Baird/STR Hotel Stock Index jumps 5.0 percent in November
“Hotel stocks outperformed again in November as investors focused on potential sources of upside in 2018 and beyond, including potential tax reform, peaking supply growth and expected performance improvement in several urban markets,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “While we are remaining cautious until we see a corporate demand reacceleration, we expect robust capital flows to support hotel valuations in the near-to-intermediate term.”
“In line with the previous month, preliminary November figures are coming in a bit stronger than expected, driven by a post-hurricane demand surge in Florida and Texas,” said Amanda Hite, STR’s president and CEO. “Excluding these two states paints a more muted demand and ADR growth picture, and we expect the hurricane impact to dissipate during the first quarter of next year. What then becomes more evident is supply growth outpacing demand and tempering pricing expectations in quite a few markets. That said, construction activity declined year over year for the first time since 2010. We interpret that to be a positive sign for the health of the industry moving forward.”
The Baird/STR Hotel Stock Index for November outgrew both the S&P 500 (+2.8 percent) and the MSCI REIT (RMZ) (+2.3 percent).
The Hotel Brand sub-index increased 6.5 percent to 7,009 from October to November, while the Hotel REIT sub-index increased 2.1 percent to 1,690 during the month.