Rewrites, adds CEO comment, analyst, shares, peers; paragraphs 4,7,8

By Raechel Thankam Job and Yadarisa Shabong

Feb 18 (Reuters) - Holiday Inn owner IHG IHG.L is returning more than $1.1 billion to shareholders in 2025 and buying European urban hotel brand Ruby for $116 million, it said on Tuesday, after annual room revenue beat expectations.

IHG, which also owns Crowne Plaza and Six Senses hotels, reported growth of 3% in annual room revenue, above market expectations, boosted by a pick-up in demand in the United States and despite weakness in China.

Analysts had expected average revenue per available room (RevPAR), a key industry metric, to grow 2.6% for the year ended December 31, 2024, a company-compiled consensus showed.

CEO Elie Maalouf said he planned to expand the Ruby brand to the United States and Asia. Currently the business operates 20 hotels in European cities.

"We would expect this (Ruby) brand to compete with Hilton’s Motto and CitzenM, both successful brands globally," analysts at Bernstein said in a note.

In the United States, its largest market, IHG reported a RevPAR growth of 1.7% for the year. In China, RevPAR fell 4.8%.

IHG kept its medium-term targets, but projected 2025 adjusted interest expense to range between $190 million and $205 million, above analysts' consensus estimate of $174 million.

Shares in the company, which scaled all-time highs last week, were down 1.2% in early trade, with Jefferies analysts saying the worse-than-expected interest expense forecast could drag profit estimates.

Peers Marriott International MAR.O and Hilton Worldwide HLT.N had forecast a downbeat 2025, hurt by poor performance at hotels in Greater China, while Hyatt Hotels H.N reported a less than stellar fourth quarter last week.

On Tuesday IHG reported annual operating profit in line with market expectations.

It launched a new $900-million share buyback programme and proposed a 10% increase in its annual dividend, taking shareholder returns this year to more than $1.1 billion.

($1=0.9555 euros)

(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman and Clarence Fernandez)

((RaechelThankam.Job@thomsonreuters.com;))