Holiday Inn’s IHG reveals $500m buyback and reinstates dividend

Holiday Inn owner IHG reveals $500m share buyback and reinstates interim dividend as profits more than double

  • IHG was boosted in year to 30 June by US profits returning to pre-Covid levels 
  • It also benefited from higher room prices and a recovery in business travel 

Intercontinental Hotels Group has announced a $500million (£412.9million) share buyback scheme and reinstated its interim dividend after posting bumper profits.

The Holiday Inn owner’s operating profit more than doubled annually to $361million in the six months to 30 June, buoyed by higher room prices, strong leisure demand and a recovery in business travel, particularly in the US.

IHG’s buyback programme will begin immediately, ending 31 January 2023, while investors will also receive an interim dividend of 43.9 cents per share, up 10 per cent on 2019 levels.

IHG has had a strong year and has bounced back from the pandemic, driven by domestic leisure demand

IHG, which also owns Crowne Plaza, Regent and Hualuxe, told investors that profitability in its largest market of the Americas had surpassed pre-pandemic levels, driven mainly by domestic leisure demand.  

Americas operating profit jumped 56.7 per cent on the period last year to £351million.

Revenue per available room – a key profitability measure – for the Americas region was 3.5 per cent ahead of 2019 levels. 

Meanwhile, the firm swung to an operating profit of $59million in the Europe, Middle East and Africa from a loss of $27million the prior year, and earnings fell 83.9 per cent to $5million in Greater China.

As of 30 June, IHG had net cash from operating activities of $175million, up from $173million last year, with adjusted free cash flow of $142m, which was down slightly from $147million.

However, despite the lure of bumper investor payouts, IHG shares slipped 1.4 per cent to 4,948p in afternoon trading, with markets unimpressed by 3 per cent growth in room numbers during the reporting period versus expectations of 4 per cent.

IHG chief executive Keith Barr said: ‘We saw continued strong trading in the first half of 2022 with increased demand for travel in most of our markets.

‘Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG’s brands, loyalty programme and technology platform.

‘IHG’s clear strategy over the last five years has seen us emerge from the pandemic a stronger and more resilient company, delivering on key priorities and progressing our ambitious 2030 Journey to Tomorrow responsible business commitments.’

He added that the ‘economic outlook faces uncertainties’ but the firm remains ‘confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth’