Proactive Investors - Hotel and tour operators are expected to strengthen this year as demand increases despite significant headwinds led by peak inflation, UBS is predicting.
Hotelier Whitbread PLC (LON:WTB) should expect “continued market share gains and outperformance of the midscale/economy segment where it has 100% exposure,” the Swiss bank stated.
A trading update on 12 January is expected to highlight how current pricing levels are counteracting cost setbacks, the bank added.
“We expect the company will be on track to deliver on its room target (3.5-4.5k),” analysts said, predicting total sales to be up 22%.
Whitbread, InterContinental Hotels Group PLC and Jet2 PLC were given a ‘buy’ rating from UBS,
IHG (LON:IHG) is predicted to see business travel recover with room sale volume likely to increase should China relax its Covid rules, with underlying profits for the Holiday Inn owner forecast to grow by 47% to US$928mln compared to 2021s US$ 632mln, the bank’s analysis showed.
“We continue to see ramp up of the pipeline and system. Based on recent data don’t expect commentary of a demand cliff,” stated the investment bank about IHG.
Jet2, the low-cost leisure airline, remain heavily discounted offering a 51% upside as UBS target a 1,420p share price (942p current share price) bolstered by a “growing leisure travel market with likely lower levels of competition and improved profitability”.
Not only does the airline and tour company boasts a high level of liquidity and a positive balance sheet, analysts expect sales to increase 300% year-on-year to £4.8bln for 2022.
UBS has set a share price target of 3,505p for Whitbread, a 5,815p forecast for IHG, the shares are currently trading at 2,755p and 4,953 respectively.
All three stocks experienced losses during 2022, with shares down around 13% for Whitbread and Jet2 whilst IHG dropped 2%.