Intercontinental Hotels: Robust Enough to Grow Market Share in This Recession

Intercontinental Hotels Group (IHG) is the world’s largest hotel operator by number of rooms. As at the end of the last financial year, the group was responsible for 622,000 rooms across 4,222 hotels. Impressive numbers. IHG leads the 2nd placed hotel group Wyndham (WYN) by 36,000 rooms, with Marriott (MAR), Hilton (HLT) and Accor (ACRFF.PK) completing the top five.

Of particular interest is the structure of IHG’s business model. Of the 4,222 hotels in the portfolio, they only own the bricks and mortar of 16. The rest are franchised or managed under well known brands such as Intercontinental, Crowne Plaza, Holiday Inn and Holiday Inn Express. The ongoing strategy of selling property to focus on hotel management has de-leveraged the balance sheet and raised $5.5bn via the disposal of 183 hotels since April 2003. Net debt continues to fall year-on-year and as of the end of March, the firm owed $1,287m down from $1,687 a year earlier. A good move indeed in the midst of a torrid recession.