Hotel Analyst Reports Signs Of Stabilization

In addition, Scholes maintained an "Outperform" rating on InterContinental Hotels Group PLC, which reported its first-quarter results on Tuesday. InterContinental said that its profit dropped 56 percent in the first quarter, but deep cost cuts helped the company beat analysts' expectations.

In a note to investors on Wednesday, Scholes noted that the company continues to be "a major source of free cash flow generation" despite market conditions.

"For the remainder of 2009, we believe InterContinental's primarily midscale portfolio will continue to outperform the upper-upscale segments as business travelers trade down to more lower-priced accommodations," Scholes said. "Additionally, IHG continues to take market share from weaker brands."

In afternoon trading, InterContinental's stock tumbled 79 cents, or 7.6 percent, to $9.55.