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Leases | 12 Months Ended
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Dec. 31, 2020
Presentation of leases for lessee [abstract] |
Leases | 15. Leases Right-of-use assets
|  | Property $m |  |  | Other $m |  |  | Total $m |
Cost |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2019 |  |  | 792 |  |  |  | 5 |  |  |  | 797 |
Additions and other re-measurements |  |  | 39 |  |  |  | 1 |  |  |  | 40 |
Acquisition of businesses (note 11) |  |  | 25 |  |  |  | – |  |  |  | 25 |
Transfers to assets classified as held for sale (note 12) |  |  | (23 | ) |  |  | – |  |  |  | (23 | )
Terminations |  |  | (15 | ) |  |  | (1 | ) |  |  | (16 | )
Exchange and other adjustments |  |  | 4 |  |  |  | – |  |  |  | 4 |
At 31 December 2019 |  |  | 822 |  |  |  | 5 |  |  |  | 827 |
Additions and other re-measurements |  |  | 12 |  |  |  | 1 |  |  |  | 13 |
Derecognition |  |  | (93 | ) |  |  | – |  |  |  | (93 | )
Terminations |  |  | (125 | ) |  |  | (2 | ) |  |  | (127 | )
Exchange and other adjustments |  |  | 1 |  |  |  | – |  |  |  | 1 |
At 31 December 2020 |  |  | 617 |  |  |  | 4 |  |  |  | 621 |
Depreciation and impairment |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2019 |  |  | (282 | ) |  |  | (2 | ) |  |  | (284 | )
Provided |  |  | (37 | ) |  |  | (1 | ) |  |  | (38 | )
System Fund expense |  |  | (5 | ) |  |  | – |  |  |  | (5 | )
Impairment charge |  |  | (32 | ) |  |  | – |  |  |  | (32 | )
Transfers to assets classified as held for sale (note 12) |  |  | 8 |  |  |  | – |  |  |  | 8 |
Terminations |  |  | 14 |  |  |  | 1 |  |  |  | 15 |
Exchange and other adjustments |  |  | (1 | ) |  |  | – |  |  |  | (1 | )
At 31 December 2019 |  |  | (335 | ) |  |  | (2 | ) |  |  | (337 | )
Provided |  |  | (34 | ) |  |  | (1 | ) |  |  | (35 | )
System Fund expense |  |  | (4 | ) |  |  | – |  |  |  | (4 | )
Impairment charge |  |  | (16 | ) |  |  | – |  |  |  | (16 | )
System Fund impairment charge |  |  | (32 | ) |  |  | – |  |  |  | (32 | )
Derecognition |  |  | 44 |  |  |  | – |  |  |  | 44 |
Terminations |  |  | 64 |  |  |  | 1 |  |  |  | 65 |
Exchange and other adjustments |  |  | (3 | ) |  |  | – |  |  |  | (3 | )
At 31 December 2020 |  |  | (316 | ) |  |  | (2 | ) |  |  | (318 | )
Net book value |  |  |  |  |  |  |  |  |  |  |  |
At 31 December 2020 |  |  | 301 |  |  |  | 2 |  |  |  | 303 |
At 31 December 2019 |  |  | 487 |  |  |  | 3 |  |  |  | 490 |
At 1 January 2019 |  |  | 510 |  |  |  | 3 |  |  |  | 513 |
The Group’s leased assets mainly comprise hotels and offices. Leases contain a wide range of different terms and conditions. The term of property leases ranges from 1-99 years. The weighted average lease term remaining on the Group’s top eight leases (which comprise 92% of the right-of-use asset net book value) is 53 years. Many of the Group’s property leases contain extension or early termination options, which are used for operational flexibility. One of the Group’s top eight leases contains a material extension option which is not included in the calculation of the lease asset and liability as the extension would not take effect before 2031. The value of the undiscounted rental payments relating to this lease and not included in the value of the lease asset and liability is $288m. Additionally, the Group has the option to extend the term of the InterContinental Boston lease for two additional 20-year terms, the first of which would take effect from 2105. These extension options have not been included in the calculation of the lease liability. Impairment testing of right-of-use assets For impairment testing of hotel properties, each hotel is deemed to be a CGU. The impact of Covid-19 and the recovery period on trading was considered as a trigger for impairment testing for all hotel assets and an impairment charge of $5m was recognised relating to one hotel in the EMEAA region, based on value in use calculations. Trading projections reflect the five-year RevPAR recovery period outlined on page 135 and estimated future cash flows were discounted at a pre-tax rate of 8.8%. Additionally, impairment charges of $43m were recognised in relation to the US corporate headquarters, using the assumptions described on page 136. $32m of this impairment charge was borne by the System Fund in line with existing principles for cost allocation relating to this facility. Other right-of-use assets were also tested for impairment with no resulting charge, the most significant of which was the InterContinental Boston, which has non-current assets with a total carrying value of $195m. Details of the testing performed and sensitivities are contained on page 137. Terminations The lease of the InterContinental San Juan was terminated in 2020, resulting in a total gain of $30m (see note 6). Other terminations relate mainly to office properties where the lease was terminated in the period. Lease liabilities Total lease liabilities are analysed as follows:
|  | 2020 $m |  |  | 2019 $m |
Currency |  |  |  |  |  |  |  |
US dollars |  |  | 385 |  |  |  | 514 |
Sterling |  |  | 10 |  |  |  | 52 |
Euros |  |  | 7 |  |  |  | 43 |
Other |  |  | 48 |  |  |  | 51 |
|  |  | 450 |  |  |  | 660 |
Analysed as: |  |  |  |  |  |  |  |
Current |  |  | 34 |  |  |  | 65 |
Non-current |  |  | 416 |  |  |  | 595 |
|  |  | 450 |  |  |  | 660 |
Amounts recognised in profit or loss The following amounts were recognised as expense/(income) in the year:
|  | 2020 $m |  |  | 2019 $m |  |  | 2018 $m |
Depreciation of right-of-use assets |  |  | 35 |  |  |  | 38 |  |  |  | 35 |
System Fund depreciation of right-of-use assets |  |  | 4 |  |  |  | 5 |  |  |  | 4 |
Impairment charge |  |  | 16 |  |  |  | 32 |  |  |  | — |
System Fund impairment charge |  |  | 32 |  |  |  | — |  |  |  | — |
Derecognition of right-of-use assets and lease liabilities |  |  | (22 | ) |  |  | — |  |  |  | — |
Gain on lease termination |  |  | (30 | ) |  |  | — |  |  |  | — |
Expense relating to variable lease payments |  |  | 7 |  |  |  | 58 |  |  |  | 48 |
Expense relating to short-term leases and low-value assets |  |  | 2 |  |  |  | 3 |  |  |  | 3 |
Income from sub-leasing right-of-use assets |  |  | (1 | ) |  |  | (2 | ) |  |  | (2 | )
Recognised in operating (loss)/profit |  |  | 43 |  |  |  | 134 |  |  |  | 88 |
Interest on lease liabilities |  |  | 37 |  |  |  | 41 |  |  |  | 39 |
Total recognised in the Group income statement |  |  | 80 |  |  |  | 175 |  |  |  | 127 |
Amounts recognised in the Group statement of cash flows Total cash paid during the year relating to leases of $104m (2019: $159m, 2018: $132m) comprises $39m (2019: $100m, 2018: $97m) paid in respect of operating activities and $65m (2019: $59m, 2018: $35m) paid in respect of financing activities. Variable lease payments Variable lease payments are payable under certain of the Group’s hotel leases and arise where the Group is committed to making additional lease payments that are contingent on the performance of the hotels. Variable lease payments relating to the UK portfolio and two German hotels are discussed in note 6. Exposure to future cash outflows At 31 December 2020, the Group was committed to future cash outflows of $nil (2019: $3m) relating to leases that have not yet commenced. A lease liability is recorded when the leased assets are available for use by the Group. The maturity analysis of lease liabilities is disclosed in note 24. The undiscounted future cash flows receivable from subleased properties amount to $2m (2019: $3m, 2018: $3m).

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