling us to meet guest and owner expectations at a faster pace than ever before. To speed up hotel check-in and reduce fees for owners, we have launched our next-generation payments system in the US and Canada, which includes a broader range of secure payment options, including tap to pay.

# What's to come

We will continue our progress in creating a more frictionless customer journey with further enhancements. This includes new mobile app features, easier digital enrolment in IHG One Rewards, an expanded Digital Concierge service, a more seamless connection to hotel wifi, and scaling up pilots to leverage our Guest Reservation System capability with selectable room attributes and stay enhancements. With the addition of Iberostar Beachfront Resorts, we will also be creating brand-new all-inclusive digital capabilities, and we expect to roll out our next-generation payments solution to the majority of our US and Canada hotels.

To further strengthen operations, we will expand our cloud-based technology to unlock new capabilities to enhance our operational systems, streamline access to applications and support us in utilising data throughout the customer journey. Work will also begin on a more flexible, user-friendly revenue management platform that will provide owners with clear insights on how best to optimise revenue to their properties.

Our strategy | Create digital advantage

IHG | Annual Report and Form 20-F 2022

27

Strategic Report

Strategic Report

# Our strategy continued

PRIORITY:

# Care for our people, communities and planet

![img-20.jpeg](img-20.jpeg)

2022 at a glance

86%

Overall employee engagement increased to 86% (+1% on 2021), placing IHG as a Global Best Employer by Kincentric

![img-21.jpeg](img-21.jpeg)

>57,000

Hours were collectively dedicated by colleagues in 2022 during IHG's Giving for Good month

![img-22.jpeg](img-22.jpeg)

3.4%

Reduction in our carbon emissions in 2022, compared with our 2019 baseline level

![img-23.jpeg](img-23.jpeg)

10

The number of relief efforts we responded to around the globe alongside our charity partners

![img-24.jpeg](img-24.jpeg)

![img-25.jpeg](img-25.jpeg)

Caring for our people, communities and planet has always been at the heart of how we work, but the nature of an ever-evolving social and environmental landscape means we continually explore how we can make a positive difference as we operate and grow.

The Board's Responsible Business Committee reviews IHG's responsible business objectives and strategy and advises the Board on our approach to diversity, equity & inclusion (DE&I), our impact on local communities, responsible procurement in our supply chain, programmes on human rights and modern slavery, our environmental impact, and our engagement with employees.

To guide our actions and drive progress, in 2021 we launched our 2030 Journey to Tomorrow plan, a series of ambitious commitments to create positive change for our people, communities and planet, aligned to our purpose of True Hospitality for Good and to the UN Sustainable Development Goals.

We know the actions we take around the environment, our people and society are closely followed by our investors and other stakeholders and are therefore critical to our reputation and growth, and we have focused our efforts on the areas where we feel we can make the greatest impact. Reflecting the changing world around us, each commitment is designed to ensure IHG grows responsibly and in ways that ensure travel has a beautiful future for everyone.

See key matters discussed by the Board on page 100-101 and the Responsible Business Committee Report on pages 110 and 111.

See our Responsible Business Report at www.ihgplc.com/responsible-business/reporting

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IHG | Annual Report and Form 20-F 2022

Strategic Report

# Our 10-year responsible business plan

Our goal is to help shape the future of responsible travel together with those who stay, work and partner with us. We will support our people and make a positive difference to local communities, while preserving our planet's beauty and diversity... not just today but long into the future.

![img-0.jpeg](img-0.jpeg)

Champion a diverse culture where everyone can thrive

Improve the lives of 30 million people in our communities around the world

Reduce our energy use and carbon emissions in line with climate science

Pioneer the transformation to a minimal waste hospitality industry

Conserve water and help secure water access in those areas at greatest risk

EMPOWER OUR PEOPLE TO HELP SHAPE THE FUTURE OF RESPONSIBLE TRAVEL

# People

Champion a diverse culture where everyone can thrive

# Our 2030 commitments

- Drive gender balance and a doubling of under-represented groups across our leadership
- Cultivate an inclusive culture for our colleagues, owners and suppliers
- Support all colleagues to prioritise their wellbeing and the wellbeing of others
- Drive respect for and advance human rights

Our people are fundamental to IHG achieving its purpose and strategic goals. IHG's business model means that we do not employ all colleagues. We directly employ individuals in our corporate offices, reservation centres, and managed, owned, leased and managed lease hotels. However, not all individuals in managed, owned, leased and managed lease hotels are directly employed, and we do not employ any individuals in franchised hotels (nor do we control their day-to-day operations, policies or procedures).

# What we achieved in 2022

# People engagement

We have several forums available for employees to share their thoughts, including employee resource groups (ERGs), a designated Non-Executive Director for workforce engagement and our employee engagement survey, known as Colleague HeartBeat, which allows people to express their views on key aspects of working at IHG.

In our 2022 survey, our overall employee engagement stood at 86%, a 1% improvement on last year, which once again saw IHG accredited as a Kincentric Global Best Employer. The survey highlighted areas that we can strengthen further, including enabling infrastructure and technology, a continued focus on rapid and high-quality decision making, plus ensuring that inclusion remains a key focus for the business. Actions taken during 2022 on talent and staffing saw a significant improvement in scores in these particular areas. These areas will remain a priority for 2023.

# Developing and retaining talent

To achieve our ambitions, we know we need to develop and retain a diverse and talented workforce, which involves creating an open and inclusive culture that promotes career development and equal opportunity, and this year we developed more tools and resources we need as individuals and as a business to be successful. Our growth as individuals and as a company is encapsulated in our employee brand. Celebrating the inclusive culture we create at IHG, it incorporates our promise to support employees on every step of their career journey by giving them Room to Belong, Room to Grow and Room to Make a Difference. To support this, in 2022 we launched Room to Grow Week, a series of events and resources to champion personal and professional development.

We also ensure our people managers are well-equipped to support our performance and development processes through offering simplified resources and delivering masterclasses to bring our processes and practices to life. As part of our continued focus on developing talent, managers have continued to hold quarterly check-ins with employees to support them in achieving their professional goals, helping them connect their own role and purpose with the overall vision for IHG.

Our strategy | Care for our people, communities and planet

IHG | Annual Report and Form 20-F 2022

29

Strategic Report

# Our strategy continued

## Care for our people, communities and planet continued

IHG's reward strategy aims to attract, retain, motivate and engage top talent. It is supported by a robust governance approach that ensures our reward and recognition practices are fair and consistent across our employee and colleague population, regardless of gender and other aspects of diversity, and there is alignment between the wider direct workforce and executive remuneration.

For our hotels, Journey to GM (our new General Manager talent acceleration programme) aims to provide a pipeline of talent that both matches our growth ambitions and fulfils the aspirations of our employees wishing to build long and successful careers at IHG. In its first year, we saw 10 Journey to GM participants move into their first General Manager role across our EMEAA and Americas regions. We also continued to develop our hotel talent management system to provide us with greater insights into the talent we have and the critical gaps we need to fill.

### Investing in our HR technology and learning and development

In 2022, we invested in our core HR and learning technology platforms and our learning offer. These areas are critical to creating the engaging, high-performance culture we champion at IHG, each providing the tools and resources we need to be successful. Delivering a more streamlined, intuitive user experience for employees and colleagues, our HR system features self-service capabilities to enable line managers to initiate a range of core HR transactions themselves. The new platform also provides an end-to-end onboarding experience and consolidates HR support into one easy-to-navigate portal.

Our new learning platform will provide our corporate offices, company-managed and franchise hotels with access to flexible training in a way that enables people to address specific needs and personalise their learning experience to strengthen opportunities for career development and growth.

See more about our workplace environment on page 41 and wider workforce considerations on pages 114, 117, 123 and 124.

### Attracting talent

To address the challenges the industry is facing in attracting talent, we have invested in our careers website, refreshed our employer brand and marketing materials, and increased social and paid media activity to improve visibility of vacancies. This has resulted in more than 80,000 visits per month to the careers website, and a significant rise in applications across job platforms. We have continued to embed inclusive hiring practices throughout the recruitment process to attract people from a wide range of backgrounds. We have strengthened our recruitment materials, such as translating our interview guides into more languages, and integrated our franchise job portal into WeChat in Greater China to reach new talent.

To support the growth of Luxury & Lifestyle brands, we have set up a team dedicated to attracting and developing GMs within the segment and launched a recruitment campaign showcasing the great career opportunities on offer across our brands.

Recognising the importance of attracting and developing talent whatever their backgrounds, circumstances or abilities, we are working with organisations across our regions to diversify our early careers pipeline, from Historically Black Colleges and Universities in the US and the Leonard Cheshire Disability charity in the UK to special education schools in Asia. To find out more, see our Communities section on pages 33 and 34.

### Wellbeing

In March 2022, we launched myWellbeing - a framework to support employees across a range of important areas, including their health, lifestyle and workplace. The myWellbeing suite of resources, which includes an employee wellbeing handbook, wellbeing guidelines for people managers and financial education materials, has been designed to provide a holistic wellbeing offering, which employees can access quickly and easily.

During the year, we established regular touchpoints to encourage employees to take care of their mental health. We marked World Mental Health Day with global webinars and a video series, while Focus Fridays encourage employees to avoid scheduling standing meetings to allow undisturbed time to focus on the week ahead.

With the world shifting to hybrid working, we took further steps to create more flexible workspaces that support employees in adopting a balance of remote and office working and the delivery of IHG's priorities.

In December 2022, we moved into our new Global Headquarters in Windsor in the UK - a modern, creative and sociable working environment equipped with the latest technology to bring employees together at the right time and help them get the most out of their days in the office. We also refurbished our Americas headquarters in Atlanta in the US to create a more inviting environment for employees to connect and collaborate.

![img-1.jpeg](img-1.jpeg)

IHG celebrated LGBTQ+ Pride Month in Atlanta, US.

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IHG | Annual Report and Form 20-F 2022

# Diversity, equity & inclusion (DE&I)

A cornerstone of our culture is our passion and commitment to DE&I. It's not just crucial to who we are, but also to how we work together and grow our business, and to the sense of belonging colleagues feel at IHG and the freedom to be themselves.

Our commitment starts at the top, but we know we can't have a one-size-fits-all approach when it comes to DE&I as the focus of each of our markets is unique. Our six regional DE&I councils - connected to our Global DE&I Board - are chaired by an increasingly diverse leadership to prioritise local agendas and focus on what makes the biggest difference to the people around them.

Every member of IHG's Executive Committee (EC) has a DE&I-focused goal. Together with their leadership teams, they review talent with a specific focus on diversity. For instance, in the UK, we have formed a steering group comprising EC, Human Resources (HR) and Employee Resource Group (ERG) representatives to educate leaders on ethnic diversity and creating a more inclusive workplace, alongside action plans to drive change.

Our commitment is emphasised throughout our global hiring guidelines and initiatives and is backed up by our Global Diversity, Equity, Inclusion & Equal Opportunities Policy, with our work in this area revolving

around a DE&I framework spanning three core areas: creating an inclusive and inspiring culture for all our people, driving gender balance globally and addressing under-representation in our leadership.

# Creating an inclusive and inspiring culture for all our people

At IHG, inclusion means creating a culture that truly values having colleagues from a wide variety of backgrounds and provides them with a positive and welcoming environment in which they can thrive.

Having already rolled out conscious inclusion training for GMs and corporate colleagues in key markets in 2021, this year we built on this foundation by extending the programme to frontline hotel colleagues.

Our ERGs are central to the conversations we have around DE&I within the business and are continuing to grow, supporting diverse employees and their allies and driving change. We now have 1,300 members and allies in 24 chapters worldwide, which represent a broad demographic of employees including race and ethnicity (Somos US, Path US, BERG US, EMbrace Europe, IMEA), gender (Lean In - global), LGBTQ+ (Out and Open, US and UK), disabilities (DAWN US and UK), generational diversity (BBX US, HYPE Greater China, US, SEAK and UK), Veterans (Serve US) and virtual workers (Fave US).

Our ERGs also play a leading role in bringing leaders and employees together to deepen their understanding of the value of inclusion at regular touchpoints throughout the year by organising activities around globally recognised DE&I celebrations, including International Women's Day, International Day of Persons with Disabilities and Pride Month.

Employee listening sessions and insights from our inclusion index are also among the ways we are keeping track of our progress and identifying areas where we need to keep improving. The index showed that nine out of 10 employees feel IHG has an inclusive culture.

We were proud to be recognised as a Best Place to Work for LGBTQ+ and Equality in the Human Rights Campaign's Corporate Equality Index in the US for the eighth year in a row, as well as in Mexico for the first time. Reflecting the inclusive culture we work hard to create within the business, we saw our internal efforts in the LGBTQ+ space extend into the communities in which we operate when we sponsored Pride in London's 50th anniversary, became members of Pride Connection in Mexico and Latin America, and continued to be a valued sponsor of Atlanta Pride in the US.

# Our DE&I Policy

IHG is committed to promoting a culture of inclusion where everyone feels safe, respected and valued. Our policy applies to anyone who is directly employed by IHG and colleagues who work in managed hotels. Below is a summary of our commitments:

- Actively support diversity and inclusion to ensure that all our employees are valued and treated with dignity and respect.
- Strive continually to provide people with a working environment that is free from racism, harassment and discrimination.
- Foster an environment where our employees can work together to maintain an inclusive working approach where everyone's unique contribution is valued.
- Ensure that all decisions affecting an employee's employment are made fairly and are based on an individual's ability and performance.

- Provide all employees with the opportunity to join our Employee Resource Groups.
- Provide employees with disabilities the appropriate support where reasonable and practicable to do so and in accordance with local requirements.
- Ensure our recruitment, development and reward practices, and our approach to working arrangements, are designed to attract, develop and retain diverse talent.
- Work to educate our employees about the benefits that diversity and inclusion brings to our business and support interventions that improve diversity and inclusion in our places of work.
- Ensure all employees are aware of this policy and complete any relevant training in relation to diversity and inclusion.
- Ensure our customers experience an inclusive welcome and stay provided by our employees.

IHG's Global DE&I Board, chaired by our CEO, and regional DE&I councils feature representatives from across our Company who offer a breadth of experience from different cultures, industries and organisations. They work with stakeholders to ensure we continue to honour our DE&I commitments and strive for best practice.

It is our policy to comply with international, national and local regulatory requirements and, where required, any affirmative action as stipulated by local laws. We set measurable objectives for achieving diversity and inclusion for IHG, and we review our progress against them each year.

See our DE&I Policy at www.ihgplc.com/responsible-business

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## Care for our people, communities and planet continued

### Driving gender balance globally

We have made significant progress towards achieving gender balance at IHG over the past decade and regularly feature in the Top 20 of the FTSE female leaders list. Globally, 34% of our leaders working at Vice President level and above are female, and we are one of the few large global businesses to have a gender-balanced all-employee population, of which 58% is female.

As part of our commitment to achieving gender balance in our corporate and hotel leadership teams by 2030, we are focusing on how we attract more women into functions that have been historically less gender balanced, such as Commercial & Technology, Operations and Development. We are also identifying and removing potential barriers to increase the number of female GMs across our estate, including through our global network of Lean In circles, which empower our female colleagues to realise their ambitions by supporting one another through small peer groups that meet regularly.

We want all women at IHG to be able to consider opportunities that encourage career growth, and which help them fulfil their potential. To that end our Flexible Working Policy encourages corporate employees to organise their time in the best way for them and IHG. We are proudly sharing the success stories of those it is helping to prosper at work, while hotel colleagues are also benefiting through initiatives like myFlex in Australia, where they can work across any hotels in the country's managed estate. Underlining our

commitment to help all parents and carers in our teams find the right work/life balance, we have market-specific family policies and continue to evaluate them to ensure they support our people to be at their best.

### Addressing under-representation in our leadership

We are committed to having leaders who represent the truly diverse global nature of our business and drive our commitment to DE&I in all our markets.

Today, 21% of our global leaders are ethnically diverse, representing 20 nationalities. We want to increase the ethnic diversity of leaders across our markets and have set clear targets in the US and UK - where we have our largest populations of corporate colleagues. Our aim is to increase ethnic minority leadership representation in the US where we are at 20% in 2022 to 26% by 2025, and in the UK where we are at 6% with the aim of getting to 20% by 2027.

To help us achieve this, we are developing action plans and initiatives supported by a range of stakeholders, including our Americas and Europe regional DE&I councils, and several ERGs.

In the Americas, we evolved our Ascend programme to nurture not only Black leadership talent but also multiracial leaders, so a wider pool of talent can acquire the skills they need to take on more senior positions. Our successful Rise programme, which is focused on increasing the number of women in GM and other senior positions in our managed hotels, saw another 90 employees graduate.

![img-2.jpeg](img-2.jpeg)

Intercontinental Lusaka, Zambia

In the UK, we ran cross-organisational programmes for manager-level employees with The Network of Networks (TNON), a DE&I partnership that has delivered our Ethnic Minority Manager programme, while non-manager level employees enrolled on the Women in Hospitality, Travel and Leisure (WiHTL) Ethnic Future Leader Programme. With 30 of IHG's leaders acting as sponsors across both programmes, we were proud to see all 10 employees on the TNON programme graduate and engage in their career-planning conversations, while participants on the WiHTL programme are expected to graduate in March 2023, with one of them invited to join the WiHTL board.

| As at 31 December 2022 | Male | Female | Total |
| --- | --- | --- | --- |
| Directors | 7 | 6 | 13 |
| Executive Committee | 7 | 3 | 10 |
| Executive Committee direct reports | 34 | 25 | 59 |
| Senior managers (including subsidiary directors) | 69 | 29 | 98 |
| All employees (whose costs were borne by the Group or the System Fund) | 5,405 | 7,494 | 12,899 |

### Supplier diversity

In 2022, we continued to focus on driving inclusion in our US supply chain in support of the People and Community pillars of Journey to Tomorrow. We introduced Engaging Partnerships through Inclusion and Collaboration (EPIC), our Supplier Diversity Programme, at the 2022 Americas Investors & Leadership Conference. We also recognised our diverse suppliers and our 'EPIC Allies' - suppliers with a verifiable Supplier Diversity Programme who are working with us to identify diverse suppliers in their respective supply chains. In 2022, IHG gained exposure to more diverse business entities and saw our qualified diverse spending double in the US since 2021. In 2023, we intend to expand this programme to the UK.

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## Human rights and modern slavery

An integral part of our global commitment to responsible business is respecting human rights in accordance with internationally recognised standards. We understand the importance of human rights in relation to our colleagues, guests and communities and we encourage those with whom we do business - including our suppliers, owners and franchisees - to prevent, mitigate and address adverse impacts on human rights, including modern slavery.

We seek to advance human rights through our business activities and by working together with others to identify challenges and effective solutions.

Key focus areas in 2022 included: the launch of minimum core requirements related to responsible labour practices for IHG-owned, leased and managed hotels, focusing on responsible recruitment and onboarding, staff accommodation, worker voice, and the use of recruitment agencies and third-party labour suppliers, with the aim to support the implementation of IHG's Human Rights Policy at hotel level. Furthermore, we conducted a labour market assessment in the UK, continued to address findings of our previous risk assessment work, progressed our supply chain risk assessment work and our approach to human rights supplier due diligence.

IHG is a member of the United Nations Global Compact (UNGC) and is committed to alignment of IHG's operations, culture, and strategies with the UNGC's 10 universally accepted principles in relation to human rights, environment and anti-corruption.

See our Modern Slavery Statement at www.ihgplc.com/modernslavery

![img-3.jpeg](img-3.jpeg)

Junior achievement IHG First Look events, London, UK

## Communities

Improve the lives of 30 million people in our communities around the world

### Our 2030 commitments

- Drive economic and social change through skills training and innovation
- Support our communities when natural disasters strike
- Collaborate to aid those facing food poverty

We aim to ensure we make a real and sustainable difference in our communities through meaningful partnerships and leveraging our skills and resources to help others.

We have pledged to improve the lives of 30 million people through skills training, being there in times of natural disaster and fighting food poverty. We do this not only through direct funding and working in partnership with expert organisations, but also through our employees and colleagues who share their time, skills and passion to address the social needs within their communities. We support the efforts of corporate employees by providing two days

of paid volunteer leave annually to work with charities close to their hearts.

As our activity increases, it is important that we measure our contribution and ensure we continue to focus on areas where we can make the biggest difference. We do this as members of Business for Societal Impact (B4SI), which sets the global standard for managing corporate community investment.

## What we achieved in 2022

### Skills training and innovation

Since 2004, IHG Academy has been inspiring rewarding careers in travel and tourism. In 2022, more than 7,400 people gained valuable employment and life skills through work experience, internships and apprenticeships alongside some of the world's best hoteliers. After expanding the programme last year to include IHG Skills Academy, a best-in-class virtual learning platform that provides free online education, this year we have built on this offer by translating some of our core learning modules into eight additional languages to make the IHG Skills Academy a truly global resource.

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## Care for our people, communities and planet continued

![img-4.jpeg](img-4.jpeg)

Sustainability classes at local schools, Six Senses Ninh Van Bay, Vietnam

We're also supporting social and economic change through partnerships with charities and Non-Governmental Organisations (NGOs), such as US non-profit Jobs for America's Graduates (JAG), which helps students historically impacted by discrimination, poverty and other barriers to graduate and secure work.

Extending our support to thousands of people being displaced in countries such as Afghanistan and Ukraine, we've also teamed up with the Tent Partnership for Refugees to train and hire refugees in the US over the next three years, which includes providing access to our IHG Skills Academy.

### Giving for Good month

As some markets remained restricted by the pandemic during 2022, we didn't reintroduce hotel targets around Giving for Good activities this year. However, through corporate colleagues and those hotels able to participate, we still managed to collectively dedicate more than 57,000 hours to making a positive difference to the lives of over 100,000 people globally.

We're proud to be at the heart of thousands of communities, and since 2018, corporate employees and hotel colleagues around the world have provided more than 380,000 acts of volunteer service.

### Supporting our communities when disasters strike

We have a proud record of being there for our communities in times of need, and with our support needed more than ever before, we work closely with a range of humanitarian aid partners around the world to assist in their critical relief and recovery efforts.

In 2022, we supported 10 relief efforts, working with our long-term partners such the International Federation of Red Cross and Red Crescent Societies (IFRC). Alongside our annual donations to support its work on multiple fronts, we assisted the American Red Cross in its recovery efforts following the destruction caused in the US and eastern Canada by Hurricane Fiona and Hurricane Ian.

We also proudly celebrated 10 years of working with CARE International, during which time we have provided support across all our key focus areas - responding to disasters, supplying aid to those facing food poverty and providing educational support. Our grants support the NGO to work with local organisations across more than 100 countries to provide a lifeline to vulnerable people in times of need.

![img-5.jpeg](img-5.jpeg)

# >380,000

Acts of volunteer service have been provided by colleagues since 2018 through Giving for Good month

![img-6.jpeg](img-6.jpeg)

We also activated the IHG Colleague Disaster Relief Assistance Fund to help colleagues impacted by natural disasters across the globe, including those affected by severe tropical storm Paeng in the Philippines.

### Collaborating to aid those facing food poverty

Our support of the Global FoodBanking Network contributes to its food bank and food provision charities in 47 countries. In addition to the support we give through our direct food bank partnerships, we are helping to support society's most vulnerable in the fight to achieve global food security. This includes working closely with key organisations, such as No Kid Hungry in the US and OzHarvest in Australia - a food rescue NGO that diverts leftover food from our hotels to those in need within our local communities. This year we extended our partnership to support the newly launched VietHarvest in Vietnam and JapanHarvest in Japan.

We also expanded the number of hotels using the food recovery app Goodr, which uses technology to make it quick and simple to pick up excess and expiring food from hotels and restaurants and donate it to local non-profit organisations.

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# Planet

With hotels in more than 100 countries and ambitious growth plans for our brands, it is important to us that we operate sustainably and help preserve our planet for all generations to travel and explore.

So that we continue to create more sustainable guest stays and support our hotels in reducing carbon emissions, managing waste, and conserving and preserving natural resources, we are working with our hotel owners, suppliers, industry peers and governments.

See our TCFD, Responsible Business Committee Report and GHG emissions disclosures on pages 54 to 61, 110 and 111 and 237 to 239.

See our Responsible Business Report at www.ihgplc.com/responsible-business/reporting

# Energy and carbon

Reduce our energy use and carbon emissions in line with climate science

# Our 2030 commitments

- Implement a 2030 science-based target that delivers 46% absolute reduction in carbon dioxide emissions from our franchised, managed, owned, leased and managed lease hotels
- Target 100% new-build hotels to operate at very low/zero carbon emissions by 2030
- Maximise/optimise the role of renewable energy

We recognise the importance of partnering with hotel owners and supporting them to not only generate profits but also decarbonise and futureproof their assets to protect the long-term value of their business. Working with our colleagues, owners and partners, we have a clear strategy for how we will deliver on our carbon reduction commitments while continuing to grow our estate, which covers three main areas: decarbonising our existing hotels; sourcing renewable energy; and developing new-build hotels that operate at very low or zero carbon.

We have set specific, measurable goals that drive sustainable operations, minimise carbon emissions and create business efficiencies. Our target has been validated by the Science Based Targets initiative (SBTi) as being

consistent with climate science and the Paris Agreement to limit global temperature rise to 1.5°C above pre-industrial levels.

The challenges faced by our hotels in recovering from the pandemic and restoring growth have required careful navigation that recognises the pressures on our owners and teams. Despite this, we achieved a 3.4% reduction in our GHG emissions, compared with our 2019 baseline level.

# What we achieved in 2022

To support our Journey to Tomorrow commitments, we undertook a review of our brand standards and have begun to incorporate a range of Energy Conservation Measures (ECMs). Existing hotels are now mandated to implement LED lighting and high-efficiency, low-flow aerated shower heads by the end of 2025. We have initially focused on ECMs that provide the most impact for the lowest cost, with paybacks of less than five years for owners.

Being part of IHG means hotel owners receive a range of support to empower them with the knowledge and resources they need to meet their energy reduction targets and go further where they can.

We are taking steps to help ensure the availability of incentives for sustainability measures that require greater investment with longer pay-back periods. This year, this included engaging directly with government officials in the US to help secure tax credits for commercial buildings that make their properties more energy efficient as part of the Inflation Reduction Act.

Every IHG hotel is given access to our IHG Green EngageTM system, our online environmental management platform, which helps hotel teams make greener choices, charts their progress, and measures, reports and manages their energy, water and waste. Another part of this strategy is to provide hotels with an automated data collection service which, at no additional cost to hotels, collects data from utility companies or hotels directly, which it then feeds directly into Green Engage.

In 2022, we rolled out the Hotel Energy Reduction Opportunities (HERO) toolkit to guide hotels on the most effective energy conservation measures for their specific building. The tool provides indicative capital costs, energy reductions and payback periods for each measure based on the hotel's facilities, climate and energy use.

We now supply all of our UK offices and managed hotel estate with a renewable electricity tariff, as well as our managed hotels in Germany and our Atlanta office and Design Center in the US.

We also continue to explore the delivery of a broader renewable energy programme that can be accessed by a wider range of our hotels. Our focus has initially been in the US, and this year we worked with a US community solar organisation to deliver our first Community Solar initiative in Maryland, which gives hotels access to renewable energy while delivering a fixed discount on electricity charges and Renewable Energy Credits so they can reduce the reported GHG emissions from their operations.

![img-7.jpeg](img-7.jpeg)

Holiday Inn & Suites Atlanta Perimeter - Dunwoody opened in 2021, complete with on-site photovoltaic solar panels to generate electricity and solar thermal panels for hot water, producing 15% of the hotel's energy use.

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Requiring no capital expenditure, Community Solar also enables hoteliers to make clean energy claims on requests for proposals to bid for corporate bookings and we're now looking to extend the initiative to other US states, subject to demand and availability.

We are also focused on how IHG hotels of the future will support our carbon goals and accelerate the decarbonisation of our industry. In 2022, we worked with technical specialists to develop a future-proof definition of what a zero carbon building will look like in the years to come. We have begun to integrate the conclusions of our analysis into our design, development and construction processes and standards to help owners future-proof their assets. We are also analysing the operational carbon measures and cost impact requirements for our Holiday Inn Express brand in the US to meet our zero-carbon definition.

### Waste

**Pioneer the transformation to a minimal waste hospitality industry**

#### Our 2030 commitments

- Eliminate single-use items, or move to reusable or recyclable alternatives across the guest stay
- Minimise food going to waste through a 'prevent, donate, divert' plan
- Collaborate to achieve circular solutions for major hotel commodity items

The world produces over 2 billion tonnes of waste annually - a figure expected to increase to 3.4 billion tonnes by 2050. Less than 20% of waste is recycled each year, with enormous quantities sent to landfill.

Our long-term aim is to achieve circularity, where resources can be recycled or reused on a large scale. This might include the incorporation of recycled content in the manufacturing of new products, or making sure items are put to good use elsewhere once they leave our hotels. We already have a system for evaluating the environmental credentials of our suppliers and make recommendations to our hotels where we can (see page 43 for the progress we're making on responsible procurement).

### What we achieved in 2022

In 2019, IHG became the first hotel company to commit to replacing bathroom miniatures with full-size amenities across all brands - and we took this further in 2021 with a commitment to eliminate single-use items or move to reusable or recyclable alternatives across the guest stay by 2030.

Our progress continued in 2022 through the signing of a deal to secure bathroom bulk amenities contracts across more than 4,000 hotels. This is expected to reduce our annual plastic usage by an estimated 850 tonnes in the Americas region alone, while providing our hotels with cost savings. To support hotels further, we've commissioned experts from Travel Without Plastic to develop

a bespoke Single Use Items Toolkit in EMEAA that will provide our hotels with a best-practice approach to reducing, reusing, replacing and recycling common products. Building on this momentum, we reviewed and updated the sustainability credentials of our guest supplies, including items such as toothbrushes and razors.

When it comes to food waste, we are minimising the amount we send to landfill through a 'prevent, divert, donate' plan. To enable our brands and hotels to set goals, avoid waste and track their progress, we are collaborating with WWF, Greenview and our industry peers on the Hotel Waste Measurement Methodology to provide a common industry approach to collecting data and measuring and reporting waste.

To support hotels across our estate in adopting best practice for reducing food waste across their teams, we launched our global food waste training e-learning module in 13 languages for colleagues and made it part of the General Manager training programme.

### Water

**Conserve water and help secure water access in those areas at greatest risk**

#### Our 2030 commitments

- Implement tools to reduce the water footprint of our hotels
- Mitigate water risk through stakeholder collaboration to deliver water stewardship at basin level
- Collaborate to ensure adequate water, sanitation and hygiene (WASH) conditions for our operating communities

Faced with the reality that the world's water resources are no longer sufficient to meet everyone's needs along with the increasing frequency of extreme weather and droughts, it's important that we understand which of our hotels are in high or very high areas of water stress, so that we can adapt our business strategy accordingly to better support these hotels and target water savings.

![img-8.jpeg](img-8.jpeg)

Holiday Inn Nairobi Two Rivers Mall

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## What we achieved in 2022

The steps we’ve taken in 2022 include using the World Resources Institute (WRI) Aqueduct Water Risk Atlas to map risk across all hotel locations. This has enabled us to create a baseline dataset on water risk, which will inform our future strategy and allows us to report in line with the Sustainability Accounting Standards Board (SASB) framework. This will provide us with the number of hotels located in areas of water scarcity, as well as taking into consideration key indicators - including risk of flooding, drought and water depletion - to provide us with an overall water risk score. Our ongoing assessment is being integrated into our overall risk management strategy, forms part of our work on TCFD and features in our analysis of both acute and chronic physical risks (see pages 54 to 61 for the full disclosure).

Despite hotel occupancy increasing as travel resumed in most markets following the pandemic, we reduced our absolute water footprint by 6.9% in 2022 compared with our 2019 baseline year. Recognising the challenge in achieving ongoing reductions in usage in future years, we have set our hotels a water reduction target, along with being required to report on their water usage through the Green Engage system.

In our four years as members of the Alliance for Water Stewardship (AWS), we have met our target to develop water stewardship action plans for six hotels, and as part of our Journey to Tomorrow strategy review, we appointed a leading sustainability consultancy to support us in the next stage of developing our water strategy. This includes targets to reduce our WASH impact and conserve water in areas at greatest risk.

We are currently conducting an assessment of current programmes and data, external drivers and peer analysis as we work on developing a Group-wide strategy for reducing our water usage across all of our hotels.

## What’s to come

### People

As we build on our inclusive and high-performance culture, we are becoming a stronger business and will continue to develop the tools, resources and capabilities to support our people.

Our Global Learning strategy will continue to evolve, with this year’s introduction of a new learning platform and programmes serving as the building blocks for the launch of our new IHG University in 2023. Tailored to distinct audiences, this new educational framework will champion learning, career development, talent acceleration and best practice across the business.

We will continue to invest in talent management to strengthen our approach to recruitment, alongside building on our successful campaign in 2022 to strengthen our General Manager pipeline in support of our growth aspirations in the Luxury & Lifestyle segment.

Having made clear DE&I commitments we will work towards reaching these goals at all levels within the business, while also continuing to provide further education for our teams.

### Communities

We will continue to work strategically with expert charities to help those in most need around the world, as well as support our hotels in developing local partnerships in line with our policy and strategy for community investment. We will extend the reach and scope of these relationships to provide support across a broader range of areas, while strengthening our ability to capture data and measure our impact. We will scale the global rollout of our IHG Skills Academy to ensure it’s available in more local languages and markets and seek new opportunities for collaboration within our communities.

### Planet

Work will begin on an enhanced IHG Green Engage system to help hotels better manage their energy, water and waste, while renewable energy contracts will be rolled out in more markets as part of our wider focus on providing owners with the most effective energy and cost-efficient solutions for their hotels. We will leverage our scale and influence within the industry to help secure more government incentives for introducing sustainability measures across our estate that require greater investment with longer pay-back periods. We will further develop our strategy to ensure our new-build hotels operate at very low or zero carbon in the future.

![img-9.jpeg](img-9.jpeg)

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# Our stakeholders

**IHG recognises the importance of engaging with its stakeholders at all levels of the business, from the Board, through the Executive Committee, Senior Leadership and corporate functions, to front-line operations. A variety of methods are used based on experience and developing best practice, including face-to-face meetings, feedback and performance reviews, employee forums and training. We adjust our engagement methods as required to ensure they remain effective for both our stakeholders and IHG.**

The effectiveness of our engagement methods is measured through a range of metrics, including our KPIs (such as signings and pipeline), performance, ability to attract and retain talent, employee engagement survey results, adherence to the policies covered by our Code of Conduct and AGM results. The views and interests of other stakeholders, such as regulators and industry bodies, are also taken into consideration. They help provide a framework against which we measure ourselves, protect our reputation and develop our commercial and social awareness.

| Stakeholders | What impacted them in 2022 | Engagement | Outcomes |
| --- | --- | --- | --- |
| Guests Our ability to offer a wide selection of brands, with quality stay experiences, plenty of choices, great value and loyalty rewards, are key to attracting and building trust with IHG's guests, while continuing to drive commercial performance and revenue. | Increased desire to travel and for access to a broader range of locations and experiences Rising cost of living and effect of inflation Increased interest in ESG profile of companies Increased desire to book and stay seamlessly | Teamed up with major events to allow IHG One Rewards members to redeem points in exchange for unique experiences Global 'Guest How You Guest' campaign to target key demographics in every market Launched next generation mobile app for bookings Guest satisfaction surveys Expanded choice of locations for our Luxury & Lifestyle brands Invested in refurbishments to create modern public spaces and guestrooms | Roll-out of transformed IHG One Rewards providing more ways to earn and redeem points Expanded our portfolio to 18 brands with addition of Iberostar Beachfront Resorts which offers resort and all-inclusive destinations Enhanced digital customer service support, including automation to speed up response time and direction to the right team Continued enhancement of meetings offered for corporate clients Holiday Inn voted Leading Budget Hotel Brand at the 2022 World Travel Awards |
| See our Guest Love KPI on page 64 and how the Board had regard for guests as part of their consideration of strategic and operational matters on pages 100 to 101. |  |  |  |
| Shareholders and investors Our ability to maintain strong relationships with shareholders and institutional investors is fundamental to our ability to access capital markets and ensure IHG's long-term success. | The impact of geopolitical unrest and continued impact of the pandemic on the hospitality sector in certain regions and IHG, which influence IHG's trading performance, financial results and capital allocation strategy Executive remuneration policies including the potential use of discretion, alignment with workforce pay and talent retention Concerns about climate change and wider sustainability issues Chair succession and Board composition | Regular roadshow investor meetings and participation at investor conferences by Executive Directors, Senior Leadership and the Investor Relations team Extensive consultations between the Chair of the Remuneration Committee and institutional investors and proxy vote advisers Meetings with the Chair, IHG's Chief Sustainability Officer and Investor Relations team to discuss governance, sustainability and workforce practices Various shareholder meetings with the Chair Designate as part of her induction plan | Continued investor confidence in IHG's performance, long-term viability and leadership as demonstrated through feedback received and across AGM results Enhanced understanding of shareholder and investor focus areas, including in relation to remuneration policy and ESG matters Continued investor confidence in the composition of IHG's Board |
| See also a description of our dividend policy on page 13, our KPIs on pages 62 to 65, key matters discussed by the Board on pages 100 and 101 and engagement with shareholders relating to Executive Director remuneration on pages 118 and 125 to 126. |  |  |  |
| Visit www.ihgplc.com/investors for further information. |  |  |  |
| Suppliers Responsible supplier relationships are vital for IHG in driving efficiency and effectiveness throughout our supply chains. | Ongoing uncertainty and disruption in supply chains Increased focus on sustainability and integrity within supply chains Increased desire of consumers for sustainable goods and services | Identified alternative solutions with suppliers where supply was impacted across our corporate and hotel estate Engaged with high performing suppliers in sustainability and the circular economy that provide key goods and services to our hotels and corporate functions Partnered with EcoVadis and engaged with 92 suppliers globally to participate in the EcoVadis ESG risk assessment | Remained agile by adjusting our approach to goods and services sourced from impacted regions Increased collaboration opportunities with sustainable suppliers and for sustainable goods in alignment with our Journey to Tomorrow ambitions Assessed suppliers' performance and identified ESG risks in our supply chain |
| Further information about how the Board considered supply chain and procurement is on pages 100 and 101, and our business relationships, including our statement of business relationships with suppliers, customers and others, is on page 237. |  |  |  |
| Visit www.ihgplc.com/responsible-business for further information about our responsible procurement approach. |  |  |  |

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| Stakeholders | What impacted them in 2022 | Engagement | Outcomes |
| --- | --- | --- | --- |
| Hotel owners IHG's success relies on hotel owners investing in our brands. To remain attractive, we focus on the breadth of our brand portfolio and effectiveness of our IHG One Rewards loyalty programme and wider enterprise. | Increased operating costs including energy, and food and beverage costs Labour shortages, supply chain challenges and financial and operational constraints caused by global macroeconomic factors Ability to capture and drive demand to their hotels given a renewed era of travel Evolving brand standards | Direct meeting with CEO and Regional CEOs IHG Owners Association collaboration Portfolio and individual hotel reviews covering operational, strategic and industry trend updates Webinars, regular newsletters and bulletins Hotel lifecycle and finance team support Collaboration with governments and industry to support recovery | Transformed IHG One Rewards loyalty programme Expanded brand portfolio with the resort and all-inclusive brand Iberostar Beachfront Resorts Streamlined operations, including removed and relaxed brand standards, and introduced a new housekeeping model Tailored marketing and promotions, supported by new data-driven resources and services that help hotels quickly identify and act on revenue opportunities Further procurement programmes to drive savings for owners Increased training, guidance and recruitment support for hotel teams Next-generation formats for Holiday Inn, Holiday Inn Express, Candlewood Suites and Staybridge Suites |
| See our net rooms supply, signings, gross revenue and enterprise contribution KPIs on pages 62 and 63 and how the Board had regard for hotel owners as part of its consideration of strategic and operational matters on pages 100 to 101. |  | Visit www.owners.org for further information about the IHG Owners Association. |  |
| Communities The communities we are a part of both support and benefit from our responsible business approach and the commitments we have made to achieve a better and more sustainable future for everyone through our Journey to Tomorrow programme. | Natural disasters, such as a severe tropical storm in the Philippines and hurricanes in the US Continued economic impacts of the pandemic and geopolitical unrest, including cost of living challenges and food poverty Modern slavery and human rights issues Access to business skills development and local employment Climate change and other wider environmental challenges | Continued close collaboration with international and local charities and NGOs, such as CARE International and American Red Cross Industry collaboration on human rights and labour conditions in specific markets Giving for Good month: a programme of activities and employee volunteering days Collaboration with local education providers and community organisations, as part of our focus on offering skills building and training opportunities | Support for relief efforts around the globe and for our colleagues and their families through our Colleague Disaster Relief Assistance Fund Support of the Global FoodBanking Network that operates across 47 countries 7,400+ people trained and mentored through our IHG Academy programme in 2022 IHG Skills Academy available across more than 90 countries More than 57,000 hours of colleague volunteering dedicated to communities during Giving for Good month Teamed up with Tent Partnership for Refugees in the US to provide refugees with skills and jobs |
| See our IHG Academy KPI on page 65, and Responsible Business Committee Report on pages 110 and 111. |  | Visit www.ihgplc.com/responsible-business for further information on our community commitments. |  |
| People Delivery of our purpose to provide True Hospitality for Good and the strategic priorities that drive future success relies on our people and our ability to maintain and evolve an engaged, diverse and inclusive culture where careers can grow. | Appeal of working in the hospitality industry during and following the pandemic Employees wishing to build long and successful careers at IHG IHG's approach to DE&I Demand to provide an intuitive user experience for colleagues and employees on our HR systems | Launched our Room to Grow week, a series of events and resources to champion personal and professional development Employee engagement survey Invested in core HR and learning technology platforms Voice of the Employee feedback sessions with the Board ERGs representing ethnic minorities, gender, LGBTQ+, disabilities and other employees Quarterly performance, development and wellbeing check-ins | Continued prioritisation of DE&I commitments, including conscious inclusion training and refreshed DE&I policy IHG accredited as a Kincentric Global Best Employer Increased focus on recruitment and talent development at hotel and corporate levels Established regular contact with staff to promote mental health care, supported by global webinars and video series Moved into our new Global Headquarters in Windsor, UK |
| See our employee engagement KPI on page 65, how the Board had regard for people in board and remuneration decisions on pages 101, 114, 117, 123, 124 and 126, Voice of the Employee disclosure on page 111, and statement on employee engagement on page 236. |  | Visit www.ihgplc.com/responsible-business for further information about our people commitments. |  |

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# Our culture

Our culture sets the tone for how we do business and drives forward our purpose of providing True Hospitality for Good.

## Our structure and governance

Led by the Board and Executive Committee our values underpin our behaviours and business ethics, and guide how we deliver our strategy, make decisions and live our purpose.

Do the right thing

Show we care

Aim higher

Celebrate difference

Work better together

![img-0.jpeg](img-0.jpeg)

**T**he long-term success of IHG is shaped by a number of interdependent factors, including our purpose, the effectiveness of our strategy, and the resilience of our business model. Underlying all of these is our strong workplace culture, which is aligned with our reputation as a well-governed, trusted and ethical company.

IHG's approach to business, including our structure and governance, risk appetite, controls and systems, workplace environment, behaviours, values, and policies (including our Code of Conduct), drives our culture. Accordingly, understanding these aspects of our business is critical to understanding how we deliver on our strategic priorities, risk management, and KPIs.

## Our structure and governance

IHG's Board has overall responsibility for ensuring that our culture and ways of working are aligned with our purpose and drive our strategy. Throughout the year, the Board and its Committees review metrics, reports and scorecards, and receive updates and presentations, on the delivery of our strategic priorities, all within the context of our culture and governance. They challenge and support Senior Leaders, particularly where there is a need to adapt policies and initiatives, to ensure the continued alignment of strategy and culture.

The Board delegates day-to-day responsibility for setting and embedding Company culture to the CEO who, together with the Executive Committee (EC), sets the tone from the top in relation to attitudes and behaviours to create an open and honest workplace environment, empowering employees to give feedback and freely ask questions about matters that concern them, such as during the CEO's quarterly, global all-employee calls. The EC is responsible for executing the Group's strategy, and keeping the Board informed of the operation of the business and workplace culture.

IHG's hotel development and operations are organised on a regional basis (Americas, EMEA and Greater China) and are supported by global functions in the key areas of Marketing, Commercial & Technology, Finance, Human Resources, Corporate Affairs, and Business Reputation and Responsibility.

Management of the regional and global teams is organised into leadership teams, who are responsible for executing IHG's strategic priorities in a manner that aligns with the Group's culture and values. Decisions on hotel developments and capital expenditure go through the appropriate deal approval and expenditure committees.

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The Group operates a Global Delegation of Authority Policy, which sets out financial commitment and expenditure approval controls. Commitments over specified thresholds or for certain types of proposals require approval from the Group's Capital Committee, which reports into the Executive Committee.

The Group's corporate legal structure is comprised of around 383 subsidiaries worldwide. These entities provide the legal framework required to support the Group in making individual contracts and commitments.

![document icon]() Information on the Board's monitoring and assessment of our culture is included on page 101.

#### Risk appetite, controls and systems

Our risk appetite and tolerance is continually reviewed by the Board in relation to the Group's pursuit of strategic and business objectives. While our strategy does not consciously expose any of our assets to significantly heightened risk, the choices we make aim to balance priorities and resources to either actively exploit current advantages or address current disadvantages versus a range of competitors, and meet stakeholder expectations. The Board considers the portfolio of uncertainties that we face, and whether our allocation of resources and the pace of initiatives used to build enterprise capability create any imbalance or exposure to other risk areas. It considers the impact of macro-external factors, including the war in Ukraine, inflationary pressures, as well as ongoing industry recovery from the pandemic.

Our risk appetite is cascaded through our values and behaviours, our Code of Conduct, Delegation of Authority and other global policies, and how we set out goals and targets, and is further reinforced by frequent leadership communications to guide behaviours and set priorities.

We are committed to a framework of monitoring and assurance processes in relation to our initiatives and policies, reviewing whether they have operated within acceptable risk tolerances where priorities have shifted or additional actions were required. Board and Committee agenda topics allow the Board to identify and discuss the nature and extent of principal (and emerging) risks, and how risk management arrangements have adapted where required.

![document icon]() See our Governance pages 99, 106 and 107.

#### Workplace environment

With the world shifting to hybrid working, we took steps to create more flexible workspaces that support employees in adopting a balance of remote and office working and the delivery of IHG's priorities. In December 2022, we moved into our new global headquarters in Windsor in the UK - a modern, creative and sociable working environment equipped with the latest technology to bring employees together at the right time and help them get the most out of their days in the office. We also refurbished our Americas headquarters in Atlanta in the US to create a more inviting environment for employees to connect and collaborate.

Throughout 2022 we provided cyber-security training to support hybrid working and improve resiliency against cyber threats. Topics included phishing, accessing systems securely while working remotely, and the secure transfer and storage of data. In recognition of ever evolving cyber threats, we also continued to enhance controls and monitoring over IHG systems to remain vigilant regarding the security of Company information.

![document icon]() See our people disclosures on pages 26 to 33, and key matters discussed by the Board on page 101.

#### Our behaviours

Our behaviours - Move fast, Solutions focused, Think return and Build one team - empower and inspire our employees to work in a way that supports our purpose and strategic priorities. Underlying these behaviours are our Code of Conduct and related policies, all of which influence how we interact with our stakeholders. By role modelling our behaviours, IHG's leaders create an environment that encourages rapid decision-making that supports our growth aspirations, within a framework of due diligence and assurance processes that ensures we continue to operate responsibly.

During the year, a series of Next Talk events were led by Executive Committee members across the organisation, to deepen understanding of the link between our behaviours and strategy. More than 2,500 employees joined each session, with positive feedback from them.

#### Code of Conduct and related policies

IHG's Code of Conduct (Code) is the framework for how we do business at IHG, and underpins our strategy and commitment to providing True Hospitality for Good. Our key principles and policies are included in the Code, which enables employees and colleagues working in IHG corporate offices, reservation centres, managed, owned, leased, and managed lease hotels to make the right decisions, in compliance with the law and IHG's ethical standards.

Included in the Code is an overview of our values, reporting concerns framework and Group policies, including those relating to human rights, respect in the workplace, diversity, equity, inclusion and equal opportunities, accurate reporting, information security, anti-bribery and corruption, and the environment. It also provides guidance on where to go if colleagues have a concern and need further help.

The Board, Executive Committee and all colleagues working in IHG corporate offices, reservation centres, managed, owned, leased, and managed lease hotels must comply with the Code. We expect those we do business with, including our franchisees, to uphold similar principles and standards.

![img-1.jpeg](img-1.jpeg)

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# Our culture continued

The Code is reviewed and approved by the Board on an annual basis, and is supported by annual e-learning requirements. In 2022, we developed and launched a new Code e-learning module to support updates to the Code. In the coming year, we will continue to enhance our engagement and measurement approaches, and provide additional guidance to highlight key themes. In addition to our Code e-learnings, we monitor and assess other aspects of our culture through a variety of methods, including direct engagement, employee engagement surveys, tracking of e-learning completion and our confidential reporting hotline.

Embedded in the Code are several key policies and principles set forth in detail below. Other areas of the Code, such as our DE&I Policy, and human rights and modern slavery commitments, are outlined on pages 31 and 33. Initiatives to respond to legal, regulatory and ethical compliance risks are on page 49.

![document icon]() IHG's Code of Conduct is available in 14 languages on the Company's intranet and www.ihgplc.com/en/investors/corporate-governance/code-of-conduct

## Speaking up

A core component of our people culture is respect in the workplace, whether it be relating to a colleague, guest or anyone else. IHG has zero-tolerance to any form of discrimination, harassment or bullying, in line with our Respect in the Workplace Policy. While we uphold our responsibility to behave ethically and protect IHG's reputation, it is possible that in limited instances, a colleague may act in a way that conflicts with the principles set out in the Code. Guidance is given to report concerns directly to line managers, supervisors or local Human Resources representatives. For instances where it is more appropriate, a confidential reporting hotline and online reporting facility is available and globally advertised. Concerns can also be reported to the Head of Risk and Assurance or the General Counsel and Company Secretary. The Board routinely review summaries of reported concerns and ensure processes are in place for investigations and follow-up.

## Safety and security

IHG is committed to providing a safe, secure and healthy environment for all colleagues, guests and visitors. All operations must comply with all applicable health, safety and security laws. Beyond compliance with the law, IHG works to identify further improvements to the way safety and security risks are managed, and has mandatory Brand Safety Standards in place for all hotels globally to drive consistency in this area. Initiatives to respond to safety and security risks are on page 51.

## Bribery and corruption

IHG is committed to operating with integrity. Bribery and any form of financial crime, including improper payments, money laundering, violations or circumvention of economic and trade sanctions and tax evasion or the facilitation of tax evasion, are not permitted under any circumstances. This also applies to any agents, consultants and other service providers who do work on our behalf.

Our Anti-Bribery Policy sets out our zero-tolerance approach and is applicable to all Directors, Executive Committee members, employees and colleagues in managed, owned, leased, and managed lease hotels. It is accompanied by anti-bribery content in our mandatory Code of Conduct e-learning module. Our Gifts and Entertainment Policy and guidance further support our approach in this area.

To continue to enhance our anti-bribery programme and in line with best practice, a Group-wide bribery and corruption risk assessment was commenced in 2021 with the assistance of specialist external counsel. The objective was to ensure that IHG's key bribery risks continue to be identified and addressed. The assessment concluded in 2022, with work ongoing to address the findings and evolve IHG's programme under the leadership of the Ethics and Compliance team. This work included approval by the Board of updates to the Group's Anti-Bribery and Gifts and Entertainment Policies. Initiatives to respond to legal, regulatory and ethical compliance risks are more broadly discussed on page 49.

IHG is a member of Transparency International UK's Business Integrity Forum and participates in its annual Corporate Anti-Corruption Benchmark. Each year, the results from this benchmark help to measure the effectiveness of our anti-bribery and corruption programme and identify areas for continuous improvement.

## Handling information responsibly

We are committed to ensuring that guests, loyalty programme members, colleagues, shareholders, owners and other stakeholders trust the way we manage data. As part of our privacy and information security programmes, we have standards, policies and procedures in place to manage how personal data can be used and protected. Our e-learning training for employees on handling information responsibly is a mandatory annual requirement, and covers topics such as password and email security, using personal data in accordance with our policies and privacy commitments, how to work with vendors and transferring data securely.

In addition to the cyber security awareness training mentioned on the previous page, we held tabletop exercises to practise our ability to detect and respond to potential security events, such as ransomware and supply chain attacks. We continue to develop our privacy and security programmes to address evolving requirements and take account of developing best practice. The Board regards cyber security as a critical business discipline and it regularly receives updates on the Group's cyber security processes and controls.

![document icon]() See initiatives to respond to cyber security and information governance risks on page 47.

## Section 172 statement

Details of how the Directors have had regard to the matters set forth in Section 172(1)(a) to (f) of the Companies Act 2006 is provided in the Section 172 statement on pages 100 to 101.

Further details can be found throughout the Strategic and Governance Reports, including in our key stakeholder engagement disclosures on pages 38 and 39.

## Non-financial information statement

Non-financial information, including a description of policies, due diligence processes, outcomes and risks and opportunities can be found as set out below. Internal verification and disclosure controls apply to all the information covered in these areas.

- Impact of the Company's activities on the environment on pages 35 to 37, 54 to 61, and 237 and 239
- Social matters on pages 33 and 34
- Anti-corruption and anti-bribery matters on page 42
- Employee matters on pages 26 to 33, 101, 114, 117, 123, 124 and 126
- Respect for human rights on page 33
- A description of the Group's business model on pages 10 to 13
- The Group's principal risks on pages 44 to 51
- The Group's KPIs on pages 62 to 65

![document icon]() See our relevant policies at www.ihgplc.com/responsible-business

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## Responsible procurement

**G**rowing our business innovatively and sustainably, while working to the highest standards of business conduct, plays a crucial role in our new supplier selection process and in how we continue to work with our existing suppliers. We are committed to working with suppliers who not only meet our minimum ethical standards but also share the values of our responsible business plan - Journey to Tomorrow.

### What we do already

Our supply chains are split between corporate and hotel spend. Hotel procurement predominantly occurs at the local hotel level because our hotels are primarily owned by independent third-party franchisees responsible for managing their own supply chains. In some key markets, the IHG Procurement team has created procurement programmes for certain goods and services related to building, opening, renovating, and operating a hotel, which hotels can leverage. Our corporate supply chain covers expenditures such as technology, office buildings and facilities management, and professional services.

To help manage and monitor our corporate supply chain, an enterprise procurement system is in place to oversee third-party corporate expenditures. Several global technology and outsourcing providers have been identified as strategic supplier relationships due to the critical nature of their services. IHG engages with these suppliers to harness innovation, provide customer service, manage risk, and promote value realisation. We annually review this list of strategic suppliers and their delivery of our business objectives.

To ensure that suppliers operate with the same integrity and respect as we do, IHG requires new corporate suppliers to confirm their acceptance of the Supplier Code of Conduct (Supplier Code) at the onboarding stage (or demonstrate that they have equivalent policies in place). It is a contractual requirement for centrally negotiated programmes in which our hotels can purchase. Recommended guidance is also provided to managed and franchised hotels when purchasing locally. At the end of 2022, 100% of new suppliers had signed the Supplier Code.

Corporate and hotel supply activities are driven by our Procurement function and guided by our responsible business agenda, with oversight from the Board’s Responsible Business Committee.

### Supporting Small Businesses

IHG complies with statutory reporting duties on payment practices and performance and is committed to supporting smaller suppliers - striving to pay suppliers with fewer than 50 employees within 30 days, where centrally accounted for across our UK corporate, managed, owned, leased and managed lease hotels.

### What we achieved in 2022

We focused on implementing responsible procurement through digital solutions and advancing our supply chain risk assurance programme. We also continued sourcing sustainable solutions, increased collaboration with diverse suppliers and improved employee awareness of responsible procurement.

Recognising that the impact of supply chain risk is not only an issue for Procurement but also prevalent on management agendas across IHG, we reviewed and refreshed the objectives of our Supply Chain Risk Council. The Council focuses on ensuring cross-functional collaboration, reviewing IHG’s profile of supply chain risks and corresponding methodology, and identifying emerging threats. This year, macroeconomic events have exacerbated disruption to global supply chains, which have required adjustment to our approach to goods and services sourced from the impacted geographies. We evaluated affected supply across corporate and hotel spend areas and identified alternative solutions where possible. Furthermore, we provided forward-looking perspectives on commodity price inflation in food and energy to our franchisees to enable better local purchasing decisions.

This year we have implemented several digital solutions to support responsible procurement, which have been integrated into our spend intelligence tool, and training has been delivered to the Global Procurement team. The solutions provide better visibility of IHG’s focus areas including labour practices, sustainability, and financial risks. These are helping to identify new opportunities, including diverse suppliers, and assisting the mitigation of supply chain disruptions.

For example, we have partnered with EcoVadis, a global leader in business sustainability ratings, to assess supplier risk and sustainability performance. To date, we have requested 92 suppliers globally to participate in the EcoVadis

ESG risk assessment. Insights from the scorecards will be used to understand supplier performance, drive improved scores, and identify ESG risks in our supply chain.

This year, we engaged with high-performing suppliers in sustainability and the circular economy who provide carpeting, showers, furniture, bedding, mattresses, flooring, and air travel to our hotels and corporate functions. This helped Procurement gain valuable insights into the sustainability journey of our suppliers, discuss opportunities for collaboration, and to build stronger relationships with our top-performing suppliers.

Textiles are a substantial supply chain commodity, given that they are widely present in our hotels. This year we have worked on a project in collaboration with our Ethics and Compliance team and a third-party consultancy to conduct a risk assessment of two key textile suppliers in our US hotel procurement programmes. The risk assessment findings will inform the evolution of our supply chain due diligence approach. We also continued working with CARE International UK following a workplace gender analysis in 2021, and this year CARE hosted an interactive workshop with internal stakeholders to review the findings and recommended actions. In 2023 we will continue to perform detailed supply chain risk mapping.

### What’s to come

We will continue our goal to increase the consideration of sustainable, diverse and resilient suppliers. We will also explore how sustainability assessments can be incorporated into our due diligence processes for new suppliers and pilot additional risk intelligence tools.

We will roll out our updated Procurement Policy, which will include additional guidance on our commitment to sustainability and diversity in our supply chain. A review of the Supplier Code commenced in 2022, informed by a benchmarking exercise, and an updated Supplier Code will be implemented in 2023.

We will also continue to support the implementation of sustainable solutions to advance the progress of our Journey to Tomorrow commitments and build hotel supply chain solutions for energy conservation measures to support IHG’s decarbonisation agenda. Additionally, we will develop an approach to segment our suppliers based on emissions profiles to identify focus areas.

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# Our risk management

## The Board's role in risk management during 2022 - constantly evolving our resilience in a volatile environment

The Board is ultimately accountable for establishing a framework of prudent and effective controls, which enable risk to be assessed and managed, and is supported by the Audit Committee, Executive Committee and delegated committees. Our governance framework and Committee agendas enable Board members to request and receive information on risk from the Executive Committee and Senior Leaders, together with other internal and external sources. New Board members are fully briefed on current risk management discussions as part of their induction.

The delivery of IHG's individual strategic objectives and overall ambition requires us to continuously balance opportunities for strategic advantage or efficiency with the need to remain resilient and agile in the short and longer term. The Board considers and defines its risk appetite and tolerance as an active part of determining and monitoring our strategic priorities. We describe the Board's approach to risk appetite on page 41, and this has also been a regular topic for consideration by management during 2022. This recognises the trade-offs inevitably required to achieve our growth ambitions between responding to individual uncertainties and the need to balance interests of multiple stakeholders, for example, how teams allocate resources and management attention. We have faced significant individual and accumulated uncertainties during the year from external events and IHG initiatives which management has reacted to and built into management processes. In order to enhance our risk management processes, we routinely look to apply learnings to future resilience and planning.

The description of the 2022 focus areas and activities for the Board and its delegated committees (see pages 90 to 138) demonstrates active ongoing consideration of emerging and evolving uncertainties across a wide range of topics and timeframes. The Audit Committee reviews the principal risks and the appropriateness of our risk management system to address these, and also considers risk and control implications of strategic topics reviewed by other committees, for example, third-party risk management and future assurance requirements for ESG data. Across the year, this discussion of risk, supported by the Risk and Assurance team, allows for review of the overall level of risk within the business, our resilience to individual and aggregated uncertainties, and implications for strategic decision-making.

More detail on formal risk appetite and tolerance is provided elsewhere in this report. For example, our appetite for financial risk is

described in note 23 to the Group Financial Statements (see pages 199 to 203), and our approach to taxation on page 69.

## How we think about risk in relation to the achievement of our strategic objectives

Like many companies, we face an unprecedented context in 2023 which includes multiple realities from outside IHG, and other inherent execution risks relating to our own internal initiatives (for example, the delivery of complex technology innovation such as the evolution of our mobile app - see page 26). During 2022 and coming out of the pandemic, we have reviewed the focus and balance of our principal risk profile, shifting from describing specific downside events or failures of control to articulating the broader uncertainties we face in delivering our objectives. These often present both opportunity and threat at the same time and require considered decision-making to achieve the best overall outcome for our various stakeholders. By evolving in this way, we aim to further reinforce ownership and enhance discussion of attitudes to risk and uncertainty within key decisions.

Certain downside events shown in prior years, including safety and security and financial control incidents, have therefore been integrated into a rearticulated uncertainty relating to our operational resilience. The previous risks relating to macro external factors and investment effectiveness have been interwoven into several of the newly defined uncertainties. We have also considered specific factors such as digital security or climate change as part of how we articulate other uncertainties, for example the evolving preferences of our owners and guests.

We continue to consider the trend (inherent impact and/or likelihood) and potential speed of impact of individual risks, comparing the level of uncertainty we face as we move into the next three-year plan relative to what we experienced in 2022. This means factors can move around the grid if they become relatively more dynamic or rapid and allows us to identify where management teams may need to intervene or course-correct to respond in 2023 and manage individual and the overall portfolio of risks to an appropriate net level.

For ease of reference, a consolidated trend and speed of impact for each uncertainty is mapped in the grid, with further detail on the following pages.

## How we consider emerging risks

We recognise that our business model means we often face long lead times to effect change working with the owners of our hotels and therefore remain vigilant to emerging risks which could impact the achievement of our stated strategic priorities and also our longer-term growth, competitiveness, viability and sustainability.

## Realities for 2023-25 ...

We are monitoring a range of external and internal factors:

- • Macroeconomic pressures - recession inflation, rising interest rates, energy, and other cost of living pressures
- • Geopolitical tension and conflict, heightening cyber threats and supply chain disruption
- • Complex IHG initiatives or investments
- • Growth into new territories and new brand and business models
- • Evolving third-party relationships
- • Uncertain central bank policies and increasing development or financing costs for owners
- • Aggressive strategies from existing and new competitors
- • Pace of digitalisation
- • Talent demands or expectations for compensation
- • Scarcity of labour or pressure on labour relations in certain markets
- • Colleague burnout
- • Operational efficiency and effectiveness opportunities
- • Managing in a permanently hybrid environment, including wellbeing
- • Onerous and increasing legal, ethical or regulatory and compliance developments
- • Increasing ESG regulation or stakeholder expectations relating to climate
- • Ongoing Covid-19 disruption

We think about emerging risks as:

- new risks, or existing risks in a new context, when the nature and value of the impact is not yet fully known or understood; and

There are emerging elements in many of our principal risks. These factors include shifts in consumer demand and travel patterns, international and domestic real estate ownership, digital transformation across all areas of the guest journey, workplace expectations of current and future IHG colleagues and several trends linked to our ongoing assessment of longer-term risks within our TCFD analysis. These factors will be considered as we develop and model future resilience, using the TCFD scenarios we are developing as a starting point.

Specific emerging trends are considered through deep dives with a smaller audience including the CFO and Head of Strategy and the General Counsel, supported by the Risk and Assurance and Group Strategy teams.

![document icon]() See also pages 14 to 15 for more detailed discussion of trends impacting our industry.

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# Principal risk - assessment of relative trend and speed of impact

![img-2.jpeg](img-2.jpeg)

# Principal risks descriptions

# Inherent risk trend

- Dynamic/Rapid
- Dynamic/More gradual
- Stable/Rapid
- Stable/More gradual

# Risk impact - link to our strategic priorities

- Build loved and trusted brands
- Customer centric in all we do
- Create digital advantage
- Care for our people, communities and planet

# How we identify, discuss and escalate risks, including emerging factors, within IHG

The Board oversees our culture through which employees are encouraged to learn and work at pace, focus on solutions and take the right risks. Management teams across IHG are highly aware of the challenges our current industry context creates and that our ambition and strategic priorities inevitably expose us to uncertainty in the short, medium and longer term. Our confidence in achieving our priorities is reviewed regularly:

- at Executive Committee meetings as part of decision-making, financial planning and strategy review, including consideration of emerging factors through open roundtable discussion;
- by first-line management teams with day-to-day responsibility for identifying and managing risk within key decisions, programmes and transactions and escalating where appropriate; and
- by second-line management functions which provide specialist expertise, support, monitoring and challenge to decision-makers on risk-related matters.

The Risk and Assurance team works with Group Strategy and other first- and second-line teams to maintain and evolve their risk profiles using the same format as the overall principal risk grid. These discussions consider how risk trends, shifts in risk appetite or

tolerance and/or changes to risk management maturity may impact future decision-making and whether any other leadership interventions may be required. These also enable teams to identify interdependencies across IHG, for example the consideration of talent risks within other risk profiles. Consolidated insights are reviewed by the Executive Committee and the Audit Committee every six months, and we also consider risk continuously as part of key decisions.

# How we manage our principal risks and uncertainties across the organisation and remain resilient to unanticipated events

Our risk management and internal control system evolves and adapts constantly, as an integral part of how we run the business and make ourselves overall more agile and responsive to unanticipated events. It engages multiple specialisms to operationalise our attitudes to risk at every level of IHG, enabling us to move at speed, balance the many uncertainties at play simultaneously within decisions and achieve an appropriate level of resilience. We adopt a tailored approach to the management of individual risks and do not aim to mitigate each one to the same level.

During 2022, we have observed themes of risk management focus which each relate to, and provide mitigation for, many of the risks shown on the following pages. These should be read in conjunction with detail elsewhere

in the Strategic Report which helps position IHG overall to respond to future opportunities and risks in delivering our ambitions, including strengthening our organisation through key strategic investments (pages 19 to 37), engaging proactively with stakeholders (pages 38 and 39) and by reinforcing our strong workplace culture (pages 40 to 43).

# Culture and leadership

We have strong 'tone from the top' on the importance of effective risk management, evidenced through 2022 by actions including:

- Policy management has been enabled by dedicated roles in key teams and a global policy approved by the Board and managed by Ethics & Compliance to align policy development, communication and compliance monitoring with good practice.
- We have strengthened risk leadership and oversight arrangements by working with risk forums to align their purpose, scope and membership to avoid confusion with other first- and second-line accountabilities and to provide advice and challenge on key indicators used to track risks.
- Several teams have also maintained strong communication on key risk topics, including cybersecurity phishing training, the importance of maintaining strong financial controls, inclusion and wellbeing, and our updated Code of Conduct training.

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# Our risk management continued

## Processes and controls

Many teams reviewed their risk assessments in 2022, including the Group-level cyber risk assessment to identify if IHG's highest valued assets are operating within security risk tolerances, a labour rights risk assessment focused on the UK market, a Group-level anti-bribery and corruption assessment with external support, a privacy programme maturity assessment and an assessment of the impacts of BEIS on our financial governance arrangements.

Compliance process and control improvements have been implemented in various areas (for example, information security policy exception management, supply chain due diligence processes and privacy management, alternative compliance arrangements for specific safety risks) while technology investments to support risk management have been made for supplier diversity and sustainability tools, a privacy management tool and a new risk & compliance measurement tool to replace ageing technology.

## Monitoring and reporting

Leadership teams have also evolved monitoring and reporting arrangements, better defining geopolitical intelligence requirements and, in some places, developing dashboards for future reporting or discussion of key risk and control indicators, although there is room for further maturity in this area (building on recent experience of refined cyber risk indicators).

With the support of Risk and Assurance, teams have identified opportunities to integrate risk management strategies. For example, collaboration between Supply Chain and Ethics and Compliance teams on third-party due diligence, between Information Security and Privacy teams on personal data training for HR colleagues, and across Threat Intelligence, Safety and Security and Resilience teams to develop scenario testing for hypothetical major security incidents. Our insurance renewal cycle has also directly engaged multiple teams to present on risk mitigation strategies in underwriting market presentations during 2022.

We have also evolved our crisis management framework to anticipate and coordinate incidents during the year, including the war in Ukraine and major events such as the FIFA world cup. The framework was also applied to an unauthorised systems disruption (see below). Teams continue to test crisis preparedness and scenario planning, including tabletop exercises and development of playbooks.

## How senior management and the Board obtain assurance in our risk management and resilience

The Governance section outlines focus areas and activities which enable the Board and its delegated committees to receive management updates on risks within key decisions. In addition, pages 47 to 51 explain how senior management and the Board are able to source ongoing assurance on our risk management and internal control system during the year and how actions may impact future risk levels.

The Risk and Assurance team reports regularly on developments in oversight of risk management. The third-line Internal Audit team has worked during 2022 with the Audit Committee to consider existing sources of assurance, for example, from direct reporting or attestations provided by first- and second-line management teams on risk and control matters. The Internal Audit plan identifies where independent assurance may be valuable, taking into account the maturity of management's own reporting, and acceptable risk tolerances. Internal Audit also monitor the confidential disclosure channel to identify any emerging trends requiring management and/or Board intervention.

The Audit Committee considers future assurance needs within the Internal Audit planning process and has also debated potential assurance considerations for non-financial data disclosures, with incoming regulations in many territories. We plan to develop an assurance roadmap for carbon data during 2023, including where this can be obtained internally on controls and when external independent input may be necessary in the coming years. This will also inform wider conversations about the Audit and Assurance Policy likely to be required by the UK Government.

![document icon]() This section should be read together with the rest of the Strategic Report, Governance on pages 90 to 138, the going concern statement on page 239, and Risk Factors on pages 240 to 245.

## How we adapted to manage cyber risk during the criminal, unauthorised access to our technology systems

No company is immune to cyber risk, and we remain vigilant to attacks, continuously learning and adapting our security response to evolving risks.

As we explained in our 6 and 29 September 2022 Stock Exchange Announcements, parts of our technology systems were subject to unauthorised activity, causing disruption to our booking channels and other applications. In line with our crisis management framework, teams across IHG came together to evaluate and address the incident. No evidence of unauthorised access to systems storing guest data was identified.

On identifying the disruption, Commercial and Technology, with direction from legal counsel, led the incident response with support from Information Security, Global Communications and Risk and Assurance teams. This team met frequently, considering technology, security and communications developments, and was also bolstered with representatives with responsibility for guest products and booking platforms and global marketing, to enable close consideration of impacts on operational services and channels and management of brand impacts and other reputational risks. External specialists were also engaged to investigate the incident.

The Executive Committee provided Group-level incident coordination, considering prioritisation of resources to address the range of stakeholder needs and our approach to stabilisation, recovery and communications and potential risks to other corporate and hotel initiatives. As the incident management proceeded, it was possible to de-escalate our crisis posture progressively by reducing the frequency of extraordinary meetings, while maintaining focus on owner and partner queries and providing assurance over medium- and longer-term remediation activities.

The Board was also engaged throughout the incident response.

![document icon]() See page 212 for further details regarding the financial impact of the incident.

46

IHG | Annual Report and Form 20-F 2022

Strategic Report

**In pursuing our ambition, we face inherent uncertainties relating to ...**

**Owner preferences for or ability to invest in our brands**

**Executive Risk Sponsor:**
**Global Chief Customer Officer and Regional CEOs**

Link to strategy:

Trend:

**Data and information usage, storage, security and transfer**

**Executive Risk Sponsor:**
**Chief Commercial and Technology Officer, Chief Customer Officer and EVP General Counsel and Company Secretary**

Link to strategy:

Trend:

**Why these uncertainties are important to the achievement of our strategic objectives over the next two to three years**

Our growth ambitions require us to take risks to drive returns for our existing and potential owners. Our owners' choice to work with IHG is dependent on our ability to build a portfolio of loved and trusted brands with a track record in delivering returns, while also continuing to invest behind digital advantage, customer centricity and caring for our people, communities and planet.

Driving owner returns in an uncertain macroeconomic and inflationary environment will expose us to risk. For example, we need to pursue opportunities in relation to hotel building and renovation and hotel opening projects and also in executing initiatives such as loyalty transformation across our open hotels and supply chains. There is also growing scrutiny of IHG's responsibilities as a franchisor or manager of our brands (including other aspects of our strategic agenda such as decarbonisation).

These opportunities need to be balanced with risks associated with increasingly complex deal structures with owners, uncertainties as we expand into new markets and a need to risk our own capital to pursue inorganic growth or to incentivise deals in key locations for key brands.

If we fail to manage this risk effectively, we will lose competitiveness and may not realise the opportunities to grow our brand footprint.

By its nature, our business involves managing large volumes of data of guests and loyalty members globally. In addition, our strategic objectives of achieving digital advantage and customer centricity will transform how we use our commercial and marketing data to improve and personalise the customer experience, grow loyalty and empower our owners to make better decisions.

This transformation involves us pursuing opportunities with cloud-based applications, storage and partnering with third-party specialists and exploiting technology advancements and innovation requiring the use of personal data and artificial intelligence. The opportunities presented by this ambition are consciously balanced with the inherent exposures our digital footprint presents to data, information security and privacy-related threats, including threat actors (including criminals, third parties and inherent colleague risk) and the need to use data appropriately and responsibly, including in response to changing regulations. This posture is possible because of investments in recent years in cybersecurity and information governance and the maturing of our risk management system, including our response to the recent systems disruption.

If we fail to manage this risk effectively, we face operational, financial and reputational impacts to the range of high-value assets we are responsible for (including critical systems and employee, guest and other sensitive data). In addition, if the data we use is not accurate, this may impair decision-making and/or lead to lack of trust or satisfaction by our guests, loyalty members or owners.

**How senior management and Board obtained assurance in our risk management and resilience in 2022**

The Board considers reporting and insight from management on:

- individual and brand category performance;
- loyalty and digital and responsible business strategies and investments;
- initiatives to strengthen owner returns;
- impacts of macro events (including the war in Ukraine) and impacts on specific markets;
- performance and prospects for key areas of capital investment, including controls over growth decision-making and post project reviews of investment effectiveness;
- external insight where valuable (for example, on investor perceptions); and
- competitor activities.

The Executive Committee also reviews these areas frequently and has obtained reports on initiatives, including to strengthen owner returns and to enhance owner communications via a new portal.

The Internal Audit plan provides independent assurance on initiatives supporting owner returns and financial processes relating to fee collection.

The Board considers reporting and insight from management, including:

- presentations on strategy for the delivery of our customer journey through technology and the refreshed loyalty programme;
- direct presentations from the Chief Information Security Officer, including on incident handling, which draw on external input on risk assessments and advice on specific topics;
- updates on the cyber insurance renewal strategy;
- second-line reporting on our privacy programme and policies for handling information securely; and
- specific updates on metric integrity, including review of ESG data principles and assurance arrangements, supported by third-party experts.

The Executive Committee monitors the execution of our data and analytics strategy and was directly accountable for overall coordination of the response to the systems disruption that occurred in September 2022. An Executive Security Risk and Compliance steering committee also tracks key projects and risk and control indicators.

The Internal Audit plan includes independent focus on governance of both cybersecurity and data and information, including providing assurance on foundational controls at both corporate and hotel levels, within commercial and marketing plans and in relation to third-party data transfers.

**Key**

**Inherent risk trend**

Dynamic/Rapid

Dynamic/More gradual

Stable/Rapid

Stable/More gradual

**Strategic priorities**

Build loved and trusted brands

Customer centric in all we do

Create digital advantage

Care for our people, communities and planet

Our risk management

IHG | Annual Report and Form 20-F 2022

47

Strategic Report

# Our risk management continued

In pursuing our ambition, we face inherent uncertainties relating to ...

Our ability to deliver technological or digital performance or innovation (at scale, at speed, etc.)

Executive Risk Sponsor:
Chief Commercial and Technology Officer and Global Chief Customer Officer

Link to strategy:

Trend:

Global and local supply chain efficiency and resiliency

Executive Risk Sponsor:
Chief Financial Officer, Chief Commercial and Technology Officer and EVP General Counsel and Company Secretary

Link to strategy:

Trend:

Why these uncertainties are important to the achievement of our strategic objectives over the next two to three years

Managing our investment effectiveness and efficiency will be critical for our short- and long-term strategic priorities to deliver digital advantage and customer centricity and to build loved and trusted brands. Delivering our priorities will require us to pursue opportunities to innovate in booking technology and to maintain and enhance the functionality and resilience of our channel management and technology platforms (including those of third parties, on which we rely directly or indirectly), and to respond to changing guest and owner needs, which may evolve in an environment of macroeconomic uncertainty (including inflationary and labour pressures).

This means we consciously expose ourselves to uncertainty in this area, as the pace of innovation and competition in digital behaviours in the hospitality industry and wider society continues to accelerate. We need to respond rapidly to shifts and opportunities in the marketplace and to drive incremental revenue by focusing on the basics of pricing, inventory and booking flow optimisation.

If we fail to manage this risk effectively, we may not capitalise on opportunities to maintain or increase guest and owner preferences for IHG and its brands, and we may also reduce the resilience of ageing channel management and technology platforms (including those of third parties, on which we rely directly or indirectly).

Our ambitions, including to build loved and trusted brands which are consistently delivered around the world, expose us to risks associated with our global and hotel supply chains. We are increasing our interdependencies with third-parties to deliver both our commercial and technology strategy to create digital advantage and to source cost-efficient products from available markets to support our owners. See pages 22 to 24 for an outline of the procurement support we provide to our owners as part of our focus on customer centricity, for example enabling them to access and control costs for key hotel materials, and page 237 for details of our business relationships with suppliers, for example with Amadeus.

We are also exposed to wider macroeconomic uncertainties impacting supply chains, including geopolitical tensions, commodity price shifts and labour disputes, which may increase costs and impact availability for our owners. Our priority to care for people, communities and planet requires us to effectively manage third-party sustainability and ethical performance. We also need to remain vigilant to threats to information security across our supply chain. See pages 38 to 39 for details of management engagement with stakeholders during 2022, including with suppliers and supply chain considerations for other stakeholders, and the outcomes achieved. See also page 43 for our approach to responsible procurement.

If we fail to manage this risk effectively, this may impact the design, opening and operation of hotels, the ongoing effectiveness of our commercial channels and impact margins for our owners, as well as fees to IHG.

How senior management and Board obtained assurance in our risk management and resilience in 2022

The Board considers reporting and insight from management, including on:

- strategic choices for technology support across our customer journey and loyalty programmes;
- technology options to support gathering of ESG data;
- budget allocation, including post project reviews by finance teams of major capital investments; and
- information security strategy and risk profile.

The Executive Committee's agenda actively steers and monitors the pace of innovation and technology delivery including focus on mobile, loyalty and booking transformation and hotel technology.

The 2022 Internal Audit plan included focus on programme governance and the effectiveness of controls over expenditure and benefit delivery for critical commercial, technology and marketing initiatives. This has provided independent assurance in relation to overall programme management, tracking and financial governance controls, and delivery of initiatives at high pace across the hotel estate and within the loyalty transformation programme. The team also works closely to support and advise several programme teams in real time, including HR system changes.

The Board considers reporting and insight from management, including:

- consideration of third-party relationships within our digital and commercial strategies;
- review of supply chain risks associated with macroeconomic factors including within management reporting on our response to the war in Ukraine and general market updates;
- second-line presentations on our Responsible Procurement strategy to the Responsible Business and Audit Committees, including wider third-party risk management and internal control arrangements; and
- clarifications of risk management arrangements with presentations on new business models and relationships.

The Executive Committee reviews our operational risk posture in relation to key digital initiatives, including the transformation of hotel technology arrangements and our loyalty programme. The CEO and CFO meet with the Chief Procurement Officer to review supply chain strategy and risks, supported by a Supply Chain Risk Council, which draws on external insight where appropriate.

The Internal Audit plan provides independent review of third-party and contract risk management and control arrangements, for example relating to vendors or strategic suppliers engaged to deliver our loyalty programme, and to vendor sourcing and fee collection.

48

IHG | Annual Report and Form 20-F 2022

# Governance

- **90 Chair's overview**
- **91** Board and Committee membership and attendance in 2022
- **92 Our Board of Directors**
- **96 Our Executive Committee**
- **98 Governance structure**
- **99 Board activities**
- **100** Key matters discussed in 2022 and Section 172 statement
- **102** Our shareholders and investors
- **103** Director appointments and induction
- **104** Board development and effectiveness evaluation
- **105** Audit Committee Report
- **110** Responsible Business Committee Report
- **112** Nomination Committee Report
- **114 Directors' Remuneration Report**
- **137 Statement of compliance**

![img-0.jpeg](img-0.jpeg)

Hotel Indigo, Bath

![img-1.jpeg](img-1.jpeg)

![img-2.jpeg](img-2.jpeg)

![img-3.jpeg](img-3.jpeg)

Governance

IHG | Annual Report and Form 20-F 2022

89

Governance

Governance

# Chair's overview

![img-4.jpeg](img-4.jpeg)

**Since joining the Board in June and becoming Chair in September 2022, I have been reminded of the importance and value of strong governance structures and processes, particularly when operating in an unpredictable geopolitical and macroeconomic environment. I am therefore pleased to introduce the Governance Report, which sets forth how IHG's robust governance framework and strong culture ensure that the business continues to operate responsibly as it delivers against its key strategic priorities.**

Throughout 2022, the Board has continued to both challenge and support management, considering the impact of decisions on the interests of stakeholders and ensuring the appropriate balance between addressing short-term needs and achieving the Group's longer-term strategic objectives. For example, with the outbreak of the war in Ukraine, the Board liaised closely with management on the Group's response and impact on various stakeholders, keeping a particular focus on the support given to colleagues and the approach to engagement with owners when approving the decision to cease operating hotels in Russia.

Cybersecurity was also a principal feature on the Board's agenda throughout the year. The Board received regular updates on the Group's approach to cyber risk management and dedicated significant time to assessing management's response to the criminal unauthorised access to its technology systems.

Despite the challenges faced by the business, the Board remained focused on the Group's longer-term strategy. Growth opportunities featured prominently on the Board's agenda, with the Board pleased to support and approve the Group's long-term commercial agreement with Iberostar.

As IHG continues to grow at pace and evolve its business, it will remain important for the Board's governance framework to continue to guide not only IHG's growth agenda but also the manner in which IHG delivers on the environmental and social commitments set forth in our Journey to Tomorrow responsible business plan. As we do this, the Board will continue to keep the interests of our shareholders, hotel owners, guests, employees and other stakeholders at the forefront of the Board's decision-making and governance framework.

## Focus areas and activities

The Board had an active year in 2022 and a fuller description of its activities is given on pages 99 to 104.

In addition to the areas of focus already noted, the Board monitored the progress of the loyalty transformation programme, focusing in particular on how performance of IHG One Rewards would be monitored and measured, the competitive positioning of the programme and the need for continued innovation.

Alongside the evolution of our loyalty programme, progress in relation to the Group's technology initiatives, particularly those which support the customer journey such as the new IHG mobile app, and the Group's longer-term technology strategy continued to be regular areas of focus.

The Group's proposition to hotel owners also featured in the Board's activities throughout the year. The Board received updates on the strategic initiative to strengthen owner returns, including strategies developed to help reduce the costs to owners of building, opening and operating hotels.

The Board was also pleased to consider and approve additional shareholder returns, through the $500m share buyback programme announced during the year as well as approval of the final dividend for 2021 and the interim dividend at the half-year in 2022.

## Board composition

With my induction to the Board, we saw the retirement of Patrick Cescau as Chair, following completion of his nine-year term. During his tenure, Patrick played an essential role in driving IHG's strong culture of governance and reputation for doing business responsibly.

During the year we welcomed Byron Grote as Independent Non-Executive Director. Byron will assume the role of Audit Committee Chair from March 2023, succeeding Ian Dyson who will retire from the Board at the end of February 2023.

We also announced that Jill McDonald will retire from the Board at the end of February 2023, to be succeeded as Chair of the Responsible Business Committee by Graham Allan, the Senior Independent Non-Executive Director.

Patrick, Jill and Ian have all been an integral part of the success of IHG and its Board over their tenures, and I would like to again share our appreciation for their dedication and contributions to the Group.

Further details of the appointments of Byron and Graham, as well as other changes to the Audit Committee and Remuneration Committee announced in December 2022, are set out in the Nomination Committee Report on pages 112 and 113.

I am also proud to report that at the end of 2022, our Board exceeds the FTSE 100 Women Leaders Review target for women on a FTSE 100 Board, and once again, IHG not only meets, but exceeds, the target set by the Parker Review for at least one Director from an ethnically diverse background, with three ethnically diverse Directors.

## Committee activities

The Board delegates certain responsibilities to its Committees to assist in ensuring effective corporate governance across the business. During 2022:

- The Audit Committee focused on the Group's controls framework and risk management and resilience arrangements in relation to principal and emerging risks (see its report on pages 105 to 109);
- The Remuneration Committee focused on the revised Directors' Remuneration Policy and consultation with shareholders (see its report on pages 114 to 136);
- The Responsible Business Committee focused on progress against the 2022 responsible business priorities, which support the Company's Journey to Tomorrow responsible business plan (see its report on pages 110 and 111); and
- The Nomination Committee focused on the execution of Board and Committee succession plans (see its report on pages 112 and 113).

Further detail on the Group's governance structure is given on page 98.

90

IHG | Annual Report and Form 20-F 2022

Governance

### Board performance review

The Board made good progress on the agreed actions arising out of the 2021 internal Board and Committee effectiveness evaluations. In particular, the return to in-person Board meetings in 2022 allowed for more robust dialogue and engagement among Board and management on key strategic initiatives and emerging issues. The members of the Board were particularly pleased to be able to return to IHG's offices in the UK and the US to engage with management and employees, and we look forward to similar engagement at the Company's new global headquarters in Windsor, UK, in 2023.

As I formally started as Chair in September 2022, the Board considered it appropriate to conduct an internal evaluation of the Board's performance in 2022, with a view to undertaking an external evaluation exercise in 2023, which the Board considers would provide more meaningful and productive insight. Further details of the internal evaluation can be found on pages 103 and 104. Individual Director feedback assessments were also conducted, details of which can be found on page 104.

### Compliance and our dual listing

IHG continues to operate as a dual-listed company with a premium listing on the London Stock Exchange and a secondary listing on the New York Stock Exchange. Under the UK listing rules, we are obliged to make a statement as to how we have applied the principles of the

UK Corporate Governance Code (the Code), and under the NYSE listing rules, as a foreign private issuer, we are required to disclose any significant ways in which our corporate governance practices differ from those of US companies. To ensure consistency of information provided to both UK and US investors, we produce a combined Annual Report and Form 20-F.

Our Statement of compliance with the Code is on pages 137 and 138. A summary outlining the differences between the Group's UK corporate governance practices and those followed by US companies can be found on page 255.

### Looking forward

In 2023, the Board will continue to ensure that robust governance structures and processes are in place to enable the Group to focus on achieving its long-term strategic objectives while doing business responsibly and keeping stakeholder interests in mind.

**Deanna Oppenheimer**

Chair of the Board
20 February 2023

### Board and Committee membership and attendance in 2022

|  | Appointment date | Committee appointments | Board | Audit Committee* | Responsible Business Committee | Nomination Committee | Remuneration Committee |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Total meetings held |  |  | 8 | 5 | 4 | 5 | 5 |
| Chair |  |  |  |  |  |  |  |
| Patrick Cescau b, c | 01/01/13 | N | 4/4 | - | - | 3/3 | - |
| Deanna Oppenheimer b, d | 01/06/22 | N | 5/5 | - | - | 3/3 | - |
| Chief Executive Officer |  |  |  |  |  |  |  |
| Keith Barr | 01/07/17 |  | 8/8 | - | - | - | - |
| Executive Directors |  |  |  |  |  |  |  |
| Paul Edgecliffe-Johnson | 01/01/14 |  | 8/8 | - | - | - | - |
| Elie Maalouf | 01/01/18 |  | 8/8 | - | - | - | - |
| Senior Independent Non-Executive Director |  |  |  |  |  |  |  |
| Graham Allan | 01/09/20 | A N P | 8/8 | 5/5 | - | 5/5 | 5/5 |
| Non-Executive Directors |  |  |  |  |  |  |  |
| Daniela Barone Soares | 01/03/21 | P PB | 8/8 | - | 4/4 | - | 5/5 |
| Arthur de Haast | 01/01/20 | P PB | 8/8 | - | 4/4 | - | 5/5 |
| Ian Dyson e | 01/09/13 | A N P | 7/8 | 5/5 | - | 5/5 | 5/5 |
| Duriya Farooqui f | 07/12/20 | A PB | 8/8 | 5/5 | 3/4 | - | - |
| Byron Grote g | 01/07/22 | A P | 5/5 | 3/3 | - | - | 3/3 |
| Jo Harlow | 01/09/14 | N P | 8/8 | - | - | 5/5 | 5/5 |
| Jill McDonald h | 01/06/13 | A N PB | 7/8 | 4/5 | 4/4 | 5/5 | - |
| Sharon Rothstein | 01/06/20 | P PB | 8/8 | 5/5 | 4/4 | - | - |

* In principle the full Board attends the relevant sections of the Audit Committee meetings when financial results are considered.

b In principle the Chair attends all Committee meetings.

c Patrick Cescau retired from the Board on 31 August 2022.

d Deanna Oppenheimer was appointed to the Board from 1 June 2022 and became Non-Executive Chair on 1 September 2022.

* Ian Dyson was unable to attend a Board meeting due to a prior engagement.

f Duriya Farooqui was unable to attend a Responsible Business Committee meeting due to a prior engagement.

g Byron Grote was appointed to the Board from 1 July 2022.

h Jill McDonald was unable to attend a Board meeting and an Audit Committee meeting due to a prior engagement.

### Board Committee membership key

A Audit Committee member

N Nomination Committee member

P Remuneration Committee member

P Chair of a Board Committee

PB Responsible Business Committee member

Chair's overview

IHG | Annual Report and Form 20-F 2022

91

Governance

# Our Board of Directors

At 20 February 2023, our Board of Directors comprises:

Deanna Oppenheimer

Non-Executive Chair

N R

Appointed to
the Board:
1 June 2022

![img-5.jpeg](img-5.jpeg)

Skills and experience

Deanna is founder of CameoWorks, LLC, an advisory firm to CEOs of early-stage technology companies, and BoardReady. Between 2005 and 2011, Deanna worked at Barclays plc where she was Chief Operating Officer of the UK business before becoming CEO of UK and Western Europe Retail Banking and subsequently Vice Chair, Global Retail Banking. Prior to this, Deanna was the President of Consumer Banking at Washington Mutual, Inc. She previously held a number of Non-Executive board positions, including with Tesco PLC (as Senior Independent Director), Whitbread PLC, Worldpay, Inc., and AXA S.A., among others.

Board contribution

Deanna has extensive board-level and executive leadership experience, across a number of high-profile consumer-focused brands, and brings valuable insights and perspectives to IHG. As Chair, Deanna is responsible for leading the Board and ensuring it operates in an effective manner, promoting constructive relations with IHG's shareholders and with stakeholders.

Other appointments

Deanna is the Chair of Hargreaves Lansdown plc and a Non-Executive Director of Thomson Reuters Corporation. She also sits on the private board of Slalom, LLC.

Keith Barr

Chief Executive Officer (CEO)

Appointed to
the Board:
1 July 2017

![img-6.jpeg](img-6.jpeg)

Skills and experience

Keith has spent more than 30 years working in the hospitality industry across a wide range of roles. He started his career in hotel operations and joined IHG in 2000. Since April 2011 he has been a member of IHG's Executive Committee. Directly before being appointed CEO, Keith served as Chief Commercial Officer for four years. In this role, he led IHG's global brand, loyalty, sales and marketing functions, and oversaw IHG's loyalty programme (now IHG® One Rewards). Prior to this, Keith was CEO of IHG's Greater China business for four years, setting the foundations for growth.

Board contribution

Keith is responsible for the executive management of the Group and ensuring the implementation of Board strategy and policy.

Other appointments

Keith is a Non-Executive Director of Yum! Brands. He also sits on the Board of WIHTL (Women in Hospitality, Travel and Leisure), the World Travel & Tourism Council Executive Committee and the International Advisory Board of EHL. Keith is a graduate of Cornell University's Nolan School of Hotel Administration and is currently a member of the Dean's Advisory Board for The Nolan School of Hotel Administration, Cornell SC Johnson College of Business.

Paul Edgecliffe-Johnson

Chief Financial Officer (CFO)
and Group Head of Strategy

Appointed to
the Board:
1 January 2014

![img-7.jpeg](img-7.jpeg)

Skills and experience

Paul is a fellow of the Institute of Chartered Accountants and is a graduate of the Harvard Business School Advanced Management Programme. He was previously CFO of IHG's Europe and Asia, Middle East and Africa regions, a position he held since September 2011. He joined IHG in August 2004 and has held a number of senior-level finance positions, including Head of Investor Relations, Head of Global Corporate Finance and Financial Planning & Tax, and Head of Hotel Development, Europe. Paul also acted as Interim CEO of the Europe, Middle East and Africa region (prior to the reconfiguration of our operating regions).

Board contribution

Paul is responsible, together with the Board, for overseeing the financial operations of the Group and for leading Group strategy.

Other appointments

Paul is a Non-Executive Director of Schroders plc.

Elie Maalouf

Chief Executive Officer, Americas

Appointed to
the Board:
1 January 2018

![img-8.jpeg](img-8.jpeg)

Skills and experience

Elie was appointed CEO, Americas at IHG in February 2015. He joined the Group having spent six years as President and CEO of HMSHost Corporation, where he was also a member of the board of directors. Elie brings broad global experience spanning hotel development, branding, finance, real estate and operations management as well as food and beverage expertise. Elie was Senior Advisor with McKinsey & Company from 2012 to 2014.

Board contribution

Elie brings a deep understanding of the global hospitality sector to the Board from multiple leadership roles across major global franchise businesses. He is responsible for business development and performance of all hotel and resort brands and properties in the Americas region and has global responsibility for customer development, providing oversight of the Global Sales organisation, as well as our owner management and services strategy.

Other appointments

Elie is a member of both the American Hotel & Lodging Association Executive Committee of the Board and the U.S. Travel Association CEO Roundtable. In addition, Elie is a board member of the Atlanta Committee for Progress and a member of the Real Estate Roundtable.

Board Committee membership key

A Audit Committee member

N Nomination Committee member

R Remuneration Committee member

S Chair of a Board Committee

RE Responsible Business Committee member

92

IHG | Annual Report and Form 20-F 2022

Governance

**Graham Allan**

Senior Independent
Non-Executive Director (SID)

**A N R**

Appointed to
the Board:
1 September 2020*

![img-9.jpeg](img-9.jpeg)

**Skills and experience**

Graham was Group Chief Executive of Dairy Farm International Holdings Ltd from 2012 to 2017, a leading Asian retailer headquartered in Hong Kong. He previously served in several senior positions at Pepsico/Yum! Brands from 1992 to 2012, assuming the role of President Yum! Restaurants International in 2003, and led the development of global brands KFC, Pizza Hut and Taco Bell in more than 120 international markets. Prior to his tenure at Yum! Restaurants, he worked as a consultant, including at McKinsey & Company.

**Board contribution**

Graham brings to the Board more than 40 years of strategic, commercial and brand experience within consumer-focused businesses across multiple geographies. Graham was appointed as Senior Independent Non-Executive Director from 1 January 2022 and will become Chair of the Responsible Business Committee from 1 March 2023.

**Other appointments**

Graham is Senior Independent Non-Executive Director at Intertek plc, Independent Non-Executive Director of Associated British Foods plc and Independent Non-Executive Director of Americana Restaurants International plc. Previously, Graham was a Director of Americana Foods, the former operating company of the Americana Restaurants business. He also serves as Chairman of Bata Footwear, a private company.

**Ian Dyson**

Independent
Non-Executive Director

**A N R**

Appointed to
the Board:
1 September 2013

![img-10.jpeg](img-10.jpeg)

**Skills and experience**

Ian has held a number of senior executive and finance roles, including Group Finance and Operations Director for Marks and Spencer Group plc for five years from 2005 to 2010, where he oversaw significant changes in the business. In addition, Ian was CEO of Punch Taverns plc, Finance Director for the Rank Group Plc, and Group Financial Controller and Finance Director for the hotels division of Hilton Group plc. Ian was previously a Non-Executive Director of SSP Group plc, Senior Independent Non-Executive Director of Flutter Entertainment Plc, and most recently was Chair of the Board of ASOS Plc.

**Board contribution**

Ian has gained significant experience from working in various senior finance roles, predominantly in the retail, leisure and hospitality sectors. As Chair of the Audit Committee, Ian has been responsible for leading the Committee to ensure effective internal controls and risk management systems are in place.

**Other appointments**

Ian is Chair of the Board of Currys plc.

**Jo Harlow**

Independent
Non-Executive Director

**N R**

Appointed to
the Board:
1 September 2014

![img-11.jpeg](img-11.jpeg)

**Skills and experience**

Jo most recently held the position of Corporate Vice President of the Phones Business Unit at Microsoft Corporation. She was previously Executive Vice President of Smart Devices at Nokia Corporation, following a number of senior management roles at Nokia from 2003. Prior to that, she held marketing, sales and management roles at Reebok International Limited from 1992 to 2003 and at Procter & Gamble Company from 1984 to 1992.

**Board contribution**

Jo has more than 25 years' experience working in various senior roles, predominantly in the branded and technology sectors. Jo became Chair of the Remuneration Committee on 1 October 2017 and, as such, she leads the Committee responsible for setting our Remuneration Policy.

**Other appointments**

Jo is a Non-Executive Director and Chair of the Remuneration Committee of Halma plc, and Non-Executive Director and Chair of the Remuneration Committee of J Sainsbury plc. She is also a member of the Board of Chapter Zero, the Directors' Climate Forum.

**Jill McDonald**

Independent
Non-Executive Director

**A N R**

Appointed to
the Board:
1 June 2013

![img-12.jpeg](img-12.jpeg)

**Skills and experience**

Jill started her career at Colgate-Palmolive Company, spent 16 years with British Airways Plc and has held a number of senior marketing positions in the UK and overseas. Jill was Chief Executive Officer UK and President for the North West Europe division for McDonald's, and held a number of other senior roles in the company from 2006. From May 2015 until September 2017, Jill served as Chief Executive Officer of the Halfords Group plc, and from 2017 to 2019, Jill served as Managing Director of Marks & Spencer Clothing and Home. Most recently, Jill was Chief Executive Officer of Costa Coffee.

**Board contribution**

Jill has over 30 years' experience working with high-profile international consumer-facing brands at both marketing and operational level. As Chair of the Responsible Business Committee, she has led the Committee responsible for responsible business objectives and strategy and reviewing our approach to sustainable development.

**Other appointments**

Jill is Executive Vice President and President, International Operated Markets, at McDonald's.

**Byron Grote**

Independent Non-Executive Director

**A R**

Appointed to
the Board:
1 July 2022

![img-13.jpeg](img-13.jpeg)

**Skills and experience**

Byron's career spanned over 30 years in the international oil and gas sector including Standard Oil of Ohio and subsequently BP p.l.c., where he held management positions in retail marketing, trading, mining, exploration and production, renewables, petrochemicals and finance. He served as an Executive Director on the Board of BP p.l.c. for 13 years and was the Chief Financial Officer from 2002 until 2011. He previously served as the Senior Independent Director and Audit Committee Chair at Anglo American plc, as a Non-Executive Director and Audit Committee Chair at Unilever PLC and Unilever N.V., and Non-Executive Director at Standard Chartered PLC.

**Board contribution**

Byron has extensive experience across a range of leading international businesses, both at Board level and in senior management positions, particularly in finance and chairing audit committees. He is a participant in the European Audit Committee Leadership Network and a member of the Regulation Group of the Audit Committee Chairs' Independent Forum. Byron will assume the role of Chair of the IHG Audit Committee in March 2023.

**Other appointments**

Byron is a Non-Executive Director at Tesco PLC, where he is the Senior Independent Director and Audit Committee Chair, and Inchcape PLC, as well as on the Supervisory Board of Akzo Nobel N.V., where he is the Deputy Chairman and Audit Committee Chair.

* Graham was a member of the Board from 1 January 2010 to 15 June 2012 prior to being appointed as Chief Operating Officer of Dairy Farm International Holdings Limited.

Our Board of Directors

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# Our Board of Directors continued

Daniela Barone Soares

Independent
Non-Executive Director

R RB

Appointed to the Board:
1 March 2021

![img-14.jpeg](img-14.jpeg)

Skills and experience

Daniela is currently Chief Executive Officer of Snowball Impact Management Ltd. She was formerly Chief Executive Officer of financial advisory and strategic consultancy Granito Group. Prior to this, she was Chief Executive Officer at Impetus, a private equity foundation, and Executive Chair of Gove.digital, a private technology business working with the public sector to improve social services in Brazil. She has served on various commercial and non-profit boards and advisory boards, including Halma plc, Evora S.A. in Brazil and the UK National Advisory Board to the GB Social Impact Investment Taskforce. She also spent nearly 15 years combined in roles at Save the Children, BancBoston Capital private equity, Citibank and Goldman Sachs.

Board contribution

Daniela brings to the IHG Board a clear commitment to ESG responsibilities and in-depth knowledge of the role of technology in driving change.

Other appointments

Daniela is a Designated Member of Snowball Impact Investments GP LLP, a diversified investment fund focused on generating financial returns with a positive social and environmental impact. She is also a Trustee of the Haddad Foundation, a Member of the Advisory Board of Forward Institute and Trustee of the Institute for the Future of Work.

Arthur de Haast

Independent
Non-Executive Director

A RB

Appointed to the Board:
1 January 2020

![img-15.jpeg](img-15.jpeg)

Skills and experience

Arthur has held several senior roles in the Jones Lang LaSalle (JLL) group, including Chair of JLL's Capital Markets Advisory Council and Chair and Global CEO of JLL's Hotels and Hospitality Group. Arthur is also a former Chair of the Institute of Hospitality.

Board contribution

Arthur has more than 30 years' experience in the capital markets, hotels and hospitality sectors, along with significant board-level knowledge around sustainability.

Other appointments

Arthur is Chair of JLL's Capital Markets Advisory Council, an Independent Non-Executive Director of Chalet Hotels Limited and Chair of its Risk Management Committee, and a member of the Advisory Board of the Scottish Business School, University of Strathclyde, Glasgow.

Duriya Farooqui

Independent
Non-Executive Director

A RB

Appointed to the Board:
7 December 2020

![img-16.jpeg](img-16.jpeg)

Skills and experience

Duriya is an Independent Director at Intercontinental Exchange, Inc. (ICE), a leading operator of global exchanges and clearing houses, and provider of mortgage technology, data and listings services. She is also an executive coach and mentor with The Exco Group, focused on helping Fortune 500 companies develop high-performing leadership teams. Duriya was previously President of Supply Chain Innovation at Georgia-Pacific, leading an organisation responsible for supply chain transformation. Prior to this, she was Executive Director of Atlanta Committee for Progress, a coalition of over 30 CEOs providing leadership on economic growth and inclusion opportunities in Atlanta. Duriya has also been a principal at Bain & Company and Chief Operating Officer of the City of Atlanta.

Board contribution

Duriya's diverse board and executive-level experience brings valuable insights and perspectives to IHG. She combines more than two decades of relevant expertise in business strategy, transformation and innovation, with a clear commitment to driving responsible operations and diversity.

Other appointments

Duriya is an Independent Director of Intercontinental Exchange, Inc. She serves on the boards of NYSE and ICE NGX, both subsidiaries of ICE, and co-chairs the NYSE Board Advisory Council. Duriya is also a Trustee of Agnes Scott College, a member of the Board of Councilors of The Carter Center and a Board Commissioner of Atlanta Housing.

Sharon Rothstein

Independent
Non-Executive Director

A RB

Appointed to the Board:
1 June 2020

![img-17.jpeg](img-17.jpeg)

Skills and experience

Sharon currently serves as Operating Partner of Stripes Group, a growth equity firm investing in high-growth consumer and SaaS (Software as a Service) companies. She previously served as Executive Vice President, Global Chief Marketing Officer and, subsequently, as Executive Vice President, Global Chief Product Officer for Starbucks Corporation. In addition, Sharon has held senior marketing and brand management positions at Sephora LLC, Godiva Chocolatier, Inc., Starwood Hotels & Resorts Worldwide, Inc., Nabisco Biscuit Company and Procter & Gamble Company.

Board contribution

Sharon brings extensive brands, marketing and digital expertise, having worked in senior positions for more than 25 years at iconic global companies. In addition to her knowledge of the hospitality industry, Sharon has wide-ranging board-level experience in a number of consumer-focused businesses.

Other appointments

Sharon serves on the boards of Yelp, Inc. and Block, Inc., and also for private companies True Food Kitchen, Inc., Califia Farms, LLC and Levain Bakery, Inc.

Board Committee membership key

A Audit Committee member

N Nomination Committee member

R Remuneration Committee member

Chair of a Board Committee

RB Responsible Business Committee member

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### Changes to the Board and its Committees, and Executive Committee

| Graham Allan | Graham was appointed as Senior Independent Non-Executive Director and member of the Nomination Committee from 1 January 2022. Graham will become Chair of the Responsible Business Committee and will step down from the Remuneration Committee with effect from 1 March 2023 |
| --- | --- |
| Patrick Cescau | Patrick retired from the Board on 31 August 2022 |
| Arthur de Haast | Arthur joined the Audit Committee and stepped down as a member of the Remuneration Committee with effect from 1 January 2023 |
| Ian Dyson | Ian will retire from the Board effective 28 February 2023 |
| Paul Edgecliffe-Johnson | Paul will step down from the Board and his role as Chief Financial Officer and Group Head of Strategy on 19 March 2023 |
| Michael Glover | Michael's appointment as Chief Financial Officer will take effect from 20 March 2023, when he will join the Board as an Executive Director as well as the Executive Committee |
| Byron Grote | Byron was appointed to the Board from 1 July 2022 and will become the Audit Committee Chair from 1 March 2023 |
| Jill McDonald | Jill will retire from the Board effective 28 February 2023 |
| Deanna Oppenheimer | Deanna was appointed to the Board from 1 June 2022 and became Non-Executive Chair on 1 September 2022. Deanna became a member of the Remuneration Committee with effect from 1 January 2023 |

### Gender split of Directors

![img-18.jpeg](img-18.jpeg)

### Skills of Directors

![img-19.jpeg](img-19.jpeg)

Our Board of Directors

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Governance

# Our Executive Committee

In addition to Keith Barr, Paul Edgecliffe-Johnson and Elie Maalouf, the Executive Committee comprises:

Claire Bennett

Global Chief Customer Officer

Appointed to the
Executive Committee:
October 2017
(joined the Group: 2017)

![img-20.jpeg](img-20.jpeg)

Skills and experience

Claire has in-depth knowledge of the hospitality industry having spent 11 years at American Express in a range of senior executive roles across business unit general management and operations. In her tenure there, Claire was General Manager (GM) Global Travel & Lifestyle, and held additional roles as EVP and GM for Consumer Loyalty, GM for US Consumer Travel, and SVP of Global Marketing.

Claire has also held senior marketing and general manager positions at Dell, as well as finance and brand management roles at PepsiCo/Quaker Oats Company, building significant expertise across technology, retail e-commerce, financial services, and the travel and hospitality sectors.

Claire currently serves as an independent non-executive Director of Samsonite International S.A. and is on the Chief Digital Officer (CDO) Board for the Mobile Marketing Association (MMA).

Previously, she served as an Executive Board Member of the World Travel and Tourism Council (WTTC), was a Board Member of Tumi Inc., and has participated on multiple industry advisory boards. Claire is a Certified Public Accountant and holds an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University.

Key responsibilities

Claire is responsible for guest experience, brand design, commercial performance, partnerships, marketing, and customer data analytics to ensure a world-class, end-to-end guest experience.

Jolyon Bulley

Chief Executive Officer, Greater China and Group Transformation Lead, Luxury & Lifestyle

Appointed to the
Executive Committee:
November 2017
(joined the Group: 2001)

![img-21.jpeg](img-21.jpeg)

Skills and experience

Prior to his appointment as CEO for Greater China, Jolyon was Chief Operating Officer (COO) for the Americas, leading the region's operations for franchised and managed hotels, in addition to cultivating franchisee relationships and enhancing hotel operating performance. Jolyon also served as COO for Greater China for almost four years, with oversight of the region's hotel portfolio and brand performance, food and beverage brand solutions, new hotel openings and owner relations. In 2021, he was appointed to lead the Luxury & Lifestyle Transformation Team.

Jolyon joined IHG in 2001, as Director of Operations in New South Wales, Australia, and then held roles of increasing responsibility across IHG's Asia-Pacific region. He became Regional Director Sales and Marketing for Australia, New Zealand and South Pacific in 2003, relocated to Singapore in 2005 and held positions of Vice President Operations South East Asia and India, Vice President Resorts, and Vice President Operations, South East and South West Asia. Jolyon graduated from William Angliss Institute in Melbourne with a concentration on Tourism and Hospitality.

Key responsibilities

Jolyon's responsibilities include the management, growth and profitability of IHG's Greater China region and working to develop and define a clear strategy for our Luxury & Lifestyle brands.

Yasmin Diamond, CB

Executive Vice President,
Global Corporate Affairs

Appointed to the
Executive Committee:
April 2016
(joined the Group: 2012)

![img-22.jpeg](img-22.jpeg)

Skills and experience

Before joining IHG in 2012, Yasmin was Director of Communications at the Home Office, where she advised the Home Secretary, ministers and senior officials on the strategic development and daily management of all the Home Office's external and internal communications. She was previously Director of Communications at the Department for Environment, Food and Rural Affairs; Head of Communications for Welfare to Work and New Deal; and Head of Marketing at the Department for Education and Skills. Before joining government communications, Yasmin was Publicity Commissioner for the BBC, where she led communications activity around the launch of a new digital learning channel and around the BBC's educational output for both adults and children.

In 2011, Yasmin was awarded a Companion of the Order of the Bath (CB) in the New Year's Honours List in recognition of her career in government communications. In addition, Yasmin is an Independent Non-Executive Director of the Rugby Football Union, sits on the Board of Trustees for the British Council, the UK's international organisation for cultural relations and educational opportunities, and is a Board Trustee member of the Sustainable Hospitality Alliance.

Key responsibilities

Yasmin is responsible for all global corporate affairs activity, focused on supporting and enabling IHG's broader strategic priorities. This includes all external and internal communications, covering both corporate and consumer brand PR; global government affairs work; and leading IHG's Corporate Responsibility strategy.

Nicolette Henfrey

Executive Vice President,
General Counsel and
Company Secretary

Appointed to the
Executive Committee:
February 2019
(joined the Group: 2001)

![img-23.jpeg](img-23.jpeg)

Skills and experience

Nicolette joined IHG in 2001, and prior to leading the Business Reputation and Responsibility function, held a number of senior legal roles, including Deputy Company Secretary, during which time she worked with the Board, Executive Committee and wider organisation to ensure best-in-class delivery and compliance across legal, governance and regulatory areas. Nicolette is a solicitor qualified in England and South Africa and previously worked as a corporate lawyer at Linklaters in London and Findlay & Tait (now Bowmans) in South Africa.

Key responsibilities

Nicolette has global responsibility for all areas of corporate governance, legal, risk management, insurance, regulatory compliance, internal audit and hotel standards.

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# **Wayne Hoare**

Chief Human Resources Officer

Appointed to the Executive Committee: September 2020 (joined the Group: 2020)

![img-24.jpeg](img-24.jpeg)

# **Skills and experience**

Wayne has more than 30 years of experience in HR and joined IHG from RCL FOODS, where he spent seven years as the company's Chief Human Resources Officer, leading RCL FOODS' culture building and talent strategy for 25,000 employees. Prior to joining RCL FOODS, Wayne spent 26 years at Unilever, where he worked across a broad range of roles in both mature and developing markets across Europe, North America, Asia, Africa and the Middle East.

Wayne's most recent role at Unilever was as SVP, HR - Global Centres of Expertise, where he held responsibility for the Global Talent, Leadership Development and Reward teams. He led the development of the company's HR strategy on enabling a performance culture focused on growth.

# **Key responsibilities**

Wayne has global responsibility for talent management, learning and capability building, diversity, organisation development, reward and benefit programmes, employee relations and all aspects of the people and organisation strategy for the Group.

# **Kenneth Macpherson**

Chief Executive Officer, EMEAA

Appointed to the Executive Committee: April 2013 (joined the Group: 2013)

![img-25.jpeg](img-25.jpeg)

# **Skills and experience**

Kenneth became CEO, EMEAA in January 2018. He was previously IHG's CEO for Greater China, a role he held from 2013 to 2017. He has extensive experience across sales, marketing strategy, business development and operations. In addition to 12 years living and working in China, Kenneth's career includes experience in Asia, the UK, France and South Africa. Before IHG, he worked for 20 years at Diageo, one of the UK's leading branded companies. His senior management positions included serving as Managing Director of Diageo Greater China, where he helped to build the company's presence and led the landmark deal to acquire Shui JingFang, a leading manufacturer of China's national drink, and one of the first foreign acquisitions of a Chinese listed company.

# **Key responsibilities**

Kenneth is responsible for the management, growth and profitability of the EMEAA region. He also manages a portfolio of hotels in some of the world's most exciting destinations, in both mature and emerging markets.

# **George Turner**

Chief Commercial and Technology Officer

Appointed to the Executive Committee: January 2009 (joined the Group: 2008)

![img-26.jpeg](img-26.jpeg)

# **Skills and experience**

In February 2019, George was appointed as Chief Commercial and Technology Officer. Prior to this, he spent over a decade as IHG's EVP, General Counsel and Company Secretary, with responsibility for corporate governance, risk and assurance, legal, corporate responsibility and information security. He is a solicitor, qualifying to private practice in 1995. Before joining IHG, George spent over 10 years with Imperial Chemical Industries PLC, where he held various key positions including Deputy Company Secretary and Senior Legal Counsel.

# **Key responsibilities**

George's responsibilities include distribution; channels; revenue management; property, owner, guest and enterprise solutions; guest reservations and customer care; digital; information security; technology; and global sales.

# **Gender split of Executive Committee**

![img-27.jpeg](img-27.jpeg)

■ Female, 3

Our Executive Committee

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Governance

# Governance structure

Our governance framework is headed by the Board, which delegates certain management and oversight responsibilities to various Committees to further IHG's purpose, values and strategy, while conducting business in a responsible manner. Executive management are responsible for the implementation of strategy which is delivered by the Group's workforce.

## The Board and its Principal Committees

The Board is responsible for promoting the long-term sustainable success of the Group and establishes its purpose, values and strategy. Operational matters, routine business and information disclosure procedures are delegated by the Board to Management Committees, with the exception of a number of key decisions and matters that are reserved for the Board. The schedule of matters reserved for the Board was reviewed and approved at the December 2022 Board meeting and is available on our website.

The Board is supported by its four Principal Committees (Audit, Nomination, Remuneration and Responsible Business), all of which consist of Non-Executive Directors. These committees assist the Board in carrying out its functions and in the oversight of the delivery of the strategic objectives it sets for management.

Committee Reports, including information on their activities during 2022, can be found on pages 105 to 136.

Pursuant to Section 172 of the Companies Act 2006, the Board has a duty to promote the success of the Company, and in doing so it must have regard to a number of factors including the interests of key stakeholders. The Board's Section 172 statement describing how stakeholder considerations are taken into account is incorporated in the description of the activities of the Board on pages 100 and 101.

Further details of key stakeholders and engagement during 2022 can be found on pages 38 and 39.

The Board is also responsible for reviewing the means for the workforce to raise concerns in confidence and the reports arising from its operation (commonly known as whistleblowing) and it reviewed confidential disclosure channel reports throughout 2022. In addition, a Non-Executive Director is designated to represent the Voice of the Employee in Board discussions. See our Voice of the Employee disclosure on page 111.

More information on our Board and Committees is available at www.ihgplc.com/investors under Corporate governance.

## Management Committees

Operational matters, routine business and information disclosure procedures are delegated by the Board to Management Committees. The Management Committees are comprised of senior executives, including, where relevant, the Executive Directors.

The Executive Committee is chaired by the CEO and considers and manages the day-to-day strategic and operational issues facing the Group. Its remit includes executing the strategic plan once agreed by the Board, monitoring the Group's performance and providing assurance to the Board in relation to overall performance and risk management.

The General Purposes Committee is chaired by an Executive Committee member and attends to items of a routine nature and to the administration of matters, the principles of which have been agreed previously by the Board or an appropriate Committee.

The Disclosure Committee is chaired by the Group's Financial Controller and ensures that proper procedures are in place for statutory and listing requirements. This Committee reports to the Chief Executive Officer, the Chief Financial Officer and the Audit Committee.

## Conduct of Board and Committee meetings

The Chair and Company Secretary operate a collaborative process for setting the Board agenda to ensure that the focus and discussion strike the appropriate balance between the short-term needs of the business and the longer-term strategic objectives. The Chair or Committee Chairs, CEO and Company Secretary also liaise in advance of each Board and Committee meeting to finalise the agendas, set the order in which items are considered and ensure that each matter is allocated sufficient time. The Company Secretary maintains an annual agenda schedule for Board meetings that sets out strategic and operational matters to be considered.

The Board held eight scheduled meetings during the year and individual attendance is set out on page 91. All Directors are expected to attend all Board meetings and relevant Committee meetings unless they are prevented from doing so by prior commitments, illness or a conflict of interest. If Directors are unable to attend Board or Committee meetings, they are sent the relevant papers and asked to provide comments to the Chair of the Board or Committee in advance of the meeting so that their comments can be duly considered.

Time is set aside at the start and end of each Board meeting for the CEO to meet with the Chair and Non-Executive Directors, and for the Chair to meet privately with the Senior Independent Non-Executive Director (SID) and Non-Executive Directors to discuss any matters arising. The SID continues to be available to discuss concerns with shareholders, in addition to the normal channels of shareholder communication.

## Our Board and Committee governance structure

![img-28.jpeg](img-28.jpeg)

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# Board activities

## Matters the Board discussed in 2022

### Board meetings

The following table gives an overview of the regular and standing items discussed and decisions made at Board meetings during the year. The table overleaf details the key matters discussed by the Board in 2022 and our Section 172 statement includes information about how stakeholders were considered. In both tables, commercially sensitive information has been excluded. In several areas, much of the substantive preparation work took place within the Board's Committees and was later confirmed by the Board or the whole Board attended certain sections of Committee meetings. Where this was the case, the discussions are treated as having taken place at Board level.

### Regular and standing items

In addition to key focus areas outlined on the following pages, the Board considers a number of regular and standing items at each meeting:

| Area of discussion | Discussion topic and decisions made |
| --- | --- |
| Chair's matters | The Chair provided an update on Board developments and meeting plans and his/her current areas of focus and engagement. |
| Chief Executive Officer's matters | The Chief Executive Officer provided an update on developments within the business, with a particular focus on net system size growth progress during the year and progress against key strategic initiatives. |
| Updates from each of the Board Committees | The Committee Chairs reported back to the Board on matters covered during their meetings. Details of Committee activities during 2022 can be found on pages 105 to 136. |
| Financial performance | The Board received regular updates from the Chief Financial Officer on recent and current trading, including RevPAR, operating profit, net system size growth and cash flow performance, and these were also compared to competitors' results and budget. Internal projections were compared with the consensus of analysts' forecasts to ensure that the Company's prospects were appropriately reflected in market expectations. |
| Corporate governance | The Board received regulatory development updates from the Company Secretary and General Counsel, covering regulatory changes in areas such as corporate reporting and governance, executive remuneration, climate change, shareholder body voting guidelines and other ESG matters. |
| Regional performance | Throughout the year, the Board received regional performance updates from each of the regional Chief Executive Officers, covering regional market and competitive landscapes, financial performance, regional strategy and progress on regional initiatives, and risks and mitigation measures. |
| Cybersecurity | The Board received regular updates on cyber activity and information security, including ongoing assessment of the Group's cybersecurity risk profile and the key risk indicators monitored by management. |
| Principal risks, internal controls and risk management systems | The Board received regular updates on principal and emerging risks, internal controls, risk management systems, the Group's risk appetite, business continuity and the global insurance programme. Committee Chairs also delivered reports on risk topics in relation to the areas of remit for their respective Committees. The Board regards the management of risks in business as fundamental to its role and does this by ensuring that appropriate controls and processes are in place. The regular monitoring of the Group's risk management systems allows the Board to ensure that issues that might otherwise impact the Group's reputation for high standards of business conduct are avoided or mitigated as appropriate and that the Group is positioned to respond to uncertainty in an agile manner. |
| Investor relations | The Board receives a regular report outlining share register movements, relative share price performance, investor relations activities and engagement with shareholders. The Board also considered views shared from the regular investor and analyst perception studies and feedback surveys as well as individual meetings with investors. |
| Corporate affairs | The Board receives a regular report outlining various geopolitical and social issues pertaining to IHG and its business; corporate affairs activity supporting IHG's corporate reputation, brands and responsible business agenda; owner and colleague engagement; government and advocacy programmes; and industry-body engagement. |

In addition to the scheduled meetings during the year, the Board also convened separate meetings specifically to consider the Group's ongoing operations in Russia following the invasion of Ukraine and management's response to the criminal, unauthorised access to its technology systems. See pages 46, 101, 105, 107 and 212 for additional information on management's response to criminal, unauthorised access to its technology systems and pages 48, 100, 102, 105, 106 and 176 for more information on the Group's response to the war in Ukraine.

Board activities

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Governance

# Board activities continued

## Key matters discussed in 2022 and Section 172 statement

Section 172 of the Companies Act 2006 requires a director of a company to promote the success of that company, and in doing so the director must have regard to six factors. These are: the long-term consequences of a decision; the interests of its employees; business relationships with suppliers, customers and others; its impact on the community and environment; the desirability of maintaining high standards of business conduct; and the need to act fairly between members of the company. The table below summarises some of the main matters dealt with by the Board during the year and how it took the Section 172 factors into account. The relevant Section 172 factors are identified in the key at the bottom of the page.

| Finance and performance |  |
| --- | --- |
| Shareholder returns The Board considered and approved a final dividend for 2021, an interim dividend for 2022 and a $500m share buyback programme. A E F | In considering the dividends paid during the year and the share buyback programme, the Board took into account the creation of value for shareholders, analysts' expectations in the context of the Company's trading and viability assessments and capacity to pay as well as the external environment, including the geopolitical situation and macroeconomic developments, while having regard to the Group's dividend policy. |
| Group finance facility The Board considered and approved the refinancing of the Group's $1.35bn syndicated revolving credit facility. A B C E | When deciding to approve the refinancing of the Group's $1.35bn revolving credit facility, the Board recognised the importance of the new facility to the Group's short and medium-term funding and liquidity prospects and noted the positive implications of having the new facility in place for the Group's stakeholders, including employees, suppliers, owners, guests and shareholders. |
| Financial statements The Board considered and approved the full and half year financial results statements, including the going concern and viability statements, and whether the Annual Report was fair, balanced and understandable. E F | In reviewing and approving for publication the Group's financial statements, the Board ensured that the Group has met its regulatory requirements in relation to providing shareholders and other stakeholders with accurate information regarding the Group and further maintained the Group's reputation for operating with high ethical standards. |
| Strategic and operational matters |  |
| Brand portfolio The Board approved the long-term commercial agreement for resort and all-inclusive hotels with Iberostar. A B C D | In approving the commercial agreement with Iberostar, the Board considered a variety of factors including the long-term culture fit between IHG and Iberostar, the enhanced attractiveness for IHG One Rewards members to gain access to a significant number of resorts globally, and the longer-term financial impact of the agreement, including the impact on IHG's system size and growth strategy. The Board also considered the opportunities to advance a sustainable tourism agenda and the Group's Journey to Tomorrow initiatives. |
| Brand portfolio The Board considered and endorsed the approach to IHG's Luxury & Lifestyle operating model. A B C D | As part of the Board's oversight of brand strategy, and recognising the long-term need to grow IHG's Luxury & Lifestyle portfolio to respond to guest preference, the Board considered and endorsed the development of IHG's Luxury & Lifestyle operating model to drive strategic growth in this area, effectively support owners in the operation of hotels, and develop colleagues to create a longer-term, more diverse talent pipeline for this estate. |
| Loyalty strategy The Board considered and endorsed the ongoing approach to the re-launch of the IHG One Rewards programme. A B C | As part of the Board's oversight of brand strategy in relation to IHG's masterbrand, the Board, in monitoring and endorsing the approach to the ongoing roll-out of IHG One Rewards, had particular regard for the cost and operational complexity for owners, the impact on guest expectations and experience, and the long-term competitive positioning of the programme. |
| Operating regions The Board approved the decision to cease the Group's hotel operations in Russia. A B C D E F | In approving the decision, the Board took into consideration the impact of IHG's withdrawal from Russia on IHG's owners and colleagues, shareholder and guest expectations in relation to companies continuing to operate in Russia in light of the war in Ukraine, regulatory considerations, corporate governance and reporting requirements, and IHG's reputation for operating responsibly. |
| Operating regions The Board approved the restructuring of leases for a portfolio of hotels in the UK. A C | In its decision to approve the restructuring of leases for a portfolio of hotels in the UK, the Board paid particular regard to the impact of the restructuring on the hotels' employees, the long-term financial impact of the changes, and the opportunity to use the hotels to advance the Group's Journey to Tomorrow commitments, particularly with respect to carbon reduction initiatives. The Board also took into account the positive impact of retaining high-profile assets in key locations on investors, hotel owners and guests. |

## Key to considerations

| A Long term | C Suppliers and customers | E High standards |
| --- | --- | --- |
| B Employees | D Community and environment | F Act fairly between members |

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Governance

**Technology**

The Board reviewed and endorsed management's response to the criminal, unauthorised access to the Group's technology systems.

**A B C E**

The Board received and considered updates regarding management's response to the criminal, unauthorised access to IHG's technology system, including in relation to the impact on guest data, regulatory and governance requirements and communications, the short and long-term consequences of the manner in which IHG responded to the incident, and the impact on IHG's reputation.

**Technology**

The Board endorsed the strategic plan for delivery of technology supporting the customer journey.

**A B C**

In considering and endorsing the long-term technology strategy and digital roadmap, including the roll-out of IHG's new mobile booking app, the Board had specific regard for the impact to guests, owners and on-property colleagues in relation to ease of use, retention of loyal guests, and booking optimisation. The Board further considered the long-term impact on the IHG Masterbrand and loyalty programme, risks associated with reliance on third-party suppliers, and the need to remain agile to address industry changes.

**Growth strategy in regions**

- Americas, EMEAA and Greater China

The Board received in-depth regional updates from the CEOs of each of the Group's three regions, and provided oversight with regard to the Group's growth strategy over both the short and long term.

**A C**

The Board received regular updates from the Group's operating regions, covering the Group's positioning and performance in relevant markets and in relation to brand performance, underlying growth drivers and the competitive environment, and further focused on actions to accelerate the Group's growth. In its discussions, the Board paid particular attention to critical owner considerations in relation to building, operating and renovating hotels, such as financing and cost and supply constraints.

**Board governance**

**Board composition**

The Board approved the appointments of Deanna Oppenheimer as Chair of the Board, Byron Grote as Non-Executive Director and Chair Designate of the Audit Committee, and Graham Allan as Chair Designate of the Responsible Business Committee.

**A B E**

When approving Board succession plans, the Board had particular regard for ensuring that both the Board and its Principal Committees have the appropriate mix of skills, experience and knowledge to provide effective oversight over the short and long-term strategic objectives of the Group and effectively consider the interests of its stakeholders while also maintaining high standards of business conduct and complying with the UK Corporate Governance Code.

**Board composition**

The Board approved the appointment of Michael Glover as Chief Financial Officer and Executive Director.

**A B E**

When progressing and approving Board and Executive Committee succession plans, the Board had regard for ensuring that both have the appropriate mix of skills, experience and knowledge, and further considered shareholder expectations, the impact to colleagues, IHG's desire to maintain its high standards of business conduct, and the long-term financial success of the Group.

**Policy governance**

The Board approved the IHG Policy Governance Policy.

**A E F**

The Board approved a new Global Policy Governance Policy to drive clarity, consistency and alignment of IHG's global policies across the business. In doing so, the Board focused on maintaining high standards of business conduct and ensuring that the impact on various stakeholders was considered in the development of IHG global policies.

**People**

**Diversity, equity and inclusion**

The Board approved the Group's updated Global Diversity, Equity, Inclusion and Equal Opportunities (DE&I) Policy, and further had oversight of the Group's DE&I initiatives.

**A B D E**

In approving the revised DE&I Policy, the Board acknowledged the critical role the policy plays in defining and embedding IHG's culture, and further noted the impact of IHG's culture on its business relationships with third parties including investors, hotel owners and guests as well as employees.

The Board also recognised the increased broader societal scrutiny on ESG matters such as diversity and inclusion, endorsing the revised policy's alignment with the Group's broader Journey to Tomorrow ambitions and commitments.

**Our people and culture**

The Board regularly considered workplace culture, taking into account feedback from the Voice of the Employee engagement plan.

**B D**

The Board assessed and monitored culture throughout the year, receiving regular updates from the CEO and from the Voice of the Employee engagement plan, overseen by the designated Non-Executive Director for workforce engagement. The Board had particular regard for the feedback received via the Voice of the Employee programme in relation to culture, ways of working, diversity, wellbeing and benefits, executive remuneration and IHG's strategy and communications processes.

See pages 38 and 39 for information about how we have engaged with our stakeholders in 2022. Further details of our regard for the environment are on pages 35 to 37 and 54 to 61.

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# Board activities continued
## Our shareholders and investors

During 2022, IHG continued its open dialogue with shareholders and investors, and conducted its annual programme of investor relations activities, with support from its brokers and advisers. The Board received regular updates and considered feedback as outlined on page 99. In addition, our Registrar and American Depositary Receipts (ADR) programme custodians have supported shareholders and ADR holders with their queries.

Committee Chairs and the Senior Independent Director are available for shareholders if they have concerns they wish to discuss.

### Annual General Meeting (AGM)

The Board was pleased to be able to meet shareholders in person at the 2022 AGM, following two years of 'virtual' meetings.

Our 2023 AGM will be held on Friday 5 May 2023. The notice of meeting will be sent to shareholders and be made available on our website in due course.

Visit www.ihgplc.com/investors under Shareholder centre.

Further information on the Board's engagement with shareholders and investors is included on page 38

### Balancing the interests of stakeholders - Ending our operations in Russia

Following Russia's invasion of Ukraine and in response to the ongoing war, the Board specifically convened to review IHG's hotel operations in Russia, ultimately agreeing that all operations should cease. The Board carefully considered a number of factors, including evolving sanctions laws in the UK, US and EU, and the impact to IHG's stakeholders.

- Colleagues: The Board prioritised consideration of employees, focusing on their safety and mitigating the impact to those employees directly employed by IHG, including in our corporate office in Moscow, General Managers in hotels, and employees in other regional offices outside of Russia who provided support to hotels and owners in the region.
- Owners: All of our hotels in Russia, both managed and franchised, were owned by third parties who employed the majority of workers at their properties. The Board considered the interests of our owners at length, understanding the impact of ceasing operations on these relationships, and further considered the impact to IHG's reputation among the larger hotel owner community.

- Guests & Communities: IHG's reputation with guests and the wider community was considered at length, including the impact on IHG's brands and the importance of maintaining high standards of business conduct.

- Shareholders: In addition to evaluating the impact to IHG's reputation, the Board also had regard for the impact on our long-term growth strategy in the region as well as wider geopolitical tensions.

The Board continues to monitor the war and, in particular, the impact to our two hotels in Ukraine. IHG's operations team continues to support these hotels and their colleagues, while IHG has also provided support to refugees through hotel stays, meals and humanitarian aid.

Although IHG is no longer operating in Russia, the Board continues to monitor ongoing impacts arising from the war as part of its review of principal and emerging risks, crisis management and business continuity.

See pages 175 and 176, note 6 for further details regarding the financial impact of IHG's exit from its Russia operations.

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# Director appointments and induction

## Director appointments

Details of the appointments to the Board made during 2022 are described in the Nomination Committee Report on pages 112 and 113.

## New Director inductions

Upon appointment, all new Directors undergo a comprehensive and formal induction programme which is tailored to meet their individual needs. We believe this is crucial to ensure our Directors have the full understanding of all aspects of our business and familiarity with the Group's purpose, culture and values, to ensure they are able to contribute effectively to the Board.

For Deanna Oppenheimer and Byron Grote, tailored induction plans were prepared in advance of their appointments to the Board. Their plans broadly covered the following topics, while being tailored to their respective roles as incoming Chair of the Board and Chair of the Audit Committee, with a particular emphasis on understanding IHG's business, long-term strategy and governance processes and controls:

- information on the Group's purpose, culture, values and strategy, including its business model, brands and the markets in which it operates;
- key strategic initiatives;
- our approach to internal controls and our risk management strategy;
- information on the Board, its Committees and IHG's governance processes;
- a reminder of the rules relating to maintaining the confidentiality of inside information and restrictions in dealing in IHG shares, together with a briefing on the policies and procedures IHG has in place to ensure compliance with such rules; and
- meetings with members of the Board and the Executive Committee, senior management from functions across the Group, the external Auditor and other key external advisers.

## Additional appointments

During 2022, the Board considered and endorsed the following additional appointments of Directors:

- Graham Allan as a director of Ikano Pte. Ltd.
- Ian Dyson as Chair of Currys plc, following completion of his role as Chair of ASOS plc.
- Paul Edgecliffe-Johnson as non-executive director of Schroders plc.
- Duriya Farooqui as a member of the Board of Commissioners of the Atlanta Housing Authority.
- Byron Grote as non-executive director of Inchcape PLC.
- Jill McDonald as Executive Vice President and President, International Operated Markets of McDonald's Corporation, transitioning from her position as CEO of Costa Coffee.
- Sharon Rothstein as a Board member of Califia Farms, LLC and a Board member of Block, Inc., following the acquisition of Afterpay Limited by Block, Inc.

In each case, the Board took into account other appointments, the time commitment required for each role and the context of the UK Corporate Governance Code, including institutional investor and proxy adviser guidelines concerning over-boarding. It was concluded that the additional appointments should not adversely impact their performance but should enhance their ability to provide constructive challenge and strategic guidance.

## Ongoing Director training and development

We understand the importance of an ongoing training programme for Directors to enable them to fully understand the Group's business and operations in the context of the rapidly developing environment in which it operates. The Chair continues to review the training and development needs with each Director on a regular basis and the Board is made aware of training opportunities.

Board and Committee meetings are regularly used to update Directors on developments in the environment in which the business operates and in-depth presentations are provided on key topical areas. In 2022, these sessions included detailed discussions on the socio-political and economic outlook against the background of the war in Ukraine, labour market challenges, China's zero-Covid-19 policy and the move to a more decarbonised economy. The Board also received an in-depth update on loyalty programmes, including the hotel loyalty programme landscape and the future of loyalty programmes.

In addition, the Company Secretary provides regular updates on regulatory, corporate governance and legal matters, and Directors are able to meet individually with senior management if necessary.

In addition to training provided during Board and Committee meetings, the reopening of IHG's corporate offices allowed for additional Board training and engagement sessions at IHG's Americas headquarters in Atlanta, in particular for Non-Executive Directors who joined the Board during the pandemic in 2021 and 2022. These sessions, joined by Arthur de Haast, Sharon Rothstein, Duriya Farooqui and Byron Grote, covered a range of topics relating to Brands and Marketing, Finance, Commercial and Technology, and the Americas region's performance and strategy, and further included site visits to several hotels across IHG's portfolio of brands as well as IHG's design center.

## Internal evaluation

Given the shortness of the incoming Chair's time in role in 2022, the Board undertook an internal evaluation of the Board's performance, with the intention to undertake an external evaluation in 2023.

Board members were asked to consider the Board's overall effectiveness by completing an internal questionnaire, which focused on the following areas:

- progress in implementing agreed action items from the 2021 effectiveness review;
- Board composition, including knowledge, experience and competencies, and succession planning;
- Board dynamics and information flow from management to the Board;
- engagement between the Board and management; and
- Board leadership and strategic focus.

The responses of Board members to the questionnaire were largely favourable in relation to all areas of the Board's operation. The feedback highlighted that the Board's engagement with management continues to be robust and effective, with the reporting from management to the Board comprehensive, in particular in relation to strategic priorities, risk management, stakeholder engagement, and liquidity and financial resilience. Board members commented positively that the Board continues to thoughtfully and effectively challenge management while supporting management's decisions. The feedback further confirmed that the Board continues to be effective in safeguarding the governance, reputation, viability and future value of IHG.

With regard to implementation of the actions agreed in relation to the 2021 Board effectiveness evaluation, Board members generally agreed that this work had progressed, particularly in relation to Board dynamics, with the return to in-person meetings in 2022 facilitating more effective discussions.

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# Board activities continued

## Board development and effectiveness evaluation

The following areas of continued focus and recommended actions for 2023 were noted:

| Area for focus | Action items |
| --- | --- |
| Long-term strategy | Board members positively noted the progress made in relation to the additional focus on implementation of the long-term strategy in particular, and noted this should continue in 2023, in light of the increasingly competitive landscape and other complex geopolitical and economic factors. |
| Board agenda, materials & dynamics | Feedback indicated that Board agendas continue to be well constructed and the materials are informative and comprehensive, with good progress having been made on more forward-looking information, but this should continue to be a priority for 2023, with a view to making the materials more concise. Board members also noted that meetings could benefit from more streamlined presentations, allowing for additional discussion time. |
| Board composition & succession planning | The responses of Board members noted that the current balance of skills, knowledge and experience at the Board was appropriate, but this should be kept under review, particularly as Board members retire. Looking ahead, it was felt that the Board could benefit from increased digital/technology, remuneration and global C-suite experience. |

### Directors' performance evaluation

In addition to the internal Board evaluation process outlined above, the Chair considered the individual performance of the Non-Executive Directors, focusing on their contribution to the Board and Principal Committees and engagement with fellow Directors, in light of their relevant skills, knowledge and experience. Particular points of note were shared with the individual Directors and overall, the Chair concluded that the Directors perform their duties independently and effectively and that they dedicate sufficient time to discharge their Board responsibilities.

The performance assessment of the Chair was led by the SID. Given the limited tenure of the Chair in 2022, the evaluation focused on overall leadership during the transition, with a more extensive evaluation to occur following the Chair's completion of the first full year of her term.

The CEO evaluation was led by the Chair, who collected feedback from the Non-Executive Directors. Key areas of focus included:

- company performance and impact of the CEO;
- the relationship and ability to work collaboratively and transparently with the Board;
- delivery of the Group's growth agenda;
- regard for community and the environment;
- building talent and organisational capabilities; and
- progress in relation to IHG's 2022 plan and future needs.

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# Audit Committee Report

Governance

![img-0.jpeg](img-0.jpeg)

## As Chair of the Audit Committee, I am pleased to present the Committee's report for the year ended 31 December 2022.

The Committee supports the Board in fulfilling its responsibilities regarding financial reporting, the effectiveness of the Group's risk management and internal controls systems and other compliance matters.

During the year, the Group operated in a volatile and uncertain environment while continuing to drive an ambitious agenda of initiatives in pursuit of growth. In this context, the Committee remained agile throughout the year and focused its attention on reviewing and obtaining assurance on evolving risk management and resilience arrangements in relation to the Group's principal and emerging risks.

The Committee's review and oversight of the effectiveness of the Group's internal control and risk management systems included specific focus on management's response to the criminal, unauthorised access to its technology systems and the governance and assurance relating to the transition of the Group's primary HR systems and the Committee concluded there were no material weaknesses in the control environment.

In terms of the broader regulatory landscape, the Committee considered emerging reporting requirements, including in relation to independent assurance of disclosures particularly relating to ESG and climate reporting, as well as ongoing UK audit and corporate governance reform, and further reviewed the Company's plans to address these evolving requirements.

As the Company announced in May 2022, I will retire from the Board on 28 February 2023 and will be succeeded as Chair of the Committee by Byron Grote on 1 March 2023. Accordingly the Committee and I have worked closely with Byron to ensure an orderly transition.

Looking back over my tenure, maintaining strong financial governance and effective internal controls has remained paramount in an increasingly complex risk and financial reporting environment. I would like to thank all those who, during my tenure, have contributed to the Committee and the robust governance framework and culture that continue to guide the Group in operating responsibly.

**Ian Dyson**

Chair of the Audit Committee
20 February 2023

## Key duties and role of the Committee

### Key objectives and summary of responsibilities

The Audit Committee is responsible for ensuring that IHG maintains a strong control environment. It monitors the integrity of IHG's financial reporting, including significant financial reporting judgements, maintains oversight and reviews our systems of internal control and risk management, monitors and reviews the effectiveness and performance of internal and external audit functions, as well as reviewing the behaviours expected of IHG's employees through the Code of Conduct and related policies.

The Committee's role, responsibilities and authority delegated to it by the Board are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board.

The ToR are available at www.ihgplc.com/investors under Corporate governance.

As noted, the Committee focused its attention on reviewing and obtaining assurance in relation to emerging and evolving risks as well as the Group's financial statements and controls. Key areas of focus over the year have been:

- review of the Group's approach to management of risk in an uncertain and volatile geopolitical and macroeconomic environment, including the risk, legal and accounting implications of the Group's exit from its hotel operations in Russia;
- review and oversight of management's response to the criminal, unauthorised access to the Group's technology systems, including recovery of systems and assessment of steps taken to mitigate risk to the Group's financial systems, controls and position;
- oversight of the Group's financial governance programme, including review of the governance and assurance relating to the transition of the Group's primary HR systems;
- review of and challenge to financial reporting throughout the year to ensure the Financial Statements provide a true and fair view of the Group's performance and that latest guidance and reporting regulations by regulators were appropriately applied;
- consideration of the Group's approach to governance, risk management and internal control arrangements in relation to franchised and managed deal approval;
- review of the Group's approach to the management of operational safety and security risks as well as key compliance programmes in relation to ethics and compliance and privacy; and
- the future role of the Committee in relation to non-financial reporting assurance.

### Membership and attendance at meetings

Details of the Committee's membership and attendance at meetings are set out on page 91. The CEO, CFO, General Counsel and Company Secretary, Group Financial Controller, Head of Risk and Assurance and our external Auditor attended all meetings in 2022. The Chair of the Board also aims to attend all meetings and in 2022 attended all but one of the meetings. Other attendees are invited to meetings as appropriate and the CEO and all other Directors were invited to Committee meetings where the approval of financial reporting was considered and discussed. The Committee continues to hold private sessions with the internal and external Auditors without the presence of management to ensure that a culture of transparency is maintained.

The Committee Chair continues to have recent and relevant financial experience and all members of the Committee are Independent Non-Executive Directors. In accordance with the Code, the Board also considers that the Committee as a whole possesses competence relevant to the Company's sector, having a range of financial and commercial experience in the hospitality industry and the broader commercial environment in which the Group operates. Further details of the skills and experience of the Committee members can be found on pages 93 to 95.

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# Audit Committee Report continued

## Reporting to the Board

Following each Committee meeting, the Committee Chair updates the Board on key issues discussed. The papers and minutes for each meeting are circulated to all Board members, who are invited to request further information if required and to provide any challenge where necessary.

## Effectiveness of the Committee

During the year, the Committee's effectiveness was reviewed as part of the internal Board evaluation process. It was concluded that the Committee remains effective.

## Focus areas and activities

### Financial and narrative reporting

During the year, the Committee reviewed and recommended approval of the interim and annual Financial Statements (considering the relevant accounting and reporting matters such as key judgement areas, going concern and viability statements, the financial reporting impacts of commercial litigation and disputes, exceptional items and impairment reviews) and the Group's quarterly trading updates. All members of the Board are asked to attend these meetings.

As well as receiving input and guidance from the external Auditor on the areas outlined above, the Committee also received regular reports from the Chair of the Disclosure Committee, which liaised closely with other external advisers of the Group to ensure that disclosure and regulatory requirements were being appropriately considered and met. Copies of the Disclosure Committee's minutes were also provided to the Committee.

The Committee received early drafts of the Annual Report and Form 20-F 2022 (Annual Report), and when providing comments considered: (i) the process for preparing and verifying the Annual Report, which included review by the Executive Committee and input from senior employees in the Company Secretariat, Legal, Operations, Strategy, Human Resources, Finance, Risk and Assurance teams; (ii) a report from the Chair of the Disclosure Committee; and (iii) a checklist prepared by the Annual Report team confirming compliance with the relevant regulatory requirements.

The Committee also considered management's analysis of how the content, taken as a whole, was 'fair, balanced and understandable', and whether it contained the necessary information for shareholders to assess the Group's position, performance, business model and strategy. In order to reach this conclusion, a dedicated project team worked on the contents of the Annual Report and a detailed verification process to confirm the accuracy of the information contained within the Annual Report was undertaken by the Financial Planning and Analysis department. The Committee then considered both the structure and content of the Annual Report to ensure that the key messages were effectively and consistently communicated and that meaningful links between the business model, strategy, KPIs, principal risks and remuneration were clearly identified throughout the Annual Report. The Committee specifically considered the impact of the ongoing trading recovery following the pandemic on performance, strategy and business resilience and where it impacted the nature of the judgements and estimation uncertainty. The Committee also considered the proportionate and consistent consideration of climate matters across the Annual Report, including the TCFD statement and an asset-by-asset review for impairment purposes.

Alongside this review, the Committee considered guidance provided by the FRC throughout the year including in relation to TCFD disclosures and climate risk in the Financial Statements, judgements and estimates, deferred tax assets, earnings per share and business combinations and concluded that appropriate enhancements had been made to ensure alignment with the latest guidance.

Following a review of the contents of the Annual Report alongside the aforementioned criteria, the Committee reported its recommendation to approve the Annual Report to the Board.

## Significant matters in the 2022 Financial Statements

Throughout 2022, the Committee provided ongoing challenge to management's accounting, reporting and internal controls. The Committee discussed with management and the external Auditor the significant areas of complexity, management judgement and estimation in relation to the Financial Statements, and the impact of any accounting developments or legislative changes. The Committee has satisfied itself that management had adequately identified and considered all potentially significant accounting and disclosure matters. The key items discussed are outlined on pages 108 and 109.

## Correspondence with US regulator

The Group received a letter dated 11 July 2022 from the US Securities and Exchange Commission (SEC) with comments on the Group's Form 20-F 2021 disclosures in connection with non-GAAP measures. The Group addressed the SEC's comments and took them into account in the preparation of the 2022 interim Financial Statements as well as the Annual Report and Form 20-F 2022.

## Internal control and risk management

The Board is responsible for establishing procedures to manage risk, overseeing the internal control framework and determining the nature and extent of the principal risks the Company is willing to take to achieve its long-term objectives. The Committee supports the Board by reviewing the effectiveness of the Group's internal control and risk management systems and assessing emerging and principal risks.

In order to effectively review the internal control and risk management systems, the Committee:

- receives regular reports from management, the Risk and Assurance team and the external Auditor on the effectiveness of the systems for risk management and internal controls, including financial, operational and compliance controls;
- reviews the process by which risks are identified (including procedures in place to identify emerging risks and linkage to wider consideration of strategy and resilience) and assesses the timeliness and effectiveness of action taken by management, including regular reports on the Company's overall risk management and internal controls systems and principal risks; and
- receives regular reports relevant to risk management internal controls, both financial and non-financial, to ensure that current and emerging risks are identified and assessed and that there is an appropriate management response (see pages 44 to 51 for further detail on our risks and initiatives to manage them).

As part of the Committee's review of the internal control and risk management systems, key financial, operational and compliance controls across the business continue to be monitored and tested throughout the year. The Committee assesses the approach to Sarbanes-Oxley Act 2002 (SOX) compliance in accordance with our US obligations and reviews reports on the progress of the SOX programme at each meeting.

During 2022, the Committee considered the activity undertaken by the Risk and Assurance team to review and refresh risk profiles and integrate resilience planning into the prioritisation and capability building of the Group's business teams. The Committee also received updates on key assurance projects relating to the evolution of the Group's loyalty programme and the transition of the Group's primary HR system. The Committee reviewed emerging risks in relation to the war in Ukraine and the impact of the Group ceasing operations in Russia, including in relation to financial statements. The Committee also reviewed the response to the unauthorised access to its technology systems, including the roles played by management teams, risk functions and Internal Audit, focusing in particular on considerations for and assessment of the financial control environment.

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Governance

Having reviewed the internal controls and risk management systems throughout the year, the Committee concluded that the Group continues to have an effective system of risk management and internal controls, and that there are no material weaknesses in the control environment.

### Tax risks, policies and governance

The Group's CFO has responsibility for tax and tax policies at Board level. These policies and procedures are subject to regular review and update and are approved by the Audit Committee. Procedures to minimise risk include the preparation of thorough tax risk assessments for all transactions carrying material tax risk and, where appropriate, material tax uncertainties are discussed and resolved with tax authorities in advance.

Our Approach to Tax document is available at www.ihgplc.com/en/responsible-business/policies

### Principal risk areas

During the year, the Committee discussed and assessed the range and aggregate impact of dynamic risks that the Group faced in the context of the volatile geopolitical and macroeconomic environment. The Committee considered the following areas:

- operational risks and wider stakeholder considerations and uncertainties relating to information security, sanctions, payment systems and supply chain caused by the war in Ukraine;
- additional supply chain uncertainties arising as a result of continuing Covid-19 restrictions in Greater China; and
- the ongoing competitive labour and salary environment, heightening risks to achievement of strategy and goals, process continuity, and employee wellbeing.

Particular attention was also paid to cybersecurity and governance in the context of the criminal, unauthorised access to the Group's technology systems.

Further details of our principal risks, uncertainties and review process can be found on pages 44 to 51.

### Non-audit services

The independence and objectivity of the non-audit services provided by the external Auditor to the Group are safeguarded by IHG's Audit and Non-Audit Services Pre-Approval Policy. The policy is reviewed by the Audit Committee annually.

The policy requires that pre-approval is obtained from the Audit Committee for all services provided by the external Auditor before any work can commence, in line with US SEC requirements, without any de minimis threshold and UK ethical standards. The Committee reviewed the audit and non-audit fees incurred with the external Auditor and noted that there had been no prohibited services (as defined by SOX or under UK ethical standards) provided to the Group during the year. The Committee is prohibited from delegating non-audit services approval to management and compliance with the policy is actively managed.

IHG is committed to maintaining non-audit fees at a low level and the Committee remains cognisant of investor advisory bodies' guidelines on non-audit fees. During 2022, 11% of services provided to the Group were non-audit services (2021: 11%), primarily related to System and Organisation Controls (SOC) Reports. Details of the fees paid to PwC for non-audit and statutory audit work during 2022 can be found on page 174. The Committee is satisfied that the Company was compliant during the year with the FRC's Ethical and Auditing Standards in respect of the scope and maximum permitted level of fees incurred for non-audit services provided by PwC. Where non-audit work is performed by PwC, both the Company and PwC ensure adherence to robust processes to prevent the objectivity and independence of the external Auditor being compromised.

### Risk and assurance - Internal Audit

The Committee discusses and approves the Internal Audit annual plan, which aims to provide objective and insightful assurance that appropriate controls are in place to support our strategy and growth ambitions. Progress against the Internal Audit plan is reported at each meeting and, during 2022, the Committee reviewed several areas set out in the plan, including data ownership and integrity, governance and assurance in relation to metrics, and controls access.

The 2023 plan presented to the Committee in December 2022 maintains focus on the integrity of the risk management and internal control system, providing independent assurance to complement management's own activities where these are relatively mature, well-governed and/or regulated. Areas of focus in 2023 include attention on principal risks related to data and information usage and storage and operational resilience to incidents/disruption.

Following consideration, the Committee confirmed its agreement to the 2023 Internal Audit plan, including the assurance objectives identified. The Committee reviews the results of completed audits and observations from other ongoing assurance and control improvement support, as well as actions taken by management in response to Internal Audit's work.

The functional effectiveness of Internal Audit is assessed on an ongoing basis and reported to the Committee throughout the year. During 2022, this has involved feedback from auditees and self-assessment of execution against methodology. This has highlighted ongoing conformance to recognised standards for internal auditing and positive feedback on the team's sustained support to management to understand risks and control approaches through their work, and considered opportunities for continuous improvement, for example, relating to the application of market best practice, application of audit management tools, and protocols for ethics reporting. An independent quality evaluation of the function will be conducted in early 2023.

### Governance and compliance

The Committee is also responsible for reviewing the Group's Code of Conduct and related policies.

### Looking forward

During 2023, the Committee will remain focused on ensuring that standards of good governance are maintained and that appropriate assurance is obtained across all areas of the business, with a particular focus on the Group's principal risks, control environment and approach to financial reporting, taking into account new and emerging legislation and regulation.

### External Auditor - Reappointment of PwC

The Committee reviewed and assessed PwC's performance during the year and considered its reappointment as the Group's external Auditor. PwC was originally appointed as the Group's Auditor in March 2021, following a tender process in 2019. Giles Hannam remained as PwC's lead audit partner in 2022.

As part of its assessment, the Committee:

- regularly reviewed and assessed the progress of the audit throughout the year;
- reviewed the findings from the FRC's annual audit inspection and the actions PwC has undertaken as a result of this inspection. Particular attention was given to the observations which could be relevant in the audit of the Group;
- enquired as to the focus areas of the engagement quality partner;
- reviewed the results of a detailed survey sent to Committee members and a number of senior IHG employees in respect of areas such as audit planning, professional scepticism, technical strength and communication; and
- met privately with the external Auditor to review key issues.

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# Audit Committee Report continued

The Committee also considered if PwC met the required levels of independence and objectivity. The Committee concluded that PwC's audit team was providing the required quality in its provision of audit services. The audit team had shown the necessary commitment and ability to provide the services together with a demonstrable depth of knowledge, robustness, independence and objectivity as well as an appreciation of complex issues. The team had posed constructive challenge to management and the Committee noted the quality of reporting provided to it. Accordingly, the Committee recommended the reappointment of PwC to the Board.

The Group has complied with the requirements of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014, which relates to the frequency and governance of tenders for the appointment of the external auditor and the setting of a policy on the provision of non-audit services.

## Case study - Auditor effectiveness

Two of the Group's significant focus areas, the IHG One Rewards loyalty programme and the System Fund, are audited by a PwC component team. The Audit Committee considered if PwC had maintained effective oversight of the component team and were able to obtain sufficient and appropriate audit evidence. Specific factors considered included:

- the consistency of the audit execution with that outlined in the plan;
- a site visit undertaken by the group team to the component team, including the lead audit partner. During the visit, PwC specifically reviewed these areas and held deep-dive meetings with management;

- the use of PwC's own actuarial experts in respect of the IHG One Rewards loyalty programme;
- the review performed by PwC's engagement quality partner in these areas; and
- specific feedback from management covering PwC's planning, execution and its understanding of complex issues.

The Audit Committee was satisfied that PwC had executed the appropriate level of audit quality in these areas.

### Significant matters in the 2022 Financial Statements

| Area for focus | Issue/Role of the Committee | Conclusions/Actions taken |
| --- | --- | --- |
| Accounting for IHG One Rewards | Accounting for IHG One Rewards requires significant use of estimation techniques and represents a material deferred revenue balance. The Committee reviews the controls, judgements and estimates related to accounting for IHG One Rewards. | The Committee reviewed the deferred revenue balance, the valuation approach, the results of the external actuarial review and procedures completed to determine the breakage assumption for outstanding IHG One Rewards points. Member behaviour during the pandemic was incorporated into the breakage analysis but was not given the same weighting as pre-pandemic activity. The Committee considered changes to the rewards programme in the year and in particular the introduction of Milestone Rewards. The Committee reviewed a paper which summarised the impacts of these changes and amendments to the deferred revenue model which have been made to accommodate them. The Committee concluded that the deferred revenue balance is appropriately stated. |
| Accounting for the System Fund | Given the unique nature of the System Fund, the Committee reviews the controls and processes related to System Fund accounting. | The Committee met with senior finance management to review and evaluate the risk areas associated with the System Fund. The Committee reviewed a paper from management summarising the principles determining the allocation of revenues and expenses to the System Fund, and the related governance and internal control environment. The Committee concluded that the accounting treatment of the System Fund and related disclosures are appropriate. |
| Expected credit losses | Expected credit losses are subject to uncertainty. During 2022, the level of uncertainty has decreased in both the Americas and EMEAA, with uncertainty remaining in Greater China. The Committee reviews the provision and, where historical experience is not considered relevant, reviews the nature and impact of assumptions made. | The Committee reviewed management's papers setting out the approach to calculating the provision for expected credit losses, including updates made in respect of Greater China to reflect the ongoing challenges within the region. The Committee concluded it agreed with the basis of calculation, that this is no longer a significant estimate (as a material change is not expected in the next 12 months), and that the related disclosures are appropriate. |

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| Area for focus | Issue/Role of the Committee | Conclusions/Actions taken |
| --- | --- | --- |
| Impairment testing | Impairment reviews require significant judgement in estimating recoverable values of assets or cash-generating units and the Committee therefore scrutinises the methodologies applied and the inherent sensitivities in determining any potential asset impairment or impairment reversal and the adequacy of related disclosures. | The Committee reviewed management reports outlining the approach taken on impairment testing and key assumptions and sensitivities supporting the conclusion on the various asset categories. The Committee examined in detail whether triggering events for impairment testing had occurred, including testing for impairment reversals, and the assumptions applied in estimating the recoverable values with a focus on the underlying cash projections. The Committee agreed with the determinations reached on impairment and that the related disclosures are appropriate. |
| Litigation and contingencies | From time to time, the Group is subject to legal proceedings with the ultimate outcome of each being subject to many uncertainties. The Committee reviews and evaluates the need for provisioning and considers the adequacy of the disclosure. | At each meeting during the year, the Committee considered reports detailing all material litigation matters including commercial disputes. The Committee discussed and agreed any provisioning requirements based on underlying factors. Disclosures were assessed, with particular emphasis on the completeness of uncertainties disclosed. Where the Group has contingent assets, the Audit Committee considered management's assessment of their probability and the extent of related disclosures and is satisfied these are appropriate. |
| Exceptional items | The Group exercises judgement in presenting exceptional items. The Committee reviews and challenges the classification of items as exceptional based on their size, nature or incidence, with consideration given to consistency of treatment with prior years and between gains and losses. | The Committee reviewed papers by management and considered the consistency of treatment and nature of items classified as exceptional. The Committee reviewed and challenged the significance, timing and nature of the exceptional items (see pages 175 to 178). The Committee also considered the sufficiency of disclosure and whether such disclosure explained the rationale for why each item is considered to be exceptional. The Committee concluded that the disclosures and the treatment of the items shown as exceptional are appropriate. The Committee considered other one-off items which are not considered to be exceptional and concluded that the treatment of such items is appropriate and adequately disclosed. |
| Going concern and viability | The Committee reviews management's financial modelling to conclude on the appropriateness of the going concern and viability statement. | The Committee reviewed and challenged the scenarios considered by management, the detailed cash flow forecasts and the mitigating actions available to management considered in its going concern assessment to June 2024 and the three-year viability assessment and concluded these were appropriate. The Committee also reviewed and challenged the reverse stress test assumptions to confirm the viability of the Group. The Committee reviewed going concern disclosures (page 157) and the viability statement (pages 52 to 53) and is satisfied these are appropriate. |
| Climate risk | In preparing the Financial Statements, the potential impacts of climate change have been considered. | The Committee reviewed an analysis from management summarising the approach taken to consider climate risk on an asset-by-asset basis and concluded that the disclosures were appropriate. The Committee agreed that the disclosures made in respect of the Task Force on Climate-related Financial Disclosures were appropriate. The Committee satisfied itself that the approach across the Annual Report has been proportionate and consistent. |
| UK deferred tax asset | Given the size of the Group's UK deferred tax asset ($109m), the Committee reviewed and challenged the key assumptions determining the recoverability of the deferred tax asset and whether this should be disclosed as a significant estimate. | The Committee confirmed the estimates used to support the recovery of the UK deferred tax asset were consistent with those used in the impairment and going concern and viability assessments. Given the recovery to levels of profitability assumed in these estimates, the Committee concluded that it agreed with the recognition of the deferred tax asset, that this was not a significant estimate, as a material change in estimate is not expected in the next 12 months, and that the disclosures are appropriate. |
| Assessment of the impact of IFRS 17 | IFRS 17 'Insurance Contracts' will be adopted from 1 January 2023. An assessment is made in advance of new accounting standards of the expected impact to the Group's results. | The Committee reviewed a paper from management summarising the impact of IFRS 17 and the key considerations made by management during their assessment. The Committee concluded that the assessment and related disclosures are appropriate. |

Audit Committee Report

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# Responsible Business Committee Report

![img-0.jpeg](img-0.jpeg)

I am pleased to present the Responsible Business Committee's report for the year, including an update on the Board's Voice of the Employee workforce engagement plan.

With increased stakeholder focus on environmental, social and governance (ESG) matters, the 2030 commitments set forth in the Group's Journey to Tomorrow responsible business plan continued to be a primary area of focus for the Committee during the year. Along with review of the 2022 priorities supporting the overall achievement of the Group's longer-term commitments, the Committee considered an external assessment of emerging ESG initiatives and regulatory developments across IHG's key markets and a benchmarking of the 2030 commitments against evolving stakeholder expectations in those markets.

The broader evolution of ESG reporting was another area of focus. The Committee considered in particular the impact of evolving political and societal expectations in relation to ESG issues for companies and the importance of maintaining consistency between the Group's commitments and its decision-making.

The Committee remained mindful throughout its meetings and discussions of the impact of the Group's responsible business agenda on stakeholders, considering for example how to utilise the Group's strong ESG foundation and progress against its responsible business commitments to drive competitive advantage with owners and guests. The Committee further considered the feedback from the Voice of the Employee programme, including in relation to workplace culture and employee wellbeing, as well as the impact of DE&I and other workplace initiatives on employees.

As the Company announced in December 2022, I will retire from the Board with effect from 28 February 2023 and will be succeeded as Chair of the Committee by Graham Allan.

I am proud of the role the Committee has played during my tenure in overseeing and championing the Group's ambitious responsible business agenda, and would like to thank the Committee members and management for their continued focus on driving progress in this area, while keeping the interests of IHG's stakeholders at the forefront of the Group's strategy.

Jill McDonald

Chair of the Responsible Business Committee
20 February 2023

Key duties and role of the Committee

Key objectives and summary of responsibilities

The Committee reviews and advises the Board on the Group's responsible business objectives and strategy, including its impact on the environment and climate change; social, community and human rights issues; its approach to sustainable development and responsible procurement; and stakeholder engagement in relation to the Group's approach to responsible business. The Committee is also responsible for assessing the Board's engagement with the workforce and the Group's DE&I agenda.

The Committee's role, responsibilities and authority delegated to it by the Board are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board.

The ToR are available at www.ihgplc.com/investors under Corporate governance.

In addition to the areas outlined above, the Committee's key responsibilities and focus areas over the year have been:

- assessing the 2022 strategic priorities that support the Group's 2030 responsible business commitments and monitoring the progress against them;
- monitoring the progress of TCFD reporting;
- reviewing the Group's responsible procurement programme;
- reviewing the Group's human rights programme and Modern Slavery Statement;
- reviewing the Group's Responsible Business Report; and
- considering the inclusion of an ESG metric in the Long Term Incentive Plan (LTIP) for Executive Directors.

Membership and attendance at meetings

The Committee's membership and attendance at meetings are set out on page 91. The Chair of the Board, CEO, General Counsel and Company Secretary, Executive Vice President, Global Corporate Affairs and the Chief Sustainability Officer attended all meetings held during the year.

Reporting to the Board

The Committee Chair updates the Board on all key issues raised at Committee meetings. Papers and minutes for each meeting are also circulated to all Board members, who are invited to request further information where necessary.

Effectiveness of the Committee

In 2022, the Committee's effectiveness was reviewed as part of the internal Board evaluation process, where it was concluded that the Committee remains effective.

Focus areas and activities

Responsible business commitments

The Committee considered and assessed the key areas of focus for the Group's responsible business commitments, including:

- progress in relation to increasing gender and ethnic diversity within management at both the corporate and hotel level, and the development of a global wellbeing programme;
- the Group's decarbonisation and energy reduction strategy, including the integration of Energy Conservation Measures (ECMs) into brand standards for operating hotels, developing very low or zero-carbon new-build hotels and future options for a renewable energy programme; and
- the Group's Human Rights programme, with particular focus on identifying and addressing human rights risks specific to the hospitality industry and the progress of the Group's anti-human trafficking programme.

Further information on our 10-year responsible business plan can be found on pages 28 to 37.

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# TCFD

The Committee assessed the Group's progress in relation to 2022 TCFD reporting, noting the increased transparency in the expanded disclosures and the inclusion of a climate transition plan, and work to embed climate risks in the risk profiles of the Group's business teams. Further information on TCFD is included on pages 54 to 61.

# Responsible procurement

The Committee considered the progress of key workstreams of the Group's responsible procurement strategy, including supply chain risk management, sustainability and supplier diversity.

# ESG metric in LTIP

The Committee worked with the Remuneration Committee to consider the inclusion of an ESG metric in the LTIP, involving measures relating to people and the environment.

# Looking forward

During 2023, the Committee will continue to focus on assessing the Group's short-term strategic priorities to drive achievement of the longer-term 2030 responsible business commitments.

Our Responsible Business Report is available at www.ihgplc.com/responsible-business

# Voice of the Employee

At the start of 2022, Duriya Farooqui was appointed as IHG's designated Non-Executive Director (NED) with responsibility for workforce engagement (Voice of the Employee). Duriya has been supported by the Group's Global Human Resources (HR) team to develop and execute a plan to engage directly with members of IHG's corporate and hotel workforces, with the aim of collating and sharing such feedback with the Board for consideration in its decision-making.

# Role and responsibilities

The role and responsibilities of the designated Voice of the Employee NED are to:

- support the design of the structure and content of Board discussions on employee engagement and culture;
- evaluate employee engagement approaches and their effectiveness;
- ensure that employee feedback and interests are factored into the Board's decisions and KPI setting;
- ensure that the Board, through the Executive Committee, has effective methods of receiving feedback from employees and communicating Board and executive decisions and priorities throughout the organisation;
- ensure all significant business and budget proposals include a management assessment of the impact on employees; and
- ensure Executives share employee feedback openly, transparently and in a balanced way, including reviewing employee engagement surveys and other employee reports, including whistleblowing.

# 2022 engagement

Building off prior years' engagement plans, in 2022, the team continued to broaden the employee feedback groups who met with and provided feedback to the Board to include a higher representation of hotel colleagues in markets outside the UK and US, as well as additional Employee Resource Groups (ERGs) to ensure a level of diversity.

During the year, Duriya, with the assistance of several other NEDs, undertook a programme of activities to engage with a cross-section of employees and receive detailed feedback both in person and through a number of virtual employee meetings/forums. These feedback sessions included leader groups within the US and UK hotels, reservations and corporate populations, and ERGs across the UK, US, India, China and various EMEAA countries.

A dozen feedback sessions were held throughout the year, and Duriya was joined by Non-Executive Directors Daniela Barone Soares and Jo Harlow and Chair Deanna Oppenheimer for some of these sessions.

Discussion topics and themes in relation to the feedback received from employees included employee wellbeing; workplace culture; flexible/remote working particularly for the large reservations teams; leader communications; strategy, prioritisation and collaboration; talent attraction; onboarding and retention; personal and career development; and agile ways of working and decision-making.

Additional engagement and activities undertaken by Duriya during the year included:

- monitoring and reviewing the content and feedback from global 'all employee' CEO calls;
- reviewing employee dashboards setting forth data/metrics relating to employees;
- reviewing employee engagement survey results; and
- engaging with the Global HR Leadership team to receive broader cultural insights.

# Insights and learnings

Duriya provided regular feedback to the Responsible Business Committee and the Board throughout the year, with key Board discussions taking place around the insights and action planning arising from employee engagement survey results. Through this feedback, the Board gained valuable insights into employee sentiment throughout the recovery from the pandemic and the shift to hybrid working.

# Plans for 2023

Duriya will remain as the Board member with responsibility for workforce engagement in 2023, and it is anticipated that additional NEDs will assist with some of the Voice of the Employee activities.

A schedule of discussions and feedback sessions has been arranged for 2023, and will continue to encompass a wide group of employees and leaders from across all regions, including ERGs and Lean In circles, with further inclusion in 2023 of a 'new starters' group to ensure a balance of tenure. Additionally, the Board will continue to keep the functioning of the Voice of the Employee programme under review to ensure it meets best practice and complies with regulatory developments.

Responsible Business Committee Report

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# Nomination Committee Report

![img-1.jpeg](img-1.jpeg)

I am pleased to present the Nomination Committee's report for the year.

Following the announcement of my appointment as Chair Designate in January 2022, the Committee's agenda has been dominated by Board composition and succession planning, particularly in respect of Non-Executive Directors approaching the completion of nine-year tenures.

The Committee led Board succession plans with the recommendations to appoint Byron Grote as Non-Executive Director and Audit Committee Chair Designate, and Graham Allan as Responsible Business Committee Chair. The Committee also oversaw a refreshment of the composition of the Audit Committee and the Remuneration Committee.

I am pleased to report that the Committee also approved the promotion and appointment of Michael Glover as Executive Director and Chief Financial Officer, with effect from 20 March 2023, evidencing the strength of the Company's succession planning at the senior management level.

Additionally, as at 31 December 2022, our Board composition exceeds the 40% target for the proportion of women on boards and meets other applicable recommendations set out in the FTSE Women Leaders Review. Our Board also continues to exceed the Parker Review's recommendation on ethnic diversity on boards.

Given the commencement of my tenure as Chair in September, and recognising the value in obtaining external feedback in relation to the effectiveness of the Board, the Committee oversaw the completion of internal Board and Committee effectiveness assessments in 2022. A full external performance evaluation will be conducted in 2023.

In a year of significant change in relation to the Board's composition, the Committee's approach to succession planning continues to ensure that the Board maintains the right mix of skills and experience to assist the Group in building talent, delivering on its strategic objectives and maintaining the Group's strong, inclusive culture.

Deanna Oppenheimer

Chair of the Nomination Committee
20 February 2023

Key duties and role of the Committee

Key objectives and summary of responsibilities

The Committee reviews the composition of the Board and its Principal Committees, evaluating the balance of skills, experience, independence, knowledge and diversity requirements before making appropriate recommendations to the Board as to any changes. It also ensures plans are in place for orderly succession both for Directors and other senior executives and is responsible for reviewing the Group's senior leadership needs.

The Committee's role, responsibilities and authority delegated to it by the Board, including processes in relation to appointments, are set out in its Terms of Reference (ToR), which are reviewed annually and approved by the Board. The ToR state that the Committee is responsible for considering potential candidates for appointment to the Board based on merit, cognitive and personal strengths with due regard for the benefits of diversity, including gender, and social, ethnic and geographic backgrounds.

The ToR are available at www.ihgplc.com/investors under Corporate governance.

The Committee's key responsibilities and focus areas during the year have been:

- assessing the Board's and the Principal Committees' composition and succession planning, including consideration of gender balance and ethnic and geographical diversity, in accordance with the ToR and consistent with the Group's DE&I Policy (details of which are on page 31);
- engaging with external search consultancies and making recommendations on appointments to the Board;
- overseeing the internal performance evaluation of the Board and its Principal Committees as well as the evaluation of individual Non-Executive Directors; and
- monitoring the Executive Committee and senior leadership talent and succession planning.

Membership and attendance at meetings

The Committee's membership and attendance at meetings are available on page 91. All members of the Committee are Non-Executive Directors. When the Committee considers matters relating to my position, the Senior Independent Non-Executive Director (SID) acts as Committee Chair.

Reporting to the Board

The Committee makes recommendations to the Board for all Board appointments. Minutes are circulated to and reviewed by Committee members, and I report back to the Board on the activities of the Committee following each meeting.

Effectiveness of the Committee

During the year, the Committee's effectiveness was reviewed as part of the internal Board evaluation process. It was concluded that the Committee remains effective.

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## Focus areas and activities

### Board and Principal Committee composition and succession planning

The Committee focused in particular on succession planning for the Audit Committee Chair and the Responsible Business Committee Chair roles, in light of the completion of 9-year terms by Ian Dyson and Jill McDonald respectively.

The Committee engaged Egon Zehnder to assist with the search for suitable candidates for the Audit Committee Chair role and an internal search was conducted for the Responsible Business Committee Chair role. In both cases, a candidate selection, assessment and interview process was conducted as relevant, with particular focus on the appropriate competencies, functional experience, cultural characteristics and consideration of candidates' other commitments in line with the provisions of the UK Corporate Governance Code. Egon Zehnder has no other connection with the Company or individual Directors.

Following the completion of satisfactory background and reference checks by Egon Zehnder, the Committee recommended to the Board the appointment of Byron Grote as Non-Executive Director with effect from 1 July 2022, to assume the role of Audit Committee Chair from 1 March 2023. Byron's biography is included on page 93 and details of his induction plan can be found on page 103. With Byron's appointment, the Audit Committee Chair will continue to have recent and relevant financial experience, as required by the UK Corporate Governance Code.

After due consideration, the Committee also recommended to the Board that Graham Allan be appointed as Responsible Business Committee Chair with effect from 1 March 2023.

During the year, the Committee also considered the Principal Committees' composition in the context of the changes outlined above, the balance of skills and experience across the Principal Committees and cross-committee assignments. The Committee determined that it would be appropriate to recommend to the Board the appointment of Arthur de Haast to the Audit Committee, with a view to him stepping down from the Remuneration Committee, and my appointment to the Remuneration Committee (I did not participate in the discussion on this). The Board approved these changes to take place with effect from 1 January 2023.

### Performance evaluations

Given informally started as Chair in September 2022, the Committee recommended to the Board that an internal evaluation exercise be carried out following my appointment, on the basis that an external evaluation process conducted during 2023 would provide more meaningful and productive insight. Further information on the internal performance evaluation is included on pages 103 and 104.

### Executive Committee talent and succession

Subsequent to the announcement in October 2022 of the upcoming departure of Executive Director and Chief Financial Officer Paul Edgecliffe-Johnson, the Committee oversaw the process to appoint a successor. Spencer Stuart supported the process, which included a broad desktop review of external candidates and an interview and assessment process for the internal candidate search, with a particular focus on the appropriate competencies, function experience and understanding of IHG's Global Finance organisation, as well as cultural characteristics and leadership competencies. Spencer Stuart has no other connection with the Company or individual Directors.

Following discussion and consideration, the Committee recommended to the Board the appointment of Michael Glover as Executive Director and Chief Financial Officer from 20 March 2023.

Throughout the year, the Committee also received updates on talent and succession planning at Executive Committee and senior leadership levels, noting in particular progress against DE&I objectives.

Information on the gender balance of senior management as well as the Board is included on page 32.

### Looking forward

In 2023, the Committee will continue its focus on Board succession planning and competencies as well as continuing to ensure that our Executive and senior talent pipeline combines an appropriate blend of skills, experience, knowledge and diversity.

Nomination Committee Report

IHG | Annual Report and Form 20-F 2022

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Governance

# Directors' Remuneration Report
## Remuneration Committee Chair's statement

![img-2.jpeg](img-2.jpeg)

"Management has delivered strongly against its objectives, having positioned the business well for recovery and for future growth and returns."

Table of contents

**114 Directors' Remuneration Report**
(subject to an advisory vote at the 2023 AGM)
114 Remuneration Committee Chair's statement
120 At a glance
122 Our approach to remuneration
127 Annual Report on Directors' Remuneration

As Chair of the Remuneration Committee and on behalf of the Board, I am pleased to present the Directors' Remuneration Report for the year ended 31 December 2022.

2022 business performance context

Demand recovered strongly across most of our markets in 2022. We passed the milestone of 6,000 open hotels in delivering adjusted net system size growth of 4.3% for the year, excluding the impact of ceasing operations in Russia, with room openings and room signings up 12.5% and 16.7% respectively. Operating profit from reportable segments, at $828 million, was up 55% on 2021. Fee margin has recovered to pre-pandemic levels following the recovery in revenue, combined with our disciplined approach to cost management. From a shareholder perspective, the Board has proposed a final dividend of 94.5¢, an increase of 10% on 2021, and resulting in a total dividend for the year of 138.4¢. Additionally, as a result of our strong cash management, we completed a share buyback programme to return $500 million of surplus capital in January 2023, and a further $750 million is due to be launched in 2023.

Wider workforce remuneration and employee engagement

The Committee is extremely mindful of the current cost-of-living challenge and its impact on the financial and emotional wellbeing of our employees. In 2022, salary increases for the UK and US corporate populations were in line with those for Executive Directors. The overall budget for 2023 increases is around 4.5% for UK and US corporate employees and 3% for the CEO.

For the UK leased hotel estate, in agreement with the owner, pay rates for front-line staff were increased in 2022, at least in line with the real living wage, and healthcare benefits were extended. Budgeted 2023 salary increases range from 5% to 8%, with higher increases applicable for front-line employees, and one-off payments made to employees who had worked for at least the final three months of 2022. Details of our approach to remuneration across the wider workforce in general and throughout the year are outlined on pages 123 to 124.

We were pleased to see overall employee engagement scores remain resilient at 86%, exceeding external benchmarks by 8%. Perceptions of pay also remained strong, exceeding external benchmarks across our hotel, reservations and general manager populations (see page 126).

Overview of 2022 remuneration outcomes

The key highlights of Executive Director incentive plan awards for 2022 are presented below, and a detailed explanation and rationale for the Committee's decisions are set out in this report:

- The formulaic achievement on Annual Performance Plan (APP) metrics (operating profit from reportable segments, room openings and room signings) resulted in awards for Executive Directors of 95.7% of maximum reflecting the outstanding performance of the business in 2022.
- The performance measures for the 2020/22 Long Term Incentive Plan (LTIP) cycle were relative Total Shareholder Return (TSR), relative net system size growth (NSSG), cash flow and Total Gross Revenue (TGR). When assessing performance for the 2020/22 award, the impact of the pandemic was considered in relation to the two absolute measures, cash flow and TGR:
  - The TGR target for that cycle was set later in the year, reflecting guidance from investor bodies at the time of the outbreak of Covid-19 that awards could be granted at the usual time with performance targets set up to six months later. The Committee was therefore able to set a TGR target that was reflective of performance expectations after the initial impact of the pandemic became evident. TGR performance was above maximum for the cycle, resulting in full vesting of this element.
  - However, the cash flow target was set in February 2020 and communicated in the 2019 Directors' Remuneration Report. Following the outbreak of Covid-19, the original cash flow target was seen as unachievable. However, the Committee determined not to adjust the targets for the in-flight awards. In October 2020, the Committee began tracking a 'shadow' cash flow target for 2020/22 that had been formulated to drive the cash management actions during this period. The original cash flow target was not adjusted and this shadow target did not replace it. However, as disclosed in our 2021 Directors' Remuneration Report, it was intended to be a highly relevant reference point when assessing the performance of the 2020/22 LTIP.
  - The Committee decided to utilise the maximum of the shadow target, $1.09 billion, as the threshold for the cash flow LTIP measure, reflecting the exceptional performance on cash management during the pandemic.

Assessment of windfall gains

As part of a range of actions taken on pay, as a result of the impact of Covid-19 during 2020, the 2020/22 LTIP award was granted at a maximum of 205% of salary, which is 40% below the Directors' Remuneration Policy approved level of 350% for the CEO and 25% below the policy approved level of 275% for the other Executive Directors. This was part of a wider range of cost-saving measures in response to the pandemic, but also mitigated against the potential for windfall gains on LTIP outcomes, given that the share price had fallen at the time of grant. We are pleased that over the period from May 2020, the share price has performed well, recovering to pre-Covid-19 levels. Before agreeing the vesting levels for the 2020/22 award, the Committee analysed the share price performance to consider the extent of any windfall gain. The analysis showed that the reduction in maximum grant value in 2020 significantly more than outweighed any gain as a result of the share price recovery over the three years, particularly for the CEO1. The Committee, therefore, considered that sufficient actions had been taken to mitigate against the potential for windfall gains and no adjustments were made to vesting levels in this regard.

1 Further details are on page 130.

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## 2020/22 LTIP award

Using our formal discretion framework (see opposite), the Committee considered whether to adjust the formulaic outcome for the cash flow target, given management's exceptional performance in maintaining such a strong cash position during a challenging period for the Company and the resulting outperformance of the maximum shadow cash flow target. Following this assessment, we determined that the result under the formulaic outcome was not reflective of the performance of the business and that discretion should be exercised to the vesting level under the cash flow element. The detailed rationale of the Committee is set out over the following pages:

### Framework for consideration of discretion

In line with the UK Corporate Governance Code, the Committee has adopted a formal framework which it will use to determine whether to exercise discretion. Some of the key factors the Committee considers are shown below.

![img-3.jpeg](img-3.jpeg)

### Committee determination

| Measure and weighting | Weighted formulaic outcome | Weighted discretionary outcome |
| --- | --- | --- |
| Cash flow (20%) | 7.3% | 14.5% (see page 129) |

### Rationale

- The Committee has reviewed performance on this measure against both the original and shadow targets set in 2020 as well as from a number of different perspectives, particularly from a wider company financial and strategic viewpoint.
- Management's use of a shadow target, which was appropriate for the new Covid-19 impacted environment, was fundamental to the strong cash flow performance. The basis for this target could be cascaded into the business as, although it was stretching, it was recognised that with the right management action plans around cost efficiencies, tight cash management and working capital focus, it could be achievable.

In terms of demonstrating the stretch inherent in the shadow cash flow target, set in October 2020:

- the target was set in the environment known at the time, predating the Delta and Omicron Covid-19 variants,
- across the three years it is consistent with the cash flows upon which debt covenants were based, and
- across the final two years of the cycle, $277 million higher cash flow generation was targeted than the internal budget approved in February 2021.

The Committee has looked at the Executive Directors' performance in the key area of cash flow and liquidity management, balancing the need to protect the business while continuing to invest in future growth, including:

- managing through the impact of Covid-19 without the need to raise new equity and maintaining an investment grade credit rating, which has returned to the pre-pandemic level;
- securing interest cover and leverage ratio covenant waivers on existing debt agreements;
- accessing increased liquidity through:
  - £600 million drawn down from the UK Covid Corporate Financing Facility (CCFF), which was repaid in March 2021; and
  - issue of two new bonds in October 2020 and a tender on 2022 bonds, raising around net £600 million to provide longer-term liquidity to the business.
- protecting cash flow by prudent use of capital and reducing costs of which $75 million has been sustained into 2022; and
- strong performance on working capital, targeted approaches to cash collections and management of expenditure.

In 2022, as a result of this strong focus on cash generation:

- positive adjusted free cash flow of $565 million was generated ($29 million in 2020 and $571 million in 2021);
- IHG's credit rating, which remained at investment grade levels throughout the pandemic, returned to pre-pandemic levels;
- the $1.35 billion revolving credit facility was refinanced on favourable terms; and
- the rapid deleveraging of the business has led to ordinary dividend payments being reinstated for 2021 and additional shareholder returns in the form of a $500 million share buyback announced in 2022. In total, over $700 million has been returned to shareholders in 2022, with a further $750 million share buyback announced to be completed in 2023.
- The Committee believes that management has done all it could to preserve IHG's resilience and strategic capability for strong future growth, justifying additional vesting in the cash flow element of the LTIP for this cycle.
- Given the significant outperformance against the shadow target, the Committee exercised its discretion to determine that vesting for the cycle should be based on a range between the maximum of the shadow target and the maximum of the original target (see page 129 for the disclosure of the original and new range). This has resulted in performance of 72.4% of target, giving a weighted vesting outcome of 14.5% for the cash flow measure.

| Net system size growth (NSSG) (30%) | 17.6% | 17.6% |
| --- | --- | --- |

- This was a relative target based on performance against a set of our largest peers.
- The Committee reviewed NSSG performance in detail, from a number of different perspectives, and used its judgement within the framework of the target to determine whether to include certain bulk transactions undertaken by IHG and our competitors during the LTIP performance period (see page 129), but otherwise concluded that it did not consider it appropriate to adjust the formulaic outcome of this relative measure.

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Governance

## Remuneration Committee Chair’s statement continued

### Committee determination

| Measure and weighting | Weighted formulaic outcome | Weighted discretionary outcome | Rationale |
| --- | --- | --- | --- |
| Total Gross Revenue (TGR) (20%) | 20% | 20% | This absolute target was set in October 2020, at the same time as the shadow cash flow target, once the immediate impact of the pandemic was known but before subsequent developments, such as the Delta and Omicron variants. Based on analysis of the data and context, the Committee did not consider it appropriate to adjust the formulaic outcome of this absolute measure. |
| Total Shareholder Return (TSR) (30%) | 0% | 0% | The IHG share price has remained resilient through the latter part of 2020 and through to the end of the LTIP cycle after recovering from an initial reduction in the first half of 2020. IHG’s TSR was significantly ahead of all European peers in the comparator group. However, the share price performance of some comparator group companies based primarily in the fast-recovering US market, with a weighting towards the economy segment, and with their shares listed on US stock markets, which have performed better than the FTSE over this period, has resulted in IHG being below the threshold level for vesting on this relative measure. Based on analysis of the data and context, the Committee did not consider it appropriate to adjust the formulaic outcome of this measure. |
| Total | 44.9% | 52.1% |  |

The relative NSSG measure is subject to the achievement of a Return on Capital Employed (ROCE) underpin. The underpin was introduced before the pandemic and was intended to ensure that the ROCE impact was considered in strategic decision making, such as M&A activity. The Committee considered the underpin for the 2020/22 cycle and noted that, whilst ROCE was below the underpin level for the first two years due to the impact of Covid-19, it was above the underpin for 2022. The Committee therefore decided not to adjust the vesting levels in relation to the underpin.

No other discretion was exercised in respect of the other LTIP measures, meaning the overall vesting was 52.1% of maximum for all three Executive Directors. Details of the awards vesting are provided on page 130.

### 2022 APP award

Alongside operating profit from reportable segments, the 2022 strategic openings and signings measures were designed to provide in-year focus on rooms growth in a competitive market, in order to complement the longer-term three-year LTIP focus on overall net system size growth. The formulaic achievement against the APP measures resulted in an award of 166.4% of target, or 191.4% of salary. The Committee feels the formulaic APP award is justified, given its view on the strong performance of the business in 2022 on both an absolute and relative basis:

| Measure and weighting | Weighted outcome | Consideration of discretion |
| --- | --- | --- |
| Operating profit from reportable segments (70%) | 135.8% | The targets were appropriately set, with a narrower range around the target outcome than in 2021 but still wider than in pre-pandemic years, resulting in greater stretch required on the upside and reflecting the context at the time; acknowledging the limited forward visibility of the shape and pace of recovery through 2022. Management delivered strong results against the key financial metrics which contribute to operating profit, while continuing to invest in growth opportunities, such as the long-term commercial agreement with Iberostar Hotels & Resorts, infrastructure to support Luxury & Lifestyle and enhancing our HR systems. The Committee has reviewed the quality of underlying performance, including whether adjustments should be made and concluded no adjustments were necessary. The Committee also reviewed a number of factors which were not budgeted for at the time of setting targets, including the exit of operations in Russia, and used its judgement to adjust for those where it was deemed appropriate, as outlined on page 128. On this basis, the Committee found no rationale for applying negative discretion. |
| Signings (15%) | 15.4% | Targets were set reflecting the typical nature of the pace at which the drivers of signings and openings respond during periods of recovery, and containing significant stretch to achieve outperformance. As noted above, in respect of operating profit from reportable segments, the Committee used its judgement to adjust for the exit of operations in Russia in the signings and openings performance as outlined on page 128. The Committee also assessed performance against our largest competitors, with IHG remaining broadly in line year-on-year. The Committee is satisfied that performance relative to our peers was competitive. See under ‘Openings’ below regarding the Committee’s assessment against Global Metrics performance. On this basis, the Committee found no rationale for applying negative discretion. |
| Openings (15%) | 15.2% | Performance was ahead of target on this measure. The Committee assessed performance relative to competitors and is satisfied that performance relative to our peers was competitive. The signings and openings measures are subject to the Committee assessing performance against the Company’s Global Metrics. The majority of metrics, seven of nine, tracked above target or prior year performance. Of those with formal targets, six of seven exceeded target. On this basis, the Committee found no rationale for applying negative discretion. |
|  |  | Overall, having also considered broader stakeholder perspectives (see page 117), the Committee found no rationale for applying negative discretion to the formulaic outcome of the 2022 APP. |
| Total | 166.4% |  |

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### Total 2022 variable incentive outcome

In addition to reviewing the individual LTIP and APP components, as outlined on page 116, and the wider stakeholder position, as outlined below, the Committee took a holistic view of variable incentive outcomes and considered the overall outcome for 2022. In total, the 2022 APP and LTIP awards for Executive Directors represent 73.6% of the maximum potential value. This is reflective of strong performance and, although not a determining factor, in line with historic overall reward outcomes, as outlined on page 132, in respect of the CEO, which have averaged at 63.8% in the previous 10 years, excluding 2020. The Committee considers the combined 2022 LTIP and APP awards appropriate in this context.

### Broader stakeholder perspectives

In considering the use of discretion, the Committee has taken into account the experience and views of wider stakeholders:

| Wider workforce | The APP measures of operating profit from reportable segments, openings and signings apply to the whole corporate employee population, along with a personal performance element below the Executive Committee (EC) level, with target bonus amounts determined by grade. The strong formulaic performance under the corporate measures will apply to and benefit this whole population. In addition, in view of the strong performance in 2022, an additional 6% is being added to the amount budgeted for the personal performance element to increase awards for those employees who performed the strongest during 2022. All LTIP award holders, around 43 of our senior management population, most of whom also receive Restricted Stock Unit (RSU) awards, will benefit from the additional discretionary vesting under the cash flow measure in recognition of the exceptional teamwork and effort required during the cycle and resulting strong performance as the recovery continues. In January 2023, the second matched share vesting took place under our employee share plan, as a result of which 1,893 employees received free shares matched on a 1:1 basis. The overall employee engagement score of 86% exceeded that of external benchmarks by 8% and views on pay and benefits, in particular, remained consistently above external benchmarks (see page 126). As explained on page 124, the employing entities for a number of UK leased hotels are part of the IHG group. With the support of the hotels' owner, all roles at these hotels are paid above the living wage and zero-hour contracts have been eliminated across this estate. From April 2022, all employees in these hotels were paid at, or above, the real living wage, with the majority paid above. Salary increases of between 5% and 8% will be made in 2023 for employees at these hotels as they continue to meet the real living wage changes announced by the Real Living Wage Foundation in September 2022. Additionally, a one-off payment of £650 (pro-rated for part-time employees) was made in January 2023 to front-line employees who had worked at these hotels from 1 October to 31 December 2022. Further considerations included under 'Remuneration at IHG - the wider context' on pages 123 to 124. |
| --- | --- |
| Owners | Favourable credit terms provided to assist with the impact of the pandemic. Agreement with owners to manage cash flow through utilisation of maintenance reserves. Expanded hotel procurement solutions to combat supply chain challenges and rising costs. Launched new hiring tools and support to recruit and retain talent. Continued review and evolution of brand standards to improve operational efficiency. Government advocacy carried out on behalf of owners. Launched the Demand Sensing Forecast model to help owners maximise revenue opportunities using data and analytics. Invested in IHG One Rewards, with loyalty contribution increasing following the launch and returning to pre-pandemic levels. |
| Guests | Flexible cancellation policy operated, and waiver of cancellation fees. Continued execution of IHG® Way of Clean and IHG® Clean Promise in our hotels. Launched a transformed loyalty offer in 2022 with IHG One Rewards providing more ways to earn and redeem points alongside more tailored experiences and enhanced food and beverage offering in our hotels. IHG One Rewards membership status protection provided. |
| Shareholders | IHG share price has remained resilient, ending 2022 at around the average of the closing price for the full year and 100% up on the lows of March 2020; and made a strong start through January 2023, ending 19% up for the month. An interim dividend of 43.9¢ was paid on 6 October 2022 and the Board is proposing a final dividend of 94.5¢ in respect of 2022. Commencing in August 2022, the Company announced a return of $500 million to shareholders through a buyback programme, and has announced a further $750 million buyback programme for 2023. There is continued momentum in future growth with the brands that we have added since 2017 already contributing 10% of our pipeline, and our Luxury & Lifestyle portfolio representing 20% of our pipeline as we increase our exposure to higher fee income segments. Having consulted with shareholders on the potential use of discretion for the 2020/22 LTIP cycle, we received positive and constructive feedback. |

Certain KPIs and Non-GAAP measures are used throughout the Directors' Remuneration Report. See pages 85 to 88 for additional detail.

Use of Non-GAAP measures: in addition to performance measures directly observable in the Group Financial Statements (IFRS measures), additional financial measures (described as Non-GAAP) are presented that are used internally by management as key measures to assess performance. Non-GAAP measures are either not defined under IFRS or are adjusted IFRS figures. Further explanation in relation to these measures can be found on pages 85 to 88 and reconciliations to IFRS figures, where they have been adjusted, are on pages 226 to 232.

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# Directors' Remuneration Report continued
## Remuneration Committee Chair's statement continued

### Implementation of Directors' Remuneration Policy (DR Policy) in 2023

The Committee commenced its review of the current DR Policy in 2022, which included an extensive internal and external consultation process to understand those elements that were working well and those where change may be required. This included stakeholder interviews with the Executive and Non-Executive Directors, a wholesale review of market practice and two rounds of consultation with our shareholders. A number of key challenges were identified:

- The need to prepare for the future - our Executive Directors have been in role for a number of years and the Committee recognised the likelihood of having to attract successors during the life of the next policy. Succession risk has been realised with the resignation of Paul Edgecliffe-Johnson, Chief Financial Officer and Group Head of Strategy (see below for further details). While we continue to have robust succession planning in place, our packages need to be attractive enough to recruit external executives in the global market with the appropriate skills, experience and US and international expertise.
- US talent market - we have previously highlighted that IHG is a global business in a global industry driven by US-based global competitors. The US represents around 65% of revenue and profit. US experience is essential for executive director roles and to sustain an effective succession plan. We are increasingly competing for talent in the US, where remuneration opportunities are much higher primarily due to the significant long-term variable pay potential. Where we have necessarily made increases at senior levels below the Board to enable us to remain competitive within the US market, this has led to pay compression with more senior roles, impacting our ability to recruit the right calibre of leaders to key positions. We have also continued to see increased turnover of key roles at senior management levels as external offers are more attractive than executive director succession at IHG. The Committee recognises that as a UK company, we are not able to pay at levels commensurate with our US peers; however, our packages are not sufficiently competitive in structure and quantum to attract talent from the US market, creating a risk to our ability to preserve shareholder value in the future.
- Disconnect between Company performance, strategy and pay outcomes - IHG continues to be a high-performing Company. However, volatility in LTIP measures, particularly TSR, undermines our strong 'pay for performance' ethos. We expect the volatility in the TSR measure to continue in the coming years as US listed companies benefit from capital flows and the US stock markets.

The Committee has been considering a range of approaches to address the above concerns. This has included extensive consultation with shareholders to understand their views. We carried out an initial consultation in September 2022, primarily on the structure of our incentives but also on the governance features in place and the performance measures. We received helpful feedback which enabled us to refine our proposals, and we began a second round of consultation in early 2023. This second phase of the consultation is ongoing, and we therefore determined that it would be beneficial to delay the publication of the new policy, to allow time for further discussion with as wide a range of shareholders as possible. For that reason, the new policy is not included in this report and it is currently intended that it will instead be published in our 2023 Notice of AGM.

Pending the outcome of shareholder consultations, details of the implementation of the policy for 2023 will also be set out in the Notice of AGM (other than 2023 salary levels, which are described on page 136, and retirement benefits, which are described below). It is anticipated that the APP will continue to be measured on operating profit from reportable segments, signings and opening targets, and that the LTIP measures will include a new Environmental, Social and Governance (ESG) measure, with targets related to decarbonisation actions as well as some of our diversity, equity and inclusion commitments.

Retirement benefits for incumbent UK Executive Directors were aligned with the maximum company contribution available to all other participants in the UK pension plan at the end of 2022. As stated in last year's report, and in line with our approved DR Policy, US retirement benefit arrangements, in which the CEO, Americas, participates, differ in a number of respects from UK pension arrangements, as explained on page 124. They are comprised of a 401(k) plan under which all corporate employees benefit from maximum employer contributions of a consistent 6% of salary, and a Deferred Compensation Plan for around 100 eligible senior employees under which all participants, including the CEO, Americas, can receive supplementary contributions of up to 16% of salary. These are common retirement benefit plans in the US market and, given the parity of treatment for all participants in each of these plans, as well as the importance of the CEO, Americas role to the business and the market competitiveness concerns over Executive Director pay, the Committee intends to maintain the arrangements as they relate to the CEO, Americas.

### Board changes

During the year, Patrick Cescau stepped down as Chair of the Board and was replaced by Deanna Oppenheimer. Byron Grote was appointed as a Non-Executive Director. The remuneration arrangements in respect of all changes were in line with the approved DR Policy and are covered on page 134.

As announced on 21 October 2022, Paul Edgecliffe-Johnson will step down from the role of Chief Financial Officer and Group Head of Strategy, and from the Board, in 2023. His leaving date will be 19 March 2023 and his remuneration arrangements on departure are as follows:

- Salary, pension and benefits will be paid up until 19 March 2023. In line with our previous commitment, his pension has been reduced to the rate of all other IHG UK pension plan participants, which is 12% of salary, from 1 January 2023.
- No further payments in respect of these elements will be paid beyond 19 March 2023, given he will be taking up new employment.
- He remained eligible to receive an APP award in respect of the full 2022 performance year. As noted above, the outcome for the APP was 95.7% of maximum. In line with our termination policy, the cash element will be paid in the usual way but the deferred shares portion will be forfeited upon his termination date.
- His LTIP awards for the 2020/22 cycle were assessed in the same way as for the other Executive Directors as outlined above; the vesting outcome was 52.1% of maximum. This award will vest on 22 February 2023 and will be subject to a two-year holding period thereafter.
- He will not be eligible to receive an APP or LTIP award in respect of 2023.

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- All outstanding APP shares and LTIP awards that have not vested on 19 March 2023 will be forfeited. The post-employment shareholding policy will be applied. He will be required to hold shares equivalent to his minimum shareholding requirement of 300% of salary as at the date of leaving for six months post cessation and 50% of the minimum shareholding requirement for a further six months.
- No other payments will be made in connection with his leaving.

Michael Glover will replace Paul Edgecliffe-Johnson as Chief Financial Officer on 20 March 2023 and further details of his remuneration can be found on page 136.

#### About this report

As always, we strive to make this report as easy to read as possible. Following this statement, there is a reminder of the approved DR Policy applicable in 2022 and its alignment with the UK Corporate Governance Code principles. As such, this report should be read in conjunction with the 2023 Notice of AGM, once published, and this report and the 2023 Notice of AGM taken together comprise the annual Directors' Remuneration Report. There is an 'At a glance' section on pages 120 to 121 providing an illustration of 2022 remuneration outcomes and, over the following pages, there is a summary of how executive remuneration aligns to company strategy; a summary of remuneration across the wider workforce; and, on pages 125 to 126, further background on the Remuneration Committee.

This Annual Report on Directors' Remuneration Report (pages 114 to 136) will be put to an advisory vote by shareholders at the May 2023 Annual General Meeting.

Jo Harlow

Chair of the Remuneration Committee

20 February 2023

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# Directors' Remuneration Report continued
At a glance

How to use this report

Within the Directors' Remuneration Report we have used colour coding to denote different elements of remuneration. The colours used and the corresponding remuneration elements are:

- Salary
- Benefits
- Pension benefit
- Annual Performance Plan (APP) 50% cash and 50% deferred shares
- Long Term Incentive Plan (LTIP)
- Shareholding

AUDITED

Audited information

Content contained within a tinted panel highlighted with an 'Audited' tab indicates that all the information within the panel is audited.

Table of contents

| 120 | At a glance | 123 | Remuneration at IHG - the wider context |
| --- | --- | --- | --- |
| 122 | Our approach to remuneration - link to strategy | 125 | Remuneration Committee details |

Over the following pages of the report, we give an overview of how our remuneration arrangements are aligned to our purpose, ambition and strategic priorities. We have included a summary of our approved DR Policy, as applicable for 2022, on page 122, together with a reminder of how the Committee has addressed Provision 40 of the 2018 UK Corporate Governance Code in respect of remuneration policy and practice throughout 2022. Alignment of pay structures throughout the organisation and the implementation of remuneration policy across the wider workforce is covered on pages 123 to 124. Pages 125 to 126 contain a summary of Committee actions during the year.

Executive Director remuneration

2022 actual remuneration vs potential remuneration

The charts below show the 2022 potential remuneration opportunity and actual achievement compared to the 2021 actual achievement.

The relevant figures for each of the elements that make up the single total figure of remuneration, as shown below for the Executive Directors, can be found in the table on page 127. See above for the key to individual elements of actual remuneration for 2021 and 2022.

Keith Barr, Chief Executive Officer
Value (£000)

![img-0.jpeg](img-0.jpeg)

Key for potential

- Minimum = Fixed pay
- Target = Fixed pay and on-target award for APP (115%) and 50% of maximum LTIP vesting
- Maximum = Fixed pay and maximum award under APP and LTIP

Paul Edgecliffe-Johnson, Chief Financial Officer
Value (£000)

![img-1.jpeg](img-1.jpeg)

Elie Maalouf, Chief Executive Officer, Americas
Value (£000)

![img-2.jpeg](img-2.jpeg)

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## How we performed in 2022

Strong performance against target across all measures meant that the formulaic 2022 APP achievement was 166.4% of target, resulting in awards for Executive Directors of 191.4% of salary. Under the LTIP, solid net system size growth performance relative to our largest competitors and strong Total Gross Revenue performance, together with exceptional management of cash flow through the pandemic and into recovery, resulted in a formulaic outcome of 44.9% of maximum, which was increased to 52.1% of maximum following the exercise of discretion by the Committee (see pages 115 and 116 for the Committee's consideration of discretion).

### Measures used for APP

![img-3.jpeg](img-3.jpeg)

#### Operating profit from reportable segments ($m)

![img-4.jpeg](img-4.jpeg)

#### Room signings (k rooms)

![img-5.jpeg](img-5.jpeg)

#### Room openings (k rooms)

![img-6.jpeg](img-6.jpeg)

### Measures used for LTIP

![img-7.jpeg](img-7.jpeg)

#### Before discretion

##### Relative Total Shareholder Return (%)

![img-8.jpeg](img-8.jpeg)

##### Total Gross Revenue ($bn)

![img-9.jpeg](img-9.jpeg)

##### Relative net system size growth (%)

![img-10.jpeg](img-10.jpeg)

##### Cash flow (original target) $bn

![img-11.jpeg](img-11.jpeg)

#### After discretion

##### Relative Total Shareholder Return (%)

No discretion applied

##### Total Gross Revenue (%)

No discretion applied

##### Relative net system size growth (%)

No discretion applied

##### Cash flow (final range) $bn

![img-12.jpeg](img-12.jpeg)

##### Cash flow (shadow target) $bn

![img-13.jpeg](img-13.jpeg)

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# Directors' Remuneration Report continued
## Our approach to remuneration

### Summary of approved Directors' Remuneration Policy (DR Policy)

The DR policy framework below, and its alignment with Provision 40 of the Corporate Governance Code, relates to 2022 remuneration. The future DR Policy is subject to ongoing shareholder consultation at the time of writing this report.

| Element | 2022 | 2023 | 2024 | 2025 | 2026 | Framework | Purpose |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Fixed |  |  |  |  |  |  |  |
| Base salary |  |  |  |  |  | Increases are generally in line with the range applying to the corporate population. Reviewed annually and fixed for 12 months from 1 April. | To recognise the value and impact of the role and the individual's skills, performance and experience. |
| Benefits |  |  |  |  |  | Relevant benefits are aligned to the typical level for the role/location. | To be competitive and consistent with role/location; to help recruit and retain. |
| Pension/Retirement benefit |  |  |  |  |  | A Defined Contribution or cash in lieu amount for UK Directors. Employee contributions with matching company contributions. Salary is the only part of pay that is pensionable. See further details regarding UK and US pension benefit on page 124. | To be competitive and consistent with role/location; to help recruit and retain. |
| Variable |  |  |  |  |  |  |  |
| Annual Performance Plan (cash) | Cash |  |  |  |  | Maximum opportunity is 200% of salary; 70% based on operating profit measure and 30% on key strategic objectives; 50% of the award is deferred into shares for three years. | To reward the achievement of stretching targets that support the Company's annual financial and strategic goals. For 2022, the key strategic objectives were: • room signings (15% weighting); and • room openings (15% weighting). |
| Annual Performance Plan (deferred shares) |  |  | Deferral |  |  |  |  |
| Long Term Incentive Plan (LTIP) |  | Performance |  | Deferral |  | The maximum potential LTIP quantum is 350% of salary for the CEO and 275% of salary for other Executive Directors; a two-year post-vest holding period applies. | A focus on industry-leading growth in our scale is at the heart of our strategy. Together with TSR and cash flow, there is a strong alignment between Executive Director remuneration and shareholder interests. |

A copy of the approved DR Policy is available on IHG's website at www.lhgplc.com/investors under Corporate Governance.

The Committee has considered the remuneration policy and practices in the context of Provision 40 of the UK Corporate Governance Code, as follows:

| Principle | IHG's approach |
| --- | --- |
| Clarity | We always seek to set and report our performance-related measures, targets and outcomes in a clear, transparent and balanced way, with relevant and timely communication with all of our stakeholders. Our reward policies drive engagement throughout the workforce with an aligned approach to performance-related reward. Through the combination of short- and long-term incentive plan measures, the DR Policy is structured to support financial objectives and the strategic priorities of the business which deliver shareholder returns and long-term value creation. Further alignment with shareholder interests is driven by the significant proportion of share-based incentives and Executive Director shareholding requirements. |
| Simplicity | Our remuneration structure comprises straightforward and well-understood components. The purpose, structure and strategic alignment of each element is clearly laid out in the remuneration policy summary table: • fixed pay: base salary, pension and benefits that are consistent with role and location; • short-term incentive: annual performance-related bonus which incentivises and rewards the delivery of financial and non-financial strategic objectives; • long-term incentive: a share-based award which incentivises performance over a three-year period and is based on measures which drive long-term sustainable growth. |
| Predictability | The range of possible values of rewards for Executive Directors is clearly disclosed in graphical form both at the time of approving the policy and in the annual implementation report. |
| Risk | Our DR Policy contains a number of elements to ensure that it drives the right behaviours to incentivise the Executive Directors to deliver long-term sustainable growth and shareholder returns and to reward them appropriately: • the maximum short- and long-term incentive awards are capped as a % of salary; • the Committee has clear discretion policies, linked to specific measures where necessary, to override formulaic outcomes; • Executive Directors agree to clear and comprehensive malus and clawback provisions; and • significant shareholding requirements apply for Executive Directors. |
| Proportionality | Individual rewards are aligned to the delivery of strategic business objectives. The Committee sets robust and stretching targets to ensure that there is a clear link between the performance of the Group and the awards made to Executive Directors and others. |
| Alignment to culture | IHG has a clear purpose and well-established values and behaviours. The alignment between remuneration incentives and our strategy for high-quality growth, and the KPIs which underpin the delivery of our strategy, is outlined on page 123. Other elements of reward, such as salary reviews and, across the wider workforce, the short-term incentive plan and our global recognition scheme, reward employees for performance and actions which demonstrate our values and behaviours. |

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## Aligning variable elements of remuneration to strategy

Variable elements of remuneration are linked to our strategy through our four strategic priorities, our purpose and our ambition, as shown below in respect of the 2022 APP and 2022/24 LTIP cycle granted in 2022.

| Our purpose | Our ambition | Our strategic priorities |
| --- | --- | --- |
| True Hospitality for Good | To deliver industry-leading growth in our scale, enterprise platform and performance, doing so sustainably for all stakeholders, including our hotel owners, guests and society as a whole. | Build loved and trusted brands Customer centric in all we do Create digital advantage Care for our people, communities and planet |

| Element | Measures | Link to strategy | Explanation |
| --- | --- | --- | --- |
| Annual Performance Plan (APP) | Operating profit |  | The strength and breadth of our portfolio, tailored services and solutions, as well as our technology and platforms drive consumer preference, owner returns and rooms growth; all contributing to our revenues and profit. Openings and signings are two of our key drivers of system size and central to our ambition to deliver industry-leading rooms growth in our scale. Aligned to our people, communities and planet strategy, the Remuneration Committee will review performance on Global Metrics, including key ESG measures (Employee engagement, Guest Love, Responsible Business), in considering the potential application of discretion to formulaic outcomes on APP strategic objective measures. |
|  | Room signings |  |  |
|  | Room openings |  |  |
|  | Global Metrics |  |  |
| Long Term Incentive Plan (LTIP) | Relative Total Shareholder Return |  | Our growth ambition is intended to deliver value and return for our stakeholders, including competitive total shareholder returns. Our ambition is to deliver high-quality, industry-leading net rooms growth in our scale, so it is important that this forms a key element of our management team's Long Term Incentive Plan. Enhancing our customer and owner offer and developing our brands at scale in high-value markets drives sustained growth in cash flows and profits over the long term, which can be reinvested in our business and returned to shareholders. |
|  | Relative net system size growth |  |  |
|  | Cash flow |  |  |

## Remuneration at IHG - the wider context

### Our reward philosophy

Our reward arrangements are competitive, drive creation of value for stakeholders and make us think and act as one team.

### How our reward practices are aligned across all levels of the organisation

Our approach to fairness in reward is an important aspect of our overall reward philosophy and is designed to attract and retain the best talent, with a focus on championing a diverse and inclusive culture where employees can thrive. The reward philosophy is supported by a robust governance approach aimed at having fair and consistent reward and recognition practices across our employee population, regardless of gender and other aspects of diversity, as well as an alignment between the wider direct workforce and executive remuneration. We regularly review our approach externally, ensuring we meet the needs of employees by offering market-driven reward packages.

### Employee engagement on pay

The 2022 employee engagement scores for participating hotel and reservations employees and general managers on the questions relating to reward and recognition exceeded our survey provider's top quartile benchmark. See page 126 for details.

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# Directors' Remuneration Report continued
## Our approach to remuneration continued

### Examples of alignment and implementation of wider workforce reward strategy in 2022

| Elements of reward | Participants | Commentary |
| --- | --- | --- |
| Fixed |  |  |
| ■ Salary | All | In the 2022 base salary review process, we continued to put managers at the heart of the process, allowing them to use their discretion in pay decisions, and included an additional 33% on top of the standard merit budget in order to address equity and talent recognition. We improved our external benchmarking capability and provided additional line manager support with improved analysis of market data and guidance. This allowed the merit budget to be targeted on areas where it would have the most impact. We continued to provide managers with our diversity, equity and inclusion statement on making fair reward decisions consistent with our Code of Conduct to ensure all employees are rewarded fairly and according to their contribution, skills and experience with tips on avoiding any conscious and unconscious bias. For 2023, additional merit budget will again be made available to address individual equity and talent recognition. |
| ■ Benefits | All | For 2022, we enhanced the UK healthcare offering to include cover for IVF and infertility treatment. Additionally, we introduced cover for gender dysphoria investigations and related mental health therapy, surgery and follow-up. We also extended the eligibility for health assessments to all of our UK corporate employees. The levels of healthcare cover on offer in the UK continue to align across all UK corporate colleagues. |
| ■ Pension benefit | All | Pension and retirement benefits are provided in the UK and US in line with market practice. UK: the contribution rate for corporate and eligible hotel employees in the IHG UK pension plan is aligned across the eligible population with a 2:1 matching ratio up to a maximum of 6% of salary from employees and 12% from the Company. During 2022, the trustee of the plan carried out a detailed assessment of our UK pension plan in line with regulatory guidance and confirmed that it continues to provide good value for members. US: US retirement saving plans are made up of a 401(k) plan which has a 1:1 matching contribution ratio up to a maximum of 6% of salary for eligible corporate employees and a Deferred Compensation Plan (DCP) which provides for supplementary company contributions of up to 16% provided at senior levels (a historic grandfathered rate of 20% applies for a small number of employees who were already receiving this rate when it was removed effective 1 January 2017). |
| Variable |  |  |
| ■ Annual Performance Plan (APP) | All | All corporate employees share the same corporate performance metrics with the Executive Committee and Executive Directors. For senior management (generally at Executive Committee level and their direct reports), a proportion of bonus is deferred into shares for a three-year period. The weightings of metrics for all corporate employees below Executive Committee level are aligned and a greater portion of an award can be achieved through an employee's individual performance and contribution to the Company. In addition, in view of the strong performance in 2022, an additional 6% is being added to the amount budgeted for the personal performance element to increase awards for those employees who performed the strongest during 2022. |
| ■ Long Term Incentive Plan (LTIP) | Executive Directors and senior management | Senior/mid-management and certain specialist roles are eligible to participate in a Long Term Incentive Plan (LTIP). Performance-based LTIP awards largely apply at the level of Executive Committee and their direct reports; Restricted Stock Units typically apply for eligible employees below this level (see below). |
| ■ Restricted Stock Units (RSUs) | Excludes Executive Directors | In line with typical market practice, particularly in the US, and due to line-of-sight over performance measures, a gradually greater proportion of the LTIP award is made as RSUs (which are not subject to performance conditions but still align employee interests with those of shareholders) for eligible roles from Executive Committee level down. In 2022, we increased the number of employees eligible to receive RSUs below Executive Committee level and also increased the quantum available to the same employees. This provided additional scope to attract and retain key talent, reward more employees for their contribution to the Company and further align with market practice. |
| ■ Colleague Share Plan | Wider workforce only | IHG matches the number of shares purchased by employees, up to a value of USD 1,000 per year, on a 1-for-1 basis. Our employee share plan is available to approximately 96% of our corporate employees below the senior/mid-management level (who receive LTIP and/or RSU awards). Our highest participation level was achieved in 2022, with 53% of eligible employees having enrolled in the Plan. The Colleague Share Plan was introduced from 2020 and the first cycle's matching shares vested in January 2022 with over 32,000 shares vesting; the second cycle's matching share award vested in January 2023 with over 26,200 shares vesting between 1,893 employees. |
| ■ Recognition schemes | All | In 2022, we reintroduced our Bravo recognition scheme. Colleagues who are below senior leader level can be nominated for a cash award for going above and beyond in their jobs whilst displaying exceptional IHG behaviours. All of the corporate workforce, including Executive Directors, are eligible to receive a Long-Term Service Award, of varying value, once the employee reaches certain service milestones. |

### UK leased hotel employees

As previously reported, following the acquisition of a number of UK hotels in 2019, employing entities for the estate's hotels were transferred to IHG. Employment terms, including remuneration and benefits, largely remained in place on their pre-acquisition basis. As with the model for leased hotels generally, IHG provides hotel management support to the owners of these UK leased hotels and makes recommendations on matters, including pay, based on market insight and experience. Decisions on implementing pay changes are ultimately determined by the hotel estate owner in the context of their own commercial position and equities across the wider portfolio.

- The Real Living Wage will be applied as a minimum for all staff in line with the Real Living Wage Foundation level from April 2023, and zero-hour contracts are not utilised in the UK leased estate.
- The reward offering was enhanced for some management roles to provide all senior management with an employee bi-annual health assessment and supplementary healthcare for the employee and their immediate family. The hotel performance management plan has been extended to all Heads of Department managers.
- Hotel colleagues receive similar benefits to corporate employees including enrolment into a workplace pension, employee room rates, employee assistance programme, Bravo recognition programme, retail discount vouchers, the myWellbeing programme and refer-a-friend bonus. Front-line colleagues can also receive incentives and performance-driven bonuses.
- In January 2023, one-off payments were made to those front-line colleagues and managers who were not otherwise eligible for an annual bonus (pro-rated for part-time colleagues based on their hours worked). This payment applied to all colleagues who worked between 1 October and 31 December 2022.

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Governance

# Remuneration Committee details

# 2022 focus areas

- Review and approval of 2021 remuneration outcomes and 2022 incentive plan structures and targets
- In-year performance and relative performance tracking
- Wider workforce remuneration matters
- ESG in incentives and IHG Green Engage progress
- Consideration of discretion relating to 2022 remuneration outcomes
- DR Policy review including 2023+ structures and targets

# Key objectives and summary of responsibilities

The Remuneration Committee agrees, on behalf of the Board, all aspects of remuneration of the Executive Directors and the Executive Committee, and agrees the strategy, direction and policy for the remuneration of the senior executives who have a significant influence over the Group's ability to meet its strategic objectives. Additionally, the Committee reviews wider workforce pay policies and practice to ensure alignment with strategy, values and behaviours and takes this into account when setting Executive Director remuneration. The Committee's role and responsibilities are set out in its Terms of Reference (ToR) which are reviewed annually and approved by the Board.

The ToR are available on IHG's website at www.ihgplc.com/investors under Corporate governance.

# Membership and attendance at meetings

Details of the Committee membership and attendance at meetings are set out on page 91.

During 2023, the Committee was supported internally by the Company Chair, the Group's CEO and CFO, and the heads of Human Resources and Reward as necessary. All attend by invitation to provide further background information and context to assist the Committee in its duties. They are not present for any discussions that relate directly to their own remuneration or where their attendance would not be appropriate.

# Reporting to the Board

The Committee Chair updates the Board on all key issues raised at Committee meetings. Papers and minutes for each meeting are also circulated to all Board members for review and comment.

# Non-Executive Directors' letters of appointment and notice periods

Non-Executive Directors have letters of appointment, which are available upon request from the Company Secretary's office.

Deanna Oppenheimer, Non-Executive Chair, is subject to 12 months' notice and is in compliance with Provision 19 of the UK Corporate Governance Code. No other Non-Executive Directors are subject to notice periods; all Non-Executive Directors are subject to an annual re-election by shareholders at the AGM.

# Effectiveness of the Committee

The effectiveness of the Committee is monitored and assessed regularly by the Chair of the Committee and the Chair of the Board.

# Remuneration advisers

In 2019, the Committee undertook a competitive tender process and IHG appointed Deloitte LLP to act as independent adviser to the Committee; they commenced work in October 2019. Deloitte is a member of the Remuneration Consultants Group and, as such, operates under the code of conduct in relation to executive remuneration consulting in the UK. The Committee is satisfied that the advice received is objective and independent. Fees of £249,425 were paid to Deloitte in respect of advice provided to the Committee in 2022, which included significant input into the review of the

Directors' Remuneration Policy during the year. This was in the form of an agreed fee for support in preparation of papers and attendance at meetings, with work on additional items charged at hourly rates. The terms of engagement for Deloitte are available from the Company Secretary's office upon request. Separately, other parts of Deloitte LLP also advised the Company in relation to corporation tax, mobility and consulting services.

# Board changes

During the year, Patrick Cescau stepped down from the Board and Deanna Oppenheimer was appointed to the Board as a temporary Non-Executive Director prior to her appointment as Chair of the Board; Byron Grote was also appointed to the Board as a Non-Executive Director. The remuneration arrangements in respect of all changes were in line with the approved DR Policy and are covered on page 134.

# Approach to target setting

Targets are set by the Committee and senior management, taking into account IHG's growth ambitions and long-range business plan, market expectations, and the circumstances and relative performance at the time, with the aim of setting stretching achievement targets for senior executives which will reflect successful outcomes for the business based on its strategic and financial objectives for the period.

Absolute targets may be set relative to budget and/or by reference to prior results, generally containing a performance range with additional stretch to incentivise outperformance as well as minimum performance levels for payout. Relative targets are set against an appropriate comparator group of companies for the relevant measure, for example, relative NSSG in the LTIP was set against our six largest competitors with over 500k rooms to reflect our industry-leading growth ambition.

# Shareholder engagement

The Committee recognises that there exists a range of views across the shareholder base in relation to the pay of Executive Directors and therefore engages in regular shareholder consultation. We consulted with shareholders and proxy agencies prior to the 2022 AGM on the implementation of remuneration policies for the prior year and matters relating to in-flight LTIPs. At the 2022 AGM, we were pleased to receive a vote of 90.01% in favour of the 2021 Directors' Remuneration Report.

Shareholder experience and the views of shareholders are fundamental aspects of the Committee's framework for the consideration of the use of discretion in relation to incentive plan outcomes. As such, we carried out consultations with leading shareholders and a proxy agency again in late 2022 and early 2023. We discussed the performance of management which, in the Committee's view, had delivered strong results and a more resilient company coming out of the pandemic. This performance is sustainable and has not been at the expense of stakeholders, as outlined on page 117. However, forecast results showed that the formulaic outcomes of the original cash flow LTIP target would likely not reflect this extraordinary effort.

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Governance

## Directors' Remuneration Report continued
### Our approach to remuneration continued

Valuable and constructive feedback was provided and, overall, shareholders were generally receptive to the potential use of discretion to increase the LTIP outcome, so long as there was sufficient and robust justification. The Committee's decision and detailed rationale is outlined on pages 114 to 117.

These shareholder consultations also covered matters relating to the Directors' Remuneration Policy review and progress on the inclusion of ESG in executive remuneration. Views expressed by shareholders will be taken into consideration ahead of putting the policy to shareholder vote.

#### Wider workforce remuneration and employee engagement

As outlined on pages 123 to 124, IHG operates an aligned approach to remuneration throughout the organisation. During the year, the Committee reviewed aspects of the Company's wider workforce remuneration approach as part of its regular meeting agenda.

The Company engaged with the workforce through its employee engagement survey, which covers a number of areas, including pay and benefits competitiveness, wellness and inclusion. Our overall employee engagement increased to 86% (+1% on 2021), placing IHG as a Global Best Employer by Kincentric.

In 2022, as part of the 'Voice of the Employee' engagement agenda, the Committee Chair hosted meetings with representative employee groups from the UK to discuss a wide range of topics. No concerns were raised regarding Executive Director remuneration or how it aligns with the wider IHG remuneration principles. The Board is committed to providing adequate employee forums for transparent two-way dialogue. We will continue to develop our approach to employee engagement on Executive pay and ensure attendees of such future meetings are aware that the broad scope of topics they can raise extends to Executive pay and how it aligns with the wider pay policy. For more information on 'Voice of the Employee' workforce engagement see page 111.

As noted on page 114, perceptions of reward and recognition gained strong results across our hotel, reservations and general manager populations:

![img-14.jpeg](img-14.jpeg)

The Company's approach to wider workforce engagement under the UK Corporate Governance Code is set out on page 111.

#### Voting at the Company's AGMs

The current DR Policy was subject to a vote at the 2020 AGM. The outcome of the votes in respect of the DR Policy and Report for 2020 to 2022 are shown below:

| AGM | Directors' Remuneration Policy (binding vote) |  |  | Directors' Remuneration Report (advisory vote) |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Votes for | Votes against | Abstentions | Votes for | Votes against | Abstentions |
| 2022 | - | - | - | 120,588,496 (90.01%) | 13,388,131 (9.99%) | 3,384,681 |
| 2021 | - | - | - | 137,628,120 (92.43%) | 11,277,368 (7.57%) | 106,271 |
| 2020 | 112,098,213 (77.14%) | 33,210,269 (22.86%) | 3,308,499 | 143,279,761 (96.49%) | 5,212,375 (3.51%) | 124,844 |

#### Jo Harlow

Chair of the Remuneration Committee
20 February 2023

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Governance

# Annual Report on Directors' Remuneration

The Annual Report on Directors' Remuneration explains how the Directors' Remuneration Policy (DR Policy) was implemented in 2022 and the resulting payments each of the Executive Directors received.

This report is subject to an advisory vote by shareholders at the 2023 AGM. The notes to the single figure table provide further detail, where relevant, for each of the elements that make up the total single figure of remuneration for each of the Executive Directors.

AUDITED

## Single total figure of remuneration - Executive Directors

| Executive Directors | Year | Fixed pay |  |  |  | Variable pay |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | ■ Salary £000 | ■ Benefits £000 | ■ Pension benefit £000 | Subtotal £000 | ■ APP £000 | ■ LTIP £000 a | Subtotal £000 | ■ Total £000 |
| Keith Barr | 2022 | 889 | 43 | 222 | 1,154 | 1,719 | 1,200 | 2,919 | 4,073 |
|  | 2021 | 857 | 41 | 214 | 1,112 | 1,727 | 360 | 2,087 | 3,199 |
| Paul Edgecliffe-Johnson | 2022 | 654 | 21 | 163 | 838 | 1,264 | 882 | 2,146 | 2,984 |
|  | 2021 | 630 | 19 | 158 | 807 | 1,270 | 265 | 1,535 | 2,342 |
| Elie Maalouf b | 2022 | 700 | 66 | 136 | 902 | 1,349 | 939 | 2,288 | 3,190 |
|  | 2021 | 606 | 53 | 118 | 777 | 1,221 | 268 | 1,489 | 2,266 |

$^{a}$ LTIP figures for 2021 relate to the 2019/21 LTIP cycle and have been restated using actual share price on date of vesting. Figures for 2022 relate to the value of shares for the 2020/22 cycle.

$^{b}$ Elie Maalouf is paid in USD and the sterling equivalent is calculated using an exchange rate of $1 = £0.81 in 2022 and $1 = £0.73 in 2021 (page 169).

## Notes to single figure table

### Fixed pay

- ■ **Salary:** salary paid for the year. Salary increases in 2022 were in line with the budget for the wider UK and US corporate workforce.
- ■ **Benefits:** for Executive Directors, this includes, but is not limited to, taxable benefits such as company car or allowance and healthcare. The 2022 figure for the non-US based Director, Elie Maalouf, includes higher travel and associated costs met by the Company than the comparable costs in 2021.
- ■ **Pension benefit:** for current Executive Directors, in line with the DR Policy, includes the value of IHG contributions and any cash allowances paid in lieu of pension contributions.

Keith Barr and Paul Edgecliffe-Johnson did not participate in any IHG pension plan in 2022 and instead received cash allowances of 25% of base salary; this has reduced to the maximum level available to all other participants in the UK pension plan from 1 January 2023, currently 12% of base salary.

Life assurance cover is provided for both Keith Barr and Paul Edgecliffe-Johnson at four times base salary.

Elie Maalouf participated in the US 401(k) Plan and the US Deferred Compensation Plan (DCP). The US 401(k) Plan is a tax-qualified plan providing benefits on a defined contribution basis, with the member and company both contributing.

Contributions made by, and in respect of, Elie Maalouf in these plans for the year ended 31 December 2022 were:

|  | £ a |
| --- | --- |
| Director's contributions to US Deferred Compensation Plan | 413,850 |
| Director's contributions to US 401(k) Plan | 21,989 |
| Company contributions to US Deferred Compensation Plan | 125,680 |
| Company contributions to US 401(k) Plan | 10,001 |
| Age of Director at 31 December 2022 | 58 |

$^{a}$ Sterling values have been calculated using an exchange rate of $1 = £0.81.

As outlined in last year's report, Elie's retirement benefit is in line with other senior US employees and comprises a 6% of salary matched contribution (subject to IRS limits in respect of 401(k) contributions) and a 16% of salary supplemental employer DCP contribution.

### Variable pay

- ■ APP (cash and deferred shares)

### Operation

Award levels are determined based on salary at 31 December 2022 and are based on achievement vs target under each measure. For operating profit from reportable segments, the 2022 award was set on the basis of a payout range of +/-10% of target payout for performance of +/- $40m of target performance. Outside of this range, payout would be on a straight-line basis between threshold and -$40m and between +$40m and maximum. For room openings and room signings, the award was set on a straight-line basis between threshold and target, and target and maximum:

- • **threshold** is the minimum level that must be achieved for there to be an award in relation to that measure; subject to Committee discretion, no award is made for achievement below threshold;
- • **target** is the target level of achievement and results in a target award for that measure; and
- • **maximum** is the level of achievement at which a maximum award for that measure is received (capped at 200% of salary).

The Committee formally reviews performance against IHG's Global Metrics as part of the APP structure in considering whether to apply discretion to adjust outcomes on the strategic measures.

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Governance

# Directors' Remuneration Report continued

## Annual Report on Directors' Remuneration continued

AUDITED

### APP outcome for 2022

The performance measures for the 2022 APP were determined in accordance with the DR Policy and were:

- operating profit from reportable segments (70%);
- room signings (15%); and
- room openings (15%).

Target award was 115% of salary and maximum was up to 200% of target for each measure, subject to an overall cap on the award of 200% of salary. The tables below show threshold, target and maximum opportunity, as well as weighting and actual 2022 achievement.

APP measures - % of target award

![img-15.jpeg](img-15.jpeg)

■ Operating profit from reportable segments

Room signings

Room openings

| Performance |  | Achievement | Weighting | Weighted achievement |
| --- | --- | --- | --- | --- |
| Operating profit from reportable segments: performance relative to target |  |  |  |  |
| Threshold | $629m | 50% |  |  |
| Target | $740m | 100% | 70% | 135.8% |
| Actual | $846m | 194% |  |  |
| Maximum | $851m | 200% |  |  |
| Room signings (k rooms) |  |  |  |  |
| Threshold | 72.6 | 50% |  |  |
| Target | 80.7 | 100% | 15% | 15.4% |
| Actual | 80.9 | 103% |  |  |
| Maximum | 88.7 | 200% |  |  |
| Room openings (k rooms) |  |  |  |  |
| Threshold | 44.9 | 50% |  |  |
| Target | 49.8 | 100% | 15% | 15.2% |
| Actual | 49.9 | 101% |  |  |
| Maximum | 54.8 | 200% |  |  |
| Total weighted achievement |  |  |  | 166.4% |

Operating profit from reportable segments is a Non-GAAP measure and excludes certain items from operating profit. Additionally, in determining operating profit from reportable segments for APP purposes, budgeted exchange rates for the year are used to ensure like-for-like comparison with the APP target set at the start of the year.

In June 2022, IHG announced the decision to cease all operations in Russia consistent with evolving UK, US and EU sanction regimes and the ongoing and increasing challenges of operating there. This situation was not foreseen at the time of setting incentive plan targets and was not a strategic choice. As such, the Committee has determined the treatment for impacted incentive plan measures. For the APP, operating profit from reportable segments, room openings and room signings results assume Russia performance for the full year was in line with budgeted performance at the

time of setting targets. In respect of this, 550 room signings, 450 room openings and $4.6 million of operating profit from reportable segments are included in the figures opposite. A further $3.8 million relates to other adjustments agreed by the Committee.

| Operating profit from reportable segments (at actual exchange rates) (see page 169) | $828m |
| --- | --- |
| Difference due to exchange rates | $10m |
| Difference for Russia exit and other adjustments | $8m |
| Operating profit from reportable segments (at 2022 budget exchange rates) | $846m |

#### ■ LTIP 2020/22 (granted in 2020)

Awards are made annually and eligible executives will receive shares at the end of the cycle, subject to achievement of the performance conditions. These conditions and weightings are described on page 129.

TSR measures the return to shareholders by investing in IHG relative to a comparator group containing the following major globally branded competitors: Accor S.A., Choice Hotels International Inc., Hilton Worldwide Holdings Inc., Hyatt Hotels Corporation, Marriott International Inc., Melia Hotels International S.A., NH Hotels Group, and Wyndham Hotels & Resorts Inc., as per data provided by our corporate bankers sourced from Refinitiv Datastream. Maximum payout is for upper quartile relative performance and threshold is median of the comparator group.

The share price in respect of the 2019/21 LTIP cycle has been restated using the volume weighted average price of 5,189p for all Executive Directors on the date of actual vesting on 23 February 2022. The corresponding values shown in the 2021 report (prior to the actual vesting) were an estimate calculated using an average share price over the final quarter of 2021 of 4,858p.

### LTIP outcome for 2020/22 cycle

The performance measures for the 2020/22 three-year LTIP cycle were determined in accordance with the DR Policy and were:

• Total Shareholder Return (30%);
• net system size growth (30%);
• Total Gross Revenue (20%); and
- cash flow (20%).

The following tables show threshold and maximum opportunity, as well as weighting and actual achievement, based on the formulaic outcomes against the three-year targets set in 2020, and following the application of Committee discretion, for each performance measure.

LTIP measures - % of maximum opportunity

![img-16.jpeg](img-16.jpeg)

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