MS chooses European hotel stocks ahead of Q1, names Accor top pick

Scandic Hotels AB

03/04/2024 11:54

** The hotel industry has made a choppy start to 2024,
Morgan Stanley says, seeing a wide dispersion in the upcoming
first quarter results
    ** The brokerage expects first quarter revenue per available
room (RevPAR) ranging from +8% to +2%, reflecting differing
exposures
    ** It points out that European RevPAR in Q1 is much stronger
than in the U.S., while China saw RevPAR growth slow sharply
during Q1, and South East Asia was much stronger
    ** In both the U.S. and UK, lower chainscales have
underperformed as the budget consumer has suffered from higher
inflation, the broker says
    ** Corporate demand continues to make a late recovery, and
U.S. urban markets are much stronger than resorts, it adds
    ** MS downgrades Scandic  SHOTE.ST  to "underweight" from
"equal-weight" as it expects a weak Q1, citing cost pressures,
strikes in Finland, and a 50% year-to-date P/E re-rating
    ** It names Accor  ACCP.PA  ("overweight") top pick, as the
company benefits from both the outperformance of Europe vs U.S.
and premium vs budget  
    ** The broker's other "overweight" stock is Whitbread
 WTB.L  as it expects FY profit before tax to be above
consensus, a reiteration of targets in Germany, and another
share buyback
    ** MS still likes IHG's  IHG.L  ("equal-weight") asset light
model, but cites the soft U.S. and China data and valuation
re-rating 

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))