Executives at hotel-focused real estate investment trusts signaled this earnings season that they are confident the hotel transactions market will ramp up in 2024. Investors seem to agree, as stock values jumped for hotel REITs in February.
Hotel brand company stock values also rose — a little more than that of their REIT counterparts.
The Baird/STR Hotel Stock Index, comprising 20 of the largest hotel brand companies and REITs publicly traded on a U.S. stock exchange by market capitalization, rose 6.3% overall from January to February. On its own, the brand subindex was up 6.5%, compared to a 5.8% gain for the REIT subindex.
The improvement is remarkable for the REITs because that subindex was down 1.9% in January, while the brands were up 4.6%.
The Hotel Stock Index outperformed the broader economy, represented by the S&P 500, which was up 5.2% in February. The RMZ, or MSCI US REIT Index, which is a gauge of the overall real estate investment market, was up 1.8% for the month.
“Hotel stocks posted solid gains in February, and both sub-indices outperformed their respective benchmarks for the third consecutive month,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The broad-based market rally has lifted valuations and stock prices across the board, and investor sentiment is much improved, particularly for the hotel companies following fourth-quarter earnings and 2024 outlooks that contained no major surprises.”
Brands and REITs shared top spots for month-to-month performance improvements, led by Hyatt Hotels Corp. and Ashford Hospitality Trust.
Compared to the same month last year, brands dominated, with IHG Hotels & Resorts' stock up 55.6%. Ryman Hospitality Trust led the REITs in year-over-year performance, up 27.7%.
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.