IHG profits top $1 billion for first time

DENHAM, United Kingdom — IHG Hotels & Resorts reported strong 2023 full-year earnings with its operating profit rising over $1 billion for the first time in its history, up 23% from 2022. The company also announced a plan to return over $1 billion to its shareholders over the next year.

Elie Maalouf, CEO of IHG Hotels & Resorts, said travel demand was strong across all markets. “Adjusting for the effect of the Iberostar hotels joining IHG’s system, openings for the fourth quarter grew by 27% year-on-year, and signings were up by 50%, representing one of our biggest ever quarters for development activity,” he said.

Maalouf said IHG was targeting high single-digital percentage growth in fee revenue for 2024, which will come through a combination of RevPAR and systemwide growth and 100-150 bps fee margin expansion.

“The travel industry has attractive, long-term drivers of demand, and the strength of our brand portfolio and enterprise platform will continue to boost our RevPAR and system size growth,” he said. “Combined with our scale and cost base efficiencies, this will further expand fee margin. IHG’s strong cash generation supports investment in growth initiatives, sustainably increasing our ordinary dividend and the regular return of surplus capital such as through buybacks.”

IHG performance

Overall, the fundamentals were strong for IHG, with global RevPAR up 16.1% year-over-year and 10.9% vs. 2019. Geographically, those RevPAR gains were highest in greater China (71.7%) and the EMEAA (23.7%), while gains in the Americas were up 7% YOY.

The company said ADR was up 5% vs. 2022 and up 13% vs. 2019, while occupancy was up six points vs. 2022 and just one point lower than 2019. IHG reported total revenue of $31.6 billion, up 23% from 2022 and 13% from 2019.

The company opened 275 hotels (47,900 rooms) in 2023, reflecting 16% YOY growth, and signed more than double that amount — 556 hotels (79,200 rooms) into its pipeline, reflecting 26% YOY growth. IHG reported gross system growth of 5.3% and net system size growth of 3.8%.

It reported a fee margin of 59.3%, up 3.4% points, driven by the recovery in greater China and the EMEAA. IHG also reported a hefty increase in net cash from operating activities of $893 million, up from $646 million in 2022, reflecting an adjusted EBITDA of $1.086 billion, up 21% from 2022.

IHG announced a new $800 million buyback program for shareholders, which, combined with the $245 million in ordinary dividends, would combine to well over a billion in payments to its shareholders.