THE BAIRD/STR Hotel Stock Index rallied with the rest of the stock market after the presidential election, surging up 31 percent in November. Along with the election, news of the impending approval of several COVID-19 vaccines drove investor optimism higher despite the immediate surge in the pandemic.
The index was still down 17.4 percent year-to-date. It outperformed the S&P 500, which rose 10.8 percent, and the MSCI US REIT Index, which was up 10.6 percent. The hotel brand sub-index increased 26.3 percent from October to 7,570, while the hotel REIT sub-index jumped 47.7 percent to 1,068.
“Election clarity and several positive vaccine updates caused a sharp reversal in investor expectations and led to significant outperformance for hotel stocks during November,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The positive vaccine updates allow investors to look to ‘the other side’ and reset their expectations for growth in 2022 and beyond. Worst-case scenarios, especially for the hotel REITs, are unlikely to unfold as previously feared, and more clarity exists regarding the timing of the broader travel recovery.”
Events driving the market during the month were a mix of good and bad, said Amanda Hite, STR president.
“Owners and operators can be excused for showing whiplash symptoms as the news governing the U.S. hotel industry was both good and bad in November,” Hite said. “Multiple vaccine trials awaiting emergency authorization are seen as signs that the travel industry can count on some recovery in 2021 and that corporate transient and group demand could return in force. The rise in hotel stock prices certainly seems to have priced that in. On the other hand, the continued rapid increase in COVID-19 cases continues to put a damper on room demand. As offices remain empty and CDC officials urge Americans to stay home, hotel occupancies continue to wane and there is no change to that pattern in sight.”