IHG misses expectations, but grows dividend, buyback plan

InterContinental Hotels Group (IHG) missed slightly on Street expectations for full-year 2022 results, reporting revenue of $1.84 billion as well as a 55% increase in operating profit of $828 million. The miss was offset by news coming CEO Keith Barr, who said that the board is recommending a 10% increase in the final 2022 dividend and announced a further share buyback program to return an additional $750 million to shareholders in 2023.

Not unlike the other industry giants, IHG showed significant improvement in trading for 4Q22 and the full year 2022, reporting on Tuesday that gross revenue for 2022 reached $25.8 billion, a 33% increase over 2021 and -8 versus 2019. Global RevPAR was up 37% versus 2021 and -3.3 versus 2019, while 4Q22 global RevPAR was up 26% versus 2021 and +4.1% versus 2019. The strongest recovery came in Americas with RevPAR +3.3% versus 2019 (4Q +9%); EMEAA improving to -7.5% (4Q +8.8%); Greater China -38% (4Q -42%).

Average daily rate was up 18% versus 2021, +8% versus 2019; and occupancy +9 percentage points versus 2021, -7 percentage points versus 2019.

IHG opened and added 49,400 rooms (269 hotels); its global estate now sits at 912,000 rooms (6,164 hotels). IHG also signed 80,300 rooms (467 hotels), marking a 17% increase YOY; its global pipeline now is at 281,000 rooms (1,859 hotels), +3.9% YOY. Signings mix drives pipeline to be weighted 54% across midscale segments and 46% across upscale and luxury. Conversions have continued to grow in importance, representing around a quarter of signings and a third of openings in 2022 (excluding Iberostar Hotels & Resort). More than 40% of the global pipeline is under construction, broadly in line with prior years.

Announced in November 2022, the long-term commercial agreement with Iberostar 48 hotels (18,467 rooms), IHG said it is investing in further integration costs, the net impact of which on operating profit from reportable segments is expected to be US$10-15 million. The Iberostar agreement is then expected to turn to a positive contribution in 2024, before ramping up significantly from 2025 with the final step up in the fee structure and the expected shift in distribution channel mix that IHG is expected to deliver.

IHG’s pipeline also includes five Iberostar Beachfront Resorts properties that are expected to be built and opened in future years.