THE BAIRD/STR Hotel Stock Index jumped up 19 percent in August, driven by medical progress against the COVID-19 pandemic and new interest rate policies, according to STR. That optimism may end, however, after Labor Day as summer travel winds down with no real replacement in sight.
The stock index was up from July when it dropped 1.7 percent month over month. However it was still down 32 percent year to date through the first eight months of 2020. The index outperformed the S&P 500 by 7 percent and the MSCI US REIT Index by 0.7 percent. The hotel brand sub-index increased 21 percent from July while the hotel REIT sub-index grew 12.3 percent.
“Hotel stocks significantly outperformed in August along with other travel-related stocks as investors cheered continued progress on the medical front and accommodative interest rate policies that are expected to be in place for the foreseeable future,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Both the hotel brands and the hotel REITs outperformed their respective benchmarks by more than 10 percentage points during the month even as the broader stock market’s momentum remained positive.”
However, the future is hard to predict, said Amanda Hite, STR’s president.
“As summer vacation season officially comes to a close, hoteliers are bracing for a post-Labor Day lull as corporate travel remains muted and group business is almost non-existent,” Hite said. “Leisure travelers have lifted U.S. performance metrics in recent months, with occupancy even topping 50 percent in mid-August, but demand has since retracted. We revised our latest RevPAR forecast slightly downward to negative 52 percent for this year, and we do not foresee any catalyst to materially change this outlook for the better.”