Hotel stock prices continued to slide in March, but not enough to wipe out double-digit gains to start the year.
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, recorded a 3.4% overall decline from February to March.
The index ended 2022 down 15%, but surged back with a 16.4% gain in January. Year to date, the hotel stock index is outperforming the broader economy, though the S&P 500 index recorded a better March, up 3.5%. The RMZ index, an indicator of the health of the real estate investment sector, was down 3.3% for the month.
Hotel brand companies continue to slightly outperform the REITs.
The hotel brand sub-index was down 2.9% in March, compared to a 5.1% decline on average for the REITs. Year to date, the brand sub-index is up 11.5%, while the REIT sub-index is up 3.4%.
Michael Bellisario, senior hotel research analyst and director at Baird, said the monthly hotel stock performance was weighed down by macroeconomic concerns, such as the failure of two significant banks in the U.S.
“Hotel stocks declined in March as investors digested the potential impacts from the recent banking turmoil, including the likely intermediate-term effects on economic growth,” Bellisario said.
“The global hotel brands declined slightly during the month and underperformed the S&P 500 on heightened macroeconomic concerns and the likely constraints on new-construction financing that could affect the companies’ net-unit-growth outlooks. Hotel REITs also fell during the month but only slightly underperformed the broader real estate benchmark.”
Amanda Hite, president of CoStar hospitality analytics firm STR, said that “recent economic uncertainty and the banking crisis did not deter travelers in March, as hotel room demand was nearly equal to the level seen in 2019 and ADR rose well above the rate of inflation.”
She added that in the first quarter, “occupancy and room rates came in ahead of our January forecast, underpinning the resiliency of the traveling public.”
Comparisons to performance in the same quarter of 2022 were somewhat easier due to first-quarter impacts from a rise in cases of the COVID-19 omicron variant. Occupancy was 3.4 percentage points above 2022 while ADR was up 10.4% year over year.
None of the 20 companies on the hotel stock index gained value month to month. Monthly performance was by Choice Hotels International, which recorded only 1% decline in stock price from February. Pebblebrook Hotel Trust, Host Hotels & Resorts, Marriott International and Hilton rounded out the top five performers, all with month-to-month declines of 2.5% or less.
For a second consecutive month, Hyatt was the top performer year over year, with a 17.1% increase in stock value compared to February 2022. No other company on the index recorded an increase in stock price from March 2022.
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.