InterContinental Hotels Group (IHG) 2025 BofA Gaming, Lodging & Leisure Conference summary

Demand trends and market performance

• Global demand remains steady, with 1.8% global RevPAR in 1H, and similar trends expected in Q3.

• Luxury segments outperform, especially among ultra-high net worth consumers, while economy segments lag due to inflation sensitivity.

• U.S. government travel is subdued, but offset by growth in leisure and corporate segments; exposure to government travel is minimal.

• China is bottoming out, with flat occupancy and record system growth; RevPAR decline is rate-driven, not demand-driven.

• Europe and EMEA show steady demand post-high comps, with strong tourism and a surge in Chinese outbound travel benefiting Southeast Asia and Europe.

Strategic growth and pipeline

• Net system growth ex-China was 5.4% in 1H; medium-term growth expected to align with fee growth targets.

• Pipeline is evenly distributed across Americas, EMEA, and China, with significant exposure in Tier 2 and 3 Chinese cities.

• Record signings and openings in 1H, with 34% of the open system under development, providing strong future growth momentum.

• Owners are constructive, with credit and equity available, though return expectations have adjusted to higher interest rates.

Financial performance and margin outlook

• Achieved 390 bps margin expansion in 1H, well ahead of the 100–150 bps annual target; driven by operating leverage and ancillary growth.

• Consensus for full-year margin expansion is 250–300 bps, with ongoing efficiency from technology and process improvements.

• EPS growth and margin expansion expected to continue, supported by scalable, asset-light business model.