Strategy will be the keyword for Intercontinental Hotels Group PLC (LSE:IHG) investors when the hotel group reports its 2023 results next month.
It will be the hotelier’s first set of results under new chief executive Elie Maalouf, who took the reins in July, and analysts at Jefferies reckon the corporate set-piece won’t see any shocks.
“We do not expect a kitchen sink nor great surprises from fourth quarter results themselves,” Jaina Mistry said in a statement.
“Industry data suggests strength in Europe and Asia, and the company is on track to deliver on its NUG [net unit growth] target.”
Mistry added: “We believe IHG is on-track to meet its soft guide of ‘close to’ 4% NUG in 2023.
“Despite short term constraints from the high cost of debt, limited access to financing and high cost of construction, we believe conversions and Iberostar openings provide tailwinds. The lumpiness of openings through the year is not uncommon.”
Jefferies rates IHG as a ‘buy’. In the note, Mistry highlights that at its current price of around $70.50, the company trades at a 6% discount to Marriott and the analyst reckons this discount can be narrowed.
“Having spent time with the company on the road in December, we detect an increasing focus on growth.
“We continue to believe that mid to high single to low double-digit underlying revenue growth and at least 13% EPS growth is a feasible medium term growth algorithm, in the absence of recession.”
By comparison, Marriott is forecast to see 3-6% RevPAR, 4-5% NUG and 10-15% earnings per share growth (CAGR).
Looking to the upcoming strategy update, Jefferies expects to hear about fee growth and cash generation efforts.
On the corporate side, the broker estimates that IHG will make some $750 million of share buybacks in 2024.
IHG reports its results on 20 February.