UBS analyst Robin Farley downgraded Choice Hotels to Neutral from Buy with a price target of $124, down from $167. The analyst sees a difficult environment for Choice to grow room rates on top of the near double digit percent increases compared to 2019 that the company has been capturing. Roughly two-thirds of Choice’s business is leisure travel, and leisure demand is likely to return to its “more price elastic nature” in the next year, particularly if the macro environment leads to a mild recession at the lower end of the consumer market, Farley tells investors in a research note. The analyst believes the RevPAR recovery in the U.S. from here forward is more likely to come from business transient and group demand, to which Choice has less exposure.
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