IHG Shares Cut to Sell by Cautious Redburn – Is Travel Demand Easing?

InterContinental Hotels Group (LON: IHG) shares gained Tuesday, despite the fact the stock was downgraded by analysts at Redburn.

Analyst Alex Brignall cut the hotel company to Sell from Neutral, but IHG closed the session at +1.82%, adding to its year-to-date gains.

The analyst said in a note to clients that he is more cautious about hotels, stating that although travel demand has stayed “belligerently strong,” the sector’s results in 2022 highlighted disappointing net unit growth guidance.

In addition, the Redburn analyst said less-accretive acquisitions are substituting organic growth, while a reduction in lending from US regional banks, due to the recent market turmoil triggered by the collapse of SVB, poses a significant risk to hotel projects.

As a result, Redburn sees less valuation support for IHG.

Our View: We have, and continue to be optimistic about the travel sector this year based on consumer demand trends, but we also noticed a slight slowdown in talk about airlines in recent weeks, suggesting a possible easing of travel demand.

The charts above show that mentions of easyJet and Wizz Air have dipped in the last couple of weeks, while our tracking of Jet2 has also revealed a slowdown.

Even so, website traffic for airlines and hotels has remained resilient so far, according to Semrush. Nevertheless, we will be keeping a watch for a potential slowdown in the next month or so.

By Sam Boughedda

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