Jefferies downgrades InterContinental Hotels to 'hold'

The bank noted the shares now trade on 9.6x FY22 estimates, which is "a fair multiple given the economic uncertainty".

Still, it said IHG is the best-positioned hotel stock in its coverage due to the company's franchise business model.

"With 95% of profits from fee business and 80% of fee revenue linked to hotel revenues, IHG has the lowest operating leverage," it said.

It highlighted several reasons why the company is well positioned. It said 70% of open rooms are in the mainstream segment, which outperformed upscale/luxury during the financial crisis, while IHG also has high exposure to domestic demand, with 85% of US estate in non-urban markets.

In addition, it said the hotel chain has low exposure to large groups and events.

"That said, we feel that this is now reflected in the share price," Jefferies said, adding that the stock is down only 26% year-to-date versus European peers down between 37% and 50%.

At 1100 BST, the shares were 2% lower at 3,576p.