Good morning, ladies and gentlemen, and welcome to the InterContinental Hotel Group 3Q IMS Conference Call. My name is Fay, and I'll be your coordinator for today's conference. [Operator Instructions] I will now hand you over to your host to begin today's conference. Thank you.

Good morning, everyone. This is Paul Edgecliffe-Johnson, Chief Financial Officer at IHG. Thank you for joining us today for our third quarter trading statement conference call. I'll start by running through some of the key highlights in the period, before touching on each of our regions in turn. And I will then open the call to questions. We have delivered a strong third quarter performance, reflecting the continuing momentum in our business, and the success of our focus on developing preferred brands on an asset-light basis in scale markets. We grew RevPAR across our business by 7%, our best quarterly performance in over 2 years; and in the U.S., by 8.7%, the highest growth we have delivered for 8 years. We opened 8,000 rooms, with over 75% of them in our largest 2 markets of the U.S. and China, and 2/3 from the Holiday Inn brand family, which continues to be a core driver of our growth. After removing 4,000 rooms, primarily in our Americas region, we've grown our net system size by 2.7% year-on-year. We signed 16,000 rooms into our pipeline, taking year-to-date signings to over 45,000 rooms, which is our best underlying performance since 2008. Around 90% of these were in our top 10 priority markets, which are the focus of our growth ambition. I'd like to give you an example from the quarter of how we drove growth in these markets and talk a little bit more about how we are strengthening our long-term relationship in Mexico with Grupo Presidente, one of the most highly respected hotel operators in the region, and who we have been partners with for more than 20 years. We have now agreed to invest in a joint venture with them to take advantage of the economic growth Mexico's experiencing and expand our…

[Operator Instructions] And our first question is from the line of Tim Ramskill from Crédit Suisse.

Three questions for me, please. The first is, obviously, you sort of ran through a number dynamics around China. I just wondered if you could explain to us. As obviously, the Chinese market has been a bit more challenging in the last few years. Have you adjusted, in any way, your approach towards the growth dynamic to sort of the pipeline opportunity at all? Or were you just going to take the longer-term view that you just got to be in it, so sort of head down and carry on? And secondly, Marriott shared some pretty useful information at their recent Investor Day around incentive fees, which is -- it was quite difficult to sort of get visibility on. I just wondered if you could update us on kind of where you're at, particularly in the U.S., as regards to the number of hotels earning incentive fees within the management portfolio, and how that might evolve? And then the final question is, obviously, you've sort of commented that sort of trends generally look pretty good, but given the recent sort of macro uncertainties in Europe and, obviously, Ebola dynamic as well, is there anything you'd pull out from any forward-looking data at all that gives you any cause for concern about the fourth quarter?

Okay. Thanks, Tim. So I mean, taking those in turn, in terms of China, as you know, we are focusing on building a scale business there, and so we've got the Eastern Seaboard well covered, great representation. They're in good locations, and then we'll be moving further west into secondary and tertiary cities. And we went in there earlier than our competition. We've secured great representation with great owners. And our brands are well known in China, both with consumers and owners, which is a great place to start from. And we are continuing with that. We are going to build up a domestic scale business there. As I said on the call, we're -- if you look at the unit growth we are achieving, taking our business up 14% year-on-year, it's adding an awful lot of growth into the business from that unit accretion. Some of those hotels are still in ramp-up, so there's an occupancy growth there. Rate was more challenging this quarter, particularly in some of the secondary and tertiary markets. We did well on the Eastern Seaboard, but it was a bit tougher there, so yes, we'll keep an eye on it, but absolutely no adjustment to the strategy. Certainly, very confident in what we're doing in terms of building out the business. In terms of incentive fees, obviously, it's a lot less of an earnings proportion for us than it is to, say, Marriott. And 85% of our business is linked to revenue, so it's the top line. We don't give the specifics that Marriott do really because it isn't that relevant. And so I think outside of the U.S., about 3/4 of paying incentive fees and a little bit less than that in the U.S. So -- but about half and half, so -- and that's remaining pretty stable really, it's not moving around too much. In terms of the trends and booking patterns that we're seeing, we do highlight in, what I would say, in the stock exchange announcement, that we are aware of the macro uncertainties out there, but equally, our booking trends are strong. And everything we are seeing about momentum in the current business gives us confidence. So that said, we are aware it has become a more uncertain macroeconomic environment.

Okay. And just to clarify, so half of your U.S. hotels are paying incentive fees. I thought it was much less than that but...

No, it's not far off that.

Our next question is from the line of Jamie Rollo from Morgan Stanley.

Three questions, please. First of all, a year or so ago, when the upper midscale segment was underperforming the overall U.S. market, you said you'd expect that sort of trend to continue. And yet this year, it's been pretty strong, if not slightly stronger than the market. I was wondering why that particular segment has come back so strongly, given it's got a little bit more supply pressure. Secondly, if you look at your gross openings year-to-date, you are pretty sort of flat year-on-year; and Q3, you're flat year-on-year as well, despite the signings really starting to pick up at the beginning of last year and some of the signings to conversions, I was wondering when that's going to convert to stronger openings. And then finally, the Chinese press is reporting you put the Hong Kong hotel up for sale. In the past, you said you probably wouldn't do that until the development next door was complete. I was wondering if you can say anything about the timing of that potential hotel disposal.

Thanks, Jamie. When we talked about in terms of the upper midscale, particularly Holiday Inn and outperformance again [indiscernible], was really to demonstrate that as the brands were already running at a big premium and they hadn't fallen so much in the trough of the last cycle, you won't necessarily get to see the same level of growth coming through. As you say in, actually, I think in the first quarter and then in the third quarter, we did grow in line with the segments. And I can't predict it quarter-on-quarter. And we maintained our RevPAR premium of $5 to the segment. I think that -- if you look at where occupancy rates are, they're extremely high. And there is not a lot of spare capacity out there, so that is driving demand for what are those strong brands. And so it's a good performance and one, hopefully, that we'll see continuing. I think what we were saying previously was just to give some of the macro background to it. In terms of the openings, and I think when you compare it against last year, you have to strip out -- so when you look at the signings first, you have to strip out some of the signings that were coming through the -- there are many rooms that got signed there. Signings have been very strong, and they will come through in a few years, but it does take a while to go through permitting, break ground and get the hotels open and opened and trading. It's a little better this year in terms of net rooms' growth than it was last year. 2.7% year-to-date, and that was with a higher level of exits in the first quarter than we'll see in the run rate. So that's, as I say, quite encouraging there. And look, in terms of Hong Kong, when we announced that we were doing the strategic review of the assets back at the first quarter, we said, yes, that would cover all the owned assets. And we got Paris done and -- nearly got it done, bang on interims a couple of days later, but we weren't -- we've got nothing to say on Hong Kong for now other than the strategic review is progressing very well.

So is it not up for sale?

All we're saying, Jamie, is the strategic review is progressing very well.

And our next question is from the line of Jarrod Castle from UBS.

I was wondering, could you maybe quantify kind of what Africa RevPAR was in the third quarter. Obviously, Accor came out with their number of minus 5% for the quarter, so just wondering if you're seeing any weakness, probably the mix of the business is different in that market. And then secondly, just in terms of Europe, you've done a number of removals during the course of this year. Can we be expecting kind of broadly flattish kind of rooms this year? I guess what I'm trying to ask is, is there any further pruning that needs to be done, any material pruning of rooms? And then lastly, you spoke a little bit about Le Grand. Do you have any kind of date in mind when it could close or do you still have to kind of get sign-off from the union?

Thanks, Jarrod. In terms of Africa, I guess the first thing is, it's a very small part of our business. If you look at Western Africa, there's only a couple of hotels there that we've got. And really, across the whole of Africa, it's less than 1% of our revenues, well under that. I mean, we've got 20 hotels right across Africa which makes you down in South Africa. So I can give you the numbers, but they are very hotel specific. I think in the third quarter, those 2 hotels were down 11.5%, and year-to-date, they've been down sort of 7%. So I don't really think it's representative of anything. And in terms of Europe -- was your question actually was, were there more rooms that would come out in Europe or more -- or across the business?

No. It's more about Europe, and then just giving a bit of color in terms of where you're taking out rooms.

Okay. Well, across the business, we do continue to take out rooms where we see an opportunity to get better representation for the brand, and that's not region specific. I mean, it has obviously been more in the U.S. over recent years, just because we've been operating there longer. But equally, we will take out rooms if we can add something that's better in there. And so there's nothing specific that comes to mind that is large in Europe that will be coming out. But you'll always see some attrition there. And in terms of Le Grand, when we announced the deals back in August, it was an irrevocable deal, just had to go through certain steps. And we've now got the Works Council approval, which is one of those steps, which means that we can now exercise our -- effectively, our push onto the purchaser, and then it's just the legals have to go through. So exactly when that will all progress to us receiving the cash, I can't exactly say. Might be by year-end, might be shortly thereafter, but sometime in that order of magnitude.

And we have no further questions, so I'll hand you back to your host to conclude today's conference.

Thanks, Fay. And thanks, everybody, for dialing in. And I'll speak to you all soon. Bye for now.

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