The Baird/STR Hotel Stock Index increased 4.3% in October, closing the month at 4,505. Year to date through the first 10 months of 2017, the index was up 21.7%.
“Hotel stocks outperformed again in October as investors remain optimistic about the potential for tax reform to lead to improved growth next year,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “Despite continued sluggish RevPAR growth trends and plenty of noise related to the hurricanes, investors appear to be looking through these near-term items and have extended their investment time horizons; most management teams remain optimistic that 2018 will be a better year than 2017, but no one is seeing any signs of improvement just yet.”
“Investor sentiment appears to be aligned with industry performance results,” said Amanda Hite, STR’s president and CEO. “Post-hurricane demand in Texas and Florida lifted September performance figures considerably and masked the weaker corporate demand we saw from the shift in the Jewish holidays. September was actually the first month since the recovery began where there was a decline in Transient ADR, but this will likely be reversed in October data with the shift in Group demand and corporate travel. Moving forward, we expect the year to continue to show slightly higher demand growth than expected with ADR increasing at a much more sluggish pace considering the high occupancy levels.”
The Baird/STR Hotel Stock Index for October was ahead of the performance of both the S&P 500 (+2.2%) and the MSCI REIT (RMZ) (+1.1%).
The Hotel Brand sub-index increased 5.4% to 6,583 from September to October, while the Hotel REIT sub-index increased 2.3% to 1,655 during the month.
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 Index’s 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-index’s 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-index’s low point occurred on 5 March 2009 when it dropped to 298.
As of 31 October 2017, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Worldwide Holdings, Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels Corporation, InterContinental Hotels Group, La Quinta Holdings, LaSalle Hotel Properties, Marriott International, Park Hotels & Resorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Worldwide Corporation and Xenia Hotels & Resorts.