InterContinental Hotels Group PLC Stock

InterContinental Hotels Group PLC (IHG) owns, operates, franchises, manages, and leases hotels.

Strategy

The company’s strategies include relentless focus on growth; brands guests and owners love; leading commercial engine; and caring for communities and planet.

Business Model

The company predominantly franchises its brands and manages hotels on behalf of third-party hotel owners. While the company will continue to have a weighting towards Essentials, the company’s pipeline shows an increasing proportion of growth in the Premium and Luxury & Lifestyle segments, as well as a more even geographical spread.

The company has a portfolio of 19 brands across more than 100 countries in the Luxury & Lifestyle, Premium, Essentials, Suites and Exclusive Partners categories.

The company generally franchises or manages hotels, with the decision largely driven by market maturity, owner preference and, in certain cases, the particular brand. Hotels in the Essentials category tend to be franchised, while Luxury & Lifestyle hotels are predominantly managed.

The company’s broad geographic spread and weighting towards essential business and domestic leisure has driven comparative resilience during times of economic downturn. Although this continues to be a core component of the company’s business, the company has made excellent progress in expanding its presence in the Luxury & Lifestyle segment, which generally generates higher fees per room.

Franchised Hotels: The company receives a fixed percentage of rooms revenue when a guest stays at one of the company’s hotels. This is the company’s fee revenue.

Managed Hotels: The company generates revenue through base management fees and incentive management fees.

Exclusive Partners: The company receives marketing, distribution, technology and other fees for providing access to the company’s enterprise platform.

System Fund: IHG manages a System Fund for the benefit of hotels within the IHG system and their third-party owners, who pay contributions into it. This includes a marketing and reservation assessment and a loyalty assessment. The System Fund also benefits from proceeds from the sale of IHG One Rewards points under third-party co-branding arrangements.

The company has invested in its cloud-based IHG Concerto platform, including the company’s Guest Reservation System and the company’s digital channels, to enhance the guest experience.

Americas

Building on the company’s midscale expertise, the company launched Garner, its new conversion brand, and strengthened the company’s Luxury & Lifestyle proposition.

The key profit-generating market is the U.S., and the company is also represented in Latin America, Canada, Mexico and the Caribbean. 93% of rooms in the region are operated under the franchised business model, primarily under the company’s brands in the upper midscale segment (including the Holiday Inn Brand Family). In the upscale market segment, Crowne Plaza is predominantly franchised, whereas, in the luxury market segment, InterContinental branded hotels are operated under both franchise and management agreements, while Kimpton is mainly managed. 17 of the company’s 19 hotel brands are represented in the Americas.

EMEAA

The company delivered a strong overall 2023 by investing in long-term growth across the company’s priority markets. This included opening iconic properties under Regent and Vignette Collection within Luxury & Lifestyle, and creating elevated guest experiences with greater consistency across the company’s brands. The company is in a stronger position than before to accelerate growth.

Revenues are primarily generated from hotels in the U.K. and gateway cities in continental Europe, the Middle East, and Asia. The largest proportion of rooms in the U.K. and continental Europe are operated under the franchised business model, primarily under the company’s upper midscale brands (Holiday Inn and Holiday Inn Express). In the upscale market segment, Crowne Plaza is evenly proportioned between the franchised and managed operating models, whereas in the luxury market segment, the majority of InterContinental branded hotels are operated under management agreements. The majority of hotels in markets outside Europe are operated under the managed business model.

History

InterContinental Hotels Group PLC was founded in 1777. The company was incorporated and registered in England and Wales in 2004 as a limited company under the Companies Act 1985.