THE BAIRD/STR HOTEL Stock Index fell 1 percent in July to 4,883. The drop comes a month after a 6.2 percent increase in June and it results from hotel REITs’ negative outlooks for the second half of the year.
The index was up 20 percent year to date through the first seven months of 2019. It lagged behind both the S&P 500 and the MSCI US REIT Index, which grew 1.3 percent and 1.1 percent respectively.
Both sub-indices underperformed their respective benchmarks modestly and hotel stocks were flat to down, said Baird Vice President and senior research analyst Michael Bellisario.
“Second-quarter earnings reports were the big driver of stock prices during the month; high investor expectations for the hotel brands and disappointing second-half outlooks from the hotel REITs caused hotel stocks to underperform in July,” Bellisario said.
The Hotel Brand sub-index remained virtually unchanged from June at a level of 7,843, while the Hotel REIT sub-index dropped 3.2 percent to 1,473.
“A stock index trending between flat and slightly down is very much aligned with recent industry performance,” said Amanda Hite, STR’s president and CEO. “It will be interesting to monitor where investor sentiment moves over the duration of the year as we do not expect to see material improvement in the data. We’ll revise our RevPAR forecast downward at the Hotel Data Conference later this week as hotelier pricing power remains elusive and supply grows at enough of a rate to outpace demand growth and pressure performance.”