Holiday Inn Owner IHG Defies Industry Trends with Strong US Growth

IHG Hotels & Resorts (IHG.L), the global hospitality giant behind the Holiday Inn and InterContinental brands, has emerged as a standout performer in the U.S. hotel market despite lingering macroeconomic headwinds and industry-wide challenges. While the broader sector continues to grapple with uneven demand recovery and pricing pressures, IHG’s Q2 2025 results reveal a 12.7% year-over-year RevPAR (revenue per available room) jump to $189, driven by a 76.4% occupancy rate and a 9.3% rise in average daily rates (ADR) to $247. These figures starkly outpace national projections of just 1-2% RevPAR growth for 2025, underscoring IHG’s strategic agility in a fragmented market.

Defying the Bifurcated Market: IHG’s Strategic Edge

The U.S. hotel industry remains split between thriving luxury segments and struggling economy/midscale properties. Luxury hotels in 2025 are posting 4.2% RevPAR growth with ADRs exceeding $250, while economy hotels languish with mid-50% occupancy and sub-$100 ADRs. IHG, however, has positioned itself to capitalize on both ends of this divide through targeted brand acquisitions and pipeline expansions.

In 2024, IHG acquired RubyTM, a premium urban lifestyle brand, for $116 million, directly addressing the $250+ ADR segment. This move complements its core Holiday Inn and Holiday Inn Express brands, which dominate the mid-tier market. The RubyTM rollout has already boosted occupancy in key urban markets, such as Las Vegas, where IHG’s properties saw a 44.6% RevPAR surge in early 2025 due to rebounding conventions and leisure travel.

Pipeline Power and Shareholder Returns

IHG’s aggressive expansion strategy is another key driver of its outperformance. The company added 371 hotels (59,100 rooms) in 2024—a 23% annual increase—and signed 106,200 rooms globally in 2024, a 34% rise. Notably, conversions (rebranding existing properties) surged by 88%, allowing IHG to expand without the high costs of new construction. This focus on conversions and urban lifestyle brands has kept supply growth moderate (1.5%-1.7% annually), supporting pricing power.

Meanwhile, IHG’s financial discipline has bolstered investor confidence. The company completed an $800 million share buyback in 2024, paid $259 million in dividends, and announced a new $900 million buyback program for 2025. With a net debt/adjusted EBITDA ratio of 2.3x, IHG maintains ample flexibility to weather macro risks like inflation or slowing GDP growth.

Navigating Headwinds: Challenges and Opportunities

Despite its success, IHG faces familiar industry hurdles. Macroeconomic uncertainty—including a projected 1.2% U.S. GDP growth in 2025—could dampen leisure and corporate travel. Additionally, supply imbalances persist in markets like Phoenix and Dallas, where overbuilding risks could pressure occupancy. IHG’s focus on group bookings and resort destinations (e.g., Las Vegas, New Orleans) helps mitigate these risks, as these segments saw 7.3% RevPAR growth in Q1 2025 due to convention recoveries.

Conclusion: IHG’s Resilience Justifies Optimism

IHG’s Q2 2025 results highlight its ability to thrive in a bifurcated market through strategic brand diversification, disciplined expansion, and robust shareholder returns. With RevPAR growth of 12.7% versus industry averages of 1-2%, and a 76.4% occupancy rate exceeding the national 63.4% projection, IHG is well-positioned to capitalize on the $250+ ADR segment’s resilience and upscale extended-stay demand.

While macroeconomic risks linger, IHG’s balanced portfolio—spanning economy, luxury, and lifestyle brands—reduces exposure to any single segment’s volatility. Investors should also note IHG’s strong cash flow and shareholder-friendly policies, which provide a cushion against potential downturns.

Final Takeaway: IHG’s US performance in 2025 demonstrates that strategic foresight and operational flexibility can overcome industry fragmentation. With a 10% dividend hike proposed for 2024 and a $900 million buyback, IHG offers both growth and stability—a compelling case for investors seeking exposure to a resilient hospitality leader.