Barclays downgrades InterContinental Hotels Group to 'underweight'

Analysts at Barclays downgraded their recommendation for shares of InterContinental Hotels Group to 'underweight', telling clients that the then current "peak" price-to-earnings multiple the shares were trading on ignored the downside risks from a potential macroeconomic slowdown.

The current economic expansion was now in its tenth year and business confidence, a key lead indicator, had been slowing and the leisure outfit was operating in a "highly cyclical" industry.

"When RevPAR declines, the falls tend to be significant (-16% 2009) and the de-ratings even more so - even for asset-light hotel groups," they cautioned.

Yes, the company's franchise model meant leverage was lower than in the past, they conceded.

"We still see 36% downside to the current share price in a recession scenario. This compares with 18% upside potential in our upside case. We see risks skewed to the downside and we cut to UW."

They had a target price of 4,400p on the shares.