InterContinental Hotels Group (IHG) has announced its plans to return up to $1 billion to shareholders through a combination of a share buyback program and increased dividends, highlighting the success of its hotels and resorts growth strategy.
Share Buyback Program and Dividends
IHG, known for brands like Crowne Plaza and Holiday Inn, shared that their strong cash generation is fueling investments in growth initiatives. The company is launching a share buyback program worth up to $800 million for the current year. Additionally, they raised their final dividend to 104 cents from 94.5 cents in the previous year, bringing the total dividend for the year to 152.3 cents.
Expansion Efforts
The planned shareholder returns represent approximately 10% of IHG's $10 billion market capitalization as of the beginning of 2023. Last year, IHG opened 31 hotels and is focused on expanding its footprint in key markets. In China, where IHG already operates 700 hotels, they have 500 more in the pipeline. In India, the company has 46 hotels open and 49 more in development, while in Saudi Arabia, they are looking to increase their current portfolio of 49 hotels with an additional 39 properties.
Strong Financial Performance
IHG reported significant financial growth, with pretax profit amounting to $1.01 billion last year compared to $540 million in 2022. Net profit also saw an impressive jump to $750 million from $375 million.
The company emphasized its commitment to delivering value to shareholders while continuing to drive expansion and innovation in the global hospitality industry.
IHG Reports Strong Financial Results for Fourth Quarter
In its recent report, the FTSE-100 company has announced a significant revenue growth, reaching $4.62 billion compared to $3.89 billion in the previous year. This surpasses the consensus forecast of $4.60 billion obtained from FactSet and based on estimates from eight analysts.
Segment Performance
Revenue from reportable segments, which is the company's preferred metric including fee business and owned, leased, and managed hotels, soared to $2.16 billion from $1.84 billion in the previous year. The company-compiled consensus was slightly below at $2.17 billion.
Operating Profit
Operating profit from reportable segments also showed impressive growth, reaching $1.02 billion compared to $828 million in the previous year. The company-compiled consensus for operating profit was $1.01 billion.
Key Metrics
The revenue per available room, a key metric in the hotel industry, witnessed a substantial increase of 7.6% in the fourth quarter and a remarkable 16% for the entire year.
Financial Position
Despite the positive financial results, there was an increase in net debt to $2.27 billion as of December 31 from $1.85 billion a year earlier. This increase included an adverse foreign-exchange effect of $105 million from sterling bond debt and $26 million in other noncash adjustments.
Future Outlook
IHG remains optimistic about industry growth despite geopolitical risks and uncertainties in some regions. The current conditions, including employment, consumer savings, and business activity levels, provide a supportive backdrop for industry growth.
For more information, please refer to the full report.
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