Hendersonville, Tenn., and Milwaukee — The Baird/STR Hotel Stock Index jumped 7 percent in November 2019 to 4,968. Year-to-date through the first 11 months of 2019, the index was up 22.1 percent.
“Hotel stocks significantly outperformed in November; the Hotel Brands posted their largest monthly percentage increase for the year and performed better than the Hotel REITs,” said Michael Bellisario, senior hotel research analyst and vice president at Baird. “The broader risk-on trade in November, which has continued in December, caused investors to become more optimistic about the prospects for continued economic growth despite still-soft industry RevPAR growth trends.”
“Despite RevPAR decreases in three of the last five months, the hotel stock index has posted gains in three consecutive months,” said Amanda Hite, STR’s president. “That speaks to the long-term credibility that hotel stocks have earned as well as investors’ ability to see the big picture. Our latest forecast revision projects RevPAR growth to come in below 1 percent for both 2019 and 2020, so in terms of performance growth, these will be the hotel industry’s worst years since the recession. However, it appears that investors are placing greater consideration on net unit growth. Of the more than 205,000 rooms under construction in our U.S. pipeline database, 80 percent are affiliated with the 10 largest parent companies. This seems to outweigh the less-than-stellar industry performance.”
November performance of the Baird/STR Hotel Stock Index surpassed both the S&P 500 (up 3.4 percent) and the MSCI US REIT Index (down 1.8 percent).
The Hotel Brand sub-index increased 9.1 percent from October to 8,035 while the Hotel REIT sub-index rose 2.5 percent to 1,474.
The Baird/STR Hotel Stock Index was set to equal 1,000 on January 1, 2000. Last cycle, the Index peaked at 3,178 on July 5, 2007. The Index’s low point occurred on March 6, 2009, when it dropped to 573. The Hotel Brand sub-index—also set to equal 1,000 on January 1, 2000—peaked last cycle at 3,407 on July 5, 2007. The sub-index’s low point occurred on March 6, 2009, when it dropped to 722. The Hotel REIT sub-index—also set to equal 1,000 on January 1, 2000—peaked last cycle at 2,555 on February 2, 2007, and its low point occurred on March 5, 2009, when it dropped to 298.
As of November 30, 2019, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Chatham Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Inc., Service Properties Trust, Hersha Hospitality 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.