Good morning, everyone, and welcome to IHG's conference call for the 2021 full year results. I'm Stuart Ford, Head of Investor Relations at IHG, and I'm joined this morning by Keith Barr, our Group Chief Executive; and Paul Edgecliffe-Johnson, our Chief Financial Officer and Group Head of Strategy. Just to remind listeners on the call that in the discussions today, the company may make certain forward-looking statements as defined under U.S. law. Please do refer to this morning's announcement and the company's SEC filings for factors that could lead actual results to differ materially from those expressed in or implied by any such forward-looking statements. The release, together with the presentation and the usual supplementary data pack, can be downloaded from the Results and Presentations section under the Investors tab on ihgplc.com. I'll now hand over the call to Keith.

Thanks, Stuart, and good morning, everyone. In a moment, Paul will talk you through our financial performance. But first, let me share some key highlights for the year. Thanks to the collective efforts of our teams and working closely with our owners and listening to our guests, we delivered a strong performance in 2021 that gives us great confidence in the shape of this recovery and things to come. Our room signings and openings were significantly ahead of the prior year, and we're seeing excellent momentum across the business. The impact of travel restrictions around the world were, of course, still felt, but with global RevPAR down 30% relative to 2019 for the year as a whole. But trading improved significantly on 2020 with RevPAR some 46% higher and occupancy at times at record highs in some local markets. By the fourth quarter, global RevPAR was down just 17% versus 2019, with nearly half of our hotels back to prepandemic levels. In December, the Americas was actually up on 2019. This significant trading improvement, coupled with the actions we've taken to deliver sustainable cost reductions, translated into EBIT more than doubling. Our high-quality fee streams and disciplined use of capital drove significant free cash flow of $571 million, which is back above 2019 levels. On the strength of this performance and our outlook for future growth and profitability, we have taken the decision to resume the dividend with the proposed final payment equivalent to that which was withdrawn in March 2020. Throughout the pandemic, we have made sure that as we dealt with its challenges, we have not lost sight of delivering on our plans to position IHG for long-term growth. We made important progress in 2021 on multiple fronts that will ensure we emerge in this period a stronger company. We've continued to invest in the quality and consistency of our estate, including completing our Holiday Inn and Crowne Plaza review. We've reduced our cost base to create a more efficient model with $75 million of recurring savings. We've launched Vignette Collection to further strengthen the attractiveness of our portfolio. And we have kept investing in the enterprise that underpins it, developing our technology offer for guests and owners and delivering a new loyalty program that this year will truly transform the experience for our guests and owners. We've also made sure that we're set up to grow in the right way through our ambitious 2030 Journey to Tomorrow responsible business plan, with key steps in 2021 including upgrading to a 1.5-degree science-based carbon reduction target. We'll talk in more detail about each of these shortly. But for now, let me hand over to Paul to take you through the financial results.

Thank you, Keith, and good morning, everyone. Starting as usual with our headline results from reportable segments. Revenue of $1.4 billion and operating profit of $534 million increased 40% and 144%, respectively, against 2020. Underlying revenue from the fee business increased 38% and operating profit 104%. Adjusted interest, including charges relating to System Fund, increased to $142 million, as expected. Our effective tax rate of 31% was in line with our previous guidance. We expect the effective tax rate for 2022 and most likely for the next few years to continue to be around 30%. In aggregate, this performance resulted in an adjusted earnings per share of $1.47, up very strongly from the $0.31 in 2020. Turning now to our drivers of performance, where, to show the status of the recovery to our previous peak trading, I will also compare against 2019's performance. Group RevPAR continued to recover rapidly and across the year was just under 30% behind 2019's level, including the adverse effect from hotels that were temporarily closed. This reflects rate of just 8% and occupancy 16.5 percentage points behind. During the year, we added 44,000 rooms to our system. Our continued focus on the long-term health and quality of our established brands resulted in the removal of 50,000 rooms. Nearly 70% of these removals related to Holiday Inn and Crowne Plaza, which I'll talk about more in a moment. These additions and removals brought net system size growth on a year-on-year basis to negative 0.6% and on a 2-year basis to negative 0.4%. Our usual summary of total RevPAR growth and total rooms available on an underlying basis can be found in the appendix. Looking at our RevPAR performance over the year. You can clearly see differing trends in monthly RevPAR by region. Both Americas and EMEAA…

Thanks, Paul. Our industry continues to evolve, accelerated in part by the pandemic. I want to take a moment to discuss how IHG is responding and adapting as a business. As Paul talked about, we're seeing a strong recovery in demand, particularly in resorts and leisure and in more suburban areas, where we've seen some of our hotels get back above 2019 levels. The areas that are still relatively more challenged are urban, so the New Yorks, Chicago, Paris, Londons of the world. But as more offices return to work, more groups and meetings come back and the practicalities and ease of international travel is restored, we're confident of a full recovery for the industry and a resumption of its attractive long-term growth characteristics. If we think about our guests and what trends we see as a company need to respond to, they are placing an increasing value on seamless technology and a stronger expectation that businesses will bring sustainable practices to the fore. There's also the shift to hybrid working with more companies considering how and where to bring their teams together and employees looking at how to combine business and vacation days. For our owners, as more people head through the doors of their hotels, many are now turning their attention to growth and opening new hotels. In parallel, we also understand the current short-term challenges owners are facing, and we are providing support and solutions to ease pressure on supply chains, cost inflation and labor availability. In terms of growth fundamentals, IHG has 4% of open rooms globally and, notably, nearly 11% of the industry's global pipeline. That's an incredibly strong position for IHG to be in, and it means we will continue to take share and increase our relative scale against the rest of the industry.…

The first question comes from Bilal Aziz at UBS.

Three from my side, please. Firstly, you clearly flagged good signing momentum across the fourth quarter. I'm guessing your U.S. number still leaves quite a room for recovery there. But you mentioned franchise applications now picking up. So keen to hear your thoughts on the construction environment over there and when you expect to see a step-up there, please. Secondly, the estate have all -- reads quite positively about getting above 4% net unit growth for this year. That still leaves just over 8,000 rooms to be opened incrementally through this year. So perhaps can you walk us through the building blocks and the phasing for those openings this year given that the signings now will probably impact '23? And then lastly, just your view on pricing. You've launched the attribute-based pricing system early this year, but there's clearly a lot of nervousness around the U.S. consumers. So any data points you can share that gives you confidence that you can drive real rates higher?

Great. Well, thank you. I'll let Paul take on signings and on unit growth, and I'll pick up on pricing.

Thanks, Keith. Yes. And -- so yes, we are encouraged by the signings environment. I think that our step-up in franchise applications was pleasing and really demonstrates the power of our brands. Our owners clearly want to open up more hotels because they make very good returns. If you think about it, you're a real estate investor today, whereas previously you might have been considering investing behind retail, behind other forms of commercial real estate, office, for example, but those are sort of off the table right now. So more and more capital is being focused into hotels. And that advantage is us. We have a very high share of the signings in the industry. Clearly, there is still room for it to recover back to what we were seeing in 2018 or so. That's partly about the financing environment. So once financing eases up and supply chains ease, then I think that we will see more signings come through, which will take our level of openings over time even higher. And in terms of our 2022 expectations for growth, that obviously is the components of how many rooms we open and how many rooms we remove. On the removals, I think we've talked pretty consistently about the fact that we can come back down now to 1.5%, which is the underlying rate we've seen, excluding Holiday Inn and Crowne Plaza, over a number of years. And then in terms of openings, in 2021, we saw 5%. So 5% less than 1.5% would have been sort of normalized 3.5% for last year. And next year, we need to open a few more rooms to get up to where we'd like to see ourselves, which is back in line with what we were seeing in 2018 at 4% or so. So yes, we still have to find some rooms to open during the year, for sure. That's not unusual for us. We have some great conversion brands, and we're well placed to do that.

Great. Thanks, Paul. In terms of pricing, I think there were two aspects to the question. There was a little bit there about attribute-based pricing and the health of the consumer and so forth, too. So I think if you look at the same data that we are seeing, generally the consumer is quite healthy, particularly in the U.S. And I guess our forward booking indicators, which have extended, give us confidence. We’re seeing in terms of leisure demand, which is that truly discretionary spend, being – continuing to accelerate across ‘21 and into ‘22, and we believe that we will see a record level of demand into Q2 and into Q3, kind of set – spring break into summer time frame. And in fact, I was telling a journalist only today, if you haven’t booked your holiday, you might want to book it now because truly, pricing and availability, pricing is high and availability is low. So I think that you’re going to see very, very strong pricing power there. Additionally, you’re now seeing business travel begin to return, groups, meetings and conferences and events that have shifted into the Q2, Q3 and Q4. So I think overall, you’re going to see generally a healthy consumer and a healthy uplift in demand for travel. In terms of attribute pricing, we are rolling that out right now. So we have set up the foundational aspects, which required us to touch every single hotel around the world and organize their data. Now we’re beginning to – a phased rollout of that, which will basically enhance the booking and searching experience for our guests and will be driving incremental revenue to our owners as it progresses, but it’s still early days.

The next question comes from Jamie Rollo at Morgan Stanley.

Three questions also, please. The first is on the room openings again. Over 40% were in China last year, which is a record high for the company. I'm just wondering how confident you are there on the pace of openings given the pipeline fell in Q3 and Q4. And also, how should we think about the impact to group fees given China is a much lower revenue and margin market compared to the rest of the business? Secondly, specifically on avid, which you're calling out as a significant opportunity again. The pipeline there shrank quite a lot. I think you terminated more rooms than you signed in the year. I'm just wondering, where is it versus your expectations? That seems to be the brand of those six with the biggest absolute potential. And then finally, on the balance between M&A and returning cash, clearly lots of opportunity in Luxury & Lifestyle. And I note on Slide 33 there's a bit of a gap in that quadrant. So I'm just wondering about whether you are looking to do more acquisitions of brands. I think 4 of the 6 were actually acquisitions rather than homegrown. And how do you balance M&A versus a buyback, please?

Great. I'll let Paul pick up on room openings, then we'll comment on avid and I'll pick up on M&A.

So in terms of the room openings, yes, a significant proportion in China, where, as you know, Jamie, we have an excellent business. And it's all our own business, so we don't have any master license agreements like some of our competitors. So effectively, we get fees from the rooms that we open in China, unlike some of our competitors. And despite the disturbance of some of the commercial property markets seen in China, we're not really seeing it in our business there. So we still watch for it, of course. We'll never be complacent. But no signings right now. And signings continue to be very strong. Openings continue to be very strong. And really good deals. And in terms of the overall blend, what's coming through, then I think if we think about the components of China, the components of luxury in EMEAA that we're seeing, it is all going to sort of blend out. So I don't think you're going to see any significant change in the overall profitability per room, which I know is one of your -- the things you watch for closely. And then in terms of avid, remember that we signed a lot of deals when we launched avid and -- which is owners wanting to build avid. And then as they've been able to get financing or not on some of those locations, we've freed up those locations for other owners to come in. But we're at 50 hotels open now, and the opportunity is very, very significant. The properties are performing really well, and I have no doubt that this will be a brand of great scale over time. It's going to take a while for it to reach Holiday Inn Express's 3,000-plus hotels but watch this space, I guess.

Yes. And Jamie, just to build on that, too. I mean we're beginning to see some of the first avids begin to trade with some significant returns going to owners, too, which helps actually accelerate the growth in the pipeline as owners see that it's great, great cash-on-cash returns and then they're transacting on it as well, too. So we're very, very confident about the continued acceleration of the curve. Now in M&A, we'll give you our normal answer. We never comment about M&A, on anything specific. But we're going to clearly look at the brand portfolio, as we've done in recent years, where we've added six brands in to fill up those white spaces. And so we've done it inorganically in a couple of areas where we felt that the right thing to do was to acquire those brands and organically when we can develop those brands. So a great success is when you look at like voco, for example. Already -- 2018 and already 70 hotels opened in the pipeline across all 3 regions in gateway cities like Singapore, Dubai and New York. And so we'll continue to look at the brand portfolio and determine what's the right approach. But we're very, very disciplined in our use of capital, very, very focused on making sure that when we invest in something, it can deliver returns, get to that stabilized level of $50 million of fee income, so it's a scale opportunity and not a niche brand, too. So again, we'll continue to expand the brand portfolio, but we're in a pretty great position today when you think about what we've done in Luxury & Lifestyle, what we've done in mainstream. The fact that now 25% of our signings were conversions, that wouldn't have happened had we not had the brand portfolio that we have today.

And can I just follow up on sort of one of the last questions? I don't think you answered in terms of sort of the cadence of net unit growth through the year. Is it fair to say that the sort of 4.5% target will be sort of back-end loaded given your removals were mostly -- or half of them were in Q4 last year? Now openings tend to be, in a normal year, Q4 loaded as well. Or could it hit 4.5-ish percent in Q1 or Q2, year-on-year, that is?

Thanks, Jamie. So I think that’s just a component of the maths of the opening and the removals and the fact that it is over a trailing 12-month basis. So I think what we’ve said is that we want – we’d like to see 2022 looking more like 2018. And so I’m not sure I said exactly sort of 4.3%. I think starting with a 4, I think, will be a really good performance in the light of what our competitors are guiding to. So that’s certainly what we hope to see. But, I mean, clearly, given that it’s on a 12-month lag basis, you’re not going to see that on a reported basis until the back end of the year when you’ve cycled off those abnormally high level of Holiday Inn and Crowne Plaza removals. If you strip that out as the openings come through, it’ll look a bit different. But you’d have to make that adjustment.

The next question comes from Vicki Stern of Barclays.

Just firstly, separate to the Crowne Plaza/Holiday Inn program, I think the exits were quite a bit higher than expected in Q4. Just why was that? And how confident are you then in the exit rate going forward being around 1.5%? Or to put it another way, is there anything that could sort of derail that and bring it to exits at sort of higher level as we look into '22 or '23? Back on those franchise applications, thanks for giving the color on the U.S. Just wondering how that sort of indication for the future signings is looking in the other regions. And also, a little bit on the lending environment and the other sort of elements and the backdrop in those regions would be helpful. And then finally on cash returns. I think before COVID, you were generally happy to sit at the top end of that target leverage range. Just wondering how you're feeling about that today. You're starting the year at 3x net debt-to-EBITDA. I guess even with the dividend payment, assuming RevPAR continues to recover, you'll be substantially below that by the back half. Just how should we be thinking about the scope of surplus cash return announcement in the second half?

Thanks, Vicki. So yes, in terms of the exits and the fact that we’ve said that our underlying rate of exits is – if you look back over multiple years, is around the 1.5%, in 2021 it was a little ahead of that; in 2020, it was behind that. And there were some hotels in 2020 which, ordinary course of business, we would have exited. But given it’s in the middle of a pandemic, we couldn’t really. So they have then gone in 2021. So if you look across 2020 and 2021 combined, the underlying, ex Holiday Inn and Crowne Plaza, rate of removals is at a normalized 1.5%. In terms of franchise applications and, more broadly, what we’re seeing from owners, owners want to open hotels with us around the world. I mean if you look at our pace of signings in EMEAA in the fourth quarter, signings were exceptionally strong. In China, our signings were exceptionally strong. We’re making great returns for owners. So getting financing in place is important. Probably the area where it is most important that it comes back is in the Americas. If you look elsewhere, we’re seeing actually very strong signings. And in terms of the 2.5 to 3x net debt-to-EBITDA, look, in current economic conditions, low interest rates, high availability of funding, I’m happy to be at the top end of that range. Nothing further we’re saying today around further returns on capital. But we are – our track record over the last 20 years or so demonstrates our future intent. .

The next question comes from Richard Clarke at AB Bernstein.

Three questions, if I may. Just starting with your investments in loyalty. And maybe you could just explain why you're making changes to your loyalty program here. Is there anything you're sort of dissatisfied with or any aims you're trying to get out of that like higher loyalty contribution, more credit card revenues? What's the ambitions with doing the loyalty program over? Second question. Paul, you mentioned that the guidance remains that gross CapEx could be as high as $350 million. I don't think you've spent that level of gross CapEx since you were a much more asset-heavy business, and it was only $100 million this year. So what could you spend that money on? Is that going to be more recyclable investments? Is there more investment needed in the System Fund? Maybe just explain what could get us to $350 million. And then the third question, I noticed your single Six Senses in the Americas is just 20 routes. I think it's in Brazil. Is there an opportunity for IHG and maybe wider brands to move into smaller hotels? And what is the -- does that expand your addressable market meaningfully? And what could possibly lead to you being able to move into smaller hotels via conversions, et cetera?

Great. Thanks, Richard. Good to talk with you. I'll pick -- I'll talk about loyalty and I'll talk about Six Senses and smaller, and then I'll let Paul talk about $350 million. As we got into the pandemic, we were committed to saying how do we exit this a stronger company. And that was one of the rallying cries across the organization into making the investments in technology, making the investments in growth, making the investments in the enterprise more broadly. And we recognized that we could invest more to strengthen the loyalty offer for our customers and for our owners and looking at as loyalty continues to evolve and becoming more competitive, how do we take share. So it's a significant transformation of the loyalty program. As we said, initially it's a new tier and different tier structures. But basically, it's going to be a richer offer for our customers. It's going to be with more personalization and increased benefits, which will close some of the competitive gaps or create some areas of competitive advantage for us. And from that increased loyalty contribution, more revenues to owners, better credit card fees, reducing costs, and better returns. So we think that it's one of the biggest thing we will have done to this loyalty program since we invented loyalty for this industry and really excited about that opportunity. I'll let Paul talk about capital and then I'll come back and talk about Six Senses.

Yes. Thanks, Richard. So in terms of the CapEx, as you say, this year, CapEx was a positive for us. And we've always talked about gross CapEx potentially being up to $350 million, but the components within that being the key money and maintenance capital, which is what is permanently deployed into the business. That could be around the $150 million mark, obviously much lower this year. And then recyclable investments and System Fund CapEx, both of which do come back over time, so they are a temporary use of cash in the business only. And we've seen that in the results this year, both of those being a net positive for us. So I think that's all been demonstrated. So what would you have to see? Well, you'd have to see a much higher level of openings. So more key money being deployed. You'd have to see opportunities for us to invest that recyclable money. So on -- a new brand or a really great opportunity to expand one of our new brands might mean that we might buy a hotel or invest in a joint venture or something somewhere. And then you'd have to see more money going out from the System Fund. So that will be the growth and how you could get up to $350 million.

Excellent. Thanks, Paul. Six Senses. I think let me start by saying first we’re thrilled with the acquisition and the brand and to say I have been pleasantly surprised, bordering on amazed, at the demand for this brand throughout the pandemic. The level of owner engagement to want to be at the high end of luxury, to be in resorts actually felt like it accelerated 2021 versus slowdown. And so the number of inquiries that we have for incredible destinations, great hotels – and these are high fee earning resorts. As you pointed out, you can have an 80-room hotel paying you $1 million a year easily. And so we’re going to continue to look to expand that and accelerate that in the Americas. I mean the history, the legacy of the brand is Asia, and now it’s moved into Europe. And now we’re building that out into the Americas. We truly see this being a global brand and scaling up quite quickly. We think there are plans for potentially 8 or 9 openings this year alone, and that being at a pace to continue to accelerate going forward as we expand our development footprint. So it’s great we get in there with smaller hotels. Some of our other brands can convert smaller hotels as well, which is appropriate, but we want to make sure if we’re in smaller hotels, that they are high-fee-income hotels to – and make sure that we get the value from it.

The next question comes from Jaafar Mestari at BNP Paribas.

I've got two, if that's okay. Firstly, just on pricing. I'm curious, in your discussions with owners, do you have a sense of how much of the pricing they've been pushing is opportunistic? The strong demand in some windows, fixed supply, that's here to stay? And in contrast, how much is reactive pricing, passing on dollar cost inflation, and ultimately, if the inflation outlook changes, the second lever possibly goes away? And I think in H1, you said it was largely cost inflation that's evolved. And then on net room openings, I'm just trying to piece together the different time lines and targets. So you're now referencing prepandemic net room openings of 4.8% and 5.6%. But also separately, you're still bringing up the opportunity to do industry leading, which, if I'm correct, prepandemic was a touch higher than that. So from your comments today, are you saying that there's basically 1 more transition year in 2022 and then 2023 could be 4.5%, 5.5% like '18, '19, but then beyond that, from '24, you still want to eventually do 6%, which was the endgame pre-COVID? Would that sequence make sense?

Great. Well, thank you very much, Jaafar. I think pricing, I think there's a combination of factors going on in pricing. We've done quite a bit in terms of our pricing simplification and our revenue management systems to enable owners to price more aggressively. And not to get too technical, but we've built out a lot of things in the back end to make sure that what happened during the pandemic doesn't negatively impact pricing. So we really make sure we're leveraging our new demand algorithms to make sure we really price aggressively. And so I say there's two aspects to it. In some markets, demand has increased so much. It's not defensive pricing, it's basically fundamental supply and demand. Basically, owners are pricing to maximize the performance in their hotels given what the demand is for those assets. Remember, 50% of our hotels are at or above 2019 levels already. And we've continued to see ADR hold very, very strongly, much more so than anyone ever believed once the pandemic started. There is also some defensive pricing going on where demand hasn't completely returned to some markets, but owners are pricing in order to make sure they're making up for the supply chain impacts and cost inflation, too. So I think there is proactive pricing, and I think there's defensive pricing going on, all of which is helping us maintain ADR and grow ADR, which is really, really a positive for IHG and for our owners.

And in terms of the question on what our aspirations are going forward around net system size growth, so I mean, we’ve said for some time that we want to be industry leading. And if you go back to 2019, for example, and you look at the openings and then you look at the removals, well, we actually led the industry in terms of openings. Nobody opened as many rooms as us on a percentage basis. We had more removals back then because we hadn’t been through the Holiday Inn and Crowne Plaza program, which going forward is going to take our removals down to 1.5% level. Had we been at that 1.5% level, we would have beaten everybody back in 2019. As we move forward, what we think is that 2022 will look more like 2018, and then going forward, more like 2019 and going forward from there. So it is a component of how many rooms we open and how many rooms we remove. So I think we’re very well placed.

The next question comes from Tim Barrett at Numis.

Just two things, please. Firstly, thinking about the dividend. If I'm right, it's just above $150 million in quantum. Just interested in what you're solving for on that decision and whether it's an EPS payout or more to do with leverage. And second question, forgive me, it's slightly devil's advocate, but on removals, 1.5%, there might be an argument to say there's always going to be a tail. And just really, why would you exclude the Holiday Inn and Crowne Plaza elements from that?

Thanks, Tim. Well, in terms of the dividend, what we said is that we are basically putting back the 2019 final dividend that we weren’t able to pay because of the pandemic. And we were one of the first companies to say we are going to withdraw this because we had to protect liquidity at the time. Now with the high level of cash flow that we’ve generated this year, $571 million of free cash flow, and coming back, very importantly, to leverage of only 3x net debt-to-EBITDA, we think it’s the right time to reinstate the dividend. And then going forward, we’ll continue to pay dividends and further returns of capital as we have over the last 20 years or so. In terms of the removals, we’re not – just to be clear, we’re not saying there aren’t going to be any Holiday Inn or Crowne Plaza removals going forward. It’s just that they’re going to be at a normal level. So across all our other brands over the last, say, 5 years, it’s been at 1.5%. And so we’re saying that Holiday Inn and Crowne Plaza, we would be removing 1.5% or so. There’ll be some blending across all the brands, but it gets to overall that sort of 1.5%, not that no Holiday Inns and Crowne Plazas are going to be removed going forward.

The next question comes from Ivor Jones at Peel Hunt.

Four quick things. On distribution channels, has anything interesting happened in this period of recovery particularly in relation to OTAs within the mix or just generally in relation to distribution? Secondly, I guess the tail end of the year is less business heavy than the rest of the year. So when do you think through the '22 you'll be able to say more confidently the level to which business is recovering given the change in business practices? When you get to a business-heavy month when you'd be able to make a comparison? Thirdly, just in relation to the contribution of Luxury & Lifestyle growth. Looking out a couple of years, is this going to be a significant driver of additional room nights through the loyalty program? Is 50% of room nights maybe the right number? Or with the luxury branding expanded, you get to 75% and will have a material effect on margin that we should be thinking about? Is that a second order payback on Luxury & Lifestyle? And lastly, Paul, you might have mentioned this already, but if there was a flow-in from System Funds in terms of cash flow in 2021, is there a flowing out in 2022? Or do we get to neutrality in 2022? I didn't quite understand the balance of those flows.

Well, thank you. I'll talk a little bit about distribution. And candidly, it's still pretty noisy in terms of distribution and where contributions are coming from because the recovery is happening at different rates at different parts of the world. And so in areas where we have seen a full recovery and you're seeing more business travel, you're seeing much more of a normalization to our traditional distribution contributions. In markets where it's been much more leisure oriented, you are seeing an increase in some of the OTAs because, again, those are infrequent leisure customers and you're seeing decreases in things like GDS. But overall, we're beginning to see a normalization back to where we were prepandemic, and we'll have probably more clarity on where distribution lands through 2022 as more things begin to open up. Because again, you'll remember, some markets today are at 2019 levels. We have some markets that are still down 70% to 2019 levels and everywhere in between, too. So there's a lot of noise in distribution. But what was interesting is we saw a lot more coming to the hotels directly, which was an interesting trend. And we saw, again, continued strong loyalty contribution overall. And I think in terms of the business-heavy months, I mean, as spring progresses, business travel picks up. I mean January and February are lighter months. And industry-wide, Omicron has definitely been a bit of a headwind. You can see that in the data in terms of business travel was accelerating into December. Industry-wide, January probably was a bit softer. But we believe come spring, you're going to see business travel begin to normalize on top of that strong leisure travel as well, too. And then at the back end of the year when you get very business heavy, kind of up that September, October, November time frame is when you really see us being back to probably normal levels. In terms of Luxury & Lifestyle, I mean, it's a growing part of our business. It's an incredibly highly lucrative fee income from each asset. It also helps the loyalty program, but they're all interconnected, right? So the investments we're making in loyalty actually make it more appealing to a Luxury & Lifestyle customer as well as a mainstream customer. And so -- and by having more Luxury & Lifestyle hotels, your programs are more attractive as well, too. And so we would expect to see loyalty contribution continue to accelerate. Remember, in the previous years, prepandemic, we raised loyalty contribution 7 points. So we showed that we were strengthening the program throughout. The whole industry saw loyalty contribution fall in '21, and we would expect now a new program in '22, landing that into '23 forward, an acceleration of loyalty contribution in Luxury & Lifestyle and in our mainstream brands as well.

And in terms of the System Fund and how the cash flows there work, I think the key thing is that we run the System Fund effectively on a cash-neutral basis over time so that some years, there may be a small inflow, in some years there may be a small outflow. 2020, to make sure we were sort of supporting our owners as well as we could, although what was coming in was much reduced, we did continue to spend to invest behind marketing and everything that would put as much income as possible into our owners' hotels. That was the right thing to do. And then some of that flows back to us this year, so there has been an inflow. But broadly, it's net neutral over time.

But what do you expect for this year, sorry, Paul?

Well, it will depend on the pace through the year. So no guidance right now. I think we've sort of caught up on what we saw in the outflows in 2020 in the 2021 numbers. So -- and then going forward, we run it to broadly neutral over time. So if we were to see an inflow in this year, another inflow, then we might spend more in the following year. It's always a little difficult to predict exactly how much money is going to come in and then how much money you're spending on your marketing. But what we're try and, as I say, make sure we're doing is putting anything that's served us back into the System Fund to drive even more demand in the future years.

The next question comes from Alex Brignall at Redburn.

Just two, if I could. On the business travel assumptions, you sort of alluded to the RevPAR expectations for back to normal in 2023. I'm just wondering what the business expectations are within that. I ask because I saw a presentation from AMEX GBT, which is pretty much the biggest business travel agency. They expect business travel to get back to 70% of prepandemic levels. It seems a little different to what you might be forecasting. There's a big difference, obviously, on sort of total office attendance and total workplace attendance, and you're exposed a little bit differently to both. But just your thoughts there would be really helpful. And then on the distribution channel mix, you just made really interesting comments about the hotel direct going up during the pandemic. Could you just talk regardless as to whether it's OTA or your own website? But what's happening to the sort of online/off-line mix because that seems like a bit of a sort of anomaly for the pandemic period? Is it going back to sort of prepandemic trends in terms of moving from offline to online?

Thanks, Alex. Yes, in terms of business travel assumptions, I think there's a couple of things we have to remember. The mix -- our mix of business -- by having a large, mainstream portfolio and an extended-stay portfolio, a good portion of that is what we call the essential business travel. And we saw that throughout the pandemic. If you'll remember back in the depths of '20 when things were at their worst, we were still running 40-plus percent occupancy in Holiday Inn Express and over 60% occupancy in our extended-stay brands because that's essential business travel. And then on top of that, then you push out the discretionary business travel groups, meetings and events. So I think what Amex is talking about is much more about that discretionary business travel, people who basically don't have to go -- to travel to do their job, because we're already above 70% materially in terms of business travel overall, too. Will it be back to 100% in this year? No, we don't believe so. But again, I think really showing that continued recovery quarter-by-quarter, and it's also being made up by incremental leisure travel and also -- I'll give you an interesting anecdote. I mean I was talking to one of the biggest services firms in the world last week. They were talking about having their partner meeting over in Europe. Going to be 3,000 people getting together. And this was back to a comment I made earlier, saying -- people are saying fewer flights but more room nights in this business/leisure mix. And we're bringing all of our partners together for 4 days to a European capital city, 3 days of meetings, and then we're letting everybody stay over 1 day on the company for a leisure day. And so it's…

If I could just ask one sort of follow-up on the first question. I guess the core kind of assumption then comes down to, is it possible for your sort of demographic in your hotels to return to previous RevPAR assumptions while higher and more urban hotels stay meaningfully below? I guess I was just thinking about the trickle-down economics of pricing. As high-end hotels lose demand, it feels to me like they'd cut price and then it might come down to you. But I can be completely off on that.

I don’t – I think the nature of the recovery will just vary. Urban centers are already beginning to recover but somewhat recovering at different paces. But we’re already seeing it. I was in London last week and talking to the teams, and you could see how busy March and April were going to be versus where January and February were, business travelers and so forth. And so I’m quite confident that the urban markets are going to recover. There will be a few outliers on this, without question, and they are dependent upon, again, more of that international, again going back to what I said in the presentation. There are still restrictions. There are still challenges on international business travel, and those go into the key gateway cities. So as those get lifted is when you’ll see it begin to come back as well, too. So it’s just going to lag but not be structurally damaged.

We have no further questions registered We have one question comes through. Do you have time to take it?

Yes, last question.

Last question comes from . He's an individual shareholder.

My question is away from the financials and is actually referring to your penultimate slide when you talked about people and your diversity programs and recruiting diverse talent. I wonder if you could speak and say a bit more about how those diversity programs might differ around the globe. And I'm particularly interested in whether you're doing anything around neurodiversity, i.e., focus on finding ways to get autistic people recruited into organizations. And I wonder whether that's something that's on your agenda at all.

Thank you very much, . Now our Journey to Tomorrow commitments for 2030, the people aspect is a huge component of it. And I think to your first point, diversity is different around the world. And having lived on many parts of this world, in Asia and Europe and in the U.S., we consciously try not to have a one-size-fits-all approach. We look actually what’s happening in the markets and what’s the right focus we want to have. So for example, 12, 13 years ago, we focused on localization in China because our China business, which is our fastest growing, was being run principally by foreign nationals/patriots. Today, you get – and we – today, you go there. It’s run principally by Chinese nationals. We’re focusing on bringing women into the workforce in the Middle East. We’re definitely focusing on our African-American and black community in the U.S. So it’s where do we have what we call hotspots of where do we need to be leaning into. So that’s gender representation, it’s LGBTQ, it’s ethnic representation and localization. We actually have a number of programs focusing on bringing individuals who have either physical disabilities or mental disabilities or challenges in the Middle East actually, in Southeast Asia. We’ve been working in Singapore in particular.

We have no questions at this time.

Well, thanks, everyone. Thanks, everyone. It’s been great to connect with you all again. We’re really pleased with how the year has turned out, and the team have done an excellent job to position us to accelerate our growth in ‘22 and ‘23. Our next market communication will be our first quarter trading update on the 6th of May. Thanks for your time and your interest in IHG and look forward to catching up with you all soon. So take care.

This concludes today's conference call. Thank you for joining. You may now disconnect your lines.