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InterContinental Hotels Group PLC ADR IHG

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Morningstar’s Analysis

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Economic Moat




Narrow-Moat Accor Underperforms Peers in Second Quarter; Shares Undervalued

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

As the pandemic continues to affect the travel and leisure industry, Accor’s second-quarter revenue per available room declined 88% in the second quarter, trailing the preannounced 75% drop and 54% decrease for narrow-moat InterContinental and Wyndham, respectively, and below our expected decline of 68%. Accor’s underperformance was driven by low occupancy (15% in the second quarter) as COVID-19 cases spiked and borders remain closed or partially closed, especially in Europe, which represents around half of the company’s rooms. As a result, we could lower our 2020 Accor revPAR forecast toward a 50% decline from a 40% drop. We may slightly lower our EUR 34 fair value estimate.

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Company Profile

Business Description

InterContinental Hotels Group operates 882,000 rooms across 18 brands addressing the midscale through luxury segments. Holiday Inn and Holiday Inn Express constitute the largest brand, while Hotel Indigo, Even, Hualuxe, Kimpton, and Voco are newer lifestyle brands experiencing strong demand. The company launched a midscale brand, Avid, in summer 2017 and closed on a 51% stake in Regent Hotels in July 2018, while acquiring Six Sense in February 2019. Managed and franchised represent 99% of total rooms. As of Dec. 31, 2019, the Americas represents 59.4% of total rooms, with Greater China accounting for 15.3%; Europe, Asia, the Middle East, and Africa make up the remaining 25.3%.

Broadwater Park
Denham, Buckinghamshire, UB9 5HR, United Kingdom
T +44 1895512000
Sector Consumer Cyclical
Industry Lodging
Most Recent Earnings Dec 31, 2012
Fiscal Year End Dec 31, 2020
Stock Type
Employees 14,645