InterContinental: We See Healthy Demand Production in the Existing Economic Environment; Shares Rich

Although savings rates have waned and inflation has remained elevated, we are more constructive on intermediate-term revenue per available room, or revPAR, for InterContinental. Our stance is based on our findings of past environments with similar savings rates and inflation that produced stout US industry revPAR growth. As a result, we have increased our 2026-28 InterContinental revPAR to an average annual growth rate of 5.1% from 3.6% previously and our fair value estimates to $111 per share and GBX 9,050 per share (or 14 times 2025 EV/EBITDA) from $99 and GBX 7,650, respectively. Despite our expanded valuation, we see shares as overvalued, but we wouldn’t need much discount to our fair value estimate to recommend shares of this brand advantaged wide-moat company.