VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Saturday, January 10, 2026
InterContinental Hotels Group PLC
IHG · London Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
InterContinental Hotels Group PLC (IHG) is an asset-light hotel company whose economics are primarily driven by franchising and management fees from a global portfolio of brands supported by IHG One Rewards. The core moat comes from brand trust and a scaled enterprise platform (marketing, technology, reservations, and procurement) that helps owners generate demand and reduce customer acquisition costs. IHG's System Fund centrally finances marketing, reservations, loyalty, and technology investments that reinforce the platform and loyalty flywheel. Reimbursable revenues and the System Fund are largely pass-through accounting lines, while owned/leased hotels represent a small portion of system size and have weaker moat characteristics.
Primary segment
Fee business (franchise, management and ancillary fees)
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
5 segments · 5 tags
Updated 2026-01-10
Segments
Fee business (franchise, management and ancillary fees)
Branded hotel franchising and management services
Revenue
36%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
System Fund (marketing, reservations and loyalty assessments)
Hotel marketing, reservation, and loyalty platform services for IHG system hotels
Revenue
32.7%
Structure
Monopoly
Pricing
none
Share
—
Peers
Reimbursable revenues (managed hotel staff reimbursements)
Managed-hotel staffing cost reimbursements (general manager and certain employees)
Revenue
20.3%
Structure
Competitive
Pricing
none
Share
—
Peers
Owned, leased and managed lease hotels
Hotel ownership and leasing operations
Revenue
10.5%
Structure
Competitive
Pricing
weak
Share
—
Peers
Insurance activities (ancillary)
Hospitality-related insurance activities (ancillary)
Revenue
0.5%
Structure
Competitive
Pricing
none
Share
—
Peers
—
Moat Claims
Fee business (franchise, management and ancillary fees)
Branded hotel franchising and management services
FY2024 fee business revenue: $1,774m (per Annual Report/20-F).
Brand Trust
Demand
Brand Trust
Strength
Durability
Confidence
Evidence
Portfolio brands (e.g., Holiday Inn) and consistent standards support guest preference and owner willingness to affiliate, underpinning royalty and fee streams.
Erosion risks
- Brand dilution from inconsistent franchise execution
- Alternative accommodation growth (e.g., short-term rentals)
- Owner reflagging at contract expiry
Leading indicators
- Net system size growth (rooms)
- Franchise/management contract renewal retention
- RevPAR index vs competitive set
Counterarguments
- Hotel owners can switch brands at renewal if fees/standards are unattractive
- Competing global chains have similarly strong brand portfolios
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength
Durability
Confidence
Evidence
Large installed base enables operating leverage in technology, marketing, distribution, and procurement; incremental hotels can be added with limited incremental corporate resources.
Erosion risks
- Technology disruption reducing advantage of incumbent platforms
- Rising OTA influence and customer acquisition costs
- Competitors outspending on digital and loyalty
Leading indicators
- Fee margin trend
- Direct channel mix and cost of acquisition
- System Fund spend effectiveness
Counterarguments
- Scale is shared by multiple global hotel groups; advantage is relative, not absolute
- Independent hotels can use OTAs and tech vendors to replicate some platform capabilities
Long Term Contracts
Demand
Long Term Contracts
Strength
Durability
Confidence
Evidence
Contract-based fee model (franchise/management agreements) and long-dated commercial partnerships support recurring fee streams, though renewals and owner negotiations can reduce terms over time.
Erosion risks
- Owner bargaining power increasing at renewals
- Litigation and disputes with franchisees
- Overcapacity in key markets pressuring owner economics
Leading indicators
- Renewal success rate and terms
- Number of contract terminations and early exits
- Owner satisfaction metrics
Counterarguments
- Contracts are renegotiated and can be lost to competing brands
- Large owners can multi-brand and negotiate fees down
System Fund (marketing, reservations and loyalty assessments)
Hotel marketing, reservation, and loyalty platform services for IHG system hotels
FY2024 System Fund revenue: $1,611m (reported revenue; matched by System Fund expenses over time).
Two Sided Network
Network
Two Sided Network
Strength
Durability
Confidence
Evidence
Loyalty program scale creates a reinforcing loop: more members drive more stays for owners, which supports further participation and hotel signings.
Erosion risks
- Loyalty program commoditization (members multi-home across programs)
- Changes in points economics increasing perceived cost to owners
- Data privacy and platform regulation affecting targeting/personalization
Leading indicators
- Loyalty member growth and active members
- Share of room nights from members
- Points sales growth and redemption patterns
Counterarguments
- Major competitors have similarly large loyalty ecosystems
- Guests can chase price via OTAs regardless of loyalty status
Distribution Control
Supply
Distribution Control
Strength
Durability
Confidence
Evidence
Central reservation and digital platforms route demand to system hotels, reducing reliance on third-party distribution and improving owner economics.
Erosion risks
- OTAs and metasearch changing demand routing and pricing transparency
- App/store platform changes reducing direct acquisition efficiency
Leading indicators
- Direct booking share and app engagement
- Cost of acquisition vs OTAs
- System Fund marketing ROI
Counterarguments
- Distribution is contested; OTAs can still dominate for many trip types
- Owners may pressure system assessments if perceived ROI declines
Reimbursable revenues (managed hotel staff reimbursements)
Managed-hotel staffing cost reimbursements (general manager and certain employees)
FY2024 reimbursable revenue: $1,000m (reported revenue; typically offset by related costs).
Pass-through reimbursement revenue
Demand
Pass-through reimbursement revenue
Strength
Durability
Confidence
Evidence
Reimbursable revenues are reimbursements of certain employee costs at managed properties; they are primarily pass-through and do not represent a durable economic moat.
Economics are tied to underlying management contracts and typically offset by reimbursable expenses.
Erosion risks
- Shift away from managed contracts toward franchising
- Owners choosing to employ staff directly
Leading indicators
- Managed hotel count and mix
- Reimbursable revenue vs reimbursable expense net
Counterarguments
- Owners can change operators/managers, affecting reimbursable flows
- This revenue line is accounting-driven and not value-capture on its own
Owned, leased and managed lease hotels
Hotel ownership and leasing operations
FY2024 owned/leased and managed lease hotels revenue: $515m (operating profit $45m).
Asset-heavy hotel operations (limited moat)
Demand
Asset-heavy hotel operations (limited moat)
Strength
Durability
Confidence
Evidence
Owned/leased hotel operations are location-specific and generally competitive; this segment is small for IHG and does not represent the core moat of the enterprise.
This segment is intentionally limited in scale versus the asset-light fee business.
Erosion risks
- Local overcapacity reducing ADR/occupancy
- Higher fixed cost base vs fee business
Leading indicators
- Owned/leased hotel margin trend
- Local RevPAR trends in owned/leased markets
Counterarguments
- Hotel operations are commodity-like in many markets
- Real estate/location, not brand platform, drives returns
Insurance activities (ancillary)
Hospitality-related insurance activities (ancillary)
FY2024 insurance activities revenue: $23m (immaterial).
Immaterial ancillary activity
Demand
Immaterial ancillary activity
Strength
Durability
Confidence
Evidence
Insurance activities are a very small revenue line for IHG and are not considered a core moat driver versus its brand, scale, and loyalty/distribution platform.
Tracked for completeness only; moat relevance is low.
Erosion risks
- Discontinued or restructured program
- Regulatory and claims volatility
Leading indicators
- Annual insurance activities revenue trend
Counterarguments
- Insurance is not a differentiator in hotel franchising
- Specialist insurers can provide similar services
Evidence
Holiday Inn was voted Most Trusted Brand in US Travel and Hospitality by Morning Consult for the fourth consecutive year.
Third-party trust/award supports brand strength and consumer preference.
A family of 19 hotel brands and IHG One Rewards, one of the world's largest hotel loyalty programmes.
Shows breadth of brand portfolio and integrated loyalty platform offered to owners.
Our well-invested scale platform, where limited resources are required to support the addition of an incremental hotel.
Direct statement of scale-driven operating leverage in the franchise model.
Total system size 987,125 rooms and total development pipeline 325,252 rooms (year-end 2024).
Large scale supports platform economics and owner proposition.
Identifying, securing and retaining franchise and management agreements and may not be able to renew existing arrangements.
Confirms the business is built on contractual agreements and highlights renewal/bargaining risks.
Showing 5 of 13 sources.
Risks & Indicators
Erosion risks
- Brand dilution from inconsistent franchise execution
- Alternative accommodation growth (e.g., short-term rentals)
- Owner reflagging at contract expiry
- Macroeconomic travel downturn reducing fee base
- Technology disruption reducing advantage of incumbent platforms
- Rising OTA influence and customer acquisition costs
Leading indicators
- Net system size growth (rooms)
- Franchise/management contract renewal retention
- RevPAR index vs competitive set
- Guest satisfaction and brand quality metrics
- Fee margin trend
- Direct channel mix and cost of acquisition
Curation & Accuracy
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