Consensus-beating Q3 RevPAR but more positives are needed

IHG delivered an above-consensus Q3 RevPAR figure, whereas we also noticed the remaining strong but narrower pricing growth. The group expects “very strong” year-end figures and will communicate a capital allocation update at the time of the FY results release but the market seems impatient and reacted negatively (share price -3.6% today).

Consensus-beating Q2; encouraging path of RevPAR growth

IHG further developed its RevPAR growth compared to 2019 in the Q2 and the quarterly operating profit from reportable segments was above the consensus by a mid-single-digit percentage, noting the earlier-than-expected recovery in Greater China. We have raised our 2023 estimates and we expect an increase to the consensus.

Expected Q1 improvements; CEO succession

IHG delivered a good-looking but much expected Q1 trading update, largely led by the long-awaited recovery in Greater China. The group CEO will step down for personal reasons and will support a smooth handover to the current Americas CEO as his successor. No major changes are expected to our estimates.

Mediocre 2022 vs another buy-back; more certainty needed

Despite continued qoq improvements, IHG’s 2022 results were barely in line with the consensus, mainly due to the subdued trading in China. This has been partly offset by an additional share buy-back of $750m in 2023. Not too much information helps to gain clearer visibility of the 2023 outlook, and the removal of pandemic-related travel restrictions in China should be constructive but in a progressive manner. We expect to trim our estimates moderately.

Q3 looks good; new CFO wanted

Thanks to the nearly fully-restored occupancy and vigorous pricing in the Americas and EMEAA, IHG delivered encouraging Q3 results which were consistent with the market’s anticipations, despite the dragging recovery in Greater China due to its zero-COVID policy. The mild positive was, however, offset by the uncertainties following the resignation of the long-staying and well-regarded CFO.

A resounding goodbye to the payout freeze

Benefiting from a good-looking business recovery and an improving net debt profile, IHG also resumed its interim dividend payment (already the case for the final dividend in FY21) and decided to launch a share buyback of up to $500m. We expect a positive change to our target price after the valuation update.

Promising perspectives but mediocre size growth

IHG’s Q1 results did not deliver much that was unexpected. Activities in the Americas remained dynamic and meaningful improvements were seen in EMEAA, while Greater China was much hindered by the pandemic-driven disruptions. Net size growth seems not competitive enough in the Americas. Regardless, the group’s outlook remains promising and should benefit from the strong US dollar.

Weak net system growth set to return to a normal rhythm

Despite the performance in the US remaining encouraging, IHG’s FY21 preliminary results were barely in line with consensus. The net system size continues to be affected by the ongoing portfolio review but is expected to revert to a normal average. The dividend distribution has been resumed.

Supported Americas but subdued EMEAA and disturbed Greater China

IHG’s Q3 was helped by the buoyant activities in the Americas, but trading in the EMEAA and Greater China remained subdued. The net system growth remained affected by the ongoing portfolio review. Currently, we don’t foresee a meaningful improvement for the coming Q4.

Growing success in profit rebuilding

IHG delivered a positive operating result in H1, thanks to a meaningful resumption of business in the Americas and Greater China. The robust RevPAR recovery seen in July is also encouraging.

Weaker-than-expected Q1 RevPAR, improvement expected for Q2

IHG’s quarterly RevPAR change was slightly weaker than consensus but still outperformed the industry. Pent-up demands were seen at the end of Q1 and continued into Q2, hoping to narrow the RevPAR drop.

A well-oriented portfolio but lack of short-term catalysts

Thanks to a “pandemic-friendly” geography-mix and segment-mix, along with its outstanding asset-light business model, IHG’s FY20 results were less affected by the global travel restrictions and fewer travellers. However, FY21 is not expected to do much better with a cheerless H1.

Business recovery is hoped to be expedited by mainstream's intensity

The UK-based hotel giant reported mediocre H1 results with Coronavirus shocks of a lesser extent than its peers. Its very important presence in the resilient mainstream segment is likely to help in stepping up the rebuilding of its business, where some early positive signs have been seen.

Accelerated expansion mixes with decelerated RevPAR

The hotel giant continues to move forward with high-speed international expansion, while RevPAR becomes lacklustre, although the underachievement could be explained by various reasons.

IHG to reap the benefits from advantageous environment in Greater China

With the foreseeable immense business opportunities, the very in-depth local market knowledge as well as the experienced and capable leadership team may support IHG further to reap the rewards after years of market expansion in Greater China.

Well positioned for future success

Strong performance against tough market conditions

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