The Baird/STR Hotel Stock Index increased 3.3% in December, closing the month at 4,888. For total-year 2017, the index was up 32.0%.
“Hotel stocks outperformed in December, primarily led by gains from the brand companies, which significantly outperformed the broader market in 2017,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “Stock valuation multiples continue to increase, particularly for the brand companies, and investors remain upbeat about the potential for better RevPAR growth in 2018 given the strong macroeconomic backdrop and several additional potential demand-related tailwinds.”
“Monthly performance figures have foreshadowed the performance trends to come during the first quarter of 2018,” said Amanda Hite, STR’s president and CEO. “Demand growth has continued unabated, and while healthy, supply growth is not a significant headwind on a national level. As seen during the last quarter, Texas and Florida data is still supported by hurricane-related demand, and we expect this to continue into the first few months of 2018. ADR growth was and will be the main driver for RevPAR and profit growth.”
The Baird/STR Hotel Stock Index for December outperformed the S&P 500 (+1.0%) and the MSCI REIT (RMZ) (-0.8%).
The Hotel Brand sub-index increased 5.0% to 7,363 from November to December, while the Hotel REIT sub-index decreased 0.4% to 1,684. For the year, the Hotel Brand sub-index was up 49.9%. The Hotel REIT sub-index grew 2.7% in 2017.
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.
As of 31 December 2017, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Worldwide Holdings, Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels Corporation, InterContinental Hotels Group, La Quinta Holdings, LaSalle Hotel Properties, Marriott International, Park Hotels & Resorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Worldwide Corporation and Xenia Hotels & Resorts.