THE BAIRD/STR Hotel Stock Index rose 6.2 percent in June after a shaky performance in May. Lifts in the overall stock market bolstered the hotel stock index, but concerns remain as hotels struggle to maintain their RevPAR, experts said.
In a change from the previous month, the index was slightly behind the S&P 500, which rose 6.9 percent. But it exceeded the MSCI US REIT Index which was up 0.7 percent. The hotel brand sub-index jumped 8.7 percent from May to 7,847 while the Hotel REIT sub-index increased 1.1 percent to 1,522.
The Baird/STR year-to-day performance through the first six months of 2019 was up 21.3 percent.
“Hotel stocks continued their up-and-down performance this year with better results in June after a tough May,” said Baird Senior Hotel Research Analyst and Vice President Michael Bellisario. “The broader stock market rebounded in June on optimism about a trade deal and that lifted the hotel brands more than the hotel REITs, although both sub-indices still were relative outperformers during the month. However, RevPAR growth expectations remain fairly muted heading into the second half of the year.”
Rather than actual hotel industry performance, investor sentiment in June seemed more influenced by the overall trading market, said STR President and CEO Amanda Hite.
“In this case, that is good news because RevPAR growth for the first few weeks of the month hovered just above the 0 percent mark, and despite very healthy demand increases nine years into the upcycle, hoteliers do not seem to be able to capitalize on full hotels,” she said. “We know that new supply in the limited-service sector, especially in the Top 25 Markets, has led to the softening of occupancy performance, but even in the case of strong occupancy, pricing power seems to be elusive. We expect the second half of the year to be better, but overall, RevPAR performance is slow across all classes and regions.”