The Baird/STR Hotel Stock Index increased 5.0% in November, closing the month at 4,732. Year to date through the first 11 months of 2017, the index was up 27.8%.
“Hotel stocks outperformed again in November as investors focused on potential sources of upside in 2018 and beyond, including potential tax reform, peaking supply growth and expected performance improvement in several urban markets,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “While we are remaining cautious until we see a corporate demand reacceleration, we expect robust capital flows to support hotel valuations in the near-to-intermediate term.”
“In line with the previous month, preliminary November figures are coming in a bit stronger than expected, driven by a post-hurricane demand surge in Florida and Texas,” said Amanda Hite, STR’s president and CEO. “Excluding these two states paints a more muted demand and ADR growth picture, and we expect the hurricane impact to dissipate during the first quarter of next year. What then becomes more evident is supply growth outpacing demand and tempering pricing expectations in quite a few markets. That said, construction activity declined year over year for the first time since 2010. We interpret that to be a positive sign for the health of the industry moving forward.”
The Baird/STR Hotel Stock Index for November outgrew both the S&P 500 (+2.8%) and the MSCI REIT (RMZ) (+2.3%).
The Hotel Brand sub-index increased 6.5% to 7,009 from October to November, while the Hotel REIT sub-index increased 2.1% to 1,690 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 30 November 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.