IHG.L WACC - Weighted Average Cost of Capital
The WACC of InterContinental Hotels Group PLC (IHG.L) is 7.3%.
| Range | Selected | |
| Cost of equity | 7.2% - 9.0% | 8.1% |
| Tax rate | 26.3% - 28.0% | 27.15% |
| Cost of debt | 4.0% - 5.1% | 4.55% |
| WACC | 6.5% - 8.1% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.54 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.2% | 9.0% |
| Tax rate | 26.3% | 28.0% |
| Debt/Equity ratio | 0.2 | 0.2 |
| Cost of debt | 4.0% | 5.1% |
| After-tax WACC | 6.5% | 8.1% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IHG.L | InterContinental Hotels Group PLC | 0.2 | 0.99 | 0.86 |
| DHG.IR | Dalata Hotel Group PLC | 0.88 | 1.49 | 0.9 |
| MEL.MC | Melia Hotels International SA | 1.66 | 0.87 | 0.39 |
| NHH.MC | NH Hotel Group SA | 0.89 | -0.45 | -0.27 |
| ODHN.SW | Orascom Development Holding AG | 1.48 | -0.36 | -0.17 |
| PNDX B.ST | Pandox AB | 1.24 | 0.49 | 0.26 |
| PPH.L | PPHE Hotel Group Ltd | 1.99 | 0.17 | 0.07 |
| SHOT.ST | Scandic Hotels Group AB | 2.73 | 0.88 | 0.29 |
| VAC.PA | Pierre et Vacances SA | 4.78 | 1.33 | 0.29 |
| WTB.L | Whitbread PLC | 1.01 | 0.62 | 0.35 |
| Low | High | |
| Unlevered beta | 0.28 | 0.32 |
| Relevered beta | 0.31 | 0.37 |
| Adjusted relevered beta | 0.54 | 0.58 |
IHG.L's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for IHG.L:
cost_of_equity (8.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.54) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.