Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Intercontinental Hotels has an avid fan in Credit Suisse

IHG has a mixed record with new brand launches, but CS thinks the market opportunity for avid hotels is enormous - if the group gets it right.
Avid Hotels
The first branded avid hotel should be up and running in early 2019

In the wake of Intercontinental Hotels Group PLC's (LON:IHG) launch of its avid hotels mid-scale brand, Credit Suisse has upgraded the hotels operator to 'outperform'.

The Swiss bank think avid “should be the most significant addition to IHG's brand stable in more than 25 years." 

Intercontinental's (IHG) plans for a new mid-scale brand were first trailed in June, and the brand name was officially launched in September, with the group saying “avid hotels is franchise-ready beginning today, officially marking the start of licensing in the US for this much-anticipated new brand”.

IHG expects the first avid hotels locations to begin construction early next year, with the first expected to open in early 2019.

The hotels group said the price point is expected to be around US$10-15 a night lower than the Holiday Inn Express brand.

Credit Suisse (CS) noted that IHG has a mixed record of successful brand launches, though Holiday Inn Express, launched in 1991, has been a true “category killer”.

The market opportunity for avid is worth about US$20bn, with around 14mln potential customers, according to CS.

“Although there could be a concern that IHG is entering into a declining market, we believe this is a sign the market has been under-served,” CS said.

“With the strength of IHG’s system, its brand credential (e.g. Holiday Inn Express) and weak competition, we believe there is significant potential for Avid in this market,” it added.

The pace at which franchisees sign up to run avid hotels will be a share price catalyst, as will a special dividend in February 2018 – if IHG pays one.

CS's rating moved up from 'neutral' to 'outperform' and the price target rose to 5,100p from 4,600p.

IHG's shares currently trade at 4,253p, up 1.9%.

View full IHG profile View Profile

Intercontinental Hotels Timeline

Related Articles

ZoomAway Travel Inc embracing blockchain, which is set to push out middle man in hospitality and act
January 11 2018
The firm plans to begin rolling out cryptocurrency payments into its white label and registration management system (RMS) clients
Festival crowd
August 20 2018
There could be a potential uplift of in both revenue and underlying earnings if the firm manages to capture a slice of the UK's 4mln festival-goers
Oil pollution
July 02 2018
A name change might be in order if PCG pulls the trigger on two investments it is mulling

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use