Hotel stock values rebounded in September as worries over a post-Labor Day hotel demand slump mostly proved unwarranted.
The latest results for 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, show a 5.2% increase in September. The index is up 13% year to date.
For the first time since February 2021, the hotel stock index outperformed the broader economy, as represented by stock indexes the S&P 500 and RMZ, which for September were down 4.8% and 6% respectively. The S&P 500 is up 14.7% year to date, and the RMZ index is up 20.2% over the same time period.
The hotel stock index has recorded month-over-month gains in four of the nine months of 2021 — the largest increase, in February, was 22.4%.
“Hotel stocks rebounded strongly in September and finally broke their streak of six consecutive months of relative underperformance,” Michael Bellisario, senior hotel research analyst and director at Baird, said. “Delta variant concerns mostly subsided during the month, and hotel stocks benefited from higher interest rates and the broader market rotation that lifted all travel-related stocks.”
Investor sentiment for the hotel industry likely was also buoyed by better-than-expected hotel demand from business travelers and groups, which was key for hotels to capture following Labor Day and the end of the summer leisure season.
“The post-Labor Day period had been a source of consternation for the industry, but the early returns produced a pleasant surprise with group demand above 1 million for two consecutive weeks,” said Amanda Hite, president of STR, CoStar's hospitality analytics firm.
“We did see a performance dip late in the month, but ups and downs are expected at this point in the recovery cycle. Overall, we estimate September demand at 93% of the 2019 comparable, and there were noticeable improvements in the major markets and corporate-dependent hotels. With leisure demand continuing to deliver, but business travel and groups progressing much slower, we do not expect recovery to kick into the next gear until next year.”
In September, hotel brand companies outperformed the hotel real estate investment trusts, with the brand subindex up 6.7% compared to a 1% gain for the REIT subindex.
The top-five performers for September were a mix of brands and REITs, led by Marriott International with a 9.6% increase in stock value over August.
All companies in the index increased stock values over September 2020 except for Ashford Hospitality Trust, which was down 10.8% year over year and has been in a similar position for much of 2021. Leading year-over-year performance was CorePoint Lodging, which increased its stock value by 184% over the same month in 2020.
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.