Analyst Note| Dan Wasiolek |
We do not plan to materially change our $67 fair value estimate for narrow-moat InterContinental, after the company reported first-quarter sales and unit growth that tracks toward our full-year estimates. Revenue per available room, or revPAR, reached 82% of 2019 levels in the quarter, about equal to 83% last quarter. Encouragingly, demand was led by room rates that are now back to prepandemic levels, indicating the brand has pricing power, and the month of March saw revPAR reach 88% of 2019 levels. Looking forward, InterContinental provided qualitative commentary that the summer outlook for leisure remains strong, with business and group activity returning at rates already around 2019 marks. We expect to maintain our 2022 revPAR estimate of 89% of 2019's level, which implies around 91% recovery on average during the last eight months of the year.