The InterGroup Corporation (INTG): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a clear, precise breakdown of The InterGroup Corporation's (INTG) market structure, so let's map out the five forces using their latest FY2025 financial data. Honestly, the picture is mixed: while they face high competitive rivalry in hospitality against major chains and deal with high supplier power from the Hilton brand licensor, the sheer capital needed to replicate their assets-like the 544-room San Francisco hotel-keeps new entrants at bay. With consolidated revenue at $64.38 million and a liquidity position of $15,195,000 at June 30, 2025, understanding where customer power is high (corporate bookings) versus where it's low is defintely key to valuing this unique real estate and hospitality mix. Dive in below to see the force-by-force analysis that shapes their near-term strategy.

The InterGroup Corporation (INTG) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing the supplier landscape for The InterGroup Corporation (INTG) as of late 2025, and it's clear that power varies significantly depending on what you are buying. For a diversified operator like The InterGroup Corporation, which has both real estate and hospitality assets, the supplier power dynamic is fragmented.

The bargaining power of suppliers for general operational inputs is low. This is largely due to the diverse nature of the inputs required across the company's segments. For the hotel segment specifically, the operating expenses for the full Fiscal Year 2025 totaled $37,631,000. This large, varied expense base means no single supplier of general goods-like linens, cleaning chemicals, or standard maintenance parts-holds significant leverage over The InterGroup Corporation.

Here is a quick look at some key financial figures related to the hotel segment, which helps illustrate the scale of purchasing:

When we look at specialized labor, particularly in the San Francisco hotel market where the Hilton San Francisco Financial District operates, the power shifts to moderate. While The InterGroup Corporation is focused on expense control, the market for skilled hospitality staff-engineers, specialized sales managers, and experienced front-office leadership-remains tight following the post-pandemic recovery. For context on rising costs in the sector, F&B department labor expenses in the broader industry rose by 4.5% in 2024.

The most potent supplier force The InterGroup Corporation faces comes from brand dependence. For the Hilton San Francisco Financial District, the bargaining power of the Hilton brand/franchise licensor is high. This dependence is structural; the brand name is critical to achieving the reported ADR of $218 and the Q1 FY2026 occupancy of 95%. Franchise-related fees, which are tied to revenue, grew by 3.9% in 2024 for the general hotel industry, illustrating the licensor's ability to extract value based on The InterGroup Corporation's top-line performance.

Conversely, the bargaining power of capital providers has been significantly reduced. This is a direct result of the successful refinancing of the subsidiary, Portsmouth Square, Inc., which owns the hotel asset. This refinancing was completed on March 28, 2025.

The new capital structure provides The InterGroup Corporation with more favorable terms and reduced immediate pressure:

• Mortgage Loan principal: $67,000,000 at floating SOFR plus 4.80%.
• Mezzanine Loan principal: $36,300,000 at a fixed rate of 7.25%.
• Initial maturity is two years, with three successive one-year extension options available.
• The refinancing successfully alleviated the going-concern uncertainty at the subsidiary as of June 30, 2025.

The successful debt restructuring, which management noted was key to stability, means lenders have less leverage over The InterGroup Corporation's day-to-day operations now than they did before March 2025. Finance: draft 13-week cash view by Friday.

The InterGroup Corporation (INTG) - Porter's Five Forces: Bargaining power of customers

You're analyzing The InterGroup Corporation (INTG) customer power, and honestly, it's a mixed bag across its different business lines. The power customers hold really depends on which segment you are looking at-hotel, real estate leasing, or investment transactions. We need to look at the hard numbers from the latest reporting periods to map this out clearly.

For the hotel operations, which saw segment income reach $8,732,000 in Fiscal Year 2025, customer power varies significantly by booking type. Corporate and group bookings definitely hold more sway. These large contracts often demand volume discounts to secure the business, which inherently shifts some pricing power away from The InterGroup Corporation. While we don't have the exact group revenue percentage for INTG, the nature of corporate contracts suggests this power dynamic is in play.

For the everyday individual hotel guest, the power is significantly curtailed by high demand. The reported occupancy rate for Fiscal Year 2025 was a very strong 92%. That strength carried into the first quarter of Fiscal Year 2026, where consolidated occupancy hit 95%. When rooms are nearly full, the ability of an individual guest to negotiate rates down is minimal. The Average Daily Rate (ADR) for FY2025 was $218, and it held at $218 in Q1 FY2026, suggesting pricing stability despite the high occupancy.

Here is a quick look at the key operational metrics that inform this assessment:

Turning to the Real Estate Operations segment, which generated segment income of $8,465,000 in FY2025, the bargaining power of tenants is assessed as moderate. The InterGroup Corporation owns and operates its real estate, which includes 16 apartment complexes, concentrated in competitive multi-family markets like Texas and Southern California. In these markets, tenants have options, but The InterGroup Corporation's focus on property operations and capital expenditures (capex) suggests they are actively managing asset quality to maintain rental rates.

The real estate portfolio composition is a key factor here:

• Apartment Complexes: 16
• Single Family Houses: 2
• Commercial Buildings: 1
• Unimproved Parcels: 1

Finally, consider the Investment Transactions segment. This segment is different because The InterGroup Corporation holds marketable securities rather than selling a core, operational product to a traditional customer base. For FY2025, this segment recorded a loss of $(2,502,000). In Q1 FY2026, it registered a modest net gain of $136,000. Because the 'customer' here is the market itself, or the counterparty in a security transaction, the traditional concept of customer bargaining power is low; the risk is market volatility, not customer negotiation power over a service price.

The InterGroup Corporation (INTG) - Porter's Five Forces: Competitive rivalry

You're looking at The InterGroup Corporation (INTG) and trying to size up the fight for market share, which is exactly what this force is all about. Honestly, in the hotel space, the rivalry is fierce. The InterGroup Corporation (INTG) is going head-to-head with behemoths like Marriott and Hyatt, which naturally puts pricing and service quality under constant pressure.

For the Real Estate Operations segment, the competition is just as sharp, though perhaps more localized. The InterGroup Corporation (INTG) manages 16 apartment complexes, and these properties are concentrated in specific US markets, meaning local operators feel the heat directly. This concentration means that in places like Texas and Southern California, where their properties are focused, any move by a competitor on rent or amenities is felt immediately by The InterGroup Corporation (INTG).

Still, the rivalry isn't uniformly high across the board. The fixed, unique nature of the 544-room Hilton San Francisco Financial District asset acts as a significant mitigating factor in the hospitality segment. That specific, irreplaceable location in the Financial District gives The InterGroup Corporation (INTG) a certain floor in terms of demand, even when the broader San Francisco market is choppy. This asset's stability helps offset some of the day-to-day competitive noise.

Here's a quick look at how The InterGroup Corporation (INTG)'s scale stacks up against the giants it competes with. The consolidated revenue for the fiscal year ended June 30, 2025, was $64.38 million. That number is definitely small when you stack it against the revenues of the major national and global hotel chains you're thinking of.

We can map out some of the key operational metrics from the most recent full fiscal year to give you a clearer picture of performance within that competitive hotel environment:

The mitigation from the San Francisco asset is also visible in the debt structure, showing strategic moves to lock in stability against future rate volatility. For instance, the refinancing secured a $67 million mortgage loan with an interest rate cap limiting SOFR exposure to a maximum of 4.50%. Plus, the mezzanine loan was modified to a principal amount of $36.3 million at a fixed interest rate of 7.25% per annum. These fixed/capped costs help manage the financial pressure from rivalry.

When you look at the more recent Q1 FY2026 data, you see the rivalry hasn't let up, even if the asset is unique. The occupancy rate ticked up to 95% for the quarter ending September 30, 2025. That suggests strong, current demand, but remember, competitors are fighting for every available room night too.

Here are the key competitive elements driving the rivalry force:

• Direct competition with major chains in Hotel Operations.
• Intense local competition for 16 apartment complexes.
• Asset concentration in Texas and Southern California markets.
• Hotel ADR held steady at $218 in FY2025.
• Q1 FY2026 occupancy reached 95%.

Finance: draft 13-week cash view by Friday

The InterGroup Corporation (INTG) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for The InterGroup Corporation (INTG) varies significantly across its operating segments, reflecting the diverse nature of its business spanning hospitality, real estate, and investment activities.

Hospitality Segment Substitution

The threat of substitution in the hospitality sector, primarily driven by The InterGroup Corporation's majority interest in the Hilton San Francisco Financial District, is assessed as high. This pressure comes from both short-term rental platforms and the growing boutique hotel segment.

• The global short-term rental (STR) market revenue is projected to reach $21.08 billion in 2025.
• The global boutique hotel market is estimated to be valued at USD 10.7 billion in 2025.
• Competition is intense, with 76% of STR operators reporting increased competition in 2024.
• Despite strong operational performance for INTG's hotel asset, with FY2025 occupancy at 92% and ADR at $218, the broader market substitution risk remains elevated due to traveler preference shifts toward unique, personalized stays.

Investment Transactions Segment Substitution

For the Investment Transactions segment, the threat of substitution is considered moderate. This segment competes with a wide array of alternative investment vehicles, and its performance reflects this competitive pressure.

The segment recorded a segment loss of $(2,502,000) for the fiscal year ended June 30, 2025. This loss, while an improvement from the prior year's loss of $(1,633,000), still indicates that capital deployment in this segment faces significant external competition, leading to negative financial outcomes.

Real Estate Segment Substitution

The threat of substitution within the broader real estate operations is rated as moderate. For its residential holdings, tenants face the fundamental choice between renting and home ownership, a decision heavily influenced by local affordability metrics.

The InterGroup Corporation's real estate portfolio includes 16 apartment complexes, one commercial real estate property, and three single-family houses. The decision to rent versus buy is complex; for instance, renting is the better financial decision in 80% of counties in the West, though owning is cheaper in close to 60% of 341 U.S. counties overall as of 2025. The average U.S. rent in April 2025 was reported at $2,024.

Commercial Real Estate/Parking Substitution

The threat of substitution is considered low for specific, highly localized assets, such as the commercial real estate holdings and the five-level parking garage associated with the hotel asset in a dense urban area.

The unique nature and location of these assets-specifically the five-level underground parking garage attached to the Hilton San Francisco Financial District-create high barriers to substitution. The scarcity of comparable, integrated parking and commercial space in a dense urban core limits the viable alternatives for customers needing those specific services.

The InterGroup Corporation (INTG) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for The InterGroup Corporation (INTG) is generally low to moderate, primarily due to the substantial financial and regulatory barriers inherent in its core real estate and hospitality segments. New competitors face steep initial costs and complex approval processes, especially in the San Francisco market.

The barrier to entry is low due to extremely high capital requirements for acquiring and renovating assets like the 544-room San Francisco hotel. Consider the scale: the Hilton San Francisco Financial District asset, which underwent a comprehensive renovation completed in June 2024, required significant capital deployment. Its prior mortgage stood at $97 million, and the April 2025 refinancing involved securing a $67 million mortgage loan agreement alongside a modified mezzanine loan of $36.3 million. This level of debt and capital expenditure for a single hospitality asset immediately screens out most smaller players. Furthermore, California construction costs can run more than twice as much per square foot as in Texas, reinforcing the capital intensity.

We can summarize the capital scale involved in INTG's primary asset class:

Capital barriers for new multi-family real estate development in INTG's concentrated markets-Texas and Southern California-are moderate but rising. In Texas markets, for instance, conservative bank underwriting in 2025 means a lender might only cover 55-60% of the total project cost for a value-add deal, leaving a significant equity gap for a new entrant to fill, compared to the 70-75% coverage seen previously. In Southern California, while occupancy remains high at 96-97%, new entrants face rising property insurance costs and maintenance expenses due to inflation and labor shortages.

Regulatory and zoning hurdles for new construction in the San Francisco market remain high, though the landscape is shifting. The city is under state pressure to build approximately 82,000 new homes by 2031. Mayor Daniel Lurie's proposed 'Family Zoning' plan aims to allow up to 36,000 homes on the north and west sides, but an analysis projects the actual production could be half that due to high construction costs. The city is actively pushing to eliminate hurdles, which suggests the existing regulatory environment is restrictive. For example, reforms to the California Environmental Quality Act (CEQA), enacted in June 2025, are estimated to reduce the entitlement timeline by 12 to 18 months for eligible infill projects by removing environmental review costs that could run into the millions of dollars.

New entrants must also overcome the existing operational footprint of The InterGroup Corporation:

• Owns 16 apartment complexes.
• Owns one commercial real estate property.
• Owns three single-family houses as strategic investments.
• Concentrates real estate holdings in Texas and Southern California.

Finally, The InterGroup Corporation's own financial position offers a slight defense against market volatility. The company reported liquidity of $15,195,000 in cash and equivalents as of June 30, 2025. More recently, as of September 30, 2025, total cash, cash equivalents, and restricted cash stood at $13,391,000, which includes $5,054,000 in cash and equivalents. This existing capital base provides a cushion that a brand-new entrant, likely needing to raise 100% of its initial capital, would not possess.