IHG shares fall as Q3 results miss expectations amid regional weakness

Investing.com -- Shares of InterContinental Hotels Group (LON:IHG ) were down on Tueday following its third-quarter results, which came in below market expectations. 

At 4:47 am (0847 GMT), InterContinental Hotels Group was trading 1.6% lower at £8,427.4.

As per UBS analysts, IHG’s revenue per available room (RevPAR) growth was softer than anticipated, posting a year-over-year increase of 1.5%, underperforming both UBS’s estimate of 2.7% and the market consensus of 2.1%​.

The underwhelming performance was mainly due to regional variations. China remained a point of weakness, with RevPAR declining by 10.3%, exceeding UBS’s forecast of a 9% drop. 

Similarly, results in the Americas lagged expectations, with RevPAR growth at 1.7% versus the 2.25% anticipated by UBS. The EMEA markets also reported a below-par performance, showing a 4.9% gain compared to UBS’s target of 6%.

Despite challenges in occupancy, which dipped by 0.1%, IHG managed a 1.7% increase in rates across its properties, partially offsetting weaker room demand. 

UBS analysts flagged that, while the company posted solid delivery by expanding system size by 4.1% year-over-year, these results fell short of expectations, leading to market disappointment​.

IHG maintained its guidance, stating that it expects to align with broader market forecasts for the full year. 

However, investors appeared concerned about the near-term outlook, especially given news that a key affiliate contract in Venice will expire at the beginning of 2025, shrinking the company’s system size. 

Although the financial impact of this loss is expected to be minimal, it has added to the market’s cautious sentiment​.

The weaker-than-expected report has prompted some analysts to suggest that investors may engage in profit-taking, contributing to the decline in IHG’s stock price. 

UBS says that, while the company’s fundamentals remain solid, these results reflect the ongoing volatility in global travel and uneven recovery across regions.

Source: Investing.com