The Baird/STR Hotel Stock Index’s 11.5 percent decline in October was deeper than the S&P 500’s 6.9 percent decline and the MSCI US REIT Index’s 3.1 percent dip.

OCTOBER SAW ANOTHER drop in the Baird/STR Hotel Stock Index, down 11.5 percent, as the U.S. hotel industry continued to see slowing in its growth. It was the worst month for the industry in almost three years.

The index was down 10.5 percent for the first 10 months of 2018. It declined more than the S&P 500, which dropped 6.9 percent, and the MSCI US REIT Index, which was down 3.1 percent. In August, when the index showed no growth over the previous month, it was down 0.3 percent year to date.

“Hotel stocks were underperformers in October and significantly lagged their respective benchmarks,” said Michael Bellisario, Baird’s senior hotel research analyst and vice president. “The broader stock market sell-off, investors shifting their focus from growth to value, and both the hotel brands and REITs not producing better-than-expected third-quarter earnings and fourth-quarter guidance were all factors that caused hotel stocks to have their worst month since January 2016.”

STR President and CEO Amanda Hite said she was not surprised by the decline.

“Even as the U.S. hotel industry continues its record-breaking run, the data points to us being closer to a point of softening performance rather than a point of acceleration,” Hite said. “RevPAR is still growing, the one month decline in September notwithstanding, and our forecast for 2019 points at more positive performance. However, growth rates are indeed slowing, and while new supply is not a major factor nationally, it is dampening pricing power in certain markets and likely will continue to put a governor on RevPAR growth. Cost containment, especially with regards to labor costs, remains the big topic this year and likely next.”

The Hotel Brand sub-index decreased 12.3 percent from September to 6,394 points, while the Hotel REIT sub-index dipped 9.9 percent to 1,598.