Baird/STR Hotel Stock Index drops 11.5% in October
The Baird/STR Hotel Stock Index dropped 11.5% in October to 4,377. Year to date through the first 10 months of 2018, the stock index declined 10.5%.
“Hotel stocks were underperformers in October and significantly lagged their respective benchmarks,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “The broader stock market sell-off, investors shifting their focus from growth to value, and both the hotel brands and REITs not producing better-than-expected third-quarter earnings and fourth-quarter guidance were all factors that caused hotel stocks to have their worst month since January 2016.”
“Unfortunately, it is not incredibly surprising to see such a negative turn in investor sentiment around hotel stocks,” said Amanda Hite, STR’s president and CEO. “Even as the U.S. hotel industry continues its record-breaking run, the data points to us being closer to a point of softening performance rather than a point of acceleration. RevPAR is still growing, the one month decline in September notwithstanding, and our forecast for 2019 points at more positive performance. However, growth rates are indeed slowing, and while new supply is not a major factor nationally, it is dampening pricing power in certain markets and likely will continue to put a governor on RevPAR growth. Cost containment, especially with regards to labor costs, remains the big topic this year and likely next.”
The Baird/STR Hotel Stock Index fell further in October than both the S&P 500 (-6.9%) and the MSCI US REIT Index (-3.1%).
The Hotel Brand sub-index decreased 12.3% from September to 6,394, while the Hotel REIT sub-index dipped 9.9% to 1,598.
About the Baird/STR Hotel Stock Index and Sub-Indices
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.
The Baird/STR Hotel Stock Index and sub-indices are available exclusively on www.HotelNewsNow.com. The indices are cobranded and were created by Robert W. Baird & Co. (Baird) and STR. The market-cap-weighted, price-only indices comprise 20 of the largest market-capitalization hotel companies publicly traded on a U.S. exchange and attempt to characterize the performance of hotel stocks. The Index and sub-indices are maintained by Baird and hosted on Hotel News Now, are not actively managed, and no direct investment can be made in them.
As of 31 October 2018, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Chesapeake Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Inc., Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels, InterContinental Hotels Group, 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 Hotels & Resorts, and Xenia Hotels & Resorts.
This communication is not a call to action to engage in a securities transaction and has not been individually tailored to a specific client or targeted group of clients. Research reports on the companies identified in this communication are provided by Robert W. Baird & Co. Incorporated, and are available to clients through their Baird Financial Advisor. This communication does not provide recipients with information or advice that is sufficient on which to base an investment decision. This communication does not take into account the specific investment objectives, financial situation or need of any particular client and may not be suitable for all types of investors. Recipients should consider the contents of this communication as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this release.
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 3,500 associates serving the needs of individual, corporate, institutional and municipal clients. Baird has more than $211 billion in client assets as of June 30, 2018. Committed to being a great place to work, Baird ranked No. 12 on FORTUNE’s 100 Best Companies to Work For in 2018 – its 15th consecutive year on the list. Baird is the marketing name of Baird Financial Group. Baird’s principal operating subsidiaries are Robert W. Baird & Co. Incorporated in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit www.rwbaird.com.
STR provides clients from multiple market sectors with premium, global data benchmarking, analytics and marketplace insights. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, and an international headquarters in London, England. For more information, please visit str.com.