Company Reports

While demand in the Middle East is temporarily hindered by geopolitical conflict, the global reach of InterContinental's portfolio assures that the human-ingrained desire to travel is quenched. We think the company holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 160 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 48% of total rooms in 2025. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and more than 10% share of all industry rooms under construction. We see its total room growth averaging 3% during the next decade, above the 1%-2% supply increase we estimate for the US industry.

While demand in the Middle East is temporarily hindered by geopolitical conflict, the global reach of InterContinental's portfolio assures that the human-ingrained desire to travel is quenched. We think the company holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 160 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 48% of total rooms in 2025. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental Hotels Group's second-quarter revenue per available room increased 3.5%. Rooms grew 5%, driven by an 8% increase in openings. Operating profit increased 10%, driven by a 7% lift in fee sales compared with a 4% rise in expenses.

While demand in the Middle East is temporarily hindered by geopolitical conflict, the global reach of InterContinental's portfolio assures that the human-ingrained desire to travel is quenched. We think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 160 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 48% of total rooms in 2025. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental's first-quarter revenue per available room, or revPAR, increased 4.4%, with broad strength across all regions except the Middle East where revPAR decreased 2%. Specifically, the US rose 3.4%, Europe 5.4%, and Greater China 5.7%. Room growth was up 5%.

We think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 160 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 48% of total rooms in 2025. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental's fourth-quarter revenue per available room, or revPAR, increased 1.6%. Net unit growth was 4.0%. For the year, adjusted EBITDA grew 12%, helped by expanding credit card fees.

Despite anemic US consumer sentiment and softer employment, we think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of 145 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 47% of total rooms in 2024. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

Despite anemic US consumer sentiment and softer employment, we think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of 145 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 47% of total rooms in 2024. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental's third-quarter global revenue per available room, or revPAR, was up 0.1%, with the Middle East region up a strong 9.5%, and the US down 1.6% as the region's leisure and group travel continued to be hindered by policy uncertainty. Unit growth remained healthy, up 4.4%.

Despite US economic uncertainty, we think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of 145 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 47% of total rooms in 2024. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental's second-quarter revenue per available room, or revPAR, increased 0.3%. Growth was led by the Europe, Middle East, Africa, and Asia region, with revPAR up 3%, while the US trailed, with revPAR down 0.9%. Total unit growth remained healthy at 4.6%.

Despite economic uncertainty, we think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of 145 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 47% of total rooms in 2024. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

Amid unsettled economic conditions, InterContinental's first-quarter revenue per available room, or revPAR, increased 3.3%. Growth was led by the Europe, Middle East, Africa and Asia (EMEAA) region, with revPAR up 5%. Total unit growth remained healthy at 4.3%.

Despite economic uncertainty, we think InterContinental holds one of the industry's strongest brand intangible assets—primary source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of 145 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 47% of total rooms in 2024. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental Hotels Group reported solid fourth-quarter revenue per available room growth of 4.6% and unit growth of 4.3%, which we think illustrates that its wide-moat brand continues to resonate with travelers and owners. We don’t plan to meaningfully change our $111/GBX 9,050 fair value estimate. Currently trading at 18 times forward enterprise value/EBITDA versus 13 times before the pandemic, the shares look overvalued to us.

Although savings rates have waned and inflation has remained elevated, we are more constructive on intermediate-term revenue per available room, or revPAR, for InterContinental. Our stance is based on our findings of past environments with similar savings rates and inflation that produced stout US industry revPAR growth. As a result, we have increased our 2026-28 InterContinental revPAR to an average annual growth rate of 5.1% from 3.6% previously and our fair value estimates to $111 per share and GBX 9,050 per share (or 14 times 2025 EV/EBITDA) from $99 and GBX 7,650, respectively. Despite our expanded valuation, we see shares as overvalued, but we wouldn’t need much discount to our fair value estimate to recommend shares of this brand advantaged wide-moat company.

Despite waning consumer savings and persistant inflation, we think InterContinental holds one of the industry's strongest brand intangible assets—primary source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 130 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 45% of total rooms in 2023. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

While waning consumer savings threaten near-term industry demand, we think InterContinental holds one of the industry's strongest brand intangible assets—primary source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 130 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 45% of total rooms in 2023. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.

InterContinental Hotels Group’s third-quarter revenue per available room and unit growth of 1.5% and 4.1%, respectively, were largely as we expected. We don’t expect to change our $97/GBX 7,650 fair value estimate meaningfully, other than for exchange-rate and time value changes since our last update. We wouldn’t require much discount to recommend the shares of this brand-advantaged company (primary source of our wide moat rating), but we currently see them as overvalued.