InterContinental Hotels Group PLC

Overview Key strengths Key risks The world's third-largest hotelier by number of rooms as of Dec. 31, 2021, with more than $1.3 billion in revenues and $630 million in EBITDA as of 2021, versus $2.0 billion in revenues and $981 million in EBITDA reported in 2019. The cyclical nature of the lodging and hospitality industry and exposure to international mobility, reflecting reliance on highly competitive and fundamentally more unstable airline and travel industries. An asset-light business model that limits operating leverage, capital intensity, and volatility with a portfolio of well-known brands in diverse price segments. Smaller scale, when measured by the size of revenues and EBITDA, compared to U.S. peers. Relatively flexible cost base that provides resilience especially in a

...Our long-term view of IHG's business strengths remains positive. IHG benefits from its considerable scale of operations, wide geographic revenue spread, a portfolio of brands that targets multiple price points, and favorable brand recognition. This results in a high S&P Global Ratings-adjusted EBITDA margin of around 46%-50%. Although its margins dropped to around 38% in 2020, they quickly bounced back to around 49% in 2021 due to significant cost initiatives taken during the pandemic. We expect IHG to return to pre-pandemic margins of 50% by 2023. In addition, the company's presence in multiple price segments, its brand diversity, and its asset-light business model afforded it resilience during the pandemic. IHG's primary focus on its management and franchising business gives it a reasonably variable cost structure that helps to preserve margins and cash flow in a downturn. IHG also has low capital investment needs because hotel franchise agreements typically stipulate that existing and...

Full Report