THE MOOD AMONG hotel investors seemed to be a little more upbeat in February, according to the Baird/STR Hotel Stock Index. The index rose 6.8 percent last month and the year-to-date performance through the first two months of 2019 was up 15.1 percent.
The Baird/STR performed better than the S&P 500 and MSCI US REIT Index, which rose 3 percent and 0.4 percent respectively during the month. The hotel sub-index jumped 8.3 percent from January to 7,036, while the hotel REIT sub-index increased 3.9 percent to 1,624.
The month’s performance, and the year to date, comes on the heels of the index closing 2018 down 16.8 percent.
“Hotel stocks continued their rebound in February in conjunction with further improvement in broader market sentiment,” said Michael Bellisario, senior hotel research analyst and vice president at Baird. “The hotel REITs and the hotel brands posted gains of 3.9 percent and 8.3 percent, respectively, and both sub-indices outperformed their benchmarks. With a more stable industry backdrop following some weakness experienced in January and companies’ full-year 2019 guidance ranges in place, investors’ focus has shifted more toward balancing growth outlooks and current valuations.”
Two straight months witnessed investor sentiment head up even as hotel performance growth remains slow, said Amanda Hite, STR’s president and CEO.
“It will be interesting to see if investors remain bullish on hotel stocks with continued flat occupancy and subdued rate growth moving forward,” she said. “We also continue to monitor the number of open positions in ‘accommodations and food service’ as published by the Bureau of Labor Statistics- that number is at roughly 1 million and growing. This will put upward pressure on wage and labor costs, which coupled with stunted ADR growth, will impact profitability.”