The Baird/STR Hotel Stock Index remained flat in August at 4,872. Year to date through the first eight months of 2018, the stock index was down 0.3%.
The hotel brands and hotel REITs both underperformed their benchmarks for the third consecutive month in August, said Michael Bellisario, senior hotel research analyst and VP at Baird. While second-quarter earnings reports were generally positive, forward-looking guidance updates did not signal any further growth reacceleration would be forthcoming in the near term, which we believe left some investors disappointed, particularly as 2019 outlooks are coming into focus.
The flat performance for the hotel stock index came after the industry reported the single largest room demand month ever in July, pointing to healthy business from all areas of the economy, said Amanda Hite, STRs president and CEO. As occupancy continues to increase gradually, all eyes are on the potential for accelerated pricing power. This becomes even more important as the rate of inflation grows, wiping out most nominal ADR gains and leaving real rate growth stymied. But overall trends continue to be healthy and our latest forecast calls for prolonged RevPAR growth through 2019.
The Baird/STR Hotel Stock Index lagged behind the performance of the S&P 500 (+3.0%) and the MSCI US REIT Index (+2.8%).
The Hotel Brand sub-index decreased 1.2% from July to 7,054, while the Hotel REIT sub-index jumped 2.0% to 1,808.
The Baird/STR Hotel Stock Index was set to equal 1,000 on 1 January 2000. Last cycle, the Index peaked at 3,178 on 5 July 2007. The Indexs low point occurred on 6 March 2009 when it dropped to 573.
The Hotel Brand sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 3,407 on 5 July 2007. The sub-indexs low point occurred on 6 March 2009 when it dropped to 722.
The Hotel REIT sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 2,555 on 2 February 2007. The sub-indexs low point occurred on 5 March 2009 when it dropped to 298.