The Baird/STR Hotel Stock Index dipped 2.8% in May to a level of 5,148. Year to date through the first five months of 2021, the stock index was up 12.6%.
“Hotel stocks declined in May and underperformed their respective benchmarks for the third consecutive month,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The broader reopening trade continues to lose momentum despite hotel fundamentals that continue to improve on a sequential basis, which is being driven by strong leisure demand. The return of the business traveler later this year is our key area of focus over the intermediate term.”
“Investor sentiment toward hotel stocks is set up to receive an injection of optimism as the summer metrics roll in over the coming weeks,” said Amanda Hite, STR president. “Leisure demand continues to drive improvement in a lot of markets, and the Saturday before Memorial Day produced the country’s highest occupancy level—83%—since the fourth quarter of 2019. With more than 2 trillion dollars in accumulated savings, many have the means and the banked vacation time to travel and pay for premium experiences in the coming months. If 2020 is any guide, we expect robust demand for destinations that offer access to beaches, parks and other outdoor settings. At the same time, there is an understanding that full recovery remains far off until a prominent return of business travel, groups and international arrivals. Midweek occupancies continue to hover around 50%, pointing to a slow recovery in the business segment that hinders growth in the major metros and at the top end of the market. April was the first month in a year with more than 2 million group rooms sold. Those rooms are more likely skewed toward social events with large corporate gatherings still on the back burner.”
In May, the Baird/STR Hotel Stock Index fell behind both the S&P 500 (+0.5%) and the MSCI US REIT Index (+0.8%).
The Hotel Brand sub-index decreased 2.2% from April to 8,862, while the Hotel REIT sub-index dropped 4.5% to 1,300.
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.