IHG Hotels & Resorts has opened up its wallet to acquire its 20th hotel brand.
United Kingdom-based IHG acquired the Ruby Hotels brand for €110.5 million ($115.8 million) from Munich-based hotel firm Ruby GmbH. Excluded from the deal is Ruby's operating company, which will continue to manage all Ruby hotels open and currently in development.
Ruby has a portfolio of 20 hotels and 3,483 rooms open in Europe — including nine hotels in Germany, three in the U.K., three in Austria, two in Switzerland, and one each in Italy, Ireland and the Netherlands. Ruby's hotel development pipeline includes 10 hotels and more than 2,200 rooms.
During an earnings conference call Tuesday, IHG CEO Elie Maalouf expressed his excitement about the Ruby deal. He added Ruby signed an 11th hotel to its development pipeline — a property in Copenhagen — a week ago.
“It just really hits the spot in an area we have been looking at, urban micro. It is something we can scale up very quickly,” he said, referring to the British firm’s quick acceleration in its brands Avid and Garner.
In a news release announcing the acquisition, Maalouf gave more detail on where the Ruby brand fits in IHG's portfolio of brands.
“The urban micro space is a franchise-friendly model with attractive owner economics, and we see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions,” Maalouf said.
IHG envisages a portfolio of 120 Ruby hotels in the next five years and 250 in the next 10, Maalouf said. IHG has similarly scaled its brands Avid and Garner, he added.
“Our track record shows that this is extremely feasible,” he said, adding there would be approximately $10 million of integration costs.
IHG plans to integrate the Ruby portfolio into its systems by March 31, 2026. Maalouf cautioned that the brand would not break even in IHG's operating profit until 2026, but the company forecasts a greater impact on its profitability in the years ahead.
“It has a lot of growth potential,” Maalouf said.
Franchise fees from the deal — all 31 hotels are due to open by the end of 2027 — would equate to approximately $8 million in 2028’s earnings numbers, while those fees are predicted to more than $15 million by 2030, Maalouf said. The deal includes potential additional payments ranging from nothing to €181 million between 2030 and 2035 depending on expanded pipeline.
Performance around the globe
Maalouf and IHG Chief Financial Officer Michael Glover shared a positive outlook of IHG's global operations across 2025.
In 2024, IHG's global revenue per available room increased 3% year over year and operating profit increased by 10%.
“The momentum improved across all markets in the fourth quarter, and 2024 is our third consecutive year of accelerating network growth. We expanded fee margins by 190 basis points,” Maalouf said. “We’re comfortable in what we’re doing in the Americas, where we had 9% more applications. … [Glover] and I were in China three weeks ago, and we talked to 100 owners and have had a great year of signings.”
There's also reason for optimism in IHG's U.S. hotel portfolio, Maalouf said. In 2024, IHG's U.S. hotel RevPAR rose 1.7%.
“I believe 2025 in the U.S. can be as good or better than 2024. If you look at the fundamentals that drive U.S. travel … another good year for RevPAR growth [is] there,” Maalouf said.
In China, residential real estate is not doing so well, but Maalouf said investors there are very interested in hotel development. Hopefully, domestic hotel demand will follow, as full-year 2024 RevPAR declined 4.8% in Greater China.
“While I was there, we inaugurated our 800th hotel, and we have 500 in the pipeline,” he said, adding IHG has much room to maneuver there.
Across 2024, IHG grew its net portfolio by 4.3%, opening 371 hotels and approximately 59,100 rooms for a total portfolio of 6,629 hotels and approximately 987,000 rooms.
IHG's revenues increased 7% to $2.31 billion, and fee margins equaled 61.2%, an increase of 1.9 percentage points, which Glover said was driven by strong trading together with new and growing ancillary fee streams.
IHG also will embark on another share buyback scheme, Glover said. In 2024, the company returned approximately $800 million in shares back to shareholders, and in 2025 it intends to increase that number to $1.1 billion in value via a new $900 million buyback program.
As of press time, IHG stock was trading at £102.70 ($129.43) a share, an increase of 32.4% year over year. The London Stock Exchange’s FTSE 100 index was up 13.8% over the same period.