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Leases
 12 Months Ended
Dec. 31, 2024
Presentation of leases for lessee [abstract]  
Leases
13. Leases
Right-of-use
assets
 
        
  Land and
buildings
$m
    
 Investment
property
$m
    
    Other
$m
    
    Total
$m
  
Cost
                                  
At 1 January 2023       571       50       2       623  
Additions and other
re-measurements
       15       –       2       17  
Transfers to investment property       (2 )      2       –       –  
Terminations       (51 )      –       (1 )      (52 ) 
Exchange and other adjustments       1       –       –       1  
At 31 December 2023       534       52       3       589  
Additions and other
re-measurements
    
28
 
–
 
5
 
33
Transfers to finance lease receivable    
(13
) 
  
(14
) 
  
(4
) 
  
(31
) 
Terminations    
(11
) 
  
–
 
(1
) 
  
(12
) 
Exchange and other adjustments    
(5
) 
  
–
 
–
 
(5
) 
At 31 December 2024
    
533
 
38
 
3
 
574
Depreciation and impairment
                                  
At 1 January 2023       (294 )      (47 )      (2 )      (343 ) 
Provided       (22 )      –       –       (22 ) 
System Fund expense       (2 )      –       –       (2 ) 
Transfers to investment property       2       (2 )      –       –  
Terminations       51       –       1       52  
Exchange and other adjustments       (1 )      –       –       (1 ) 
At 31 December 2023       (266 )      (49 )      (1 )      (316 ) 
Provided    
(21
) 
  
–
 
(1
) 
  
(22
) 
System Fund expense    
2
 
–
 
–
 
2
Transfers to finance lease receivable    
8
 
13
 
–
 
21
Terminations    
11
 
–
 
1
 
12
Exchange and other adjustments    
5
 
–
 
–
 
5
At 31 December 2024
    
(261
) 
  
(36
) 
  
(1
) 
  
(298
) 
                                   
Net book value
                                  
At 31 December 2024
    
272
 
2
 
2
 
276
At 31 December 2023       268       3       2       273  
At 1 January 2023       277       3       –       280  
  
  
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
one
 
to
 
99
years. The weighted average lease term remaining on the Group’s top eight leases (which comprise 95% (2023: 94%) of the
right-of-use
asset net book value) is 56 years (2023: 56 years). The InterContinental Boston lease, expiring in 2105, has a significant impact on this weighted average lease term; excluding this lease the weighted average lease term is seven years (2023: eight years). Undiscounted cash flows on the Boston lease of $3,191m (2023: $3,212m) represent 95% (2023: 94%) of the total undiscounted cash flows relating to lease liabilities.
Many of the Group’s property leases contain extension or early termination options, which are used for operational flexibility. The lease agreement over the US corporate headquarters 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 and there is no reasonable certainty the option will be exercised. The value of the undiscounted rental payments relating to this lease and not included in the value of the lease asset and liability is $301m. 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 and impairment reversals
2022 impairment
Details of the $2m impairment charge are contained in note
12
.
2022 impairment reversal
An i
mpairment reversal of $2m w
as
 recognised in relation to one hotel in the EMEAA region and arose due to improved recovery forecasts as well as strong 2022 trading.
Lease liabilities
The majority of the Group’s lease liabilities are discounted at incremental borrowing rates of up to 10%. The rate implicit in the InterContinental Boston lease was 9.7% and was derived from a valuation of the hotel at lease inception in 2006.
 
       
    2024
        
    2023
  
Currency
      
$m
        
$m
  
US dollars
    
357
   
357
Sterling
    
31
   
32
Euros
    
3
   
4
Other
    
23
   
33
     
414
   
426
 
 
 
 
 
 
 
 
 
 
 
 
 
Analysed as:
                    
Current
    
26
   
30
Non-current
    
388
   
396
     
414
   
426
The maturity analysis of lease liabilities is disclosed in note
23
.
The Group’s lease liability is not materially sensitive to inflation as $335m (2023: $342m) relates to the InterContinental Boston and the US corporate headquarters, which both include fixed payments and are not subject to inflationary
adjustments
.
Amounts recognised in the Group income statement
 
        
    2024
$m
             2023
$m		               2022
$m		  
Depreciation of
right-of-use
assets		    
22
      22         25  
System Fund depreciation of
right-of-use
assets		    
(2
) 
       2         3  
Expense relating to variable lease payments    
77
      62         47  
Expense relating to short-term leases and
low-value
assets		    
1
      2         1  
Income from operating subleases    
(3
)
       (2 )        (1 ) 
Recognised in operating profit
    
95
      86         75  
Interest on lease liabilities    
30
      29         29  
Total recognised in the Group income statement
    
125
      115         104  
 
 
 
Variable lease payments
The UK portfolio leases contain guarantees that the Group will fund any shortfalls in lease payments up to an annual and cumulative cap. These caps limit the Group’s exposure to trading losses, meaning that rental payments are reduced if insufficient cash flows are generated by the hotels. Since there is no floor to the rent reduction applicable under these leases, they are treated as fully variable. In the event that rent reductions are not applicable, annual base rental payments stabilise at £34m over the remaining lease to 2043. Additional performance-based rental payments are calculated using hotel revenues and net cash flows.
In addition, two German hotel leases under a similar structure are treated as fully variable.
Amounts recognised in the Group statement of cash flows
 
        
    2024
$m
        
    2023
$m
          
    2022
$m
  
Operating activities    
108
      92         72  
Investing activities    
(4
) 
       –         (6 ) 
Financing activities    
46
      28         36  
Net cash paid
    
150
      120          102