InterContinental Hotels Group (IHG) reported robust financial performance for the full year 2024, with global RevPAR increasing by 3% and net system growth reaching 4.3%, marking the third consecutive year of acceleration. Fee business revenue grew by 6%, with underlying growth at constant currency achieving 7%, while fee business operating profit rose by 9%, or 11% on an underlying basis.
A significant highlight was the expansion of the fee margin by 190 basis points to 61.2% in 2024. This improvement was driven by 130 basis points from positive operating leverage, as fee revenue growth outpaced fee business cost growth of just 1%, and an additional 60 basis points from $25 million in revenue from loyalty point sales and other ancillary revenues.
IHG demonstrated its commitment to shareholder returns by completing an $800 million share buyback program in 2024 and initiating a new $900 million program for 2025. The company also proposed a 10% increase in the final dividend for 2024, bringing it to $1.144 per share, reflecting consistent growth.
Capital allocation included a doubling of key money spend to $206 million in 2024, projected to be in the $200 million to $250 million range annually, as a strategic investment in high-quality growth. The company expects to convert approximately 100% of adjusted earnings to free cash flow, returning to typical levels after a 94% conversion in 2024 due to System Fund surplus spend-down.
Management expressed confidence in meeting current full-year consensus profit expectations for 2025, with operating profit from reportable segments currently at $1.251 billion, implying an 11% growth on 2024 results. The adjusted EPS consensus of $4.97 suggests a 15% growth, partly due to an anticipated 130 basis points of fee margin expansion from ancillary fee streams.
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