Research Update: InterContinental Hotels Group PLC (IHG) Outlook Revised To Positive; 'BBB-' Rating Affirmed

We expect leisure and essential business travel demand will continue to strengthen in 2022 relative to the already improved levels during 2021. We think InterContinental Hotels Group (IHG) is on track to benefit from the continued recovery in pent-up leisure travel demand. We now think the group will improve its revenue per available room (RevPAR) levels to close to pre-pandemic levels in 2022, which will support accelerated EBITDA recovery and leverage reduction when compared to our previous base-case assumptions. Given our revised expectations, we think IHG's S&P Global Ratings-adjusted debt to EBITDA will likely be below 3.5x in 2022, our current upgrade trigger for IHG to return to a 'BBB' rating. We revised the outlook on IHG to positive from

...- We expect leisure and essential business travel demand will continue to strengthen in 2022 relative to the already improved levels during 2021. We think InterContinental Hotels Group (IHG) is on track to benefit from the continued recovery in pent-up leisure travel demand. - We now think the group will improve its revenue per available room (RevPAR) levels to close to pre-pandemic levels in 2022, which will support accelerated EBITDA recovery and leverage reduction when compared to our previous base-case assumptions. - Given our revised expectations, we think IHG's S&P Global Ratings-adjusted debt to EBITDA will likely be below 3.5x in 2022, our current upgrade trigger for IHG to return to a '###' rating. - We revised the outlook on IHG to positive from negative and affirmed our '###-' rating on the group. - The positive outlook reflects the possibility of raising our rating on InterContinental by one notch over the next 12 months if IHG continues to show EBITDA and cash flow recovery...

Research Update