IHG Announces Major Partnership with Japan

October 23, 2006

Dear colleagues,

IHG’s global strategy is to build the industry’s largest operating system in the biggest markets and segments. IHG has long recognised Japan as one of those key markets. As the world’s second largest economy and the second largest travel and tourism market, Japan offers great potential for us to build a winning business.

We have now taken a major step towards securing our position in this critical market. Earlier today - Monday 23 October 2006 - in Tokyo, I signed an agreement with All Nippon Airways Company (ANA) to form a joint venture in respect of their successful hotel business, ANA Hotels & Resorts (AHR). IHG will hold a majority interest in the joint venture. The joint venture, which will be named IHG ANA Hotels Group Japan, will officially commence business on 1 December 2006.

ANA Hotels & Resorts operates 31 hotels and more than 9,000 rooms in Japan. IHG currently operates a portfolio of 11 hotels and 3,100 rooms in the region. Our combined estate, with 42 hotels and more than 12,000 rooms, will make IHG the largest international hotel group in Japan. All of ANA’s 13 owned and leased hotels, accounting for a total of nearly 5,000 rooms, will be immediately added to IHG’s global system size, bringing us a big step closer to our target of adding 50,000 to 60,000 rooms on a net and organic basis by the end of 2008.

The joint venture will be well positioned to further expand the business in Japan, where considerable new room growth is expected over the next five years.

Our joint venture partner, ANA, is Japan’s largest domestic airline. In 2005, ANA was voted the best airline for all routes between Japan and the rest of the world by Nikkei Business Magazine and ranked second in an employer of choice survey by Japanese university graduates.  ANA Hotels & Resorts was voted the highest ranking domestic hotel chain in Japan in the December 2005 Guest Survey by Business Development Research Consultants .

The joint venture will combine the strength of the ANA brand with the IHG family of brands under a co-branding arrangement for Japan. First to re-brand will be ANA’s 13 owned and leased hotels. Four of the hotels will be branded as InterContinental-ANA, eight as Crowne Plaza-ANA and one as Holiday Inn-ANA. The first hotel to be re-branded will be the flagship ANA Hotel Tokyo, which will become the InterContinental-ANA Tokyo in April 2007. The remaining owned and leased hotels will be re-branded over the following 18 months. Owners of the joint venture’s other hotels will also be offered the opportunity to enjoy the benefits of our combined brands and we are confident that most if not all will choose to work with the joint venture company.

The true strength of our new partnership lies in the complementary strengths of the two joint venture partners and the ANA Hotels team. ANA and ANA Hotels have the market knowledge, the strength of the ANA brand and the understanding of the Japanese business environment and culture. IHG brings its global systems and brand strength, management and franchising expertise and global network and distribution.

The ultimate goal of the IHG-ANA joint venture is to build the strongest integrated operating system in Japan, making our combined hotels the first choice amongst our guests and our owners. We want to continue growing our presence in primary as well as secondary and resort locations throughout Japan.

I would like to take this opportunity to thank all those colleagues who have worked so hard for so long to make this fantastic partnership a reality. A team of more than 80 people from around the globe have worked for almost a year in a true demonstration of our 360 spirit. Thank you also to those who now will take the venture forward to its long-term success and an especially warm welcome to the new colleagues who will be joining us from ANA Hotels & Resorts.

I am confident that your intimate market knowledge, coupled with your energy and passion for the hotel business, will make this an unbeatable team.

In the land of the rising sun, today the sun is indeed shining brightly.

Regards