InterContinental Hotels Group PLC ADR IHG

InterContinental's Global Portfolio Seeing Strong Demand Despite Near-Term Middle East Headwinds

While demand in the Middle East is temporarily hindered by geopolitical conflict, the global reach of InterContinental's portfolio assures that the human-ingrained desire to travel is quenched. We think InterContinental holds one of the industry's strongest brand intangible assets—one source of its wide moat—and forecast it will expand its room share during the next decade. Renovated and newer brands focused on the attractive midscale and extended-stay segments as well as a loyalty program of more than 160 million members will aid this growth. Also, the company holds a strong presence in international markets, with non-Americas regions constituting 48% of total rooms in 2025. This positions the company well for the more than 1 billion middle-income class individuals expected to be added to the global population over the next decade. The company currently has a mid-single-digit percentage share of global hotel rooms and over 10% share of all industry rooms under construction. We see its total room growth averaging more than 3% over the next decade, above the 1%-2% supply increase we estimate for the US industry.