On Tuesday, IHG (InterContinental Hotels Group), the owner of Holiday Inn, has announced a $900 million share buyback plan. But was less than what investors expected, sending shares in the company down 5%. Even though IHG did better than what was expected when it came to their revenue forecast annually, we saw that the lower buyback and increasing expenses weighed down on the investors, leading to an IHG stock drop.
IHG said it would return over $1.1 billion to shareholders in 2025, comprised of the buyback and a 10% dividend hike. IHG purchase of European hotel brand Ruby for millions missed market expectations despite reporting strong earnings results on the day, which contributed to the IHG stock drop.
Market Reaction and Analyst Insights
IHG shares, which reached record highs last week, fell by 5.4% by 14:46 GMT. The decrease was because of the less buyback and worry about increasing cost, causing an IHG stock drop. JP Morgan experts said IHG’s earnings were strong but investors were looking for a bigger share buyback, possibly around $1 billion.
The company, which owns Crowne Plaza and Six Senses, saw the room revenue rise 3% for the year. Due to growth in the US, China weak performance got offset. Analysts had forecast a 2.6% increase in revenue per available room (RevPAR) for the year ending December 31, 2024.
Expansion Plans and Regional Performance
CEO Elie Maalouf revealed plans to expand the Ruby brand into the United States and Asia. The brand currently operates 20 hotels in European cities. People thinking is Ruby will compete with Hilton’s Motto and citizenM which is already famous in the world.
IHG’s biggest market, the US, saw RevPAR rise by 1.7% through August. Moreover, RevPAR fell by 4.8% in China. Marriott International and Hilton Worldwide along other major players are looking for 2025 to be weak due to slow demand in Greater China. Hyatt Hotels also said last week its fourth quarter was disappointing.
Profit in Line with Market Expectations
Despite the market reaction, IHG’s annual operating profit aligned with analyst forecasts. The firm continues to prioritize returns to shareholders and investment in growth, though investors are apprehensive about costs and a less robust buyback than expected, which led to an IHG stock drop.
