InterContinental Hotels Group (LON:IHG) saw its London-listed shares close at $171.55 on Friday, just 2.4% below its all-time high of $175.70 reached on June 25. The stock's proximity to record levels highlights the company's aggressive share buyback program, which has been executed at near-peak prices, prompting investors to reassess the sustainability of its capital returns.
According to a Form 6-K filing on June 26, IHG repurchased 200,000 ordinary shares over 10 trading days through June 25, spending approximately $34 million at a weighted average price of $170.17 per share. The final purchase on June 25 was made at an average price of $174.4244. These shares are set to be cancelled, reducing the total shares in issue to 149,163,876 (excluding treasury shares).
This buyback is part of a broader $950 million program announced for 2026, following over $1.1 billion in shareholder returns in 2025. However, with shares trading near record highs, each dollar spent on buybacks retires fewer shares than earlier in the program. As a result, future per-share earnings growth will increasingly depend on operational expansion, particularly room growth and fee income from new signings.
On the operational front, IHG announced two significant European signings last week. On Thursday, the company revealed four new hotels in Italy, adding 449 rooms. These include a 263-room dual-branded Crowne Plaza and Staybridge Suites conversion in Milan. On Wednesday, IHG announced the 323-room InterContinental Vilamoura – Algarve in Portugal, a conversion from Crowne Plaza, expected to open in April 2027. Combined, these projects add 772 named rooms, with approximately 83% tied to conversions rather than ground-up development.
Willemijn Geels, IHG's vice president for development in Europe, commented on Italy: 'We're only getting started.' This sentiment underscores IHG's growing presence in the region, where it now operates 32 open hotels and has 20 more in development.
The company's first-quarter results, reported by Reuters in May, showed global revenue per available room (RevPAR) rising 4.4%, above the consensus forecast of 3.3%. U.S. RevPAR increased by 3.4%, while Greater China saw a 5.7% gain. CEO Elie Maalouf noted that U.S. consumer spending remains robust. However, the Middle East was a weak spot, with RevPAR falling 2% in the quarter and a 50% decline in April, according to IHG's warning.
AlphaValue analyst Yi Zhong observed that IHG's midscale brands are well-positioned for value-seeking leisure travelers, but its exposure to business travel could limit gains relative to peers. The shift in focus from buybacks to operational growth comes as the company prepares to release half-year results for the period ending June 30 on August 11.
IHG's move to change the trading currency of its London shares from sterling to dollars on January 2 has simplified the buyback analysis, aligning the share price, buyback budget, and reported earnings in a single currency. As the buyback program continues, investors will closely monitor any further share repurchases, whether the stock retests its $175.70 high, and the pace of new conversion deals ahead of the August results.