Intercontinental Hotels Group H1 Earnings Call Highlights

Key Points

• Strong first-half financial performance: Global RevPAR rose 4.1%, fee revenue increased 7%, operating profit grew 10%, and adjusted EPS climbed 13% to 274.7 cents. IHG raised its interim dividend 10% and expects to return more than $1.2 billion to shareholders in 2026.
• Americas led hotel demand growth: Americas RevPAR increased 4.8%, while EMEAA and Greater China grew 3% and 3.1%, respectively. Group travel was the strongest global demand segment, with revenue up 6%.
• Development activity reached record levels: IHG opened 197 hotels and signed 352 more in the first half, producing 5% net system growth. Its pipeline of 2,400 hotels represents potential future room growth of 33%, supported by continued momentum in markets including the U.S., China, India and Saudi Arabia.

Intercontinental Hotels Group NYSE: IHG reported higher revenue, operating profit and earnings per share for the first half of 2026, supported by global hotel demand, margin expansion and record development activity.

Chief Executive Officer Elie Maalouf said the company delivered “strong financial performance” during the period, with global revenue per available room, or RevPAR, rising 4.1%, net system growth reaching 5%, fee revenue increasing 7% and reportable-segment operating profit growing 10%.

Adjusted earnings per share rose 13% to 274.7 cents, aided by profit growth, margin gains and share repurchases. IHG also declared an interim dividend of 64.5 cents per share, up 10% from a year earlier.

Financial results and capital returns

Chief Financial Officer Michael Glover said reportable-segment revenue rose 7% to $1.26 billion and EBIT increased 10% to $655 million. Fee business revenue increased 7% to $971 million, while fee business operating profit grew 8% to $640 million.

Fee margin expanded 120 basis points to 65.9%, which Glover said was in line with IHG’s medium- to long-term objective of annual average margin expansion of 100 to 150 basis points. Fee margins improved across each geographic region:

• Americas fee margin rose 150 basis points to 84.2%, with operating profit up 7% to $442 million.
• EMEAA fee margin increased 400 basis points to 69.8%, supporting 10% profit growth to $141 million.
• Greater China fee margin expanded 460 basis points to 62.5%, with operating profit increasing 25% to $55 million.

Adjusted free cash flow was $360 million, up $58 million from the first half of 2025. The company said trailing 12-month cash conversion remained above 100%.

IHG’s $950 million share repurchase program was 42% complete at the half-year balance sheet date. The company had repurchased another 2.7 million shares, reducing its share count by 1.8%. Including ordinary dividends of about $285 million, IHG expects to return more than $1.2 billion to shareholders in 2026.

Glover said the company narrowed its full-year adjusted interest-cost guidance to $230 million to $240 million. It maintained its outlook for fee business overhead growth of 1% to 3% for the full year, despite a 4% increase in the first half due partly to the timing of front-loaded costs.

RevPAR growth led by the Americas

Global RevPAR growth of 4.1% reflected a one-percentage-point increase in occupancy and a 2.5% rise in average daily rate. Second-quarter global RevPAR grew 3.5%, and all three operating regions posted positive growth for both the quarter and first half.

Americas RevPAR increased 4.8% during the half, accelerating from 3.6% in the first quarter to 5.4% in the second quarter. Glover said the World Cup added about 100 basis points to second-quarter Americas RevPAR growth, while underlying growth remained broad-based across business, leisure and group travel.

EMEAA RevPAR rose 3% in the half. Growth slowed to 0.6% in the second quarter from 5.6% in the first quarter, reflecting the impact of conflict in the Middle East. The Middle East sub-region, representing 5% of IHG’s global business and just under 20% of EMEAA, saw RevPAR decline 19% in the second quarter. Excluding that sub-region, EMEAA RevPAR grew 4% in the quarter.

Greater China RevPAR increased 3.1% in the first half. First-quarter growth of 5.7% was followed by 0.8% growth in the second quarter, which the company attributed in part to public holiday timing.

Across demand segments globally, group revenue was the strongest performer, increasing 6%. Business demand rose 2% and leisure demand increased 3%.

Record development activity

IHG opened 197 hotels comprising 31,500 rooms in the first half, generating gross system growth of 6.5%. Excluding rooms associated with the Ruby acquisition, openings rose 8% year over year. New builds represented 55% of openings, conversions accounted for 43%, and Ruby represented 2%.

The company removed just under 9,000 rooms from its system, equivalent to a 1.5% removal rate, resulting in net system growth of 5% year over year.

Signings totaled 352 hotels and 49,200 rooms. Organic signings increased 8%, with new builds accounting for 51% and conversions making up 49%. IHG signed 12,500 rooms in the Americas, 19,500 in EMEAA and 17,100 in Greater China.

Maalouf said IHG’s pipeline includes 2,400 hotels and represents 33% future rooms growth, with about half of pipeline rooms under construction. The company cited particular development momentum in the U.S., Greater China, Germany, Japan, India and Saudi Arabia.

In the U.S., IHG signed more than 10,000 rooms, up 30%, across more than 100 hotels. In Greater China, the company celebrated its 900th hotel and said more than 50% future rooms growth is embedded in its pipeline. In India, IHG signed a record 24 hotels and said it aims to exceed 400 open and pipeline hotels over the next five years.

Brands, technology and loyalty initiatives

Maalouf said IHG has expanded its brand portfolio to 21 brands from 10 at the beginning of 2015. The company said luxury and lifestyle total gross revenue has doubled to $10 billion from $5 billion in 2014.

Newer brands contributed about one-third of development activity. Regent had grown to 25 open and pipeline hotels, while Ruby expanded to 42 open and pipeline hotels and signed its first two U.S. properties in New York and Chicago. Garner opened 23 hotels in the first half and added 54 hotels to its pipeline.

IHG also said it was selected with partner Centinel for the U.S. Department of the Air Force Lodging Program. A 50-year agreement remains in progress, and operational transfer into IHG’s system is expected to begin in late 2027, initially covering hotels at 23 Air Force installations.

On technology, the company said it is rolling out cloud-based property management systems and expects the new system to reach 4,000 hotels by the end of 2026. IHG also introduced AI-enabled natural-language search on its app and website, launched an IHG plugin within ChatGPT, and began piloting a cloud-based guest customer relationship management platform.

IHG One Rewards had more than 160 million members at the start of 2026. Loyalty members accounted for about 67% of global room nights booked and 73% of U.S. room nights booked. Maalouf said IHG’s enterprise channels generated 83% of rooms revenue booked for its hotels.

Looking ahead, IHG reiterated its medium- to long-term growth algorithm of high-single-digit fee revenue growth, annual fee-margin expansion of 100 to 150 basis points, surplus capital returns and adjusted EPS growth of 12% to 15%.

About Intercontinental Hotels Group (NYSE:IHG)

Intercontinental Hotels Group plc (IHG) is a multinational hospitality company that develops, owns, manages and franchises a broad portfolio of hotels and resorts. The company operates across full-service luxury and upscale segments as well as midscale and extended-stay categories, providing lodging, food and beverage, meeting and event services, and related guest amenities. IHG's business model emphasizes brand franchising and management agreements, while retaining ownership or direct investments in a smaller portion of its global property portfolio.

IHG's brand portfolio spans global and regional names designed to serve different traveler needs and market segments.

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