What’s Behind The IHG Share Price Increase?

Over the past year, the share price of InterContinental Hotels Group PLC (IHG) has seen tremendous growth. 

For traders observing this stock, the question is, what does this share price surge mean? 

In this in-depth guide, we’ll analyze the recent IHG share price data, discuss what’s driving the gains, and, most importantly - assess what it could signify for traders in 2024 and beyond.

Overview of InterContinental Hotels Group

IHG is a British multinational hospitality company headquartered in Windsor, England. It is one of the world’s largest hotel chains, with over 5,900 hotels across 100 countries.

Some of IHG’s most recognizable hotel brands include InterContinental, Holiday Inn, Crowne Plaza, Regent, and Kimpton. 

The company franchises, leases, manages and owns hotels and resorts in nearly every major travel destination globally.

IHG is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It has over 12,000 employees worldwide and reported £3.16 billion in revenue in 2022.

Examining the IHG Share Price Data

Phase 1 - Gradual Decline (January to May 2023): The IHG share price opened in 2023 around 5700p and remained rangebound through February and March. It began declining more noticeably in April, falling to around 5260p by May.

Phase 2 - Recovery (June to November 2023): From the May lows, the IHG share price recovered steadily from June through November to over 6100p, a climb of over 15% from the low point.

Phase 3 - Surge (December 2023 to Present): December marked the start of a massive surge in the IHG share price, which has continued into early 2024. The IHG share price rose to over 7000p in December and has continued trending upwards, reaching nearly 7200p.

The most significant gains have come in the past two months. But what’s driving this share price growth for IHG?

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5 Factors Behind the IHG Share Price Surge

Several factors have likely contributed to the recent bull run in IHG’s share price:

1. Strong Financial Results

IHG reported an impressive revenue growth of 49.48% in 2022 compared to 2021’s growth of 13.22%. The company increased its dividend and share buyback program, instilling further confidence.

2. Recovery in Travel/Hospitality

As pandemic restrictions have eased globally, hotel and travel demand has risen. IHG has benefited from rebounding leisure and business travel tailwinds.

3. Growth Initiatives

IHG has continued expanding through new hotel openings and strategic acquisitions, securing its lead in the hospitality space. 

It also launched an enhanced loyalty program, further boosting reservations.

4. Improving Macroeconomic Outlook

Optimism about inflation cooling and recession risks fading has boosted equity markets. 

An improved macro environment bodes well for IHG’s bookings and pricing power.

5. Undervalued Shares

Despite significant YTD gains, IHG shares still trade at attractive valuation multiples compared to pre-pandemic levels and peers - signalling an upside.

IHG is operating at its best while macroeconomic conditions are improving, which has made analysts and investors very bullish on the stock - driving the momentous share price rally.

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Assessing the IHG Share Price Outlook for 2024

Given the surge over the past two months, traders’ big question is whether the IHG share price can continue running higher through 2024. 

Here are some facets to consider when gauging the outlook:

Bull Case

Several elements suggest the share price could maintain an upward trajectory this year:

• Global travel demand is expected to remain robust, with pent-up demand still to be unleashed, supporting IHG’s revenue growth.
• Interest rate hikes could slow, helping IHG maintain pricing power and profitability.
• The stock still appears attractively valued despite recent gains.
• IHG may continue rewarding shareholders via dividends and buybacks.

Bear Case

However, some cautionary factors to keep in mind include:

• Corporate travel budgets could blow if a recession hits, weighing on bookings.
• Higher interest rates and inflation may still constrain some leisure travel.
• IHG faces competition from disruptive boutique and lifestyle hotel brands.
• The huge run-up increases vulnerability to profit-taking.

As long as travel demand holds up and macroeconomic conditions don’t deteriorate sharply, the IHG share price may have further room to run this year. 

However, expectations are very high already, meaning the risk/reward is becoming less favourable for new positions at current levels.

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How Traders Can Approach IHG Stock

Given the analysis above, here are a few recommendations for how different types of traders can approach IHG stock:

Long-term Investors - The long-term travel industry outlook remains strong, and IHG is well-positioned with its global brand portfolio, aggressive expansion plans, and loyal customer base. 

Investors with a multi-year timeframe can likely still find an attractive entry point. Consider pounds-cost averaging over 6-12 months.

Swing Traders - With IHG shares extended after doubling in six months, wait for inevitable pullbacks to identify attractive short-term entry points. 

The 50-day moving average near 6500p or 200-day MA near 5800p could provide support on dips.

Day Traders - Closely watch for a breakout above 7300p resistance, which could signal a continued surge. 

Use tight stop losses given extended share price. Target rallies to 7500p and 7700p areas if momentum accelerates.

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Bottomline

The IHG share price has massively surged over the past two months, driven by an improving macroeconomic backdrop and the company’s operational performance. 

While further upside remains possible, the risk/reward ratio is becoming less favourable at current valuations.

Long-term investors can likely still find attractive entry points through British pound-cost averaging. However, traders should wait for inevitable pullbacks before initiating new positions. 

Regardless of strategy, utilize prudence and protective options at these extended levels.

It appears that the price of IHG shares is likely to continue to rise in 2024. By analyzing the available data, understanding the factors, and adopting the appropriate trading strategies, you can position yourself to benefit from the expected growth in the value of the stock over the next year.

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“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”