The Baird/STR index dropped 3.4 percent during August, compared to a 1.9 percent rise in July. The index fell behind the S&P 500, which rose 2.9 percent, and the MSCI US REIT Index, which was up 1.8 percent during the month.

INVESTORS REMAINED CONSERVATIVE in August, leading to a decline in the Baird/STR Hotel Stock Index from the month before. The downward pattern may continue into next year or longer.

The Baird/STR index dropped 3.4 percent during the month, compared to a 1.9 percent rise in July. Year to date through the first eight months of 2021, the stock index was up 7.4 percent.

The index fell behind the S&P 500, which rose 2.9 percent, and the MSCI US REIT Index, which was up 1.8 percent during the month.  The Baird/STR hotel brand sub-index fell 5.4 percent from July, while the Hotel REIT sub-index increased 2.5 percent.

“Hotel stocks continued their streak of relative underperformance in August as investors remained focused on the impact of the Delta variant and the likely changes to post-Labor Day business travel trends,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The near-term trajectory of the recovery has flattened; however, investors appear to have priced in near-term downside scenarios, in our opinion, and they continue to look to 2022 and 2023 when the broader travel environment should be more normal versus today.”

“August performance, still shaped by continued strong demand from the American leisure traveler, came in lower than the July peak but still at a healthy level overall,” said Amanda Hite, STR’s president. “With the summer of travel behind us, all eyes are now on the fall season, which traditionally has been buoyed by corporate group demand. Unfortunately, the Delta variant has already caused major meetings cancellations, and it seems that the industry will have to wait a bit longer for that segment to return at a significant level. Whereas last year leisure travelers continued to generate room demand well into the fall, we expect softer demand this year with schools back in-person.”