Intercontinental Hotels Group PLC (LSE:IHG) shares slipped 2.5% at the open on Tuesday, despite the hotel giant delivering another solid set of first-half numbers.
The reaction looks to be less about anything going badly wrong and more about investors wanting a little more after IHG’s strong run.
Operating profit from reportable segments rose 10% to $665 million, while adjusted EPS jumped 13% to 274.7 cents. Global RevPAR was up 4.1%, with higher room rates and occupancy helping drive growth across all three regions.
The growth story was also strong, with a record 31,500 rooms opened during the half and 49,200 rooms signed. That took IHG’s global estate to more than 1.04 million rooms, while its pipeline of 348,000 rooms now represents roughly a third of the existing estate.
Adam Vettese, market analyst at eToro, said the share price reaction showed "how unforgiving the market has become once the easy recovery gains are banked."
He said IHG had delivered on mid-single-digit RevPAR growth, faster system growth and further margin expansion, but the slowdown in EMEAA and foreign exchange movements had weighed on sentiment.
"Investors may have grown used to IHG beating expectations; merely meeting them no longer moves the needle," Vettese said.
Still, he believes the underlying investment case remains intact, pointing to 5% net room growth, a sizeable pipeline and generous shareholder returns.
Vettese described IHG as a "high quality, cash-generative compounder", adding that the early share price weakness looked "more like profit-taking than a fundamental reappraisal."
IHG remains on track to return more than $1.2 billion to shareholders this year and raised its interim dividend by 10% to 64.5 cents per share.
