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InterContinental Hotels Group PLC ADR IHG

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

InterContinental and Peer Demand Stand to Benefit From Some Sustainability in Remote Working

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

We have increased our fair value estimate for InterContinental to $67/GBX 4,890 per share from $64/GBX 4,400 to incorporate our view that increased worker flexibility will lead to higher long-term travel demand. This harmonizes with changes we began instituting across our accommodation travel coverage since InterContinental reported its third-quarter sales update. We developed our positive stance because higher-income occupations (like those in technology, finance, legal, and architecture) are in industries that are the most likely to support sustainably working from remote locations. As with peers, the adjustment is reflected in InterContinental’s revenue per available room, with the metric now averaging between 3.5%-4% growth during 2024-30 (after the full recovery to 2019 levels by 2023) versus about a 3% increase prior.

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Company Profile

Business Description

InterContinental Hotels Group operates 889,000 rooms across 17 brands addressing the midscale through luxury segments. Holiday Inn and Holiday Inn Express constitute the largest brand, while Hotel Indigo, Even, Hualuxe, Kimpton, and Voco are newer lifestyle brands experiencing strong demand. The company launched a midscale brand, Avid, in summer 2017 and closed on a 51% stake in Regent Hotels in July 2018. It acquired Six Senses in February 2019. Managed and franchised represent 99% of total rooms. As of Dec. 31, 2020, the Americas represents 58% of total rooms, with Greater China accounting for 16%; Europe, Asia, the Middle East, and Africa make up 26%.

Contact
Broadwater Park
Denham, Buckinghamshire, UB9 5HR, United Kingdom
T +44 1895512000
Sector Consumer Cyclical
Industry Lodging
Most Recent Earnings Dec 31, 2012
Fiscal Year End Dec 31, 2021
Stock Type
Employees 13,002

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