Shares in Intercontinental Hotels Group PLC (LSE:IHG) retreated 4%, having hit all-time highs in recent weeks, after the Holiday Inn owner reported full-year results largely in line with expectations, as analysts pointed to higher interest rate payment guidance and 'key money' costs as potential headwinds.
Jefferies noted that while revenue, EBIT, and EPS were in line with expectations, guidance for interest and 'key money' – referring to upfront payments made to property owners or developers to secure management or franchise agreements – were higher than anticipated.
The broker said this could lead to a consensus pre-tax profit downgrade of around 2.5%.
IHG also announced the acquisition of the Ruby brand of 'lean luxury' city hotels, which Jefferies said may support net unit growth in 2025 but would result in lower-than-expected share buybacks.
Analysts at Peel Hunt stated that the stock was close to its fair value and that the results were "not enough to move shares further".
"Peers Hyatt and Marriott have reported recently and saw their share prices decline subsequently. Therefore, we do not expect IHG’s share price to make significant progress today."
Despite the company's long-term growth potential, Jefferies said that at 26.3 times 2025 earnings and a 6.0% discount to Marriott, IHG’s valuation remains "full", keeping it on the sidelines. Peel Hunt maintained its 'add' rating with a target price of 10,670p.