Hotel stock values increased for a second month in October, on pace with broader economic indexes, as hotels in major markets benefited from the start of what is traditionally conference season in the U.S.
The Baird/STR Hotel Stock Index, which comprises 20 of the largest hotel companies publicly traded on a U.S. stock exchange by market capitalization, grew by 6.8% in October, led by hotel brand companies, which increased in value by 9% collectively. Hotel real estate investment trusts listed on the index grew stock values moderately, by 0.5%.
Year to date, the stock index is up 20.7%, due in large part to a 22.4% surge in February. In September, the index grew in value by 5.2%.
Broader economic indexes the S&P 500 and the U.S. RMZ increased by 6.9% and 7.6%, respectively, in October, and 22.6% and 29.4%, respectively, year to date.
Michael Bellisario, senior hotel research analyst and director at financial services firm Baird, said the hotel brands "were the absolute and relative winners" of the month. Hotel stock performance should continue to trend upward into 2022, he added.
"Delta variant concerns are in the rearview mirror now, and investors are looking forward to the recovery continuing in 2022, particularly in some of the harder-hit segments, markets and regions that are poised to rebound strongly,” he said.
Amanda Hite, president of CoStar hospitality analytics firm STR, said the hotel industry has demonstrated strength in steadily improving weekday occupancies “as businesses bring their workers back to the office, adding to the already strong room demand from weekend leisure travelers."
Group demand for hotels has also improved, with groups booking more than 1 million hotel room nights each week "since the start of conference season," she said.
"Industry stakeholders, especially in major cities, are also drawing optimism from the border opening to international travelers next week, although we expect a more delayed impact for hotels," Hite said. "Overall, industry recovery remains solid with weekly ups and downs continuing as well as labor costs pressuring profitability into at least the winter.”
Top performances for the month came from hotel brand company Choice Hotels International and hotel REIT CorePoint Lodging.
Choice stocks increased in value by 11.3% from September to October, compared to a 11.2% increase for CorePoint. The other top five performers, month over month, were all brands — Hyatt Hotels Corp., InterContinental Hotels Group and Wyndham Hotels & Resorts.
Compared to October 2020, CorePoint Lodging stocks increased by 260.7%. Stock values for other REITs — Xenia Hotels & Resorts, Ryman Hospitality Properties and Braemar Hotels & Resorts — also grew by more than 100% year over year.
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.