The Baird/STR Hotel Stock Index jumped 7.0% in November to 4,968. Year to date through the first 11 months of 2019, the index was up 22.1%.
“Hotel stocks significantly outperformed in November; the Hotel Brands posted their largest monthly percentage increase for the year and performed better than the Hotel REITs,” said Michael Bellisario, Senior Hotel Research Analyst and VP at Baird. “The broader risk-on trade in November, which has continued in December, caused investors to become more optimistic about the prospects for continued economic growth despite still-soft industry RevPAR growth trends.”
“Despite RevPAR decreases in three of the last five months, the hotel stock index has posted gains in three consecutive months,” said Amanda Hite, STR’s president. “That speaks to the long-term credibility that hotel stocks have earned as well as investors’ ability to see the big picture. Our latest forecast revision projects RevPAR growth to come in below 1% for both 2019 and 2020, so in terms of performance growth, these will be the hotel industry’s worst years since the recession. However, it appears that investors are placing greater consideration on net unit growth. Of the more than 205,000 rooms under construction in our U.S. pipeline database, 80% are affiliated with the 10 largest parent companies. This seems to outweigh the less-than-stellar industry performance.”
November performance of the Baird/STR Hotel Stock Index surpassed both the S&P 500 (+3.4%) and the MSCI US REIT Index (-1.8%).
The Hotel Brand sub-index increased 9.1% from October to 8,035 while the Hotel REIT sub-index rose 2.5% to 1,474.
The Baird/STR Hotel Stock Index was set to equal 1,000 on 1 January 2000. Last cycle, the Index peaked at 3,178 on 5 July 2007. The Index’s low point occurred on 6 March 2009 when it dropped to 573.
The Hotel Brand sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 3,407 on 5 July 2007. The sub-index’s low point occurred on 6 March 2009 when it dropped to 722.
The Hotel REIT sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 2,555 on 2 February 2007. The sub-index’s low point occurred on 5 March 2009 when it dropped to 298.