InterContinental Hotels Group PLC (NYSE:IHG) Q4 2025 Earnings Call Transcript

InterContinental Hotels Group PLC (NYSE:IHG) Q4 2025 Earnings Call Transcript February 17, 2026

InterContinental Hotels Group PLC beats earnings expectations. Reported EPS is $2.59, expectations were $2.57.

Operator: [Operator Instructions] And I will now hand over to Elie Maalouf to introduce the Q&A session.

Elie Maalouf: Thank you, and welcome to this Q&A session. I’m Elie Maalouf, Chief Executive Officer of IHG Hotels & Resorts. Hopefully, you’ve all had a chance to watch the results presentation, which we made available at 7:00 U.K. time this morning, featuring myself and Michael Glover, our Chief Financial Officer. Michael and I are in different locations today. Michael is at our headquarters in Windsor and I am currently with our business in the U.S. So do bear with us as we coordinate sharing the questions. Before we open the line to take the first questions, I will briefly summarize our excellent performance in 2025. Our RevPAR grew by 1.5%, reflecting the breadth of our geographic footprint, the depth of our brands and the resilience of our operating model.

We delivered gross system growth of 6.6% and net system growth of 4.7%, driven by outstanding development activity and record hotel openings. We signed over 102,000 rooms across 694 hotels, a 9% increase with over 2024 when excluding the Ruby acquisition in 2025 and the NOVUM Hospitality agreement in 2024. We expanded our fee margin by 360 basis points, driven by operating leverage and step-ups in ancillary fee streams. EBIT grew 13% and adjusted EPS grew 16%, supported by the completion of 2025’s $900 million share buyback. In summary, we made excellent progress on our strategic priorities and we are confident in the strength of our enterprise platform and the attractive long-term growth outlook. Touching briefly on 2026, while very early in the year, we have seen and are pleased with the trading performance to date in all three regions.

We have also announced a new — today, a new $950 million share buyback program and formally launched our latest brand, Noted Collection. And with that, let me turn it over to the operator to take the first question.

Q&A Session

Operator: Thank you, Elie. And your first question comes from the line of Richard Clarke of Bernstein.

Richard Clarke: If I’m allowed, I’ll do three. I guess, if I look back at 2025, if I was to strip out the cost savings and the boost on card revenues and points revenues, I think your EPS would have grown off algorithm about somewhere in the mid-single digits. I appreciate it wasn’t the best RevPAR year. If RevPAR doesn’t play role in 2026 or going forward, do you have other levers to pull to kind of make sure you hit your algorithm? I guess second question, you said a couple of times, Michael, that there’s some key money that’s been deferred into the first quarter of 2026, just the scope of that and whether that should make us quite optimistic about unit growth and sort of luxury unit growth in 2026? And then thirdly, I think there was — your margins down in China.

You talk — made a comment about improving unit economics or owner returns in China. I guess Holiday Inn Express now a $22 RevPAR brand in China? I don’t think you’d open a $22 RevPAR brand in the U.S. So do you need to improve those RevPAR numbers? Do you need to improve owner returns? Does the brand work at that level of RevPAR?

Elie Maalouf: Thank you, Richard. I’ll take the key money question first. And then I’ll turn over the fee margin triangulation while I’ll touch on it briefly, then hand over to Michael for some details and turn over to him the margin question on China. So first on key money, as you saw in Michael’s presentation, we have been very prudent and thoughtful deployers of capital across a range of places we — and manners in which we deploy capital, whether it’s key money, recyclable maintenance and, of course, our capital returns to shareholders. If you go back over an extended period of time, our capital has been fundamentally stable, up some years, down some years, because some of it’s lumpy, but it’s been pretty stable, while our revenues and profits have grown significantly, something we’re very pleased with.

But some of these investments, whether it’s key money, whether recyclable, can be lumpy instead of happening towards the end of 1 year, they may happen in the other. So we’re flagging that, some of it may roll over from ’25 into ’26, but then you never know what rolls over from ’26 to ’27. Nonetheless, we are confident in the growth track record that we have. Our 4.7% system size growth in 2025 is the 4th year of acceleration. Our 6 — our best in 6 years. Our signings were strong, as you can see, up 9%. Our pipeline grew 4.4%. Our openings were strong at 10%. And that just shows that we have a lot of firepower. Now, we have more brands with Noted Collection being announced today. We’re not putting a ceiling on our growth potential for 2026.

The consensus is 4.4%. I would say there’s more upside than downside to that number, but we’re comfortable with it where it sits. And we think we have even more potential to continue to accelerate that system size growth. Michael will touch on the fee triangulation for 2025. Before he takes on the China margin thing, look, we have a lot of confidence in our trajectory in China. I’ve been saying for 2 years now that China is bottoming out gradually. It turned out to actually be true at some point, right? And we saw it gradually bottom out in 2025 quarter-after-quarter, turned positive in the fourth quarter. Indications are that, that will continue in the first quarter of 2026 and into the year. We have a bigger system now with over 880 hotels open, over 550 underdevelopment, record signings and openings again.

And the economics at a general level, Michael will take you through the details. Our economics work across our brands. That strong signings, strong performance, strong openings of Express in China last year, where we keep the full economics, economics work for our owners. Now different tier markets have different rates, as you know. But because of the very strong openings that we have, that RevPAR is also influenced by the ramp-up, right? So many of those hotels are new in the year in China. Express is our fastest-growing brand. It was our latest growing brand, too, the one that started growing the latest because we started with Holiday Inn, Crowne Plaza, and InterContinental. So a lot of these brands are still in ramp-up. And some of them — in fact, some of the hotels are still ramping up post pandemic.

So I think that, that is influencing the RevPAR. If you look at the RevPAR in total in China, it’s about half of where it is in the U.S., which is a good place to be for a GDP that’s per capita that’s probably 1/8 of what it is in the U.S., right? So you actually see leverage on the RevPAR from the GDP per capita economy, it’s growing at 5%, the technology sector that is actually competitive with the U.S. technology sector, leaders in renewables, leaders in many industries, exports again at a record last year. We’re confident in the Chinese economy. We’re confident in our business in China. We’re confident in how our hotels are going to perform in China. Michael, over to you.

Michael Glover: Thanks, Elie. Yes, let me — Richard, let me first go to your first question on kind of 2025 in earnings per share without the ancillaries and cost savings. I guess the first thing I would say there is the ancillaries are not going to stop growing. And so, if you look at what we’ve said kind of moving forward, while we don’t have the step-ups next year, we do see strong growth there and at a rate in the double digits, above 10%. So we do still see that moving forward. The second thing around cost, obviously, we’ve talked about this a bit at the half year. When Elie and I came in, we really started to focus and look at how we could look at this cost base and how we could change the curve and really be able to take more dollars of revenue to the bottom line.

And obviously, you’ve seen us do that in 2025 with costs being down about 3%. Now next year, we’re — in 2026, what we’re looking at, is that being coming back and being around an increase of 1%, but still having some of that savings come through that we’ve been doing with our programs. And so we still feel like we’ll have strong cost control as we move into 2026. And then, I think the other thing that we also mentioned at the half year was really around the fee triangulation where I think we talk about and many of you will know where you look at RevPAR and system size and look at the fee revenue growth. And we mentioned kind of a few things that were really impacting us in 2025. First and foremost, which is a really — is a good thing, is that we’ve had a record number of openings.

And obviously, as those hotels open, they’re not fully ramped. So you don’t get the fee income as quickly as you would normally because you’re actually accelerating those openings. So it’s not normalized yet year-over-year. And so you’re having a bit of that impact in there as well. We also mentioned we have a large number of hotels under renovation that obviously has a fee impact as those hotels close and renovate and then come open again. And then the third thing was we mentioned at the half year was that we had a few large exits, particularly two hotels in New York, where the replacement hotel hasn’t come in, but will be coming in and ramping up soon. So that’s affected that fee triangulation and fee growth in the Americas. So we expect that to normalize as we move into this year and not have some of those effects.

The other effect is you have the NOVUM Hotels, who came in and are in the process of ramping up. That was a large impact as they — because a large set of hotels have come in over the last year or so. And then some smaller things like you had one less day with leap year this year. So a few smaller things there. I think we feel confident over the medium to long term, we can still get back to our growth algorithm, and that’s still going to grow. I think what we showed this year is really the breadth of our organization and how we can actually, even in a turbulent time, as we’ve said, we can still deliver that growth algorithm, and we feel confident that we can continue to do that. And just I’ll just add to, Elie’s key money point. It is lumpy.

And certainly, we have not changed that guidance at all that we’re going to be in that $200 million to $250 million range. So same as what we said last year. And that overall capital will be around that $350 million a year mark. So we’ll continue with that guidance and view there. In terms of China, the margin was down very slightly. And — but yet overall profit was still up by $1 million. So overall, a good result in a year where you had RevPAR negative. And so, I think as we go forward, we’ve talked about and been saying for quite some time that China RevPAR is bottoming out. And we really saw that happen throughout the year with the fourth quarter actually turning positive, 1.1%. And as Elie mentioned, we’re really pleased with how RevPAR is starting to shape up in Q1.

We mentioned last year at the Q3 announcement, we felt like Q4 could — sorry, Q1 into 2026 might look negative because of some of the tougher comps. As we sit here today, it looks like all three regions will be positive, and that includes China. And so early training indicating that it looks good. So let me pass back to Elie and just see if he wants to add anything on there.

Elie Maalouf: No, Michael, that was great. Just on those factors affecting the fee triangulation for 2025, just note that most of those are positive things, right? Strong openings way above the prior year’s renovations, then all those other factors, whether it was a leap year or whatever, all those — we start to comp against in a better way. So they were good factors in one end and then they become tailwinds as we go forward.

Operator: And your next question comes from the line of Jaafar Mestari of BNP Paribas.

Jaafar Mestari: I have two, if that’s okay. The first one is just on the fee business overheads. Those $23 million of cost efficiencies in ’25, should we assume they were broad-based across the three regions, across central costs? Or was the restructuring this year particularly targeted in one region, thinking specifically Americas, were you able to flex the costs more in response to what’s been a turbulent here? And then on credit card fees and ancillary fees in general, when you announced your two big renegotiations 18 months ago, loyalty point sales and the credit card fees, you are the only major global company to have something of that materiality going on really. It looks like you were closing the gap with U.S. peers who had historically more material contribution from those, and it’s great that you’re able to have a bit of a mark-to-market with issuers as you’re much stronger today, et cetera.

But since then, we’ve now seen Hyatt last November and then Marriott just last week, also announced their own major renegotiations, big explicit millions of dollars targets for increase in fee contributions over the next few years. My question is, once everyone is fully ramped up, so you’ve had your step up, it will continue to grow. They will have their step-up in the next 12, 18 months. When everyone’s fully ramped up, where do you think that gap will be? Because historically, you were saying, well, we’re a bit behind. We can convince insurers and increase that and catch-up. Where do you think that will be? Will the gap have closed over 36 months as everyone gets the renegotiations? Or will it have just translated your level of ancillaries and their level of ancillaries, please?

Elie Maalouf: Thank you Jaafar, let me take those questions, and Michael, of course, jump in and build on that. So on the fee business cost, I think we just have to pull back and touch on what Michael said in his presentation earlier, what he mentioned when speaking to Richard’s questions. We’ve always maintained a highly disciplined approach to cost management. If you look at the presentation, our cost growth over a long period of time has been well below revenue and profit growth. But since Michael and I came in, we’ve taken a more philosophical view of how do we just shape the whole cost structure for the future, make it future-ready, scalable, using technology, new processes, shared services, locations and now artificial intelligence.

So we can continue in the future to grow revenues and profits at a much higher gradient than cost. This was not a reaction to last year because actually, we started our work, our strategic work when he and I assumed our positions in 2023. And it took some time to really design it strategically. We had outside help. We have inside teams. We had a long runway of work that we started deploying in 2024. We saw our cost growth in 2024, be only 1%. Then you saw cost reduction of up to minus 3% in 2025. So there’s been a trajectory of us bringing in these initiatives in a thoughtful strategic way, not a reaction to a market that was up, for a market that was down. It’s just really reshaping our cost base and our processes and our technology and taking advantage of new technologies like AI.

So that is generally how we achieved the benefits of 2024 plus 1%, 2025, minus 3%. And we’re saying that going forward, low or very low single digits is what would happen on average. It could be a little bit different from year-to-year, but we’re not actually done with the opportunities in cost efficiency as technology continues to give us more opportunity. On the credit card fees, look, I won’t comment on what others have renegotiated. Are we negotiating? Will we renegotiate? Those are questions for them, and we don’t have the particulars of all the arrangements or where they plan to be in the future. What we do know is we have a lot of upside and a lot of exciting upside. Maybe the most upside, I don’t know about other businesses, but we believe we have a lot or maybe the most upside in the industry.

And we started delivering that in 2025 by doubling the fees and credit cards earned from 2023. And then we continue to be on the right track to triple it by 2028. We’re not putting a ceiling on it. Whatsoever, we think it continues to grow from there. And I think that the — as we grow our system, a number of hotels, as we grow our membership and IHG One Rewards is now 160 million members at a fast growth rate from 145 million. As we grow the engagement of our guests, it’s not really how many members you have, it’s how engaged you are. And now we’re at 66% of our members constituting our nightly stays, 72%, 73% in the United States. So we’re right up there in the industry. So we’ve got more members. They’re more engaged, they’re spending more.

They’re taking out more credit cards. Our sign-ups are up double digits for cards. And that is all fueling our growth in card fees, and that will continue. We don’t see a ceiling to it. How it compares to others, I’m confident we compare very favorable to others. And frankly, the more potential others reveal, the higher our ceiling goes. So I’m not discouraged by what others are doing. In fact, it encourages me. Michael, do you want to — just want to comment on overheads?

Michael Glover: Yes, let me jump in on both of those actually. And Jaafar, great question on the overheads. And Elie mentioned it is broad-based, but he also mainly covered the P&L. And I’d say we’ve also done this within the system fund as well. Because that gives us more firepower as well. And so actually in terms of total dollars, we’ve saved more as a part of this program in the system fund than we have in the P&L, which is actually great, because it allows us to reinvest and go after things that drive revenue. And then if you look at kind of by region and being broad-based, it was across every region and every function within IHG, but we also had investment. And I think that’s important to note as well. Certainly, we had the investment about integrating Ruby coming in EMEAA.

That’s why you might see some of the costs a little — not as much down in EMEAA actually, I think it was slightly up. But we’re also investing in places like India. And I think that’s really important that it’s not just about cost reduction, it’s about investing our dollars where we can get the most growth in the future and repurposing those dollars. And that’s what we want to do. Because we’ve said many, many times, our biggest risk is not capturing our share of that growth in the future because this is a growth industry, it’s an industry that’s going to achieve higher highs and higher lows. And we want to be a part of that, we want to participate. We want to compete in that. On the credit card fees, the only thing I’d add there is we announced a new credit card, Revolut, a deal here in the U.K. with Revolut, we have more countries we can go to, and it doesn’t bring the quantum for sure that the U.S. does, and it’s much smaller.

But that just shows the power of the loyalty program as it grows. We have more opportunity in different countries around the world to continue to launch that. It’s great to launch one here in the U.K., and we’re in the process of launching others around the world and as we get those agreements done, we’ll let you know about them. I’ll pass it back to you, Elie.

Elie Maalouf: Thank you, Michael. Thanks for Jaafar. I’ll just add that in addition to credit cards and our ancillaries, let’s not forget our point sales business, which grows very nicely and also has no ceiling to it and our emerging and rapidly growing branded residencies, all of which are high margin accretive to our bottom line. Next question.

Operator: Your next question comes from the line of Jamie Rollo of Morgan Stanley.

Jamie Rollo: Three questions too, please. First, just on that Branded Residence income. I don’t think you’ve quantified it yet. I know you’ve got 30 projects, both open and in the pipeline. But what did those generate for you last year? And when you say substantial increase in ’27 and beyond, could you sort of give us some numbers behind that, please? Secondly, on the removals rate, I think it was 1.9% ex the Venetian. Should we expect that to fall back towards sort of 1.5% this year? Is that what’s giving you confidence to the upside to the consensus 4.4% net unit growth? And then just coming back, if I may, on the sort of gap between the comparable and the total RevPAR and then looking at the fees, you’ve got a helpful slide on Slide 56.

So there’s about a 2-point gap between comparable and total RevPAR. And there’s also another couple of points in the three regions between underlying fee income and the sum of total RevPAR and available rooms. Are you saying that those timing issues mean that those negative figures turn positive this year or at some point in the future? Just to, sort of, clarify the algorithm.

Elie Maalouf: Thank you, Jamie. I’ll take Branded Residences, removals, I’ll turn over the fee income to Michael, and anything else he wants to build on. So look, Branded Residences, we’re very excited about that business. It builds on the power of our Luxury & Lifestyle portfolio, that just keeps growing with the six brands we have now, mainly the ultra-luxury brands: Six Senses and Regent. I mean, just let me just give you an anecdote. I was — I’ve already been to six countries, it’s not even mid-February yet and — or it is just mid-February. And I was in Bangkok early this month, late last month, and we have an InterContinental Residence project that had just started sales in the heart of the city, in December, of speaking to the owner, they were 40% sold by mid-January that raised prices 4x.

I told them they have to raise prices again to slow these sales down. So — and that’s InterContinental, not even Regent and Six Senses, where we have most of our projects. So there’s more coming across more brands. Yes, we have 30 projects today. We have many more that are going into the sales space. They are in London, when Six Senses is London is opening this coming month. The Branded Residences are all sold out or maybe there’s one left I understand. Up to now, I’d say the fees range have not been that material. It’s been $5 million to $10 million. However, we see substantial increase in that starting in 2027 and beyond. So again, we’re not putting a ceiling on that. We think it’s totally accretive, and we’re very excited about where it’s going.

On the removals rate, yes, we’re confident it will go back towards the 1.5% over the next few years. There was just a lot of lumpiness going on right now, especially in China as things normalize post-pandemic, but we see a path to clearly back to the 1.5%. I don’t think that’s the only thing that can give us — it is lumpy, but I don’t think it’s the only thing that can give us more upside in 2026. The strength of our signings, the strength of our brand portfolio, the proven enterprise to get more openings going, whether it’s conversion or even new build, all of that put together gives us more confidence in our system growth over the medium to long term. Yes, there’s opportunity also in lower removals, but that’s not the primary thing. It’s a combination of everything.

Michael, if you want to build on those and answer the question on fee income.

Michael Glover: Yes, sure. I mean, I was going to say the similar on the net system size. I mean, we’ve been saying consensus is at 4.4% for next year. We certainly feel like there’s more opportunity on the upside of that. Then there is risk to the downside as we move into the year based on the visibility we have. And really, Jamie, it’s not just about removals coming down, which we do believe they will. It’s really about those openings and how things are proving out and what we look at, we see really strong growth across EMEAA and China. You saw that in our results this year. We see — if you exclude the Venetian, the U.S. at 1.5%, we’re on the right track record or the Americas at 1.5%. We’re on the right track there. So I think, we feel confident in that, and that’s why we’re willing to say that there’s more opportunity to the upside to that 4.4%.

And then when you look back — and on your third question regarding the table in the chart — in the presentation, thank you. We thought that would be helpful. It is. It is helpful, but it also goes back to what we talked about earlier and the reason for that total RevPAR being less than the comparable RevPAR, particularly the ramp-up of hotels. So it takes sometime for hotels once they open to build that base business and then begin to yield as you open more hotels, and we have that acceleration in openings, you’ve got more hotels in that as a percentage of your system than you used to have. And so that’s affecting that. You also have the renovation effect. There’s also, of course, the leap year effect, but then also the mix effect of when — as hotels are opening around the world.

So I think over time, yes, that gets back and that normalizes. We’re going to still open as many hotels as we can. So we want to continue that as you see that acceleration. And really, you go back to Elie’s point, of us growing our system size over the last 4 years. It just puts more openings in there and more hotels ramping up as a percent of the system size versus what we used to have. And so I do think that normalizes over time, and we get to a better position. And I’ll pass back to Elie, if there’s anything else.

Elie Maalouf: Thank you, Jamie. Next caller.

Operator: And your next question comes from the line of Ricardo Benevides Freitas of Santander.

Ricardo Benevides Freitas: Two questions from my end. Firstly, on the brand portfolio, we’ve seen these two recent additions to your collections brand portfolio, right? What I wanted to ask is what other thematics, let’s say, are you willing to approach on further brand acquisitions or entering? Is it more collections or any other specific team? And I wanted to ask you regarding — I mean, you’ve had a very strong cash flow generation this year. Your net debt seems to be very under control. Why not a bit more allocated towards your share buyback program?

Elie Maalouf: Thank you, Ricardo. I’ll take the two questions and Michael, if you can build on the cash generation and leverage, if you wish. Look, obviously, we don’t comment on what else we’re going to launch until we launch and tell you, like today. And so actually, we indicated this collection in Q3, and we just named it today and formally launched, and we’re very excited about it, reaching 150 hotels. We’re starting in EMEAA with Noted Collections really because EMEAA has the largest percentage of unbranded hotels and we’ve typically launched our collection and conversion brands in EMEAA before going to east and west from there. So that’s the future of the brand. It won’t be just in EMEAA, but we’ll go east and west, but establishes itself in EMEAA first.

We do look at M&A from time-to-time, as you know, and we did Ruby acquisition last year. We don’t need M&A to grow. It’s helpful if we find the right opportunity in the portfolio. It’s most likely — although I won’t say exclusively, it’s most likely to be in premium and above premium, upper upscale luxury lifestyle, and we tend to launch our own brands, when it’s a soft brand like Noted Collection or whether it’s a mainstream brand like Garner, those we tend to launch on our own, although there could be exceptions to that. But we don’t need M&A to grow. We have 21 very strong brands now. 11 of which launched in the last 11 years with a lot of runway. So those are still new. Those are basically still new and new to new countries. I think in 2025, there were 32 or 33 instances when we took one of our existing brands to a new country.

As far as that country is concerned, that’s a new brand launch, right? That’s a new brand launch. So we have many more of these new country launches ahead of us for our brand portfolio, while we look at what else we could be interested in. What are some territories it could be appealing to us? We’ve been very successful in ultra luxury with the Regent and Six Senses. I’d say extremely successful, not just in the hotel brand itself by expanding it, also expanding into Branded Residences. If there was a right opportunity, we could add more there. We’ve talked before about looking at branded shared home rentals. It’s something we’ll continue to explore. Anything in premium, lifestyle like Ruby is interesting. Only if it’s accretive, if it’s different and differentiated from the brands you already have, if it’s at the right valuation also, or the right trajectory if we launch it ourselves, we don’t need it given the strength of our portfolio.

But look, it’s a dynamic industry, right? Guests interest are dynamic, owner, investment interests are dynamic. So our strategy can’t be static. That’s why we’ve added to our portfolio thoughtfully, but we’re not competing with anybody to have a most number of brands, I don’t think that, that is a recipe for success. We’re competing for having the right brands for the right guests and the right owners. On cash generation, we have a very clear capital allocation policy and philosophy. First, we invest in the business, just like launching Noted or buying Ruby to grow the business because that’s where the highest returns on invested capital come from for our shareholders. Number two, we maintain and grow our ordinary dividend. And number three, we return surplus capital to shareholders.

And only when it’s surplus. Fortunately, we have a strong asset-light growing cash-generating business that converts 100% on average of adjusted earnings into cash flow. And again, in 2025, we did that. And so we can return surplus capital. And we wanted to get it back into the stated leverage range of 2.5% to 3%, and we are. So we’re confident that our business model can continue to generate surplus cash flow over the years and that we can return surplus cash flow to shareholders. But we’re not commenting on where else our share buyback will go in the future. Michael, do you wish to build on that?

Michael Glover: Yes. I mean, you said that really well. What I would also just say, if you go back and look at kind of where we were in — when we first started the buybacks again, back in 2023, we were well below the leverage range. And so a lot of what you had going on in our buybacks was a step-up to get back into the range. And we finally have arrived in that. And I think what’s exciting about this buyback is that we’re able to actually grow the buyback again this year and be in the range. So we’re no longer getting that — delivering the buyback and having any of the step-up come in as part of that buyback, which is really a good indication of the kind of cash generation that this business can do. I’m very happy with that.

And I’m also — there’s just a couple of other things, kind of nuanced in there that are really, really helpful. One, we’ve eliminated that we’ve greatly eliminated the currency translation on our debt. That’s a huge benefit for us. And by the end of this year in the first quarter of next year, we will have completely eliminated that many of you who have followed us for many years have known about that. The other thing was we refinanced our RCF this year and have taken out and no longer have debt covenants on that. That gives us a lot of flexibility. And as we’ve said many times, with our shareholders, and the expectation is that we will continue to do buybacks. And so whether it’s delivering cash this year or at the next one, we will do that and we’re committed to do that.

You’ve seen our track record on that from the $500 million we did in 2023 to the $750 million we did in ’24 and — excuse me, the $750 million we did in ’23, the $800 million we did in ’24 and then $900 million we did in ’25. We’ve built that track record, and we’ll continue to do that.

Operator: Your next question comes from the line of Jaina Mistry of Barclays.

Jaina Mistry: I have three questions as well, two follow-ups. So the first follow-up is around Branded Resi. When we’re thinking about your growth algos of 100 to 150 bps on the margin or roughly 10% EBIT growth, should we think about Branded Resi next year is contributing to growth over and above that algo? And then second question is around net unit growth. I mean, your commentary sounded really quite confident and bullish around it. If we’re thinking about net unit growth being around the 4.5% mark in 2026. Is this the run rate going forward for the medium term as well, somewhere between 4.5% and 5%? And then very lastly, just on RevPAR, I wondered if you could set the stage for ’26. Why are you confident in an inflection? Or indeed, are you confident in an inflection? And could you give some color by region about what you’re expecting?

Elie Maalouf: Thank you, Jaina. Let me start with your last question and then work our way back. Michael, please build on my responses, if you wish. So let me start with RevPAR outlook. Understanding we don’t give guidance either by quarter or by year, but just give you some context also by region. Let’s start where I’m sitting today in the United States, although by tomorrow morning, I’ll be back in London. And if you look at 2025, we’re very pleased with our performance in 2025 in the United States. We believe it was competitive, but we also know there was some burden on the industry 2025, which started very well in January and February. And then we had a series of things that became sort of headwinds. You have the tariff anxiety and uncertainty.

You had reductions in government spending. The Dodge project, which affected government travel down, say, 20% on average. Then you had reductions in inbound, mostly from Canada, but a little bit also from Mexico and from Europe. Inbound for the U.S. ends up being down 4%. And then you had a record government blend shutdown in the fourth quarter. You take all those things, and yet, I think we performed competitively in 2025. Those things either don’t reappear in 2026 in the U.S. or they don’t get worse. We don’t think government travel gets worse, it may not get better. We don’t think there’s going to be a government shutdown at that length or maybe not even one or whatsoever. Instead of reduced international travel, we got the World Cup. We’ve got [ USD 250 ].

In many cases, we’ve got a weaker dollar, which is not unhelpful. And so the comps get better going into 2026. But on top of that — on top of that, the structural reasons to be confident in the U.S. are not a few. You have strong GDP growth as an exit rate from 2025. You have strong employment. Some months, the job report is higher than others, but January was surprisingly strong. Regardless, we’re still at a record number of people employed in the U.S., low unemployment, real wage growth, diminishing inflation, improving trajectory for interest rates, they’re at least stable to going down. Consumers are still spending up in October, November, 2.6%. Wages are outpacing inflation. The corporate area has clarity on tax after last year’s tax bill, and that starts to be beneficial to individuals and to corporations this year with accelerated depreciation and higher refunds coming back.

And so you put those things together, in addition with the super cycle of capital investment from technology companies, not just in AI and in technology, but also in the energy to provide that and infrastructure to provide that. That’s just private sector investment. I mean, four companies have announced spending $660 billion. That’s just four companies, let alone the others. So we’ve got a lot of capital investment going in. So I think that gives you confidence that the U.S. starts to comp against some negative factors last year. It’s got a lot of positive factors. We’re not putting a number on where the U.S. could be this year, but you have to — you have to be a big pessimist to believe it doesn’t have better fundamentals in ’26 and 2025.

Then I flip to the other side of the world. In China, I think it’s visible, right, that we bottomed out. We’ve always said it won’t be a V-shaped recovery, and we don’t think it will be, but it’s a recovery. It’s a U-shaped recovery. We think the gradient is upward from where we are now ready. And that becomes a tailwind for us with a much bigger system, strong signing, strong openings, a leading position in the industry across all tiers. So we’re confident about what’s happening there. And then that China outbound that was up 22% last year at high rates, that is fueling our growth in Southeast Asia, big numbers in RevPAR, whether it’s in Vietnam, Japan, South Korea, Indonesia, all those markets are strong for us because of the Chinese outbound.

The Middle East strong double-digit to high single-digit RevPAR whether it’s in UAE, in Dubai, regardless of the uncertainty, Middle East, our RevPAR was very strong there. So that region is doing well. In Europe, yes, low GDP growth, but what do you know? Strong travel growth. Mid-4s RevPAR last year, strong exit rate in Q4. And people travel to Europe from the U.S. was up 3% last year, Middle East going to Europe, Chinese travelers come back to Europe. So when I look across the globe, everything seems to be favorable compared to 2025, where we were negative in China returning positive, where things were flat in the U.S. there’s fundamental for a little more optimism. And our EMEAA region continues to move at a good pace. So that’s kind of why we are constructive about RevPAR going into 2026.

And the early indicators, while early, and I’ll say that we have a short booking windows, 60% of our bookings come in the last week, but early indicators so far are positive in all regions. On net unit growth, I think I talked about it earlier. We — we’ve had a consistent trajectory now for 4 years of growing net unit growth, best in 6 years. In 2025, our strong signings and strong construction starts with 50% of our pipeline now under construction give us confidence in more openings. Our strong signings give us confidence in owner demand for our brands. Our brand portfolio is stronger. We’re not putting a ceiling on where our net unit growth can be. We’re comfortable with consensus where it is, Michael and I have both said that we think there’s more upside than downside.

But we’re really more focused about the long-term trajectory for that to be sustainable so that we’re not just doing say, unproductive uneconomic things to increase or not to work. You’ve heard me speak for years now, but keys with fees, not just keys. That’s what we’re focused on in all of our markets, but we think that’s what we’re achieving. We’re not putting a ceiling on where we can go. We’re very ambitious, but we’re comfortable with the consensus. And Branded Residences. It’s going to be a significant contributor over time. I think that probably starts in ’27, given the time it takes for some of these projects to come for sale. And we — when you start to look at it within the growth algorithm, all these things start to fall in it. We have a range of 100 to 150, sometimes, some years, some things will push us to the upper end of the range or slightly above the range.

Some years, it won’t happen quite like that. But at some point, it all starts to work within the algorithm. So we’re comfortable that Branded Residences just gives us more confidence about our growth algorithm going forward. Michael, please jump in.

Michael Glover: Elie, no, I mean I think you covered it in detail. Nothing more for me to add.

Elie Maalouf: Let’s take the next caller.

Operator: Your next question comes from the line of Alex Brignall of Rothschild & Co Redburn.

Alex Brignall: I’m just going to stick to one, if that’s okay. It’s a similar vein to Richard and Jamie earlier. If I take your fee revenues less your non-RevPAR fee revenues than your sort of take rate as a percentage of gross revenues was down 8 basis points this year, and it was down 6 basis points the year before and is down sort of 25, 30 basis points from pre-COVID levels. There was some noise in the COVID years. I can’t imagine that this is from existing contracts. So how do we solve for that in terms of the contribution of new properties? The same trend is exactly as seen at Marriott and actually also Hilton this year. So how do we — how does that not mean that new rooms are coming with a slightly lower sort of effective royalty rate?

Elie Maalouf: Alex, thank you for your question. I’ll take it, then Michael build on it. Our take rate is not reducing. I can tell you that. So there may be — there are a few factors working into it. As we moved into more luxury lifestyle premium, and we’ve been very open about it, our key money has moved up too, because we’re now participating by strategic choice in a sector that has more key money to plan it, but also has higher fees. So that key money amortization is starting to come through and affect a little bit of the fee revenue, and we’ve quantified that actually for you. And so I think that there is that factor and the — but our fee rates that we get, whether it’s mainstream, whether it’s some premium, with a Luxury & Lifestyle have not been diminishing. And so you might be seeing some year-over-year fluctuations due to normalization of key money or other factors, but it’s not a headline fee rate change. Michael?

Michael Glover: Yes. I mean, I just would go back to the same factors I said when — on Jamie’s question, and Richard’s question as well. I mean, it’s just a bit of noise, Alex, right now. It goes back to these record level of openings being incrementally more than what we’ve had in the past. And just to give you an idea, it takes time for a hotel to ramp up. And because we’ve had such strong openings, you’ve got a greater percentage of that in your system. Over time, if those are normal — openings are normalized, and it equals, it equals. But you’ve got more hotels earning less fees as they come in. And so that’s affecting your fee triangulation and some of that fee growth. Now that normalizes over time. So that’s why I say it’s a bit of noise.

Elie discussed the key money, which we talked about as well. We’ve talked about leap year, we’ve talked about renovations. There’s a number of things like that, that are — that’s kind of in there that’s affecting this. As we look out and we look forward and we model this business, there is nothing to suggest that we will not still be able to hit that high single-digit fee revenue growth over time. I go back to the algorithm. There’s no reason to believe we can’t generate the 100 to 150 basis points of margin improvement. We’ve been demonstrating that over the past several years and including that EBIT growth of around 10%. And that earnings per share growth in the 12% to 15% range. Everything we do, everything we look at how we model the business, nothing of that has changed with this noise that we’re kind of seeing right now.

Elie Maalouf: I mean, if you look at the pace of openings, Alex, not only was it a record in a number of hotels last year, but a lot of our openings tend to be skewed to the second half. Our fourth quarter tends to be our biggest opening. So from an arithmetic point of view, you’re not really even getting 6 months of fees in that given year for those openings while the unit now accounts for the full year. Now that’s okay if you have the same percentage increase in openings year-over-year because you start to lap all the same amount. But when you have a surge of openings like we’ve had, then you get a bit of dislocation, which normalizes. We’re happy with that. We’d rather have more openings happening sooner. And as the hotels ramp up, the fees will come through. That doesn’t concern us.

Alex Brignall: I just — that’s why I didn’t ask the question like Richard and Jamie, I asked it as a percentage of the gross revenues, which would be, I guess, — is there a reason for the fee revenues, just the net fee revenues and the gross revenues to have different timing? I wouldn’t have thought that, that would affect in a year.

Elie Maalouf: No, I mean, I think gross — I mean, you get the fee — Michael, maybe you can help with that, but the — you get to the net fee from the gross fees and you’re not earning the gross fees if the hotel opens in October. You’re not earning the same amount of gross fees from a hotel that has a partial year of revenue but has a full year of denominators and net unit growth. So I think that it’s — you’re not earning the full fees yet. So it’s the same thing.

Alex Brignall: But the gross revenues would be — and the gross fees are counted in the same way. That’s why I’m not looking at it versus NUG. I’m just looking at it versus gross revenues, which you’ve disclosed in the release and the net revenues that you’ve disclosed in the release, and that’s where the royalty rates has come down a bit. But we can take it offline.

Elie Maalouf: Yes. Just I want to conclude that there is nothing that we see where our royalty rate is decreasing across any of our brands or our management fees neither. Thank you, Alex.

Operator: Your next question comes from the line of Andre Juillard of Deutsche Bank.

Andre Juillard: Just two follow-up questions for me. First is on segmentation. Could you give us some more color about the trend you’re seeing segment-by-segment? And do you see a pickup in the MI segment especially? Second question about AI. I really appreciate the Slide 40, 41. Could you give us some more granularity about the disruption you’re expecting from AI? Is it mainly a top line driver, a mix of top line and cost optimization? Is it a real change in the yield management? So I would appreciate any information you could give us.

Elie Maalouf: Okay. Well, thank you, Andre. I’ll start with your second question on AI. I’ll turn over the question on segmentation to Michael, okay? So just bear with me because when we talk about artificial intelligence, we shouldn’t just focus on one small thing, because our strategy around artificial intelligence and what we’re seeing is broad and enterprise-wide. Yes, there is disruption, but I want to start by saying that there are two things that we fundamentally believe are not changing. The first one is that there will always be a guest that will want to travel for business or for leisure. We absolutely see no change in that. In fact, we see more interest in that. And on the other hand, they want to go to a destination that has a live real experience.

The more people experience the virtual, the artificial, the digital, the more they favor live experiences. Sports events, theater, restaurant, bar and hotel, people want live experience, everything in between, the distribution, how you get there, how you book, how you view it, how you share it, how you search it, that is changing. We don’t think it’s a disruption for us. We think it’s an opportunity for us. And we feel like we’re in a strong position to capitalize on these opportunities and to actually deepen our competitive moat because of the huge strides we’ve made in recent years to modernize our tech stack. We’re in a fortunate position because of the work we’ve been doing over 5, 6 years. You’ve heard me talk about our guest reservation system on the call.

We’re the first to roll out this industry-leading guest reservation system. Then we migrated our core enterprise data to the cloud and that allows to quickly plug AI powered systems into our tech ecosystem. Since then, we were the first to deploy machine learning AI revenue management to all of our hotels. So to your question about revenue management, we’re already doing it. It’s all of our hotels, AI Powered. Then we added new cloud-based DMS platform that will be most of our hotels by the end of this year. And now we’re adding new loyalty and digital content platforms. So this foundation of systems, platforms, data solutions, places us in a very strong place and to be AI ready. And the areas of focus are generally the ones that you touched on, guest acquisition, commercial optimization, cost efficiency.

So on guest acquisition, yes, it’s about delivering top funnel visibility, driving booking conversion and deepening guest loyalty. I mean today, 66% of our global room nights come through IHG One Rewards. So strengthening that incredible foundation is a big opportunity. And we do that. First, in search, with this new content platform that we discussed in my presentation today, now we’re going to be able — which we’re launching this content platform at scale this year. We already started launching some elements this year. You’re going to be able to take all that digital information, the right information, put it in the right channel at the right time, that strengthens those digital hooks needed for our hotels to be recommended by AI agents.

This matters as travel search patterns evolve. It will also create new ways to combine information digitally, move it around, shift it, recombine it, unlocking the greater flexibility and how this content is created, deliver, personalized. So it makes it an even more powerful factor when layering AI-generated search on top of it. And you’re going to have more engaging types of content, which we don’t have today, but we will, video, 360 images, virtual tours, automated language translation, floor plans, everything to get the attention, a, of guests searching directly or of their agents doing it. And we’re going to begin deploying this platform this year. Second, in discover sort of we’re working on trip planning capabilities in partnership with Google.

It’s not a stand-alone project for us. It’s an evolution of how our guests plan trips and enabling a more conversational search experience on IHG’s owned websites and apps. So we are going to be leaders ourselves in this. And we’re going to be testing these capabilities with external customers later this year. And then we’re adding AI-powered marketing across all of our tools for more targeted, more personalized, meaningful improvements on click-through rates and on ROI. Then, we mentioned in my presentation, a brand-new CRM system powered by Salesforce that launches this year for our loyalty platform, unifying all of our customer data in a new cloud-based system. This gives us a seamless view of our loyalty members, all their experiences, whether they’re calling a customer care center, checking into hotel, requesting a copy of their bill, we can provide more personalized experiences, more relevant promotions, better benefits, loyalty rewards faster, more efficiently.

And so we can scale our platform across the state. We’re going to take this CRM platform and scale it across the state in 2026. And there are many other things that build around these tools to rapidly analyze huge amounts of data, guest feedback and be more responsive to our guests. Lastly, we talked about the commercial optimization. This, through the revenue management system that we have launched already is already creating revenue uplifts. You asked about cost efficiency. You see it in our results in 2025, with our cost being down 3%. We’re using the latest technology, new ways of working, automating routine tasks, delivering insights through AI across the business. You’ve heard us say this technology, together with the process redesigns and greater leverage of our centralized support, it’s unlocking a more efficient, more scalable cost base for us.

In addition to the step change savings we delivered in 2025, we believe those are sustainable for the long term. So we think this actually is an opportunity to make our business stronger, more scalable, more efficient, build a deeper and wider moat and give us a competitive advantage. So Michael, do you want to address Andre’s question on segmentation?

Michael Glover: Yes, sure. Happy to do that. Well, first, I’ll just start with where we ended up the year. As we discussed in my presentation, that business was up 2%, Leisure was flat for the group and groups were up 1%. And that’s been very pleasing to see in as Elie described a turbulent year across, particularly the U.S. And so as we look forward in what we’re seeing right now, as we started 2026, we actually saw really solid business demand coming in. Obviously, in the U.S., that then began to get affected by the storms in the cold weather that hit the U.S., but overall, still positive and moving forward. And so, then if you then look at groups and what we see right now, what we see on the books is still almost double digits up year-over-year.

So it looks like groups are going to be strong. And remember, particularly in the U.S., 2025 was lapping against the election year, which had the big events like the Democratic National Convention and the Republican National Convention and then all the other events that happen as part of the election. So you’re now out of that, and so you should have better comparables there as well as you get in it. So we look groups continue to be strong. We have less visibility in leisure as, of course, the booking windows on that are shorter. However there’s nothing right now to indicate things would be slowing down there. If you go back to Elie’s comments on the different markets and how we’re seeing things shake up, it seems to be more positive than the previous year.

Now we’re obviously very early in the year, so we’ll need to see how that progresses. But that’s how we’re seeing it shape up as we sit today.

Andre Juillard: Maybe one additional question, which is a follow-up. If you consider that you have 2/3 of your clients, which are a part of the loyalty program, what is a reasonable target for you? And what is proportion of new clients you’re welcoming every year?

Elie Maalouf: We’re very pleased with the progress of our IHG One Rewards program hitting 160 million members. We believe that on a member per room, we’re right up there and the leadership across the industry. The important thing is that they’re very engaged too. You go back 5 years, we’re below 50% room nights contribution from our loyalty plan now. We’re over 66% globally, over 72% in the U.S. That’s a remarkable move up. So they’re engaged, they’re staying more. They’re spending more. They’re joining our co-brand products. They’re spending on those core brand products. So it’s a whole flywheel of virtuous behavior that we’re fostering. So we’re not putting a ceiling on what our membership could be. We’re not putting a ceiling of what our contribution could be.

We’re a growing business. Look, we — with all of this, we still have only 4% of the rooms in the world with 10% of the pipeline. So as we grow our openings to grow our brands, to grow our system around the world, the opportunities for greater membership and greater penetration just continue to expand. We’re ambitious, but we’re not putting a ceiling on it.

Operator: And we have one more question in the queue, and this comes from the line of Kate Xiao of Bank of America.

Kate Xiao: Just a quick follow-up question from me. I wanted to ask about your pipeline, obviously, 33% relative pipeline size. And you mentioned over 50% of that is under construction. Is it possible to give some color around which bit of the pipeline is new build versus conversion? I’m asking that because in the context of conversion accounting for over 50% of the new openings last year and obviously, the 4.7% underlying, excluding the [ nation ] impact was helped by a bit of conversion and some conversion deals. I’m just thinking your visibility into kind of conversion this year. Are you looking at new conversion deals that could help kind of maybe give you a bit more confidence to really hit that 4.7% kind of run rate and maybe accelerate after that?

Elie Maalouf: I’ll just touch on conversions in general and Michael can take you through the proportions and what that’s been. I just want to address, sort of, conversion opportunity and tell you that what we firmly believe is that the conversion opportunity is not as limited as some in the industry might have mentioned, the analyst industry might have mentioned. It is not for us strictly converting from independents. The addressable market is much larger. Most of our conversions actually come from branded operators, whether large or small or regional, it’s owners who see the strength of our enterprise, the strength of our brand portfolio, the strength of our — support of our people and want to join a stronger system. So we don’t think it’s limited just independence and therefore, we think that the addressable market is very large.

And we have now more conversion brands and products with the addition today of Noted Collection. The success of voco, Vignette, of Garner, all of which are way ahead of our initial projections and are many more markets than we thought they would be early on. So — and many of our conversions actually come from our non-specific conversion brand. So we can convert across most of our brand portfolio already, and we have more dedicated conversion brands and the addressable market is broad, and it’s not just the U.S. It’s actually EMEAA, where there’s a large — the largest unbranded proportion of hotels. And in China, conversions are picking up. So we think there’s a lot of runway in conversions. And we’re not looking at it as a percentage of signings and openings.

Actually, I don’t really care about the percentage. What I cares is that both grow. I care that new build signings grow, and they grew globally and that conversions grow, and they grow in absolute figures and the proportions can fall wherever they may. Michael, let me turn it over to you for the detail.

Michael Glover: Sure. Thanks, Elie. Just to give you the numbers here, I think it may be a little surprising to say and to hear that only 20% of our pipeline is typically conversion around that. But there’s logic behind that. It’s because they come in and out of the pipeline much quicker as obviously, it takes not as much time to get those open as it does a new build. And so — but if you look at 2025, just to give you a feel of that, if you look at our openings, roughly 40% of those openings around the world were conversions with 50 — roughly 54% being new build, and then there were some other items in there as well. And then, of course, our signings were 52% conversion and 43% new build. So the reason you see those higher numbers in the signings and openings is that they come out quicker. And so that’s why we would see overall the pipeline having a smaller percentage over time than what you see opening and signing.

Operator: And this does conclude our Q&A session. I would like to hand the call back over to Elie for closing remarks.

Elie Maalouf: Thank you, everyone. It’s been great to connect with you today. We are very proud of what our teams have accomplished in 2025, and we remain confident in our ability to continue delivering on our strategy and driving shareholder value creation going forward. Our next market communication will be our first quarter trading update on Thursday, the 7th of May. Thank you for your time and your interest in IHG, and I look forward to catching up with you soon.