InterContinental Hotels Group PLC (IHG.L) | Investment Case

1. Company Snapshot

1.a. Company Description

InterContinental Hotels Group PLC owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China.The company operates hotels under the Six Senses, Regent, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo, EVEN Hotels, HUALUXE, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, avid, Staybridge Suites, Atwell Suites, Candlewood Suites, voco, and Crowne Plaza.It also provides IHG Rewards loyalty program.

As of December 31, 2021, the company operated 5,991 hotels and 880,327 rooms in approximately 100 countries.InterContinental Hotels Group PLC was founded in 1777 and is headquartered in Denham, the United Kingdom.

Show Full description

1.b. Last Insights on IHG

InterContinental Hotels Group's recent performance has been impacted by slowing growth, driven by weakness in the US market amid pressure on spending. The company's RevPAR (Revenue Per Available Room) slipped in Q3, particularly in the Americas, where it fell nearly 1%. Additionally, global hotel chains have flagged weakening US demand, citing weaker RevPAR in price-sensitive tiers and patchy midweek corporate travel. The departure of the company's chief development officer for the Americas and downgrades to its key visitor offering have also contributed to negative sentiment.

1.c. Company Highlights

Last Price	133.9
Change Percentage	1.29%
Open	133.7
Previous Close	132.2
Market Cap ( Millions)	20134
Volume	391263
Year High	150.9
Year Low	97.61
M A 50	139.18
M A 200	126.42

FCF Yield	3.91%
Dividend Yield	1.28%
ROE	-23.50%
Debt / Equity	-181.87%
Net Debt / EBIDTA	239.15%
Price To Book	-7.41
Price Earnings Ratio	32.1
Price To FCF	25.54
Price To sales	4.47
EV / EBITDA	14.88

2. IHG Hotels & Resorts Beats Expectations with Strong 2025 Performance

The company's financial performance in 2025 was outstanding, with revenues growing in line with the industry's expansion. Actual EPS came out at $1.41, significantly beating estimates of $0.913. The strong EPS growth was driven by a 13% increase in EBIT and a 16% rise in adjusted EPS, supported by the completion of a $900 million share buyback. Fee margin expansion was also notable, with a 360 basis point increase driven by operating leverage and step-ups in ancillary fee streams. As Michael Glover, Chief Financial Officer, mentioned, the company is on track to triple its fees from 2023 by 2028, indicating a strong growth trajectory.

Publication Date: Feb -20

                                    📋 Highlights
                                    RevPAR Growth:
                                                Increased 1.5% in 2025 driven by geographic diversification and brand strength.
System Growth:
                                                Achieved 6.6% gross and 4.7% net system growth, outpacing expectations with new openings.
Fee Margin Expansion:
                                                Expanded by 360 basis points via operating leverage and ancillary fee step-ups.
Profitability:
                                                EBIT rose 13% and adjusted EPS grew 16%, supported by a $900M share buyback.
Branded Residences:
                                                30 projects active, with fees expected to triple from 2023 levels by 2028.

                                

Revenue Growth Drivers

The revenue growth was driven by a 1.5% increase in RevPAR, gross system growth of 6.6%, and net system growth of 4.7%. The company's diverse geographic footprint and range of brands contributed to the RevPAR growth. Additionally, the Branded Residences business is growing nicely, with 30 projects currently in place, and is expected to contribute to growth over and above the company's algorithm.

Regional Performance

The company's regional performance was mixed, with strong growth in EMEAA and China, but a more challenging environment in the Americas. However, the company is optimistic about the US market in 2026 due to stronger GDP growth, a strong job market, and a weaker dollar. In China, the company has seen a U-shaped recovery and is confident that the gradient will be upward.

Valuation Metrics

To understand what's priced into IHG's stock, we can look at some key valuation metrics. The company's P/E Ratio is 34.06, indicating a relatively high valuation. However, the EV/EBITDA ratio is 15.65, which is more reasonable. The ROIC is 26.67%, indicating a strong return on invested capital. The Net Debt / EBITDA ratio is 2.39, suggesting a manageable debt burden. Analysts estimate next year's revenue growth at 5.4%, which is in line with the company's growth trajectory.