IHG projects $1 billion shareholder return following strong 2023

It aims to grow luxury without neglecting mid-scale business

IHG Hotels & Resorts aims to return over $1 billion in 2024 through dividends and share buybacks, with profit from reportable segments growing by 23 percent, surpassing $1 billion for the first time, said Elie Maalouf, IHG Hotels & Resorts’ CEO.

IHG HOTELS & RESORTS reported a 23 percent increase in profit from reportable segments in 2023, surpassing the $1 billion milestone for the first time. The company also noted a 16.1 percent rise in RevPAR, a 5.1 percent increase in ADR, and a 6.4 percentage point uptick in occupancy during the previous year. It anticipates returning more than $1 billion to shareholders through dividends and share buybacks this year, IHG said in a statement.

“Travel demand was strong across all markets, with RevPAR up 16 percent from last year and 11 percent ahead of the 2019 pre-pandemic peak,” said Elie Maalouf, IHG Hotels & Resorts’ chief executive officer. “Combined with the power of our enterprise and efficient operating model, profit from reportable segments grew by 23 percent, exceeding one billion dollars for the first time, and adjusted EPS grew by 33 percent.”

This marks one of the company’s most significant quarters for development activity, IHG said. The company reported full-year revenue of $4.62 billion, marking a nearly 19 percent increase from $3.89 billion in 2022.

“We are announcing a further $800 million share buyback program, which together with ordinary dividends is expected to return over $1 billion to shareholders in 2024,” said Maalouf, who assumed the top position last July following nearly nine years of leadership in the group’s largest region, the Americas.

Pipeline expansion 

The Holiday Inn-owner sustained portfolio expansion, while strengthening the global presence of its brands in 2023, IHG said. It opened 275 hotels and signed more than double that amount—556 hotels—into its pipeline in 2023. Adjusting for the inclusion of Iberostar hotels joining IHG’s system, fourth-quarter openings grew by 27 percent year-on-year, while signings increased by 50 percent.

“The travel industry has attractive, long-term drivers of demand, and the strength of our brand portfolio and enterprise platform will continue to bolster our RevPAR and system size growth,” Maalouf said. “Combined with our scale and cost base efficiencies, this will further expand fee margins. IHG’s strong cash generation supports investment in growth initiatives, sustainably increasing our ordinary dividend and regularly returning surplus capital, such as through buybacks.”

The company witnessed growth in its primary markets, the U.S. and China, as well as in other regions such as the Middle East, Southeast Asia (including India), Korea, and Japan, the statement added. Hotel chain owners have benefited from a tourism surge over the past year, with travel demand projected to exceed pre-pandemic levels.

Scaling upscale 

The company aims to expand the scale of its luxury and lifestyle properties without compromising its mid-scale business, IHG said. It targets high single-digit growth in fee revenue through yearly increases in RevPAR and hotel numbers, on average, over the medium to long term.

“We look forward to an important next chapter of growth for IHG that creates long-term sustainable value for our shareholders and benefits our employees, hotel owners and communities,” said Maalouf.

During the fourth quarter/full-year 2023 earnings calls, Choice Hotels International and Wyndham Hotels & Resorts discussed Choice’s proposed acquisition of Wyndham. As the companies exchanged remarks, reports emerged that four state attorneys general are examining the proposed acquisition, potentially initiating investigations of their own.