Businesses, including those in the hotel sector, have often helped boost the value of their shares by engaging in share-buyback programs.
The reasoning behind this is generally straightforward: When demand for stock increases, the price for that stock increases, so if businesses buy their own stock, that helps the price surge, which brings more value to stockholders.
There are, in most countries, also tax benefits, as upon the sale of shares dividends are taxed, but share value increases are not.
For the companies themselves, removing shares from their profit-and-loss statements can benefit performance metrics such as revenue per available room, which potentially helps generate more demand.
Laws concerning share sales differ across countries. In the United Kingdom, as an example, share buybacks must be acquired with cash at the time of any buyback. It is not permitted to defer payment over time, and any shares acquired in this manner must be cancelled, unless they have been acquired with distributable reserves, capital that is put aside for shareholder dividends and other returns.
In 2024, several hotel companies based in Europe increased their financial flexibility via share buyback programs.
IHG Hotels & Resorts
February 2024 — Denham, England-based hotel firm IHG Hotels & Resorts announced it would repurchase an additional $800 million in shares.
September 2024 — IHG subsequently repurchased 15,000 of its shares on the London Stock Exchange priced between £78.34 ($103.29) per share and £78.88 per share for an approximate total value of £1.18 million, which it said it plans to cancel.
Following the transaction, IHG now has approximately 159.5 million ordinary shares in issue, excluding approximately seven million held in treasury.
October 2024 — In its third-quarter 2024 earnings report, IHG said it had already acquired and cancelled $614 million of its shares, or 76.75% of its previously announced $800-million share-buyback program. It said the latest numbers reduce its “share count by 3.7%” and that it was “on track to return over $1 billion to shareholders in 2024 through dividend payments and share buybacks.”
During IHG’s third-quarter earnings results’ presentation, CEO Elie Maalouf said the firm is “on track to return over $1 billion to shareholders in 2024 through dividend payments and share buybacks.”
November 2024 — IHG bought a further 35,000 of its own shares at an average price of £98.57. Following this transaction, it has approximately 158.5 million ordinary shares in issue, excluding approximately 6.9 million held in treasury.
Accor
April 2024 — Paris-based Accor completed a €400 million ($417 million) share buyback program that it announced in February.
The company said €275 million was “executed through a share purchase agreement signed with Jinjiang International on March 11 … 7 million shares at a price per Accor share of €39.22. The remaining amount of the share buyback program, launched on March 20, 2024, for €125 million, has been completed on April 4, 2024.”
Accor also said the shares would be cancelled.
May 2024 — Accor embarked on a new share buyback program, saying a €1.76 billion program would start on May 31 and run for 18 months. It said in a note to investors that its “share capital amounted to (approximately) €727 million, divided into 242,366,124 shares of a nominal value of €3.
Whitbread PLC
October 2024 — Dunstable, England-based Whitbread PLC — the owner of Premier Inn, the largest brand in the U.K. by hotel count — embarked on a £100 million share buyback scheme, with the maximum number of shares it said it would repurchase being approximately 16.5 million. At the time, executives announced the scheme would run until April 28, 2025.
Whitbread provided one example of how share buybacks add value to remaining shares and company-wide performance metrics.
“With a reduction in the number of weighted average shares following share buybacks during the year, adjusted basic earnings per share increased by 27% to £2.07 and statutory basic earnings per share increased by 16% to £1.61,” CEO Dominic Paul said.
November 2024 — Whitbread published a release on the London Stock Exchange stating that since its October announcement, it had already successfully repurchased approximately 3.23 million shares at a cost of approximately £110.5 million.
At the time, the company had returned £600 million to shareholders “over the past year through two £300 million share buy-backs, [and] the board … plans for a further £150 million in share buybacks, to be completed during the first half of full year 2025.”
Dalata Hotel Group
September 2024 — In its half-year 2024 earnings report, Dublin-based Dalata Hotel Group announced a €30 million share buyback program.
November 2024 — Dalata repurchased 202,000 shares in two stages on the Euronext Dublin stock exchange as part of its previously announced buyback program. The company said, “the shares were bought at prices ranging from €4.51 to €4.62 and will be cancelled, leaving the company with 215.1 [million] shares in circulation.”
PPHE Hotel Group
Oct. 2024—Amsterdam-based PPHE, which, as well as owning and managing in-house brands, has an exclusive master franchise for Radisson Hotel Group’s Park Plaza brand in the EMEA region, said it completed a £4 million ($5.1 million) share buyback program that was announced on July 11.
It said across all 2024 it repurchased 616,966 shares at average price of £12.74 per share for a total of £7.86 million ($10 million), which it added was “more than (a) 50% discount to the June 30 … net reinstatement value of £26.24.”
Scandic Hotels Group AB
December 2024 — The Stockholm-based hotel firm launched a share buyback program to repurchase approximately 300 million Swedish krona ($27.3 million) that it said it would target a completion date of May 2025.
In a note to investors, Scandic executives said, “the purpose of the buybacks is to adjust Scandic’s capital structure and, accordingly, the board of directors intends to propose to the 2025 Annual General Meeting that the repurchased shares are cancelled.”