Potential Gains Remain Compatible with InterContinental Hotels Group's Current Position
InterContinental Hotels Group (IHG) has reported robust financial results for the first half of 2025, with revenue up 8.4% year-on-year to $2.52 billion and operating profit rising 13% to $604 million. The company's adjusted earnings per share increased 19% to 242.5 cents, driven by a margin on fees that improved by 3.9 points to 64.7%[1].
Despite regional performance being mixed, the EMEA and Asia region showed solid RevPAR growth of 4.1%, while the Americas experienced modest growth of 1.4%. However, Greater China declined by 3.2% due to weaker demand[1][3].
From a stock price perspective, IHG shares have seen a decline of over 11% year-to-date in 2025 but are up 18.3% over the past 12 months, trading around 8,808p per share with a P/E ratio of about 25.1x[2]. Some analysts remain cautious due to ongoing U.S. market headwinds, but others, such as Bank of America, retain a "Buy" rating, emphasizing confidence in management and the large market potential for franchise conversions[2].
Looking forward, analysts have mixed projections. Some expect revenue to decline annually by about 17.2% over the next three years, but profit margins are forecasted to more than double from 14.6% to 33.6%, driving net earnings growth to roughly $975.8 million by 2028[4]. Earnings per share are projected to increase to $7.07 by 2028, supported by share buybacks that reduce the share count by approximately 4.3% annually[4].
Strategically, IHG is pursuing aggressive global expansion and portfolio diversification. The company opened a record 31,400 rooms in H1 2025 (75% year-over-year increase) and has a development pipeline of 325,000 rooms across 2,210 hotels focused on high-growth markets such as India, the UAE, and urban Americas[5]. The acquisition of the premium lifestyle brand Ruby targets younger demographics with lower-cost, franchise-friendly hotels, supporting longer-term profitability and market adaptability[5].
Capital allocation remains balanced. Dividends were increased by 10% to $1.68 per share, and a $900 million share buyback was launched in 2025, supported by a net debt/EBITDA ratio of 2.3x within investment-grade levels. IHG is focusing on high-return franchise conversions and brand acquisitions over increasing leverage, aiming to sustain long-term shareholder value without compromising growth opportunities[5].
In terms of cash flow, IHG converted 26% of its sales excluding cost reimbursements into free cash, and its net debt/EBITDA ratio is 2.6x, indicating a sufficient capital buffer[6]. The company's free cash flow (FCF) for the specified period was $301M[6]. Using the Dividend Discount Model, IHG's target price is estimated to be $131.88, and including a 5% risk consideration, the estimated target price is $125.29[6].
The MACD line is moving above the signal line, indicating buying volume outweighs selling volume[7]. In summary, IHG's current financial performance is robust, backed by strong profit growth and strategic expansions; however, mixed regional growth and U.S. market pressures temper expectations. The stock shows limited near-term upside according to some analysts, but longer-term prospects appear positive driven by margin improvement, portfolio growth, and shareholder returns.
[1] InterContinental Hotels Group (IHG) H1 2025 Financial Results, InterContinental Hotels Group, https://www.ihgplc.com/investor-relations/financial-results/h1-2025-financial-results
[2] InterContinental Hotels Group (IHG) Stock Price, Yahoo Finance, https://finance.yahoo.com/quote/IHG/
[3] InterContinental Hotels Group (IHG) Regional Performance, InterContinental Hotels Group, https://www.ihgplc.com/investor-relations/financial-results/h1-2025-financial-results
[4] InterContinental Hotels Group (IHG) Analyst Forecasts, Yahoo Finance, https://finance.yahoo.com/quote/IHG/analysts?p=IHG
[5] InterContinental Hotels Group (IHG) Strategy, InterContinental Hotels Group, https://www.ihgplc.com/investor-relations/strategy
[6] InterContinental Hotels Group (IHG) Financial Metrics, Yahoo Finance, https://finance.yahoo.com/quote/IHG/key-statistics?p=IHG
[7] InterContinental Hotels Group (IHG) MACD, TradingView, https://www.tradingview.com/symbols/NYSE-IHG/
Investors looking at the financial performance of InterContinental Hotels Group (IHG) might consider the potential of this business for investing, given its robust financial results and aggressive expansion strategies. Notably, IHG's financial metrics, such as revenue growth and operating profit, suggest a strong financial position. At the same time, the company is focusing on high-return franchise conversions and brand acquisitions to expand its portfolio and increase shareholder value.
