SocGen downgrades Whitbread as it highlights competition from Airbnb

Societe Generale downgraded Costa and Premier Inn owner Whitbread to ‘hold’ from ‘buy’ and cut its price target to 5,220p from 5,343p as it took a look at the impact of Airbnb on the company’s markets.

The bank pointed out that right now, the UK and London are only Airbnb’s third-largest market, with an offer of around 80,000 accommodations. It said that according to management, for the time being, Premier Inn has not felt any impact from Airbnb, even on weekends in London.

However, SocGen reckons Premier Inn is the type of hotel that is indeed exposed to this new form of competition, with all its hotels in the economy segment and 60% of customers travelling for leisure.

Moreover, it highlighted the fact the UK has just eased regulations on letting part or all of a private home. It is no longer necessary to obtain permission as long as the rental period is less than 90 days.

“These factors are, nevertheless offset by Premier Inn’s very strong reputation and visibility, particularly on the internet (85% of the group’s bookings take place directly on its website) and by momentum on the UK market.”

In addition, a slowdown in the hotel sector would not have any impact on the robust growth of the Costa division in the UK market, SocGen said.

It forecasts a 7% drop in revenue per available room Premier Inn in five years and has cut its EBIT estimates as a result.

At 1342 GMT, Whitbread shares were down 1.4% at 4,767p.