There are attractive opportunities in the European hotel sector, but they are ‘not without risk’, opines Deutsche Bank in its latest investment circular, which carried an upgrade for InterContinental Hotels Group PLC (LON:IHG).
It has moved to ‘buy’ from ‘hold’ on the stock in the Footsie-listed group while raising its price target to £56 a share from £51.75.
The price would have to rise 19% to hit the new Deutsche valuation.
In the note, the German bank said it expects the industry to have returned to pre-pandemic levels by 2023 – representing 18 months in the full grip of the crisis and two-and-a-half years of recovery.
It said in taking a more positive stance on the industry it was looking at the rising vaccination rates across key markets such as the US, UK and parts of Europe, where inoculation programmes are starting to break the link between infections, hospitalisations and deaths.
“This should eventually lead to a more benign environment, as governments become more supportive of travel, but the UK is probably a testing ground for this theory,” Deutsche said.
“Success here in curtailing hospitalisations [and] death rates could encourage others to follow suit, while failure could plunge the world into more uncertainty ahead.
“We already see some indication of governments looking to move beyond the Delta strain, with Germany moving the UK, Portugal and India, amongst others, from its highest risk category to second highest, despite the countries being regions with a significant spread of the Delta variant.”