Intercontinental Hotels Group (LSE: IHG) He lost a quarter of his value in just four months. But FTSE 100 The actions still increased by more than 100% in five years, even after a keen pull from 10 880p to 8 240p from February.

This is why I think it’s just a matter of time before the supplies return to the winning ways.

An attractive business model

IHG, as you know, is one of the world’s largest hotel companies operating in over 100 countries. Group brands include a budget (Holiday Inn) for luxury (Intercontinental, Kimpton and Regent), but has a very mighty presence on the medium market.

It is critical to understand that IHG is usually not the owner of hotels directly. Instead, he earns revenues through franchise fees, which are based on the percentage of revenues from the room. Or fees for managing hotels on behalf of the owners.

It also generates value from the IHG One Rewards loyalty program, which has over 145 million members. Many hotels pay a fee for part of this loyalty program.

This model of revenues from assets, repetitive revenues, means that the company is very profitable. Last year, the operational margin was fit 21%.

Economic uncertainty

In Q1, IHG opened 14,600 rooms in 86 hotels, more than twice in the same period last year. Global revenues for the available room (Revpar) increased by 3.3%, with enormous results in the Americas (+3.5%) and Europe, the Middle East, Asia and Africa (+5%).

However, the company’s fortunes are of course still closely related to the continuous travel demand. In China, Q1 Revpar fell by 3.5%, with an occupancy of 52.8% compared to 63.4% for the USA and 66.7% for Europe, the Middle East, Asia and Africa. The global boost in the occupancy was quite anemic, amounting to only 0.6%.

Meanwhile, tariff uncertainty led to fear of recession in the USA. She recently released an international trip to America. The United States is the most critical IHG market, so this is probably the biggest risk here.

The exemption can affect short-term growth, while any escalation in the conflict of Israel-Iran can discourage people at all to the Middle East.

Another problem that is worth emphasizing is the IHG decision to launch a high operating program of USD 900 million in February. Because at that time, trade in shares at that time some investors asked if cash would be better spent on reducing the net debt position of the group by $ 2.7 billion.

Very supportive trends

While the rest of the year looks uncertain, I am stubborn on IHG long -term perspectives. Currently, it has a global pipeline of 334,000 rooms in 2265 hotels, with emerging markets, such as India, South -East Asia and Africa, offering the huge potential of expansion.

We can live in the world Airbnb and digital nomads living in a hostel, but the brands of hotels still rule a henhouse in the field of business trips, groups and loyalty programs. And everything covering a decent breakfast!

According to the Airports Council International (ACI), the global passenger traffic has almost twice double up to 2053, reaching 22.3 billion. This will cause a growing middle class on emerging markets and a growing demand for air travel. A wide selection of IHG hotels will be waiting for them around the world.

After 25% of the hairstyle, the actions are rotated about 20 times forecasted earnings on 2026. With this valuation, I think that it is worth considering a long-term addition to a varied portfolio.