Our strategy for high-quality growth

We are focused on delivering high-quality growth, which for us means delivering consistent, sustained growth in cash flows and profits over the long term, via our portfolio of preferred brands.

Our strategy is unchanged. Through our Winning Model, we focus on value-creation by building preferred brands, delivering a superior owner proposition, leveraging scale and generating revenue through the lowest-cost, direct channels. We concentrate on a Targeted Portfolio that, together with

Disciplined Execution of our strategy and a commitment to doing business responsibly, will drive superior shareholder returns.

We measure our performance with a set of carefully selected key performance indicators (KPIs), which monitor our success in achieving our strategy – see pages 23 to 25.

Superior shareholder returns

Value creation

Whilst doing business responsibly See pages 18 and 19

Disciplined Execution

Targeted PortfolioWinning Model

We operate in the most attractive markets for IHG and in the highest

opportunity segments based on guests’ occasion needs, with an

asset-light business model franchising and managing

hotels rather than owning them.

10Priority markets: US, Middle East, Germany, UK, Canada, Greater China, India, Russia and CIS, Mexico and Indonesia.

Our priority markets represent

87%of the IHG System and

89%of the IHG pipeline

We recognise that successful delivery of our strategy for high-quality growth requires Disciplined Execution. We prioritise investment in our technology platforms and our people,

as well as delivering operational efficiencies.

For further information on our strategy, go to www.ihgplc.com/about-us under Our strategy.

Preferred brands delivered through our peopleBuild and leverage scaleStrong brand portfolio and loyalty programmeEffective channel managementSuperior owner proposition

Staybridge Suites Alpharetta –North Point, Georgia, US

14 IHG Annual Report and Form 20-F 2016 Strategic Report

Our strategy for high-quality growth

The individual components of IHG’s Winning Model are at the heart of our success, and continue to align our organisation to focus on the most important strategic initiatives, delivering value-creation and high-quality growth for our shareholders.

STRENGTHENING OUR DIFFERENTIATED BRANDS

Preferred brands delivered through our people

A strong portfolio of preferred brands is fundamental to our success. In a highly competitive industry, with demanding consumers and proliferating distribution channels, it is vital to have brands that guests prefer, will seek out and will pay a premium for.

To see how we strengthen our portfolio of brands, go to: - The InterContinental Life, on page 16; - Holiday Inn and Holiday Inn Express: design and guest experience, page 17;

- The Crowne Plaza Accelerate programme, page 30.

BUILDING AND LEVERAGING SCALE IN KEY MARKETS

Build and leverage scale

Scale provides significant advantages in the hotel industry at the global, national and city level. The size of the IHG portfolio and our concentration in attractive markets and key gateway cities allows us to benefit from significant economies of scale, leading to higher margins and greater operating leverage.

CREATING LIFETIME GUEST RELATIONSHIPS

To see how we build and leverage scale in our key markets, go to: - Strengthening our lifestyle and boutique presence in AMEA, on page 30;

- Building scale in Germany, page 30.

Strong brand portfolio and loyalty programme

Having a strong loyalty programme tailored to our guests’ needs and which drives high value revenue across our portfolio is critical. By building lifetime relationships with our guests, our loyalty programme creates a revenue stream that extends out for years to come and, if done right, turns regular travellers into powerful advocates for our brands.

To see how we create lifetime relationships with our guests, go to: - A new, global, loyalty benefit – Your Rate by IHG Rewards Club, on page 16.

DELIVERING REVENUE TO HOTELS THROUGH THE LOWEST-COST, DIRECT CHANNELS

Effective channel management

We drive demand to our hotels through our direct channels by having strong brand awareness. This reduces distribution costs and delivers better returns for our owners. We endeavour to drive business through our direct channels (digital and voice) as they are less costly to owners than third-party intermediaries.

To see how we drive demand through our direct channels, go to: - Guest Reservation System (GRS), on page 17.

DRIVING SUPERIOR RETURNS TO OUR THIRD-PARTY OWNERS

Superior owner proposition

A strong owner proposition, preferred brands, effective operational support and long-standing owner relationships play a vital role in making us the brand of choice for owners. We continue to invest in initiatives that will deliver superior returns for our owners.

To see how we drive superior owner returns, go to: - Franchise Plus in Greater China,

on page 30, for details of our new, tailored, franchising model in this region.

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IHG Annual Report and Form 20-F 2016 15

HUALUXE Haikou Seaview, People’s Republic of China

InterContinental Suzhou, People’s Republic of China

A NEW, GLOBAL, LOYALTY BENEFIT – YOUR RATE BY IHG® REWARDS CLUB

THE INTERCONTINENTAL LIFE

To see our regional highlights, please go to the Performance section on page 30.

Our Winning Model in action: executing our strategy

We are focused on delivering across all components of our Winning Model and, in 2016, executed several important global initiatives.

Building lifetime relationships with our most high-value guests is fundamental to creating long-term revenue for our owners.

After successful trials in Europe and The Americas, we introduced Your Rate by IHG Rewards Club, offering loyalty members the lowest rate available when booking direct with us, compared with other channels.

Your Rate drives revenue because:

• our most loyal members stay at our hotels more often and spend more while they are with us – around 30 per cent of members pay for additional hotel services; and

• an owner’s cost of sale may decrease by as much as 20 per cent when a guest books direct through Your Rate rather than via an online travel agent.

Since May 2016, Your Rate has seen some exciting responses.

• Direct-channel growth has increased by 5.3 ppt.

• There has been no material impact on the average daily rate for our owners.

Your Rate has also contributed to a record growth (year-on-year) in IHG Rewards Club:

• a 16 per cent increase in new member enrolments; and

• an increase of around 10 per cent in revenue from members.

We celebrated the 70th anniversary of InterContinental Hotels & Resorts, the world’s largest luxury hotel brand, in 2016. With more than 185 hotels worldwide, we have the international know-how and local cultural wisdom to deliver ‘The InterContinental Life’. We have successfully launched multiple initiatives this year, including:

• new brand-orientation training for all frontline colleagues;

• a new multi-million dollar integrated global advertising campaign in key markets; and

• the management of a $180 million refurbishment and reopening of InterContinental New York Barclay.

We continued to add hotels in the world’s top destinations, including Beijing, Doha and Shanghai. With hotels secured in Houston, Maldives, Phuket, San Diego and Venice, it was one of our strongest years for hotel signings. The brand continues to excel in the luxury hotel space, being named:

• the World’s Leading Hotel brand for the eighth consecutive year at the World Travel Awards; and

• the Best Business Hotel Chain Worldwide at the Business Traveller Awards.

Some of our hotels also featured in the Condé Nast Traveller Readers’ Choice awards.

187hotels make InterContinental the largest luxury chain worldwide

18signings, our best performance since 2008

+3.9 pptdirect web growth

-20%in owners’ costs of sale compared to online travel agents

Strategic ReportIHG Annual Report and Form 20-F 201616

Crowne Plaza Borjomi, Georgia

Holiday Inn Brentford Lock, United Kingdom

Candlewood Suites Atlanta West I-20, Georgia, US

Our Winning Model in action: executing our strategy

GUEST RESERVATION SYSTEM (GRS)

Jointly developed with the leading technology provider, Amadeus, our new Guest Reservation System will give guests a degree of choice and personalisation far beyond that offered by the industry today. This is a part of our strategy to provide flexible, technological systems that, when combined with our proprietary systems (such as revenue management and customer loyalty management), will give us real competitive advantage.

• Guests will no longer be constrained to a limited range of room types, allowing them to customise their reservation based upon features they find important.

• Hotel staff will experience an interface that allows for more effective management, so they can spend more time with guests.

• The new Guest Reservation System will transform our ability to categorise, sell and manage the revenue of our room inventory and other hotel services, while driving greater returns for our owners.

The new Guest Reservation System remains on track to begin roll-out in 2017, with more enhancements to the guest experience to be released over time.

HOLIDAY INN® AND HOLIDAY INN EXPRESS® DESIGN AND GUEST EXPERIENCE

The global success of our Holiday Inn and Holiday Inn Express brands is underpinned by consistent improvements to ensure we continue to deliver differentiated, relevant guest experiences.

Holiday Inn• In Europe, the open-lobby concept, which transforms

hotel lobbies into a welcoming space to work or socialise, has become a brand standard, and almost 60 per cent of hotels open or in the pipeline have committed to introducing it.

• In The Americas, a new, home-like room design launched in 2016, and is expected to feature in more than 100 hotels by 2018.

• In Greater China, new room designs that incorporate a popular children’s character have seen an increase of Average Daily Rate by 22.1 per cent.

Holiday Inn Express• Using results from guest research on ‘smart traveller’

preferences, the brand launched new design schemes offering a combination of fresh, dynamic, and focused design features. Tailored to each region, enhancements include efficient check-in pods, more versatile rooms and public spaces, and additional guest-room comforts and conveniences.

Introducing open lobbies in Holiday Inn hotels in Europe has increased Guest Love scores in those hotels by

8 ppt

886Holiday Inn Express hotels open or in the pipeline featuring the new designs

Tailored options for guests

Improved inventory

management

Intuitive interface for hotel staff

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