Stock values rose in November for all but three of the 20 hotel companies on the Baird/STR Hotel Stock Index, driving an overall improvement of 9.3% after three months of declines.
The 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 — last posted a monthly improvement in July, but that 8.2% improvement over June was then nearly fully negated by an 8% cumulative decline August through October.
Year to date, the index is up 25.2%, despite declining in six out of 11 months through November. The gains have far exceeded the dips, particularly in January, when the index gained 16.4% in value compared to the end of December 2022. The November improvement is the index's second-best month-to-month showing after January.
The hotel REITs outperformed the brands on the index in November, though the brands have had the upper hand for most of the year. The REIT sub-index was up 12.1% for the month, compared to an 8.6% improvement by the brand sub-index. Year to date, the brands are up 30.6% while the REITs are lagging at a 7.6% improvement.
“Lower interest rates primarily drove the gains during the month, particularly for real estate stocks, and overall investor sentiment improved. Year-to-date, the hotel REIT sub-index turned positive ... while the hotel brand sub-index ... continues to be a relative outperformer,” Michael Bellisario, senior hotel research analyst and director at Baird, said.
The index tracked closely with broader economic indexes. The S&P 500 was up 8.9% in November; and the RMZ, or MSCI US REIT Index, which is a gauge of the overall real estate investment market, was up 10.2%. Year to date, the hotel stock index has fared slightly better than the overall economy, with the S&P 500 up only 19% and the RMZ down 0.1%.
For November, four of the index's top five performers were REITs, led by Park Hotels & Resorts, with a 28.6% improvement in stock value over October. Brand company Hyatt Hotels & Resorts rounded out the top five, with a 12% month-to-month gain.
Of the only three companies on the index to decline monthly, two were REITs — Braemar Hotels & Resorts, down 19.8%; and Sotherly Hotels, down 15.2%. Choice Hotels International, which has been in the news lately regarding its bid to acquire fellow brand Wyndham Hotels & Resorts, posted a 0.2% loss in stock value for the month.
On Nov. 28, a $1.4 billion deal was reached by KSL Capital Partners and Hersha Hospitality Trust to take the hotel real estate investment trust private. As a result, Hersha will exit the New York Stock Exchange, and the Baird/STR Hotel Stock Index, on Dec. 11.
STR President Amanda Hite said overall U.S. hotel performance in November experienced a seasonal decline, in contrast to the trajectory of the hotel stock index.
“As expected, U.S. hotel demand dipped slightly in November due to lessened corporate travel around Thanksgiving,” she said. “That metric should improve with a longer period between Thanksgiving and Christmas, which allows for more business travel and groups before the year-end holiday period.”
Year over year, the index's top five performers all posted double-digit improvements in stock value, led by IHG Hotels & Resorts with a 33.5% gain. Hotel brands made up four of the five, joined by REIT Park Hotels & Resorts with a 15.6% year-over-year increase. Lagging November 2022 the most were five REITs, with Ashford Hospitality Trust at the bottom with a 66.4% decline.
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.