Hotel stock index flat in October

Pandemic and politics suppress investor interest

The Baird/STR Hotel Stock Index was down 0.2 percent in October. The hotel stock index outperformed the S&P 500 during the month, which dropped 2.8 percent, and was down 36.9 percent year to date through the first 10 months of the year.

HOTEL STOCKS WERE relatively flat in October, but still outperformed other indexes, according to the Baird/STR Hotel Stock Index. Rising numbers of COVID-19 cases and political uncertainty of the presidential election took their toll on the market.

The Baird/STR index was down 0.2 percent to a level of 3,323. The index was down 36.9 percent year to date through the first 10 months of the year.

The hotel stock index outperformed both the S&P 500 and the MSCI US REIT Index during the month, which both dropped 2.8 percent. The hotel brand sub-index increased 0.4 percent from September to 5,993, while the Hotel REIT sub-index decreased 2.1 percent to 723.

“Hotel stocks outperformed modestly in October despite heightened stock market volatility during the month as investors focused on rising nationwide coronavirus case counts and uncertainties regarding the upcoming election and timing of additional stimulus,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Going forward, we believe clarity surrounding the election outcome should be a near-term boost to broader investor sentiment and travel-related stock prices.”

The future is not bright, said Amanda Hite, STR president.

“Preliminary data suggests that RevPAR declines, which had eased in prior months, actually worsened in October,” Hite said. “Historically speaking, Labor Day has been the line of demarcation between leisure travelers returning home and corporate travelers hitting the road. But this year has obviously been different, and the lack of those two demand generators will make operators and owners look at the remainder of the year with trepidation. We publish a revised forecast during NYU’s upcoming virtual conference, but the industry should not expect much improvement from the previous version.”