We initiate on the European Hotel sector with a negative
stance. The sector has outperformed the E300 by 20% over
the past 3 months on, in our view premature expectations of
earnings recovery.
 We expect RevPAR to remain negative until Q3‟10 as
underlying demand, specifically for business travel, remains
weak.
 Based on previous cycles, we expect the sector to
underperform over the next 3-6 months driven by weak
RevPAR data.
 Whitbread [BUY - TP 1400p] is our top pick in the sector
because of its resilient market positioning, dominant market
share and solid long term growth prospects
 We initiate on IHG with a SELL recommendation [TP 650p] as
we forecast consecutive years of earnings declines in 2009
and 2010 driven by weak RevPAR and dramatically slowing
room growth
 We are cautious on the underlying trends at Accor [NEUTRAL;
TP