Investing.com - Faster growth in the American and Chinese hospitality sector this year should help offset a slowdown in Europe after a strong 2024 in the region, according to analysts at Bernstein.
Boosted in part by the Olympic Games in Paris, the Euro 2024 soccer tournament in Germany and a raft of trade shows, European hotels delivered strong underlying demand last year, with revenue per available room -- a key metric of demand -- rising by around 6% annually, Bernstein said.
"In 2024, Europe was the place to be," the Bernstein analysts led by Sabrina Blanc said in a note to clients on Friday.
Yet Blanc estimated that expansion in revenue per available room at European hotels will cool to 2.7% in 2025, adding that this trend would represent a return to a more typical yearly performance for the continent.
However, the easing in Europe is set to be countered by solid growth in other parts of the world, Blanc said.
"2025 should be a year of normalization; that normalization will mean acceleration in US [and] China and acceleration elsewhere," Blanc said. Revenue per available room in the US in particular will come in at 3.1%, Blanc projected, noting that this would be faster than pre-pandemic levels.
As a result, the analysts outlined changes to their outlook for two hospitality firms.
Holiday Inn-owner InterContinental Hotels Group's (LON:IHG) rating at Bernstein was upgraded to "market-perform" from "underperform", with the analysts citing a "bullish" forecast for revenue per available room in both the US and China that will make lower-than-anticipated earnings "less likely."
Meanwhile, the analysts lowered their rating of French food services company Sodexo (EPA:EXHO) to "market-perform" from "outperform", warning that they do not expect to see "any strong catalysts" for the stock in the short term and "more downside risk than upside risk of a guidance downgrade."