IHG to return US$1.1B to shareholders, acquires Ruby Hotels for US$116M

UK – Multinational hotel management company IHG has announced plans to return over US$1.1 billion to shareholders in 2025 and acquire European urban hotel brand Ruby for US$116 million, following stronger-than-expected annual room revenue.

IHG, the parent company of Crowne Plaza and Six Senses hotels, reported a 3% increase in annual room revenue, surpassing market expectations.

This growth was driven by rising demand in the United States, despite ongoing challenges in China.

According to company-compiled consensus, analysts had forecast a 2.6% rise in revenue per available room (RevPAR) for the year ending December 31, 2024.

CEO Elie Maalouf announced plans to expand the Ruby brand into the U.S. and Asia. Currently, Ruby operates 20 hotels across European cities.

Under the agreement, The Ruby Group will retain operational control of both existing and future hotels under the brand, while IHG will receive franchise fees and the flexibility to expand Ruby with other owners.

Additionally, the seller is incentivized to develop more Ruby properties, with up to €181 million payable, depending on the number of rooms in operation at predetermined dates.

Commenting on the development, Michael Struck, Founder and CEO of The Ruby Group, stated, “We have carefully chosen IHG as the ideal partner to take Ruby to the next stage of international expansion.”

“IHG’s strong distribution capabilities, the complementary nature of Ruby within IHG’s portfolio, and their expertise in maintaining brand identity during integrations give us confidence as we move forward together.”

By leveraging IHG’s global reach and resources with Ruby’s streamlined operational and construction model, we can generate superior returns for our investors and real estate partners alike.”

Bernstein analysts noted that Ruby is expected to compete with Hilton’s Motto and CitizenM, both of which have been successful globally.

IHG recorded a 1.7% RevPAR increase in the U.S., its largest market, while China experienced a 4.8% decline in RevPAR.

While maintaining its medium-term targets, IHG projected an adjusted interest expense for 2025 ranging between US$190 million and US$205 million, exceeding analysts’ consensus estimate of US$174 million.

IHG reported annual operating profit in line with market expectations.

The company also launched a US$900 million share buyback program and proposed a 10% increase in its annual dividend, bringing total shareholder returns for the year to over US$1.1 billion.

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