Concerns about inflation and the possibility of a recession of the U.S. economy are weighing on investors and now are taking a toll on hotel stock values, which previously have demonstrated some insulation from macroeconomic woes.
The Baird/STR Hotel Stock Index, comprising 20 of the largest hotel brand companies and real estate investment trusts publicly traded on a U.S. stock exchange by market capitalization, was down 5.8% in May. By comparison, the S&P 500 index was flat with April and the RMZ index was down 6.3% month over month.
Year to date, the hotel stock index is down 2.8%, while the S&P 500 is down 13.3% and the RMZ index is down 14.8% over the same time period.
Michael Bellisario, senior hotel research analyst and director at financial services firm Baird, said: “Hotel stocks declined in May amid the broader stock market volatility as investors grew concerned about macroeconomic slowing and inflationary pressures, among other risks and uncertainties."
He further noted that "hotel fundamentals have continued to improve and are showing no signs of slowing; the demand recovery is broadening, the harder-hit urban markets are rebounding, and midweek business travel is coming back at a strong pace."
Still, he continued, "despite the positive fundamental momentum, investors remain a bit skeptical and are focused on the health of the consumer amid a slowing growth backdrop.”
Hotel real estate investment trusts have fared slightly better on the stock index, with values down 4.9% in May but up 2.8% year to date, compared to those of the hotel brand companies, which were down 6% in May and have declined by 4.5% since the first of the year.
Among the 20 companies listed on the index, only one — Hersha Hospitality Trust, a REIT — outperformed April, with stock values up 12.3% in May. On the other end of the spectrum, three REITs experienced double-digit losses in May, led by Ashford Hospitality Trust — down 20% — and followed by Summit Hotel Properties and Chatham Lodging Trust.
In year-over-year comparisons, three of the top five performing companies were hotel brands — led by Marriott International, up 19.5%; and including Hyatt Hotels Corp. and Hilton, up 13.2% and 12.4%, respectively. Ryman Hospitality Trust and Host Hotels & Resorts led the REITs in year-over-year improvement.
For more information about the Hotel Stock Index, email hotelstockindex@rwbaird.com.
The Baird/STR Hotel Stock Index and sub-indices are available exclusively on Hotel News Now. 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 30 June 2021, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Ashford Hospitality Trust, Chatham Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, Hersha Hospitality Trust, Hilton Inc., Host Hotels & Resorts, Hyatt Hotels, InterContinental Hotels Group, Marriott International, Park Hotels & Resorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Service Properties Trust, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Hotels & Resorts, and Xenia Hotels & Resorts.