Intercontinental Hotels Group PLC (LSE:IHG) faces a more uncertain outlook despite solid trading in its core US market, as geopolitical tensions begin to weigh on global travel demand.
UBS has cut its forecasts for the FTSE 100 hotel operator as although the first quarter saw a stronger-than-expected performance in the US, with revenue per available room growth of around 3%, this has been offset by weaker trends elsewhere.
The Swiss bank cut its overall group revPAR forecast to around 2% from 3%, reflecting a slower recovery in China and softer expectations for Europe, the Middle East, Asia and Africa as the Iran war weighs on demand and increases uncertainty.
UBS warned that a prolonged Gulf conflict could have wider economic consequences, including higher inflation and reduced discretionary spending, which would impact travel budgets.
There is also a risk that fuel shortages could disrupt airline connectivity, further affecting hotel demand.
Despite these pressures, IHG’s geographic exposure provides some resilience, with the US accounting for more than half of revenues and continuing to outperform.
UBS maintained a 'neutral' rating on the shares and trimmed its price target slightly to $150, with earnings forecasts for 2026 and 2027 reduced by around 1%.