Baird/STR Hotel Stock Index drops 8.5% in December
The Baird/STR Hotel Stock Index was down 8.5% in December to 4,069. For total-year 2018, the stock index fell 16.8%.
“Hotel stocks declined meaningfully in December and capped off a year of underperformance as investor sentiment broadly continued to deteriorate,” said Michael Bellisario, senior hotel research analyst and VP at Baird. “The hotel REITs and the hotel brands fell 13.9% and 5.5%, respectively, in December, and the sub-indices declined 17.5% and 16.3%, respectively, in 2018. The year was marked by significant volatility, and initial optimism around tax reform for the brands and M&A upside for the REITs quickly faded. However, given that we do not expect fundamentals to meaningfully decelerate in the near term, we view valuations as more attractive at current levels even in the face of heightened macroeconomic uncertainties.”
“Uncertainty from a policy and global markets perspective continues to create stock volatility and widen the disconnect between industry fundamentals and investor sentiment,” said Amanda Hite, STR’s president and CEO. “This stands in sharp contrast to the connection between hotel industry performance and the overall macroeconomic outlook in the U.S., which is actually—even though tempered—still quite positive. Hotel performance results for Q4 look to be lower than expected, and muted RevPAR growth is probably a sign of things to come. But the continued GDP growth outlook coupled with a very low unemployment rate and a growing labor participation rate gives us conviction that demand and ADR will continue to grow in 2019.”
The Baird/STR Hotel Stock Index’s performance was ahead of both the S&P 500 (-9.2%) and the MSCI US REIT Index (-8.8%).
The Hotel Brand sub-index decreased 5.5% from November to 6,160, while the Hotel REIT sub-index dropped 13.9% to 1,389. For the year, the brand sub-index fell 16.3%, while the REIT sub-index was down 17.5%.
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 December 2018, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Chatham Lodging Trust, 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, 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.
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