By Raechel Thankam Job and Yadarisa Shabong

(Reuters) -Holiday Inn owner IHG announced a $900 million share buyback plan on Tuesday which fell short of some investors' estimates, sending its stock around 5% lower despite the hotel operator's better than expected annual room revenue.

IHG's plan to return more than $1.1 billion to shareholders in 2025, including the buyback it said would start immediately and a 10% increase in dividend, overshadowed its results and purchase of European urban hotel brand Ruby for $116 million.

Its shares, which had scaled all-time highs last week, were down 5.4% by 1446 GMT on the lower-than-expected buyback as well as concerns about rising expenses, according to analysts.

"On balance, whilst this is a sound print overall, we believe SBB (share buyback) expectations were a touch higher on average, which might not be enough for the shares today in the context of the recent share price performance," JP Morgan analysts said in a note.

Some had expected up to $1 billion in buybacks.

IHG, which also owns Crowne Plaza and Six Senses hotels, reported growth of 3% in annual room revenue, 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. 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%.

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

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

($1=0.9555 euros)

(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman, Clarence Fernandez and Emelia Sithole-Matarise)