Research Update: InterContinental Hotels Group Upgraded To 'BBB' On Recovering RevPar And Increased Leverage Cushion; Outlook Stable

Despite macroeconomic headwinds, we think InterContinental Hotels Group (IHG) is on track to benefit from the continued recovery of leisure travel demand, average daily rates, and fundamental business travel, seen in the group's first-half 2022 performance, and we now expect 2022 revenue to reach $1.7 billion, versus $1.39 billion in 2021. Our updated forecast assumes that IHG's S&P Global Ratings-adjusted net leverage will be remain within 3.0x-3.5x in 2022 and 2023, back to pre-pandemic levels. We furthermore believe that, thanks to strong presence in the U.S. and in particular the midscale segment (i.e., midscale economy according to the average daily rate), IHG will be able to pass to customers inflationary pressures and protect its profitability in the next 12-36 months.

...- Despite macroeconomic headwinds, we think InterContinental Hotels Group (IHG) is on track to benefit from the continued recovery of leisure travel demand, average daily rates, and fundamental business travel, seen in the group's first-half 2022 performance, and we now expect 2022 revenue to reach $1.7 billion, versus $1.39 billion in 2021. - Our updated forecast assumes that IHG's S&P Global Ratings-adjusted net leverage will be remain within 3.0x-3.5x in 2022 and 2023, back to pre-pandemic levels. - We furthermore believe that, thanks to strong presence in the U.S. and in particular the midscale segment (i.e., midscale economy according to the average daily rate), IHG will be able to pass to customers inflationary pressures and protect its profitability in the next 12-36 months. - Consequently, we raised our issuer credit rating and issue ratings on IHG and its debt to '###' from '###-'. - The outlook is stable because we expect IHG will make financial policy choices regarding share...

Research Update