Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

The number of hotel rooms in the U.S. is increasing at a historically low level of less than 1% a year. In the past 25 years, industry RevPAR has never decreased when supply growth was less than 1%.
The lodging industry is enjoying a solid recovery, with domestic RevPAR up by more than 25% since the last recession.
The company is the leader in the China branded midscale and upscale hotel markets. Strong growth in the region should enable InterContinental to sustain solid long-term growth. Read more 

Bears Say

The lodging industry, while currently in recovery, remains highly cyclical, and there is risk of a decline in revenue and the company's share price in the event of another recession.
The recovery in the lodging industry is already priced into InterContinental's share price, after a more than threefold increase in the stock price since early 2009, and investors are smart to wait for a better entry point.
While InterContinental has been continually selling real estate, owned properties, which are more sensitive to an economic downturn, still generate more than 30% of operating income. Read more 

Management

Richard Solomons became CEO in 2011 after previously serving as CFO. Patrick Cescau, former group CEO of Unilever, serves as nonexecutive chairman of the board. We like that the CEO and chairman roles are split so as to ensure that an independent party   Read more 

Profile

InterContinental is the largest franchiser, manager, and owner of hotels in the world, as measured by total rooms, with more than 4,500 hotels in more than 100 countries   Read more 

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