HENDERSONVILLE, Tennessee, and MILWAUKEE — 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.
About the Baird/STR Hotel Stock Index and Sub-Indices
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.
The Baird/STR Hotel Stock Index and sub-indices are available exclusively on www.HotelNewsNow.com. The indices are cobranded and were created by Robert W. Baird & Co. (Baird) and STR. The market-cap-weighted, price-only indices comprise 20 of the largest market-capitalization hotel companies publicly traded on a U.S. exchange and attempt to characterize the performance of hotel stocks. The Index and sub-indices are maintained by Baird and hosted on Hotel News Now, are not actively managed, and no direct investment can be made in them.
As of 31 October 2019, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Chatham Lodging Trust, Chesapeake Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Inc., Service Properties Trust, Host Hotels & Resorts, Hyatt Hotels, InterContinental Hotels Group, Marriott International, Park Hotels & Resorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Hotels & Resorts, and Xenia Hotels & Resorts.
Chesapeake Lodging Trust was acquired by Park Hotels & Resorts on September 18, 2019, and effective the same day, Hersha Hospitality Trust (HT) replaced Chesapeake Lodging Trust (CHSP) in the Baird-STR Hotel Stock Index and the Baird-STR Hotel REIT Sub-Index.
This communication is not a call to action to engage in a securities transaction and has not been individually tailored to a specific client or targeted group of clients. Research reports on the companies identified in this communication are provided by Robert W. Baird & Co. Incorporated, and are available to clients through their Baird Financial Advisor. This communication does not provide recipients with information or advice that is sufficient on which to base an investment decision. This communication does not take into account the specific investment objectives, financial situation or need of any particular client and may not be suitable for all types of investors. Recipients should consider the contents of this communication as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this release.
Celebrating its 100th anniversary in 2019, Baird is an employee-owned, international wealth management, asset management, investment banking/capital markets, and private equity firm with offices in the United States, Europe and Asia. Baird has approximately 4,500 associates serving the needs of individual, corporate, institutional and municipal clients and more than $208 billion in client assets as of Dec. 31, 2018. Committed to being a great workplace, Baird ranked No. 12 on FORTUNE’s 2018 100 Best Companies to Work For list. Baird is the marketing name of Baird Financial Group. Baird’s principal operating subsidiaries are Robert W. Baird & Co. Incorporated in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s website at www.rwbaird.com.
STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. For more information, please visit str.com.