IHG(IHG) - 2025 H1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - RevPAR grew by 1.8%, reflecting the company's geographic footprint and brand depth [6] - Gross system growth was 7.7% and net system growth was 5.4%, driven by development activity and record openings [6] - EBIT increased by 13% and adjusted EPS grew by 19% [6] - The company completed 47% of its $900 million share buyback program, returning over $1.1 billion to shareholders this year [6] Business Line Data and Key Metrics Changes - The Americas fee revenues were down about 1% despite a 1.5% RevPAR growth and around 1.5% adjusted net unit growth [10] - The company signed over 51,000 rooms across 324 hotels, a 15% increase over 2024 [6][20] - Openings in The Americas were up 40% year over year, contributing to future fee growth [24] Market Data and Key Metrics Changes - The company reported a constructive outlook for US demand and hospitality performance, with stable inflation and interest rates [14][15] - In China, the company sees the economy bottoming out, with GDP growth of about 5% in Q2 and expectations for improved RevPAR trends in the back half of the year [66][68] Company Strategy and Development Direction - The company is focused on high-growth opportunities, including investments in technology and expanding its luxury and lifestyle brands [52][54] - The company aims to grow both new builds and conversions, with a strong pipeline of openings and signings [63][110] - The branded residential segment is expected to contribute consistently to fee growth, with 30 properties currently open and more in development [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year profit and EPS consensus, despite uncertainties in the short term [15][85] - The company noted that the fundamentals for US hospitality remain strong, with job growth and corporate capital investment driving demand [14][15] - Management is optimistic about the long-term growth potential in China, despite current challenges [66][68] Other Important Information - The company has been investing in technology and process improvements to enhance operational efficiency and scalability [94] - The company expects to see continued margin growth driven by cost savings and ancillary revenue streams [95] Q&A Session Summary Question: Current trading outlook for Q3 and Q4 RevPAR in the U.S. - Management does not provide guidance but feels comfortable with full-year profit and EPS consensus, indicating a stable outlook for U.S. demand [12][15] Question: Explanation for the decline in Americas fee revenues despite RevPAR growth - Management attributed the decline to high-fee hotels exiting and renovations impacting available rooms, but does not see it as a long-term issue [20][22] Question: Insights on branded residential contribution to profitability - Management is excited about the growth trajectory in branded residential, which is expected to contribute consistently to fees [31][33] Question: Investment focus among technology pillars - Management emphasized ongoing investments in technology, particularly in PMS and RMS systems, to ensure competitiveness [34][38] Question: Update on the performance of the Garner brand - Management reported strong progress with 51 open Garners and a robust pipeline, indicating significant international demand [78][79]