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Highlights
- IHG's global RevPAR increased by 1.5% in 3Q, with strong gains in EMEAA but a notable decline in Greater China.
- IHG's $800 million share buyback and $255 million dividend payments will return $1.055 billion to shareholders in 2024, reducing voting rights by 3.7%.
- IHG issued a €750 million bond and now has $3.482 billion in outstanding bonds, with a blended borrowing cost of 4.1%.
InterContinental Hotels Group PLC (LSE:IHG) has released its third-quarter trading update for 2024, reporting a slight increase in global revenue per available room (RevPAR), despite mixed performance across different regions. While the Americas and EMEAA (Europe, Middle East, Asia, and Africa) experienced modest growth, Greater China faced significant declines, highlighting the varied demand recovery across IHG's global markets.
Q3 Performance Overview
In the third quarter of 2024, IHG’s global RevPAR rose by 1.5%, with noticeable variations in regional performance:
- Americas: RevPAR increased by 1.7%, reflecting stable demand in this key region.
- EMEAA: The region saw the strongest growth with a RevPAR increase of 4.9%, supported by steady recovery in travel demand across Europe, the Middle East, and Africa.
- Greater China: This region continues to face challenges, with RevPAR dropping by 10.3%, reflecting ongoing difficulties in travel recovery post-pandemic.
The group’s rooms revenue on a comparable hotels basis showed a 6% increase in group demand and 2% growth in business demand, though leisure demand remained flat compared to the same quarter last year.
Year-to-date (YTD), global RevPAR saw a 2.4% increase overall, with stronger performances from EMEAA (+6.4%) and the Americas (+1.8%), but a 5.6% decline in Greater China. Average daily rate (ADR) growth was modest at +1.7% in Q3, while occupancy rates slightly decreased by 0.1 percentage points in the same period. For the year, ADR is up 1.9%, and occupancy has improved by 0.4 percentage points.
Financial Strategy and Shareholder Returns
IHG continues its focus on returning capital to shareholders. The company’s $800 million share buyback programme, announced in February 2024, is now 77% complete, with $614 million (£482 million) spent so far. The repurchase of 6.1 million shares has resulted in a 3.7% reduction in voting rights, bringing the total number of shares down to 159.2 million as of October 21, 2024.
Together with $255 million in ordinary dividends, IHG will have returned a total of $1.055 billion to shareholders in 2024, representing 7.1% of IHG's market capitalization at the start of the year and 6.0% of its most recent market valuation of $17.7 billion.
Bond Issuances and Debt Management
IHG has been active in managing its debt portfolio. In September 2024, the company issued a €750 million bond at a 3.625% coupon, repayable in September 2031. This bond was converted into US Dollars, with a fixed debt of $834 million and interest payable semi-annually at 4.903%.
In addition, a €500 million bond matured in October 2024, with upcoming bond maturities spread across 2025 through 2031. As of October 2024, IHG has a total of $3.482 billion in outstanding bonds, with a blended borrowing cost of approximately 4.1%.
Outlook and Leverage
IHG continues to anticipate that its leverage ratio will remain at the lower end of its net debt to adjusted EBITDA target range of 2.5-3.0x by the end of 2024. This outlook reflects the company's balanced approach to capital allocation, prioritizing shareholder returns while maintaining a stable debt profile.
