Aug 11, 2026 earnings call — Half-year results and record development activity
IHG reported fee margin up 120 basis points to 65.9% and adjusted EPS up 13% to $2.747.
Revenue $2.7B (est $2.7B) · EPS $2.75 (est $2.65)
Key quotes
"We opened 31,500 rooms across 197 hotels during the first half, delivering gross system growth of 6.5%."
"Coming back to our fee margin progress. This increased by a further 120 basis points to 65.9%, in line with our medium- to long-term ambition of delivering annual margin accretion of between 100 and 150 basis points on average."
"Our approach to artificial intelligence is grouped into 3 distinct areas: guest acquisition and loyalty, hotel performance and corporate efficiency and innovation."
Analyst Q&A 8
Why China RevPAR fell and fee timing
Q (Jamie Rollo · Morgan Stanley): Why did RevPAR slip in China and could that hurt owner economics and net system growth? Also, why are group-level fees growing slower than RevPAR and rooms, and are you considering changes to charge-outs?
A: China had a strong Q1 because of extended holidays that pulled demand forward into Q1, so Q2 was softer but still positive; management says China growth and profitability remain strong and development is being absorbed. On fees, most of the gap is from many newly opened hotels where fees are graduated and build over years; as those hotels mature the fee triangulation will narrow. On owner economics, IHG has taken steps since 2024 (lowered loyalty assessments, higher reward reimbursements, reduced program costs) managed through the System Fund, not IHG P&L.
"The vast majority of the fee triangulation difference that you raised is really around the development activity and the record level of openings and the growth in system size that we've seen." — Michael Glover (CFO)
NUG outlook, Revo exposure, owner association
Q (Jaina Mistry · Barclays): Is consensus NUG of 4.7% too low given Middle East and any Revo bankruptcy risk? When will triangulation narrow and what run-rate is achievable? How does the owners association differentiate IHG?
A: Management says consensus at 4.7% looks reasonable but there is upside opportunity and they would not expect a number below that. They have very little exposure to Revo and it will not be material. They expect triangulation to continue to narrow as system growth stabilizes, but Luxury & Lifestyle openings can take 2–3 years to reach steady-state fees; the owners association provides a constructive forum and they work closely with owners.
"And so it's not going to be a material factor." — Elie Maalouf (CEO)
Drivers of ADR and residences pipeline
Q (Leo Carrington · Citi): Was ADR growth in H1 pricing power or yield management? What's the visibility for residences fees in 2027 and how material could they become? Also, key money outlook with luxury mix?
A: Management says H1 RevPAR growth was balanced: both ADR and occupancy improved across regions and brands, and the World Cup was a small factor. Residences are small today but growing, with projects under construction that should add fee streams over multiple years and become material in 2027 and beyond. Key money was slightly down in H1 and they expect maintenance capital and key money to remain in the $200 million to $250 million range.
"So I think that in the long term, typically, the majority, not all, but the majority of RevPAR growth comes from ADR anyway." — Elie Maalouf (CEO)
Garner key money, pipeline and commercial services
Q (Richard Clarke · Bernstein): Are you seeing higher key money requests for Garner? Why is the pipeline growing slower than unit growth and any terminations to flag? What is the scale and nature of the new commercial services program and savings for owners?
A: They are not seeing key money for Garner. Pipeline was influenced by record openings (e.g., China) rather than unusual exits; they have not seen cancellations in the Middle East and 90% of their Middle East pipeline is in KSA, Egypt and Turkey. The commercial services program offers a menu of outsourced marketing, digital, web and training services; it was redesigned to provide deeper support at lower cost, has been rolled out to 500 hotels and is saving money for participating hotels though specific stats are confidential.
"No, we're not seeing more key money or really key money at all for Garner." — Elie Maalouf (CEO)
Middle East trading, demand mix, cash conversion
Q (Estelle Weingrod · JPM): How will H2 evolve in EMEAA given current Middle East situation? Why did business travel decelerate in Q2? Any cash phasing to know given H1 results, interest and tax guidance?
A: Management says the conflict peaked in March–April and since the peak subsided they have seen a rolling monthly recovery; if the situation remains where it is today they expect a gradual recovery and believe they can fully offset the impact through year end. Globally, business, leisure and groups were all up in H1, with groups particularly strong; cash conversion on a trailing 12 months is over 100% and they expect full-year cash conversion to be around 100%.
"So since the conflict peak has subsided, we've seen a recovery, not a V-shaped recovery, we've seen a recovery on a rolling monthly basis." — Elie Maalouf (CEO)
Military lodging, fee margin outlook, AI cost cuts
Q (Jarrod Castle · UBS): Can you describe U.S. military contracts economics and competitiveness? How much further can fee margins in the Americas improve over the next 3–5 years? How much can AI cut owners' costs?
A: On the Air Force deal, they are in advanced negotiations and expect to sign; economics are asset-light, similar in net fees per key to off-base franchises, development by partners, long agreements and highly competitive selection focusing on track record and capabilities. Management believes there is further medium- to long-term upside in fee margin and they can continue to grow the 100 to 150 basis points range, without a set time limit. On AI, they are focusing AI on guest acquisition, hotel performance and corporate efficiency; AI is being applied to top-line and costs but they will not attach a percentage now because it is early and outcomes vary by region and brand.
"In general, the economics are similar, not the same sort of configuration, but they end up being similar in terms of net fees per key as a typical off-base franchise." — Elie Maalouf (CEO)
China removals and selling services externally
Q (Kate Xiao · BofA): Are you seeing heightened removals in China like some peers? Would you sell owner services (IT, procurement) to independent nonowners as a revenue stream?
A: In China, IHG runs a fully controlled business with no partners or master franchisees and says that governance has helped keep a high-quality estate; they do have removals but see nothing unusual and are confident in continued system growth. They will not make services available a la carte to nonowners; their platforms and System Fund investments are shared with owners and services are only for owners in the system.
"So in China, we've built a fully controlled IHG business with no partners or JVs or master franchisees." — Elie Maalouf (CEO)
Key money trend, U.S. triangulation, loyalty economics
Q (Alex Brignall · Rothschild & Co Redburn): Is there contagion in key money trends to other hotels and to mid-scale? Why does a gap remain between U.S. fee growth and NUG/RevPAR? And how do loyalty night economics split between IHG and owners?
A: They say key money is stable and they see no change to their asset-light model or capital guidance; retention versus new-project key money bumps around and they are not disclosing a split but do not see a trend. Americas net system size growth is accelerating year-over-year and triangulation has narrowed (Americas improved 110 basis points y/y in fee triangulation). On loyalty, they redesigned the program with owners, now at 160 million members and higher reward night penetration, and owners generally want more loyalty contribution because it drives room nights and hotel economics.
"If you look back at the half year 2025, we were at -- in the Americas, we were at 0.1% year-over-year system growth." — Michael Glover (CFO)