In key news on UK stocks, InterContinental Hotels (GB:IHG) shares fell by almost 3% as of writing, despite the company reporting a revenue surge in its first quarter update. IHG’s global RevPAR (revenue per available room) grew by 2.6% year-over-year, primarily driven by an 8.9% increase in the Europe, Middle East, Africa, and Asia (EMEAA) region. However, the market responded negatively to the update, as the RevPAR was down from the 7.6% reported in the previous quarter, indicating slower growth.
IHG is a British hospitality group that owns and manages a chain of hotels and resorts. The company owns 19 hotel brands, including Holiday Inn, Garner, Regent, and Six Senses.
IHG’s Q1 Performance
In the first quarter, IHG’s global occupancy saw a 20 basis point increase, reaching 62%, while the average daily rate experienced a 2.3% rise. This uptick highlights the robust return of travel demand among leisure, business, and group segments.
Regionally, the Americas, having rebounded strongly, remained stable. Meanwhile Greater China saw a 2.5% growth and is poised to further benefit from the return of international inbound travel this year.
In terms of its operations, IHG launched 6,200 rooms across 46 hotels in the first quarter and increased its global system to 946,000 rooms. Recently, the company also signed a deal with NOVUM Hospitality to expand its presence in Germany. This agreement will result in 17,700 new rooms, representing 1.9% of its global base, between 2024 and 2028.
Changes to IHG’s System Fund
Along with its Q1 numbers, IHG announced changes to its system fund. This includes a reduction in standard loyalty assessment fees paid by owners to the fund. Earlier, the total revenue generated from loyalty points was included in IHG’s system fund. However, now a portion of this revenue will be recognized directly in IHG’s segment results, beginning with 50% in 2024. This adjustment is expected to boost full-year revenues by around $25 million in 2024. By 2025, 100% of this revenue will be incorporated into IHG’s results.
What is the Stock Price Forecast for IHG?
As per the consensus of analysts on TipRanks, IHG stock has a Moderate Sell rating based on 15 recommendations, including nine Holds, five Sells, and one Buy.
