IT’S A GOOD NEWS/bad news situation for the Baird/STR Hotel Stock Index. The index rose 0.2 percent in July to 4,874 points, but remained down 0.3 percent for year-to-date through July.
The index also fell behind the S&P 500 and the MSCI US REIT Index for the month, each rising 3.6 percent and 0.5 percent respectively. The hotel brand sub-index also increased 0.3 percent from June to 7,138, and the Hotel REIT sub-index grew 0.1 percent to 1,772. Both performances were not what was expected, said Baird’s Senior Hotel Research Analyst Michael Bellisario.
“Both the hotel brands and hotel REITs underperformed their benchmarks again in July, but the sub-indices were up slightly in absolute terms during the month,” he said. “While investors were less focused on changes in interest rates and the U.S. dollar in July relative to the prior month, a continued lack of a material RevPAR growth reacceleration has caused investor optimism to moderate a bit, which has weighed on hotel stock price performance recently.”
STR President and CEO Amanda Hite has a more optimistic take on the index’s status.
“Market activity was more aligned with performance results in the sector,” she said. “With Q2 earnings calls underway, it is clear that the hotel industry, after taking a ‘breather’ in 2016 and 2017, is now reaccelerating its pace of growth. Reaching 100 consecutive months of RevPAR growth in June was just another outward sign of strong fundamentals. We hear from our clients and data partners that group demand is healthy, and continued strength in the corporate sector leads to confidence in demand and ADR growth. We will present an upward revision to our forecast later this month at the Hotel Data Conference, which is yet another signal of a robust industry.”