THE BAIRD/STR HOTEL Stock Index rose again in April, continuing a trend the index has followed for the past four months. Investors’ optimism is driven by the travel industry’s ongoing recovery due to pent-up demand that is overriding negative influences, such as the Russia/Ukraine war and rising interest rates.
Baird/STR went up 0.7 percent during the month, according to STR. The index rose 3.1 percent over the first four months of 2022. In March it increased 2.2 percent in March after rising 4.1 percent in February.
The index also surpassed both the S&P 500, which dropped 8.8 percent in April, and the MSCI US REIT Index, which went down 4.6 percent. The hotel brand sub-index rose 0.5 percent from March, while the hotel REIT sub-index jumped up 1.5 percent.
“Hotel stocks increased modestly in April but were significant relative outperformers as the broader travel recovery accelerated, particularly domestically,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Underlying hotel fundamentals continued their rebound in April, especially in some of the harder-hit urban markets, and better-than-expected intra-quarter updates from companies boosted investor sentiment and stock prices during the month. While broader macroeconomic risks remain elevated (for example, higher interest rates, higher gas prices, Russia/Ukraine conflict, and growing recession concerns), the broader travel momentum is strong and pent-up demand continues to surprise to the upside.”
Rising demand and inflation-influenced pricing led to April’s results, said Amanda Hite, STR’s president.
“Corporate transient and group demand are climbing at a healthy rate, pointing to the continued return of business travel. Our March P&L data also showed the strongest GOPPAR level since November 2019, meaning that the strong rebound in top-line performance is translating to an improving bottom line,” Hite said. “When looking at the pipeline, the number of rooms in construction remains on a downward trajectory, giving the majority of operators another tailwind that should last through this year and 2023.”