Despite a dip in February, hotel company stock values have started the year strong, and thanks to a surge of investor confidence in the sector in January are up 13.4% year to date as of Feb. 28.
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 2.5% overall decline from January to February.
The index ended 2022 down 15%, with brands slightly outperforming the REITs.
By sub-index, the hotel brand companies outperformed both the hotel real estate investment trusts and the overall economy — down 1.2% compared to a 7% decline by the REITs on the index and declines of 3.4% and 5.1% by the S&P 500 and RMZ indexes, respectively. The hotel brand sub-index is still up 14.8% year to date as of the end of February; and the hotel REIT sub-index is up 8.9% for the same period.
“Hotel stocks — just like the broader market — pulled back in February as the focus turned to earnings and initial 2023 outlooks,” said Michael Bellisario, senior hotel research analyst and director at Baird.
“The global hotel brand stocks, while down slightly during the month, outperformed the S&P 500 on the heels on strong fourth-quarter earnings reports and guidance that matched expectations. Hotel REITs were weaker and relatively underperformed as investors focused on somewhat mixed fourth-quarter earnings reports and 2023 guidance that embedded heightened expense pressures and outsized renovation disruption.“
STR President Amanda Hite said hotel revenue per available room “moderated“ in February, up 17.3% year over year. RevPAR growth was driven by a 10.7% increase in average daily rate and a 5.5% occupancy increase.
“Room demand, however, was the second highest for any February on record and has been at or above prior monthly peaks for the past six months, with records set in September and December. Looking ahead, modest performance is expected as easy comps give way to tougher ones, but growth is expected for the foreseeable future,” Hite said.
Month-to-month performance was led by Hyatt Hotels Corp., which was the only company listed on the index to record an increase in stock value at 6.5%. REIT Ryman Hospitality Partners and brands Hilton and Wyndham Hotels & Resorts recorded sub-1% month-to-month dips.
Hyatt was also the top performer year over year, with a 19.7% increase in stock value compared to February 2022. Ryman again took the second-place spot with a 5.3% year-over-year increase.
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.