The Baird/STR Hotel Stock Index increased 0.2% in October to 4,641. Year to date through the first 10 months of 2019, the index was up 14.0%.
“Hotel stocks had mixed performance in October with the hotel brands outgaining the hotel REITs by nearly five percentage points,” said Michael Bellisario, Senior Hotel Research Analyst and VP at Baird. “Third-quarter earnings have been highlighted by slower growth trends and reduced forward-looking guidance, which have negatively impacted the hotel REITs more than the hotel brands.”
“Industry fundamentals and investor sentiment don’t always align, but with that said, October was a pretty good month for hotel stocks considering the latest RevPAR trend,” said Amanda Hite, STR’s president. “With two months of RevPAR declines in the books thus far in 2019, the year is shaping up to come in well below the expectations of analysts and operators alike. We continue to monitor the lack of hotelier pricing power as a concerning sign as the industry has now shown ADR increases below the level of inflation for five consecutive quarters. While supply increases at the national level are manageable, demand increases have only been in line with those increases, meaning that the occupancy change for 2019 is basically flat. All RevPAR increases are ADR-driven, and those increases are and will be muted going forward."
October performance of the Baird/STR Hotel Stock Index was behind both the S&P 500 (+2.0%) and the MSCI US REIT Index (+1.3%).
The Hotel Brand sub-index increased 1.7% from September to 7,364 while the Hotel REIT sub-index declined 3.2% to 1,438.
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.
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