Should I Buy InterContinental Hotels Group PLC (IHG)?

Page 1 of 2

LONDON — It’s time to go shopping for shares again, but where to start? There are loads of great stocks to choose from, and I’ve got my wallet out. So here’s the question I’m asking right now. Should I buy InterContinental Hotels Group PLC (ADR) (LSE:IHG) (NYSE:IHG)?

Checking in
One of my broker contacts has been getting very excited about InterContinental Hotels Group. He thought it was a great way to play the U.S. recovery, claiming the current low supply of hotels gives plenty of scope for growth in total revenues per available room (RevPAR), the key measure of industry success. As the global economy recovers, the business travel market should rebound, helping to fill up those rooms. Is he right? And if so, should I buy this share?

InterContinental Hotels Group PLC (ADR) (NYSE:IHG)Traveling light
InterContinental boasts more than 4,500 hotels in nearly 100 countries ,with a total of 672,000 rooms. Every year, 153 million people spend a night in one of its nine brands, which include Holiday Inn, Crowne Plaza, and, naturally, InterContinental. Yet the group physically owns a mere handful of those hotels, having sold the rest and signed long-term management or leasing contracts with the owners. Instead, it sells its expertise in-house management, systems, and marketing to these hotels. Its “asset light” strategy means there is a lot less capital-intensive baggage for investors to carry, and a lot more cash to count.

RevPAR for the course
Not that investors have been worrying lately. The share price is up 24% over the past three months to 18.96 pounds, helped by a reassuring Q3 2012 update, which showed strong RevPAR growth across all its key markets, and in the U.S. and China in particular. InterContinental has opened nine hotels with a total of 2,704 rooms in Greater China in Q3 alone. Group revenue rose between 1% and 3%, adjusted for currency movements, while operating profit rose 9% to $167 million. Group net debt fell to $472 million, from $644 million in 2011. The group’s global diversification has been a big help, sparing it restless nights in Europe. In fact, InterContinental is one of those businesses that have benefited from the recession, as a shortage of business finance has made it tricky for smaller rivals to borrow the funds they need to compete.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!