InterContinental Hotels Group PLC

Overview Key strengths Key risks The world's third largest hotelier by number of rooms (925,320 as June 30, 2023), with more than $1.9 billion in revenues and $935 million in S&P Global Ratings EBITDA as of 2022, versus $2.0 billion in revenues and $1.0 billion in EBITDA 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 with U.S. peers such as Marriott (2022 revenue of $5.4

...After a strong 2022, Intercontinental Hotels Group (IHG) continues to witness a sharp rebound in performance in the first half of 2023, deriving support from a strong leisure demand while business demand gradually picks up. IHG reported strong revenue and profitability growth in 2022, inching closer to its pre-pandemic levels (about 90% of 2019 level) while exceeding our previous expectation. The primary driver of the recovery was a strong rebound in tourism activity especially in the second half of 2022. IHG's S&P Global Ratings-adjusted EBITDA margins improved above its pre-pandemic levels to 50.7% for 2022 against 48.4% in 2019; the chief driver of this was the recovery in its fee margins, higher average daily rates (ADR) and the accrual of benefits from its cost-savings initiatives during the pandemic. Supporting the higher ADR levels was the willingness of consumers to pay premium rates, indicating pent-up demand after two years of no leisure activity--particularly in the urban markets....

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