GROWING COVID-19 CONCERNS resulted in a significant drop of 11.7 percent to 4,296 in the Baird/STR Hotel Stock Index for February. That follows a 7.7 percent drop in January and results in an 18.5 percent decrease in the index through the first two months of 2020.
The Baird/STR index’s February performance fell behind both the S&P 500 and the MSCI US REIT Index, down 8.4 percent and 8.1 percent respectively.
“Hotel stocks fell off a cliff at the end of the month due to mounting COVID-19 concerns domestically, and the broader stock market correction has disproportionately impacted travel-related stocks,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Increased cancellations and stricter corporate travel policies will impact near-term profitability for both hotel owners and hotel brands. However, the disruption for owners, particularly ones with more urban gateway and group exposure, will be far greater than the impact on the global hotel brands companies.”
The hotel brand sub-index decreased 10.6 percent from January to 7,195 while the hotel REIT sub-index declined 14.3 percent to 1,169.
“It was not surprising to see such a steep drop in the stock index given the heightened concern around the coronavirus outbreak and the overall sentiment in the market,” said Amanda Hite, STR’s president. “Prior to the wider spread outbreak, we forecasted flat RevPAR performance for the year. Performance has held to this point, but we expect a negative trend to surface at some point in this quarter’s data, especially in gateway cities.”