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Goodwill and other intangible assets | 12 Months Ended
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Dec. 31, 2023
Text Block [Abstract] |
Goodwill and other intangible assets | 12. Goodwill and other intangible assets
|  |  |  |  | Goodwill $m |  |  | Brands $m |  |  | Software $m |  |  | Management agreements $m |  |  | Other intangibles $m |  |  | Total $m |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2022 |  |  |  |  |  |  | 532 |  |  |  | 439 |  |  |  | 878 |  |  |  | 122 |  |  |  | 26 |  |  |  | 1,997 |
Additions |  |  |  |  |  |  | – |  |  |  | – |  |  |  | 46 |  |  |  | – |  |  |  | – |  |  |  | 46 |
Fully amortised assets written off |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (94 | ) |  |  | – |  |  |  | – |  |  |  | (94 | )
Disposals |  |  |  |  |  |  | (8 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (8 | )
Exchange and other adjustments |  |  |  |  |  |  | (11 | ) |  |  | – |  |  |  | (5 | ) |  |  | – |  |  |  | – |  |  |  | (16 | )
At 31 December 2022 |  |  |  |  |  |  | 513 |  |  |  | 439 |  |  |  | 825 |  |  |  | 122 |  |  |  | 26 |  |  |  | 1,925 |
Additions |  |  |  |  |  |  | – |  |  |  | – |  |  |  | 52 |  |  |  | – |  |  |  | 1 |  |  |  | 53 |
Fully amortised assets written off |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (52 | ) |  |  | – |  |  |  | (3 | ) |  |  | (55 | )
Disposals |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | – |  |  |  | (1 | )
Exchange and other adjustments |  |  |  |  |  |  | 3 |  |  |  | – |  |  |  | 1 |  |  |  | – |  |  |  | – |  |  |  | 4 |
At 31 December 2023 |  |  |  |  |  |  | 516 |  |  |  | 439 |  |  |  | 825 |  |  |  | 122 |  |  |  | 24 |  |  |  | 1,926 |
Amortisation and impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 1 January 2022 |  |  |  |  |  |  | (191 | ) |  |  | – |  |  |  | (485 | ) |  |  | (113 | ) |  |  | (13 | ) |  |  | (802 | )
Provided |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (20 | ) |  |  | – |  |  |  | (3 | ) |  |  | (23 | )
System Fund expense |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (78 | ) |  |  | – |  |  |  | (1 | ) |  |  | (79 | )
Impairment reversal |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 12 |  |  |  | – |  |  |  | 12 |
Fully amortised assets written off |  |  |  |  |  |  | – |  |  |  | – |  |  |  | 94 |  |  |  | – |  |  |  | – |  |  |  | 94 |
Disposals |  |  |  |  |  |  | 8 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 8 |
Exchange and other adjustments |  |  |  |  |  |  | 5 |  |  |  | – |  |  |  | 3 |  |  |  | – |  |  |  | 1 |  |  |  | 9 |
At 31 December 2022 |  |  |  |  |  |  | (178 | ) |  |  | – |  |  |  | (486 | ) |  |  | (101 | ) |  |  | (16 | ) |  |  | (781 | )
Provided |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (18 | ) |  |  | (1 | ) |  |  | (2 | ) |  |  | (21 | )
System Fund expense |  |  |  |  |  |  | – |  |  |  | – |  |  |  | (76 | ) |  |  | – |  |  |  | (1 | ) |  |  | (77 | )
Fully amortised assets written off |  |  |  |  |  |  | – |  |  |  | – |  |  |  | 52 |  |  |  | – |  |  |  | 3 |  |  |  | 55 |
Disposals |  |  |  |  |  |  | – |  |  |  | – |  |  |  | 1 |  |  |  | – |  |  |  | – |  |  |  | 1 |
Exchange and other adjustments |  |  |  |  |  |  | (2 | ) |  |  | – |  |  |  | (1 | ) |  |  | (1 | ) |  |  | – |  |  |  | (4 | )
At 31 December 2023 |  |  |  |  |  |  | (180 | ) |  |  | – |  |  |  | (528 | ) |  |  | (103 | ) |  |  | (16 | ) |  |  | (827 | )
Net book value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At 31 December 2023 |  |  |  |  |  |  | 336 |  |  |  | 439 |  |  |  | 297 |  |  |  | 19 |  |  |  | 8 |  |  |  | 1,099 |
At 31 December 2022 |  |  |  |  |  |  | 335 |  |  |  | 439 |  |  |  | 339 |  |  |  | 21 |  |  |  | 10 |  |  |  | 1,144 |
At 1 January 2022 |  |  |  |  |  |  | 341 |  |  |  | 439 |  |  |  | 393 |  |  |  | 9 |  |  |  | 13 |  |  |  | 1,195 |
Goodwill and brands Brands Brands relate to the acquisitions of Kimpton ($193m), Regent ($57m) and Six Senses ($189m). They are each considered to have an indefinite life given their strong brand awareness and reputation, and management’s commitment to continued investment in their growth. The brands are protected by trademarks and there are not believed to be any legal, regulatory or contractual provisions that limit the useful lives of the brands. In the hotel industry there are a number of brands that have existed for many years and IHG has brands that are over 60 years old. Allocation of goodwill and b r ands to CGUs
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Analysed as: |
|  |  |  |  | At 1 January 2022 $m |  |  | Exchange adjustments $m |  |  | At 31 December 2022 $m |  |  | Exchange adjustments $m |  |  | At 31 December 2023 $m |  |  |  |  |  | Goodwill $m |  |  | Brands $m |
Americas (group of CGUs) |  |  |  |  |  |  | 419 |  |  |  | – |  |  |  | 419 |  |  |  | – |  |  |  | 419 |  |  |  |  |  |  |  | 132 |  |  |  | 287 |
EMEAA (group of CGUs) |  |  |  |  |  |  | 337 |  |  |  | (6 | ) |  |  | 331 |  |  |  | 1 |  |  |  | 332 |  |  |  |  |  |  |  | 196 |  |  |  | 136 |
Greater China |  |  |  |  |  |  | 24 |  |  |  | – |  |  |  | 24 |  |  |  | – |  |  |  | 24 |  |  |  |  |  |  |  | 8 |  |  |  | 16 |
|  |  |  |  |  |  | 780 |  |  |  | (6 | ) |  |  | 774 |  |  |  | 1 |  |  |  | 775 |  |  |  |  |  |  |  | 336 |  |  |  | 439 |
The recoverable amounts of the CGUs, or groups of CGUs, have been determined from value in use calculations. The key assumptions are RevPAR growth (detailed on page 161 within ‘Going concern’), terminal growth rates and pre-tax discount rates. Cash flows beyond the five-year period are extrapolated using terminal growth rates that do not exceed the average long-term growth rates for the relevant markets . Cash flow projections are discounted using pre-tax rates that are based on the Group’s weighted average cost of capital and incorporate adjustments reflecting risks specific to the territory of the CGU. The weighted average terminal growth rates and pre-tax discount rates are as follows:
|  |  |  |  | 2023 |  |  |  |  |  | 2022 |
|  |  |  |  | Terminal growth rate % |  |  | Pre-tax discount rate % |  |  |  |  |  | Terminal growth rate % |  |  | Pre-tax discount rate % |
Americas |  |  |  |  |  |  | 1.6 |  |  |  | 13.0 |  |  |  |  |  |  |  | 1.9 |  |  |  | 13.7 |
EMEAA |  |  |  |  |  |  | 2.4 |  |  |  | 15.1 |  |  |  |  |  |  |  | 2.5 |  |  |  | 16.2 |
Greater China |  |  |  |  |  |  | 2.5 |  |  |  | 12.1 |  |  |  |  |  |  |  | 2.5 |  |  |  | 13.8 |
The recoverable amounts of the CGUs, or groups of CGUs, exceeded their carrying value such that no impairment has arisen. Assumptions were sensitised, including using the Severe Downside Case scenario (detailed on page 161 within ‘Going concern’), with no impairment arising reflecting the number of years of Base Case forecasts required to recover the carrying value. Software Software includes $146m relating to the development of the next-generation Guest Reservation System with Amadeus. Internally developed software with a net book value of $105m is being amortised over seven to ten years, with five years remaining at 31 December 2023, reflecting the Group’s experience of the long life of guest reservation systems and the initial term over which the Group is party to a technology agreement with Amadeus. The remaining project value relates to enhancements to existing systems as part of the project, which are amortised over five years. In 2023 and 2022, no impairment was charged. Management agreements Management agreements relate to contracts recognised at fair value on acquisition. The weighted average remaining amortisation period for all management agreements is 14 years (2022: 15 years). 2022 impairment reversal The impairment reversal of $12m related to the Kimpton management agreement portfolio in the Americas region and arose due to strong trading conditions in 2022 and significantly improved industry forecasts. The key assumption was RevPAR growth which was approximately in line with the Group forecast detailed in the 2022 Annual Report. Cash flows beyond the five-year period were extrapolated using a 1.8% long-term growth rate that did not exceed the average long-term growth rates for the relevant market. The portfolio was valued at value in use (which exceeded fair value less costs of disposal) using discounted cash flow techniques that measure the present value of projected post-tax income flows. The post-tax discount rate used was 10.8%; the pre-tax equivalent rate is 14.8%.

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