InterContinental Hotels Group (IHG) came under modest pressure in early trading after reporting first-half results that were solid overall but fell slightly short of market expectations.

While the Holiday Inn owner delivered 10% growth in operating profit, 13% growth in adjusted earnings per share and record hotel development activity, investors focused on a slowdown in second-quarter room revenue growth and a small profit miss versus consensus forecasts.

Shares of the FTSE 100 company fell about 1.8% in early London trading.

“A combination of World Cup fever and resilient demand from affluent customers has helped InterContinental stand tall during a difficult period for the broader travel and hospitality sector," said Dan Coatsworth, head of markets at AJ Bell.

"However, with revenue coming in short of expectations, growth slowing in the second quarter and with the company warning about the continuing impact of the Middle East conflict, some investors checked out of the shares in the wake of its results."

IHG reported first-half global revenue per available room (RevPAR) growth of 4.1%, with the Americas up 4.8%, Europe, Middle East, Asia and Africa (EMEAA) up 3% and Greater China up 3.1%. Total gross revenue increased 7% at constant currency to $18.2bn.

Investors focused on the moderation in RevPAR growth during the second quarter, which slowed to 3.5% from 4.4% in the first quarter. However, IHG said demand in the US accelerated during the quarter, while continued growth in Greater China and stronger trading elsewhere in EMEAA helped offset weakness in the Middle East.

Operating profit from reportable segments rose 10% to $665m, slightly below analyst expectations of about $673m. Adjusted earnings per share increased 13% to 274.7 cents, while fee margin expanded by 1.2 percentage points to 65.9%. Trailing 12-month core earnings rose 11% to $1.392bn.

The group also delivered record levels of hotel development activity. It opened 197 hotels with 31,500 rooms during the first half, taking its global estate to 7,109 hotels and 1.049 million rooms. The development pipeline increased 3% to 2,385 hotels and 348,000 rooms. The company signed 352 hotels during the period, representing organic growth of 8% year on year.

Coatsworth added: “IHG benefits from having a diverse mix of hotel brands across the globe, which typically allows it to offset weak performance in some areas with stronger showings elsewhere. The hotels group is continuing to expand at pace, benefiting from its capital-light model. Because the business only owns a small proportion of its hotels and instead focuses on franchising and managing premises, it can generate strong margins and grow without employing lots of capital."

Cash generation improved, with net cash from operating activities rising to $355m from $312m and adjusted free cash flow increasing to $360m from $302m. Net debt rose by $330m from the start of the year, largely reflecting $564m of shareholder returns through dividends and share buybacks. IHG was on track to return more than $1.2bn to shareholders during 2026, including a $950m share buyback programme and a 10% increase in the interim dividend to 64.5 cents.

Management maintained its full-year outlook and said it remained on track to meet consensus profit and earnings expectations.

IHG CEO Elie Maalouf said: "Our diverse global footprint and better-than-expected demand in most markets around the world delivered strong RevPAR growth of +4.1% in the first six months of 2026. Trading in the US accelerated in the second quarter, growth in Greater China continued and a good performance elsewhere in our EMEAA region helped offset challenges in the Middle East. This robust revenue growth, combined with an acceleration in net system growth, an efficient cost base driving further margin expansion and the ongoing return of surplus capital to shareholders, delivered adjusted EPS growth of +13%.

"While there are ongoing impacts from the Middle East conflict, including some wider disruption to international travel flows, we continue to expect these to be fully offset by growth in demand elsewhere. We remain on track to meet full year consensus profit and earnings expectations."

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