Skip to Content

InterContinental Hotels Group PLC ADR IHG

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

InterContinental Sees Q2 Demand Improvement as It Focuses on Portfolio Quality; Shares Overvalued

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

InterContinental’s second-quarter revenue per available room, or revPAR, returned to 57% of 2019 levels, an improvement from the 49% printed three months earlier. This sequential lift compares with narrow-moat peers Marriott and Hilton, which saw revPAR expand to 56% and 62% of 2019 levels in the second quarter, respectively, up from 42% and 45% in the first quarter. The slower rebound was driven largely by transitory issues, such as relatively high exposure to Greater China (17% of rooms), which is recovering ahead of other regions and brings with it a lower average room rate. The firm also carries above average group and European exposures, which have been slower to rebound, but still should lift as demand broadens out into 2022. Encouragingly, IHG’s second-quarter U.S. (around mid-50% of rooms) revPAR reached 77% of 2019 levels, a strong showing compared with the 67% and low-60% at Hilton and Marriott, respectively. We may lower our IHG 2021 revPAR toward low-60s of 2019 versus high-60s but still expect a full recovery by 2023. With this offset by time value, we don’t expect a material change to our $60 fair value estimate, leaving shares slightly overvalued.

Read Full Analysis

Company Profile

Business Description

InterContinental Hotels Group operates 884,000 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

Related

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.