The Baird/STR Hotel Stock Index dropped 11.5% in October to 4,377. Year to date through the first 10 months of 2018, the stock index declined 10.5%.
“Hotel stocks were underperformers in October and significantly lagged their respective benchmarks,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “The broader stock market sell-off, investors shifting their focus from growth to value, and both the hotel brands and REITs not producing better-than-expected third-quarter earnings and fourth-quarter guidance were all factors that caused hotel stocks to have their worst month since January 2016.”
“Unfortunately, it is not incredibly surprising to see such a negative turn in investor sentiment around hotel stocks,” said Amanda Hite, STR’s president and CEO. “Even as the U.S. hotel industry continues its record-breaking run, the data points to us being closer to a point of softening performance rather than a point of acceleration. RevPAR is still growing, the one month decline in September notwithstanding, and our forecast for 2019 points at more positive performance. However, growth rates are indeed slowing, and while new supply is not a major factor nationally, it is dampening pricing power in certain markets and likely will continue to put a governor on RevPAR growth. Cost containment, especially with regards to labor costs, remains the big topic this year and likely next.”
The Baird/STR Hotel Stock Index fell further in October than both the S&P 500 (-6.9%) and the MSCI US REIT Index (-3.1%).
The Hotel Brand sub-index decreased 12.3% from September to 6,394, while the Hotel REIT sub-index dipped 9.9% to 1,598.
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