UBS downgrades Whitbread, hotels "under threat" from Airbnb

UBS has downgraded leisure group Whitbread from 'neutral' to 'sell', saying that the hotel industry is "under threat".

The bank has trimmed its target price for the stock from 4,450p to 4,200p, saying that the current valuation is "full".

The Premier Inn, Beefeater and Costa Coffee owner saw its share price fall 1.4% to 4.268p on Friday morning.

UBS said that increased supply from shared accommodation is likely to affect the hotel industry, "especially those hotels with a low business mix and operate in the economy/budget sectors".

It said that Airbnb, through which people can rent out spare rooms or even entire homes, has a "sweet spot" in the single-room occupancy market.

"While we estimate 55% of Whitbread clients travel for business and the company operates in the UK midscale and economy segment we do not think they will be immune from some of the impact from shared accommodation," the bank said.

It estimates that Airbnb currently has a 3% share of accommodation supply currently in London, an important market for Whitbread.

As for Whitbread's own business, current hotel trading is strong but UBS expects the rate of growth to slow, which could limit share-price upside.