STR/Baird Hotel Stock Index rose 15.6 percent in April

Worst-case scenarios’ failure to manifest led to higher investor confidence

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In April, the Baird/STR index outperformed both the S&P 500, which rose 12.7 percent, and the MSCI US REIT Index, which went up 8 percent.

IN A HINT of good news for the U.S. hotel industry, the Baird/STR Hotel Stock Index rose 15.6 percent in April. For the year to date, though, the index was down 39.7 percent.

The Baird/STR index outperformed both the S&P 500, which rose 12.7 percent, and the MSCI US REIT Index, which went up 8 percent. The hotel brand sub-index jumped 17 percent from March while the hotel REIT sub-index increased 11.7 percent.

“Hotel stocks rebounded in April following one of their worst months on record, but the stocks remain well below levels seen earlier this year,” said Michael Bellisario, Baird’s senior hotel research analyst and director. “Worst-case zero-occupancy scenarios have not unfolded as investors had feared, and the hotel companies have significantly bolstered their balance sheets with credit facility draws, bond offerings, and points pre-sales, which afford plenty of breathing room on the liquidity front until hotel demand begins to materially rebound.”

STR’s weekly U.S. performance data for the end of April indicates, in which a slight rise in occupancy was seen, indicates the market may have hit bottom earlier that month, said Amanda Hite, STR president.

“While there have been modest demand gains over the last three weeks, the level of hotel business remains at incredible lows,” she said. “Certainly, there is good news in slight demand increases versus further steep declines, but uncertainty will persist for the industry even as businesses begin to reopen and distancing limitations are eased. Hotel companies have released new cleaning protocols which should give guests a sense of safety as travel demand resumes.”

The index dropped 36 percent in March, STR previously reported.