The Baird/STR Hotel Stock Index increased 5.3% in September, closing the month at 4,318. Year to date through the first nine months of 2017, the index was up 16.6%.
“Hotel stocks posted solid gains in September as investors bid up more economically sensitive sectors, including both the hotel brand companies and the hotel REITs,” said Michael Bellisario, Senior Hotel Research Analyst and Vice President at Baird. “Higher interest rates, improved prospects for potential tax reform, and expected hurricane-related demand tailwinds helped stocks easily outperform their benchmarks last month. Fundamentals have remained steady, but investors have extended their investment time horizons and are more optimistic about next year’s growth prospects.”
“Despite the fact that there was a calendar shift with the Jewish high holidays (October last year), preliminary performance results point to a healthy September and a record occupancy level for the first ninth months of the year,” said Amanda Hite, STR’s president and CEO. “The massive hurricanes in Texas and Florida affected demand and will likely have implications on the development pipeline moving forward. Because of the aforementioned Jewish holiday calendar shift, and the very disruptive hurricane season, September and October data will be hard to parse for trends. By the time a more ‘normal’ November comes around, the year will basically be done, but we still expect that room demand growth will be slightly higher and ADR growth slightly lower than previously projected.”
The Baird/STR Hotel Stock Index for September was ahead of the performance of both the S&P 500 (+1.9%) and the MSCI REIT (RMZ) (-0.7%).
The Hotel Brand sub-index increased 6.2% to 6,249 from August to September, while the Hotel REIT sub-index increased 3.7% to 1,618 during the month.
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 September 2017, the companies that comprised the Baird/STR Hotel Stock Index include: 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.