Citi has lowered its target price for Intercontinental Hotels Group PLC (LSE:IHG) to $115 while maintaining a 'sell' recommendation, arguing that weak US lodging demand and growing competition from short-term rental platforms will weigh on the company's medium-term growth.
The bank said IHG's full-year 2025 results came in broadly in line with expectations, with growth in credit card and loyalty programme earnings helping to offset headwinds from a soft US hotel market.
Citi forecasts adjusted earnings before interest and tax growing at a compound annual rate of around 8% between 2025 and 2028, below the company's own medium-term target of around 10%.
The bank said the shortfall was driven primarily by its cautious outlook for the United States, where it sees the hotel sector facing pressure from both weak underlying demand and rising competition from short-term rental platforms such as Airbnb.
Citi identified a range of demand headwinds in the US market, spanning one-off factors such as the government shutdown and hurricane activity, cyclical pressures including uneven consumer spending, and more structural issues around market share losses to vacation rental platforms.
The bank said investors should wait for a more attractive entry point before buying the shares.
In late-morning trading, IHG shares were up 2.4% at 135.55p.