Could a recovery be due at Vodafone?

Vodafone shares have disappointed for some time since the heyday of its acquisition of Mannesmann in the early noughties. However, with interest taken in the mobile phone giant lately by activist investors, things could be looking up for shareholders.

First, Carl Icahn’s Swedish based investment group Cevian took a stake in the company earlier this year. It is pushing for a shakeup of the business and for Vodafone to lead consolidation in the European telecoms sector.

More recently, Emirates Telecom, based in the United Arab Emirates, has purchased a majority shareholding in the company worth 10%. The company says it is supportive of Vodafone’s current strategy.

Vodafone’s chief executive Nick Read says he is busy looking for takeover targets in the European telecoms markets. The company is currently in discussions with CK Hutchinson, Hong Kong-based owner of Three, about the possibility of combining its respective UK businesses.

However, talks with Masmovil in Spain earlier this year came to nothing, while Vodafone turned down a bid from Iliad for its Italian business.

There is always the risk that an ill-judged acquisition spree doesn’t pay off. And the German business is underperforming. Read recently warned investors at the recent results that Vodafone will also be hit by inflationary pressures. Full-year figures are likely to be lower than expected.

However, the shares are worth buying at 130p for the long-term on activist investor interest.

Intercontinental Hotels Group seeing increased pricing power

With the hotel industry emerging from the Covid-19 pandemic, shares in Intercontinental Hotels Group could be worth looking at. Despite the difficulties of Covid-19, the hotel industry has been more insulated from the ravages of the pandemic compared to the airline and cruise line industries.

This is because customers have continued to make staycation bookings. Plus, while the sector faces inflationary cost pressures, it does not have to contend with the huge hikes in jet fuel the airline industry is facing.

Indeed, recent first-quarter figures from IHG were encouraging with RevPAR up 61% vs 2021 and attaining 82% of 2019’s level. Its hotels in the Americas and Europe and the Middle East also saw improved trading after a tough January.

“We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world,” said IHG CEO Keith Barr at the recent first-quarter results earlier this month.

“The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy. We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.”

Barr says the company’s hotels are seeing increased pricing power, with leisure rates in its US hotels up by more than 10% on levels seen in 2019. However, its hotels in China are being hit by Covid lockdowns and restrictions currently in place.

At 4,735p, shares in the hotelier are down 12% on their highs of 5358p seen in November last year and have oscillated this year. However, with trading conditions at the group improving, the shares could be worth buying.

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