Interactive Investor

ii view: InterContinental Hotels details disappointing Q1

Operating hotels in the world’s two biggest economies of the USA and China and with a relatively new CEO at the helm. We assess prospects.

3rd May 2024 15:55

by Keith Bowman from interactive investor

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First-quarter trading update to 31 March

  • Revenue per available room (RevPAR) up 2.6%
  • Signed 17.7k rooms (129 hotels)

Chief executive Elie Maalouf said:

“The combined power of our platform and efficiency of our operating model will continue to drive IHG forward. We are excited about the future and our ability to capitalise further on our strengths, scale and leading positions, and on the attractive, long-term demand drivers for our markets."

ii round-up:

Global hotelier InterContinental Hotels Group (LSE:IHG) today reported sales below City forecasts, but with changes to financial arrangements with hotel owners or franchisees expected to aid future profits.

IHG, which charges fees to property owners to operate and run their buildings under its hotel brands, outlined growth in Revenue per Available Room (RevPar), a key industry metric, of 2.6% for the first quarter to late March - below analyst hopes for growth of 3.5%. 

Shares in the FTSE 100 company fell 2% in UK trading having come into this latest news up around 10% year-to-date. That’s similar to rivals Marriott International Inc Class A (NASDAQ:MAR) and Hilton Worldwide Holdings Inc (NYSE:HLT) and ahead of a 6% gain for the FTSE 100 index itself in 2024. 

IHG operates 19 global brands from budget to luxury names which include Holiday Inn, Staybridge and Iberostar. 

RevPar for its key Americas region, generating close to three-quarters of group annual profits, fell 0.2% during the quarter, hit by changes in the timing of holidays and reduced business travel.

Revenue on the same basis in China, accounting for close to a tenth of profits, rose 2.5%, short of estimates for nearer 10%, blamed on tough year-over-year comparatives and expanded outbound travel to Southeast Asia.   

Elsewhere, RevPar for its remaining combined Europe, Middle East, Asia, and Africa (EMEAA) region climbed 8.9% year-over-year, driven by robust European demand. 

Changes being made to its financial arrangements with franchisees and focused on the customer loyalty programme are expected to generate a $25 million uplift in this year’s annual profit, with further gains expected in future.  

First-half results are scheduled for 6 August.  

ii view:

Headquartered in Buckinghamshire, InterContinental operates more than 6,300 hotels in over 100 countries. Employing over 340,000 people, global rivals include Marriot and Accor SA (EURONEXT:AC). Crowne Plaza, Kimpton, Candlewood Suites, Regent and Hualuxe in China are among its many brands. 

For investors, high interest rates continue to squeeze spending for both consumers and corporate customers initiating business travel. Executives can now avoid travel by using video calls, costs for businesses generally remain elevated, while global geopolitical tensions persist with a cooler relationship between China and the West not to be forgotten.  

On the upside, geographical and brand diversity are high and new hotels are being opened. An asset light business model is being pursued, while shareholder returns remain a focus via both an ongoing $800 million share buyback programme and forecast dividend yield of around 1.8%.

For now, and despite room for caution given underwhelming trading at its core US/Americas region, this global hotelier looks to remain deserving of a place in diversified investor portfolios.


  • Brand and geographical diversity
  • Focus on shareholder returns 


  • Uncertain economic outlook 
  • Heightened global geopolitical tensions

The average rating of stock market analysts:

Weak hold

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