Start here if you're new
what it is
IHG licenses hotel brands like Holiday Inn and InterContinental, then collects fees while other people own the buildings.
how it gets paid
Last year IHG made $5.2B in revenue. Americas was the main engine at $2.55B, or 49% of sales.
why it's growing
Revenue grew 5.4% last year. Year to date through september, system-wide revenue per available room was up 1.4%, driven by higher occupancy and a slightly lower average daily rate.
what just happened
IHG reports on a semiannual rhythm, so “quarterly” EPS lines are comparative reads, not four equal prints per year. The earnings block below uses the disclosed Q3 comparison path ($1.83 → $2.04 → $2.97).
At a glance
B++ balance sheet — above average — nothing keeping you up at night
10/100 earnings predictability — expect surprises
25.1x trailing p/e — priced about right
1.6% dividend yield — cash in your pocket every quarter
24.7% return on capital — every dollar works hard here
xvary composite: 58/100 — below average
What they do
IHG licenses hotel brands like Holiday Inn and InterContinental, then collects fees while other people own the buildings.
IHG wins because hotel owners fund the concrete while IHG collects the fee stream. Franchise model → other people pay to build and run hotels → so what: you get growth without tying up billions in real estate. With 987,000 rooms in 2024 and more than 1.01 million rooms by September 2025, your brand scale shows up everywhere travelers book.
How they make money
$5.2B
annual revenue · their business grew +5.4% last year
Americas
$2.55B
Europe, Middle East, Asia & Africa
$1.66B
China
$0.36B
Other
$0.62B
The products that matter
brand licensing and fee income
Franchised rooms
734,598 rooms · 73% of system
This is the main engine. 734,598 franchised rooms means most of the estate pays fees without putting hotel real estate on IHG's balance sheet.
fee-heavy
operating contracts for owners
Managed rooms
271,967 rooms · 27% of system
Managed rooms add another 271,967 keys to the platform. Same brands, more operating involvement, still far lighter than owning the building.
scale layer
direct hotel ownership
Owned & operated rooms
4,191 rooms · 0.4% of system
Only 4,191 rooms are owned & operated. That's the quiet part loud: this is barely a landlord business at all.
tiny exposure
Key numbers
26.0%
operating margin
Operating margin → profit after running the business → so what: IHG keeps $0.26 from each $1 of revenue before interest and taxes.
24.7%
return on capital
Return on capital → profit generated from money invested in the business → so what: this asset-light model still earns elite returns.
$3.2B
long-term debt
Long-term debt is 13% of capital, which is manageable next to a B++ balance sheet grade.
25.1x
trailing p/e
Trailing P/E → price versus past 12 months earnings → so what: you are already paying up for room growth and fee durability.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $3.2B (13% of capital)
- net profit margin 16.0% — keeps 16 cents of every dollar in revenue
- return on equity 11% — $0.11 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in IHG 3 years ago → it's now worth $21,850.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Latest comparative Q3 EPS reached $2.97 (2025) versus $2.04 (2024) and $1.83 (2023) — fee scale still showing in earnings.
This replaces the old conflicting “$1.81” line, which did not match IHG’s own Q3 progression. Full-year revenue on the bridge remains $5.2B (+5.4% vs. prior year); the room-count milestone below is the operating proof.
~$1.3B
quarter revenue (approx.)
$2.97
Q3 EPS (2025 comp.)
26.0%
operating margin
the number that mattered
Crossing 1.01M rooms mattered because room count is future fee income in disguise. Versus the ~987k rooms cited for 2024 in the moat copy, that is roughly low-single-digit system growth — not the old “17%” line (which did not reconcile to the room bridge on this page).
-
intercontinental hotels group continues to add rooms to its system.while the company only discloses earnings semiannually, the third quarter update reported that the number of hotel rooms generating revenues crossed the one million mark.
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at the end of september franchised rooms globally totaled 734,598.
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managed rooms reached 271,967 and owned & operated rooms 4,191.
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the grand sum of those is 1.01 million rooms; check that growth claim against the ~987k → ~1.01m bridge in the moat copy (low-single-digit % on that math).the total number of hotels reached 6,845, with 4,366 of those in the americas and a little over 1,000 in europe.
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year to date through september, system-wide revenue per available room was up 1.4%, driven by higher occupancy and a slightly lower average daily rate.
source: company earnings report, 2026
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What could go wrong
the main risk is not some abstract hotel-cycle story. It is rooms leaving almost as fast as new ones arrive in the Americas.
med
slowing net unit growth
In the Americas, gross growth was 3.6% and removals were 3.3%, leaving net growth at just +0.2%. If that math sticks, the fee base stops compounding in the region that generates ~49% of revenue (Americas bridge below).
impact: fewer net new rooms means slower fee growth for a business valued like scale will keep doing the heavy lifting.
med
franchise renewals are an owner math problem
The 734,598-room franchise base looks sticky until owners decide the flag is not earning its fee. Contracts are long. Renewals still depend on economics.
impact: if owners walk, the biggest profit engine loses rooms without IHG selling a single hotel.
med
RevPAR is positive, but barely doing any flexing
RevPAR — revenue per available room — rose 1.4% through september. Occupancy helped. Average daily rate slipped a bit. That is fine until travel demand gives you a colder read.
impact: softer room economics eventually feed back into fees, owner sentiment, and renewal pressure.
med
the valuation already assumes decent execution
A 25.1x trailing p/e with 10/100 earnings predictability is a demanding mix. You are paying for quality and buybacks before the growth picture looks especially smooth.
impact: when the multiple is premium, merely okay operating trends can still hurt the stock.
This is the quiet part: a hotel stock with only 4,191 owned rooms has less asset drag, but it also has fewer places to hide if fee growth cools.
source: institutional data · regulatory filings · risk analysis
Pay attention to
system scale
1.01M rooms is the milestone. net growth is the real test.
Crossing one million rooms matters because every additional room can feed fee income. What matters more from here is whether openings stay ahead of removals.
removals
Americas net growth is too close to zero
Gross growth was 3.6% and removals were 3.3%, leaving net growth at +0.2%. If that gap does not widen, the premium multiple gets harder to defend.
calendar
next earnings: feb 17, 2026
Consensus EPS is $2.57. Focus less on the headline and more on RevPAR, room additions, removals, and whether owner economics still look healthy.
capital return
watch the $950M buyback pace
The dividend yield is only 1.6%. The bigger shareholder signal is how quickly management follows through on the new repurchase authorization.
Analyst rankings
earnings predictability
10 / 100
Only 10 out of 100. in human-speak, analysts think this one can post strong annual numbers and still give you uneven quarters.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 135 buyers vs. 87 sellers in 3q2025. total institutional holdings: 14.5M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$116
$218
$138
current price
$167
target midpoint · +21% from current · 3-5yr high: $235 (+70% · 15% ann'l return)
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