Investors should check in for further gains at Intercontinental Hotels Group PLC (LSE:IHG), analysts at JPMorgan suggest, arguing the hotel operator’s loyalty scheme is becoming a far more powerful earnings driver than many realise.
The Holiday Inn and Crown Plaza owner is the bank's "highest-conviction" leisure sector pick.
IHG’s rewards ecosystem is increasingly mirroring the highly profitable models used by major US hotel groups, the analysts noted, helping generate higher-margin revenues from areas such as co-branded credit cards and loyalty points monetisation.
At its first-quarter results at the start of the month, the group said its IHG One Rewards programmes had "over 160 million members" across its 21 hotel brands.
JPMorgan estimates these ancillary activities now contribute around 11% of group earnings before interest and tax.
Analyst Estelle Weingrod said 2025 marked a "clear step-up" in monetisation from loyalty but argued there was still "substantial headroom ahead" as the company expands the programme further.
The broker also highlighted artificial intelligence and technology investment as other profit levers, with AI expected to improve customer conversion, efficiency and operating leverage over the medium term.
Combining improvements in net unit growth, stronger loyalty economics and technology-driven efficiencies could support a further rerating of IHG shares, the analyst said.
She forecasts consensus net unit growth of 4.6% for 2026 and said trading conditions remained supportive, citing resilient US demand, easier year-on-year comparisons, improving Chinese markets and a likely tourism boost from the football World Cup.
IHG reported a strong start to 2026 earlier this month, with first-quarter global revenue per available room rising 4.4%, helped by robust business and group travel demand and improving trends in China.
The hotel group's investment in expansion saw 82 hotels opened in the quarter, with a growing pipeline of more than 343,000 rooms, while also returning cash through a $950 million share buyback programme.