We See Narrow-Moat InterContinental’s Demand Traveling Higher in 2023; Shares Fairly Valued

We don’t plan to materially change InterContinental’s $71 fair value estimate, as the company posted 2022 revenue and EBITDA growth of 34% and 42%, respectively, near our 33% and 44% estimates. We see shares as appropriately valued. For the full year, revenue per available room, or revPAR, was 97% of 2019’s level versus our 101% estimate, driven by average daily rate of 108% of prepandemic marks. As with peers, 2022 revPAR was strongest in the Americas and Europe/Middle East/Asia/Africa, which posted 103% and 108% of 2019’s level, respectively, well ahead of Greater China’s 62%, as travel restrictions hindered demand in that region. On a consolidated basis, fourth-quarter revPAR reached 104% of 2019’s level, improving throughout the quarter, with October at 102%, November 103%, and December 107%. The firm noted that demand has remained resilient into 2023, and we expect its revPAR to lift again in 2023, aided by the human-ingrained desire to travel, improving group and business demand, shift to service consumption, remote work flexibility, and the removal of China’s COVID-19 policy on Jan. 8, 2023.