UBS Best Picks: These Leisure Stocks Could Surge Despite Global Chaos By Investing.com

Investing.com -- The Leisure sector, spanning hotels and gaming, remains relatively resilient despite heightened geopolitical uncertainty linked to the Middle East conflict.

While elevated oil prices and macro volatility pose risks to global travel demand and consumer spending, structural factors such as diversified geographic exposure, asset-light models, and ongoing digital/AI integration provide important buffers.

Within this context, UBS highlights selective opportunities where company-specific strengths can outweigh broader cyclical pressures.

Accor (Hotels)

Accor stands out as a defensive play within the hotel segment, supported by its asset-light business model and global diversification. Direct exposure to the Middle East is relatively limited (around 8-10%), reducing vulnerability to regional disruption. Importantly, historical trends suggest that geopolitical shocks tend to have only temporary effects on hotel demand, unless accompanied by a severe global downturn.

Operationally, Accor is positioned to benefit from margin expansion through franchising and efficiency programs, while steady unit growth (~4%) supports medium-term revenue visibility. Additionally, strategic optionality, such as potential asset monetization and capital returns, adds further upside.

The company is also integrating AI into pricing and customer experience, which could enhance revenue optimization over time.

Lottomatica Group (Gaming)

Lottomatica represents a high-conviction pick in gaming, driven by its strong balance sheet, disciplined leverage, and structural online growth. While gaming is inherently discretionary and sensitive to consumer income pressures, Lottomatica's exposure to fast-growing online segments provides a key offset to macro headwinds.

The company is expected to generate robust cash flows, enabling meaningful shareholder returns while still deleveraging. Its positioning in less mature markets further supports sustained EBITDA growth, even in a softer economic backdrop. Compared to peers, Lottomatica trades at an attractive valuation, with a compelling free cash flow yield, suggesting potential for re-rating.

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