Holiday Inn owner IHG stayed positive after interims reassured some investors
Holiday Inn owner InterContinental Hotels Group (LSE:IHG) saw its shares finish Tuesday in green, up 0.76% despite trading more strongly earlier, after reporting growth in revenue and profits for its first half of 2024.
Revenue rose by 7% to $1.1 billion, whilst operating profit was up 12% to $535 million.
Meanwhile, the hotelier’s key performance metric ‘RevPAR’ – revenue per available room – had improved by 3% worldwide.
China was a drag on performance, however, where RevPAR was down 7%. Nevertheless, growth in the Americas and the EMEAA region (Europe, Middle East, Africa and Asia) offset the worst of it.
In the United States, the hotel operator reported a significant rebound particularly in the second quarter.
“We are making great progress on the delivery of our strategic priorities and the clear framework to drive future value creation that we set out in February,” chief executive Elie Maalouf said.
IHG raised its interim dividend by 10% and returned over $400 million to shareholders through dividends and share buybacks.
Additionally, it highlighted that it had signed a record number of new hotels in the first half of 2024, which supports its net system size growth expectations.
Analysts at stockbroker Peel Hunt commented that IHG’s “growth algorithm” was delivering, highlighting that its modest RevPAR growth plus rooms and margin growth is allowing the hotel firm to keep returning cash to shareholders. The broker retained a bearish ‘reduce’ rating for the London-listed share on what it said were valuation grounds – given that the broker’s 7,000p price target compares to a prevailing market price of 7,410p.
Elsewhere, analysts at Barclays described the IHG interims as “reassuring” and “a touch ahead”, whilst not getting carried away with a ‘equal weight’ rating.
“We do not expect consensus forecasts to change and expect the release can reassure given recent lowering of expectations by Marriott and general concerns regarding the travel outlook,” the bank’s analysts said in a note. In London, IHG shares finished Tuesday 0.76% higher for the day, at 7,410p.
