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Intercontinental Hotels upgraded to ‘buy’ as Deutsche Bank predicts fast recovery for hotels once pandemic ‘stabilises’

The bank said hotel stocks are “traditionally hit hard” in similar situations, but would rise quickly when revenue per available room “shows the first signs of recovery”

Intercontinental Hotels - Intercontinental Hotels upgraded to ‘buy’ as Deutsche Bank predicts fast recovery for hotels once pandemic ‘stabilises’

Intercontinental Hotels Group PLC (LON:IHG) has been upgraded to ‘buy’ from ‘hold’ by analysts at Deutsche Bank (DB), who said they expected the hotel sector to “recover as soon as the [coronavirus] situation stabilises”.

In a note on Thursday, which also saw the bank cut its target price for the Holiday Inn owner to 4,600p from 4,860p, the bank said hotel stocks are “traditionally hit hard” in situations such as the current pandemic, but would rise quickly when revenue per available room (RevPAR) “shows the first signs of recovery”.

READ: Intercontinental Hotels upped to ‘outperform’ as RBC highlights ‘low-risk business model’ amid pandemic

“A couple of months ago, China was almost the only country impacted by [coronavirus]. Since then, however, the disease has spread very rapidly to a large majority of the rest of the world… The correction [in stock markets] has been as dramatic as the advance of the virus around the world”, the bank said.

Deutsche Bank’s assessment follows a positive appraisal for IHG from RBC on Wednesday, with the Canadian bank saying the group had a “low-risk business model” and upgraded the stock to ‘outperform’ from ‘sector perform’.

Meanwhile, analysts also cut their price target for Whitbread PLC (LON:WTB), owner of the Premier Inn hotel chain, and retained their ‘hold’ rating on the stock.

Shares in IHG were 2.6% lower at 3,070p in late-morning trading, while Whitbread inched up 0.5% to 2,742p.

Quick facts: Intercontinental Hotels

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Price: 4722 GBX

Market Cap: £8.65 billion

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