HENDERSONVILLE, Tennessee, and MILWAUKEE—The Baird/STR Hotel Stock Index rose 1.9 percent in July to a level of 5,086. Year to date through the first seven months of 2021, the stock index was up 11.2 percent.
“Hotel stocks were positive but performance was mixed in July with the hotel brands significantly outperforming the hotel REITs,” said Michael Bellisario, senior hotel research analyst and director at Baird. “While second-quarter earnings so far have exceeded expectations, investors appear to be focused on the potential impact of the Delta variant domestically, how business travel might unfold post-Labor Day, and broader macroeconomic growth concerns. Sentiment toward the global and domestic recoveries appears to have normalized a bit in July, which we believe explains the large divergence in stock price performance between the hotel brands and hotel REITs last month.”
“Preliminary U.S. performance data for July points to the continued surge in summer leisure travel, although there was some slowing in demand late in the month, which falls in line with historical trends,” said Amanda Hite, STR president. “At the same time, room rates are at an all-time high on a nominal basis. Outsized leisure travel is driving a demand disparity between strong weekends and softer weekdays, which is a cause for concern as the summer travel season nears its end. The sharp rise in the Delta variant will likely put a damper on the expected business travel rebound post-Labor Day. Also, as more states and markets reinstate mask mandates, and the total cost of travel continues to increase, it is possible that corporate travel managers push business travel back to the early part of 2022.”
In July, the Baird/STR Hotel Stock Index fell behind both the S&P 500 (up 2.3 percent) and the MSCI US REIT Index (up 4.7 percent).
The Hotel Brand sub-index increased 5.6 percent from June to 8,993, while the Hotel REIT sub-index dropped 8.0 percent to 1,191.