Holiday Inn owner IHG boosts dividend and buyback amid continued growth
Holiday Inn owner IHG has announced the purchase of its 20th brand and a boost to shareholder returns as it benefits from the revived travel market.
IHG has soared as travel has returned after the pandemic, with early estimates for 2024 suggesting the hotel industry has finally surpassed 2019’s revenue.
The Windsor-headquartered company told markets this morning that revenue rose to $2.3bn (£1.82bn) in 2024, up seven per cent from $2.1bn in 2023.
Operating profit rose 10 per cent to $1.1bn, while earnings per share rose 15 per cent to 434.4 cents per share.
Its share price dipped 1.73 per cent in early trades.
IHG owns the rights to a raft of well-known brands, from Crowne Plaza to Six Senses and Staybridge Suites, primarily through a franchise model.
The company opened 59,100 rooms in 371 hotels, up 23 per cent year over year, taking its global estate to 987,000 rooms in 6,629 hotels. It has a pipeline of 325,000 rooms in 2,210 hotels, up 10 per cent year over year.
“2024 was an excellent year of financial performance, strong growth and important progress against a clear strategy,” Maalouf said.
“We continue to strengthen our enterprise to position IHG as the first choice for guests and owners, further improving and growing our brands, driving loyalty contribution, rolling out new hotel technology and increasing our ancillary fee streams,” she added.
IHG buys European lifestyle brand
Alongside today’s results announcement, the hotel group told the market it had bought Ruby, a European urban lifestyle brand, for €110.5m (£91.6m).
Ruby has become the 20th brand owned by the hotel giant.
“We see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions,” Elie Maalouf, chief executive officer, IHG Hotels & Resorts, said.
Established in 2013, the Ruby brand currently operates 20 hotels in major cities across Europe —three of which are in London—and has another 10 pipeline hotels.
The company said it provides “space-efficient designs” and an “attractive, flexible concept that IHG expects to rapidly expand globally.”
“This acquisition demonstrates our focus on building our presence in large, attractive industry segments and using our experience of integrating and growing brands and hotel portfolios,” Maalouf added.
Share buyback and dividend jump
IHG reported the completion of its $800m share buyback programme and the payment of $259m of ordinary dividends to shareholders in 2024.
The company proposed a final dividend of 114.4¢, resulting in a total dividend for the year of 167.6¢ for 2024, up 10 per cent year on year.
It launched a new $900m buyback programme, which together with ordinary dividend payments is expected to return over $1.1bn to shareholders in 2025, it said.
“We enter 2025 with confidence in further capitalising on our scale, leading positions and the attractive long term demand drivers for our markets, all of which supports the ongoing successful delivery of our growth algorithm,” Maalouf said.
It follows numerous share buyback programmes post-pandemic.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “IHG has booked a strong set of results.
“They reflect the renewed focus and investment in the business, which continues today with the acquisition of Ruby – the company’s 20th brand.
“Away from the solid numbers, there is also a subtle shift in the approach to shareholder returns, with the dividend reduced in favour of share buy backs – a move that is consistent with a more US approach to shareholder returns and, perhaps, reflects IHG’s desire to be as successful at attracting global investors as it is at attracting global travellers.”