IHG Reports Strong 2025 Results: Operating Profit Up 13%, Announces New $950m Buyback and Launches Noted Collection Brand

Record hotel openings and a bigger, richer pipeline

IHG opened a record 443 hotels (65.1k rooms), up 10% year-on-year, taking the estate to 6,963 hotels (1,026k rooms). Net system size growth was +4.7% when adjusting for the removal of rooms previously affiliated with The Venetian Resort Las Vegas (+4.0% reported).

• Signings: 102.1k rooms (694 hotels). Excluding the Ruby acquisition and 2024’s NOVUM signings, signings rose 9%.
• Pipeline: 340k rooms (2,292 hotels), +4% year-on-year, equivalent to 33% of current system size.
• Conversions: 52% of openings and 40% of signings, accelerating quick-to-market growth.
• Mix upgrade: pipeline is 49% upscale and luxury, which typically earns higher fees per key.

Opinion: more rooms, a higher-quality mix, and a strong conversion engine set IHG up for sustained fee growth. With around half the pipeline under construction, there’s good visibility too.

Brand moves: Noted Collection launch and Ruby momentum

IHG unveiled Noted Collection today – a new premium “collection” brand focused initially on EMEAA. Collection brands let high-quality independent hotels plug into IHG’s loyalty and technology without losing their individual character – a proven formula for owner appeal and fast conversions.

The 2025 acquisition of Ruby is already moving: 17 of the initial 20 hotels are integrated into IHG’s system, signings are ramping, and IHG has taken the brand into the US (first signing in Chicago). Meanwhile, conversion brands keep scaling fast – Garner has reached 166 open and pipeline hotels in just over two years, Vignette sits at 31 open and 45 pipeline, and voco is at 124 open with 108 in pipeline.

Why this matters: conversion-friendly premium brands expand IHG’s addressable market, speed up system growth, and typically carry healthy fee economics.

Cash flow, leverage and shareholder returns

• Adjusted free cash flow: $893 million (2024: $655 million), helped by higher profit and lower outflows for capex, tax and the System Fund.
• Net cash from operating activities: $898 million.
• Net debt: up to $3,333 million, reflecting $1.1 billion+ returned to shareholders and the $120 million Ruby acquisition. Leverage at 2.5x net debt:adjusted EBITDA sits within IHG’s 2.5–3.0x target.
• Liquidity: $2,599 million (including an undrawn $1.5 billion RCF maturing 2030).
• Dividends: final 125.9¢ proposed (+10%), total year 184.5¢ (+10%).
• Buybacks: $900 million completed in 2025; new $950 million programme for 2026. Cumulative returns will exceed $5 billion over 2022–2026.

Watchpoint: adjusted interest expense rose to $200 million in 2025 and is guided to $230–250 million in 2026, largely due to higher net debt from capital returns. The model can clearly fund buybacks and dividends, but rising interest costs deserve monitoring.

Regional colour and what to look for in 2026

• Americas: fee business revenue fell 1.6% to $963 million, but operating profit rose 1.1% to $804 million as efficiencies pushed fee margin to 83.4%. The narrative improves if US demand normalises as IHG expects.
• EMEAA: fee business revenue up 9.6% to $433 million and operating profit up 13.2% to $292 million. Incentive fees climbed to $134 million – a nice cyclical kicker.
• Greater China: fee business revenue up 2.5% to $165 million, operating profit up 1.0% to $99 million. RevPAR was slightly down for the year, but Q4 turned positive and development remains record-strong.

On supply, US net supply growth remains low near term (supportive for pricing), while emerging markets and China should see stronger supply growth – fertile ground for IHG’s brand portfolio.

My take for retail investors

This is a high-quality, fee-driven, cash-generative story. 2025 showed IHG’s engine working at scale: fee revenue up 7%, fee margin up 360bps, adjusted EPS up 16%, record openings, and a pipeline equal to one-third of the current estate. The loyalty and co-brand flywheel is clearly adding profitable ancillary fees.

Balanced against that, US softness in 2025, rate pressure in China, and higher interest costs are real watchpoints. Net debt rose, albeit within leverage targets. There are also ongoing exceptional costs tied to efficiency work and litigation in 2025, with programme costs to complete in 2026.

Overall, though, the setup looks favourable. A fatter pipeline skewing to higher-fee segments, strong cash conversion, disciplined capex, and consistent capital returns – plus the launch of Noted Collection and the expansion of Ruby – all support the Board’s ambition to compound adjusted EPS at 12–15% over the medium to long term.

Quick jargon buster

• RevPAR: revenue per available room – a standard hotel performance metric combining price and occupancy.
• ADR: average daily rate – the average room price paid.
• Fee margin: fee business operating profit divided by fee revenue – a clean measure of profitability in IHG’s asset-light model.
• Pipeline: hotels signed but not yet open – future growth already in the queue.
• System Fund: owner-funded marketing, reservations and loyalty spend that is not managed to a profit or loss for IHG.