The Baird/STR Hotel Stock Index dipped 0.2% in March to a level of 5,131. Year to date through the first three months of 2021, the stock index was up 12.2%.
Hotel stocks were relatively flat in March but underperformed their benchmarks as investors rotated into more defensive and value-oriented sectors, said Michael Bellisario, senior hotel research analyst and director at Baird. The pent-up demand expectation is becoming a reality, and broader travel trends continue to improve as vaccination rates improve; with leisure strength well understood at this point, we expect the focus to begin shifting to the business traveler and what the demand environment might look like later this year.
March produced weekly occupancy levels that were the best in the U.S. in a year, supported by healthy leisure and spring break demand, said Amanda Hite, STR president. U.S. room demand during Q1 actually trended slightly ahead of our forecast, reflecting the acceleration in vaccine distribution and travel. TSA checkpoints have now registered more than 1 million flyers since March 11, which combined with slowly rising Wednesday occupancy levels, can be seen as an indicator that corporate transient demand is also returning. Our forecast still calls for a return of group travelers in the later part of the year.
In March, the Baird/STR Hotel Stock Index fell behind both the S&P 500 (+4.2%) and the MSCI US REIT Index (+3.9%).
The Hotel Brand sub-index decreased 0.3% from February to 8,811, while the Hotel REIT sub-index came in flat at 1,304.
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.