Goldman upgrades InterContinental Hotels, downgrades Whitbread

The bank said IHG’s enhanced long-term earnings per share growth algorithm, improved enterprise platform and optionality on ancillary revenue streams merits a narrower valuation discount to key US peers.

"We think the stock’s de-rating over the last six months creates an attractive entry-point into a high quality, asset-light hotel franchise platform offering more than 15% EPS CAGR (2023-28E) a 7% shareholder return per annum and one of the highest returns on invested capital in our leisure coverage (circa 46% in 2025E)," GS said.

"While we still see Whitbread as a business with the appropriate strategy to take advantage of structural opportunities and a strong management team, our profit before tax estimates are circa 2% below consensus in FY25/26 and soft UK industry revenue per available room trends could weigh on the short-term outlook."