The Leisure sector - encompassing hotels and gaming - continues to show a degree of resilience despite elevated geopolitical uncertainty tied to the Middle East conflict. UBS underlines that while rising oil prices and broader macro volatility can dent travel volumes and discretionary spending, company-specific attributes may blunt those effects.
UBS points to several structural features that provide a buffer against near-term shocks: diversified geographic exposure, asset-light operating models and sustained investment in digital tools and artificial intelligence. These elements, the bank argues, can help individual companies manage through cyclical pressure.
Accor (Hotels)
Within the hotel universe, Accor is identified as a relatively defensive option. Its predominantly asset-light model and wide geographic spread reduce concentrated risk. UBS notes that Accor’s direct exposure to the Middle East is limited - cited at roughly 8-10% - which should temper the company’s vulnerability to regional disruption.
Historical patterns mentioned by UBS suggest that geopolitical shocks typically exert only short-lived effects on hotel demand, unless they coincide with a major global economic downturn. On the operational front, Accor is positioned to pursue margin expansion via franchising and internal efficiency initiatives, while a steady unit growth rate of about 4% is said to underpin medium-term revenue visibility.
UBS also highlights Accor’s strategic optionality, including the potential for asset monetization and capital returns, as incremental upside. The firm points to the company’s integration of AI into pricing and customer experience as a mechanism that could progressively improve revenue optimization over time.
Lottomatica Group (Gaming)
In gaming, UBS elevates Lottomatica as a high-conviction pick, citing a strong balance sheet, disciplined leverage and structural expansion in online segments. The bank recognizes that gaming is discretionary and sensitive to consumer income, but views Lottomatica’s exposure to fast-growing online channels as a material offset to macro headwinds.
UBS expects Lottomatica to generate robust cash flows that permit both meaningful shareholder returns and ongoing deleveraging. The company’s footprint in less mature markets is highlighted as supportive of sustained EBITDA growth even in a softer economic environment. Relative to peers, Lottomatica is described as trading at an attractive valuation with a compelling free cash flow yield that could prompt a multiple re-rating over time.
UBS’s analysis therefore narrows the focus to company-level strengths within the Leisure sector, arguing that operational models, geographic mix and digital adoption can allow select names to outperform despite broader geopolitical and macro risks.