InterContinental Hotels Group (IHG) H2 2025 (Q&A) earnings summary

Executive summary

• RevPAR grew 1.5% in 2025, with system size reaching 1,026k rooms (+6.6% gross, +4.7% net YOY), reflecting broad geographic reach, strong brands, and a resilient operating model.

• EBIT increased 13% and adjusted EPS rose 16% year-over-year, supported by a $900 million share buyback and over $1.1bn returned to shareholders.

• Record hotel openings in 2025, with 65.1k rooms opened (+10% YOY), and strong signings up 9% year-over-year.

• Strong growth in conversions, representing about half of all openings and 40% of all signings; Ruby brand acquisition and Noted Collection launch enhanced portfolio.

• Launched a new $950 million share buyback program and introduced the Noted Collection brand in early 2026.

Financial highlights

• Fee margin expanded by 360 basis points to 64.8%, driven by operating leverage and ancillary fee growth.

• Revenue from reportable segments rose 7% to $2,468m; fee business revenue up 7% to $1,897m.

• Adjusted free cash flow reached $893m, with share buybacks of $900m reducing share count by 4.8%.

• Costs reduced by 3% in 2025, with ongoing cost control expected to keep increases around 1% in 2026.

• Branded residences generated $5–10 million in fees, with substantial increases expected from 2027 onward.

Outlook and guidance

• Early 2026 trading is positive across all regions, with confidence in continued system growth and RevPAR improvement.

• Net unit growth consensus for 2026 is 4.4%, with more upside than downside anticipated.

• FY26 interest expense expected to rise to $230m–$250m due to higher net debt and borrowing costs.

• Medium- to long-term ambitions: high-single-digit fee revenue growth, 100–150bps annual fee margin expansion, 12–15% adjusted EPS CAGR.

• Branded residences and ancillary revenues are expected to become more material contributors to growth.