AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights:
- Upbeat on Hotels: JP Morgan upgrades Accor and maintains an 'overweight' stance on Whitbread due to strong travel demand and American tourism to Europe.
- Favorable Gaming Sector: Flutter Entertainment is identified as a top choice due to strong fundamentals and favorable comparatives in the first half of 2025.
- Selective Catering and Pubs Focus: Elior is upgraded as a recovery play, and Marston's remains the top pick in UK pubs for its value-driven strategy and de-leveraging efforts.
JP Morgan has adopted a positive stance on European leisure stocks for 2025, focusing on the hotel and gaming sectors, with upgrades and reaffirmations reflecting strategic opportunities in travel, tourism, and hospitality.
Hotels: A Boost from Travel Demand and Currency Tailwinds
JP Morgan turned more optimistic on the hotel sector, citing resilient travel demand as a key driver. The bank expects Europe to benefit from a surge in American tourism, fueled by a strong US dollar and the pro-tourism policies anticipated under Donald Trump’s administration.
As part of this revised outlook, France’s Accor has been upgraded to ‘overweight,’ while Whitbread, the owner of Premier Inn, retains its ‘overweight’ rating. Whitbread’s status is attributed to its framework of enhanced shareholder returns and share buybacks. Meanwhile, InterContinental Hotels Group (IHG) is rated ‘underweight’ due to ambitious guidance and high valuation expectations.
Gaming: Flutter Entertainment Leads the Way
In the gaming sector, JP Morgan continues to favor stocks with strong fundamentals and momentum. Flutter Entertainment is highlighted as the top choice, with an ‘overweight’ rating, given its appealing business fundamentals and relatively easy comparatives for the first half of 2025. This sub-sector is deemed one of the most attractive due to its growth potential and consumer engagement.
Catering: Strategic Selectivity in Recovery Plays
The catering sector sees a more selective approach from JP Morgan following a solid performance in 2024. Elior is upgraded to ‘overweight’ as an attractive recovery play, reflecting its potential to capitalize on a stronger operational framework. Compass Group remains positively viewed but has been removed from the analyst focus list after a strong rally, while Sodexo is rated as ‘neutral’ for its moderate growth outlook.
UK Pubs: Marston’s Retains Top Position
In the UK pubs sector, Marston’s remains JP Morgan’s preferred choice. Its value-driven, suburban-focused business model, along with self-help initiatives and ongoing debt reduction, makes it a standout pick. The FTSE 250 operator’s exposure to affordable dining and wet-led venues further aligns with consumer trends, solidifying its 'overweight' rating.
Conclusion
JP Morgan’s updated outlook underscores its confidence in the European leisure sector, driven by strong travel demand, favorable market fundamentals, and strategic recovery opportunities in gaming, catering, and hospitality. By focusing on quality and value, the firm identifies clear growth opportunities heading into 2025.
