Hotel company stock values were essentially flat in March 2021, after reaching pandemic-era highs in February.
The Baird/STR Hotel Stock Index — comprising 20 of the largest companies publicly traded on a U.S. stock exchange by market-capitalization — was down 0.2% in March, according to the latest data released by Baird. Still, the index composite value was 5.131, which is an 87.1% increase over March 2020 and a 10.8% increase over March 2019.
STR is CoStar Group’s hospitality analytics firm.
According to Baird's monthly hospitality report: "March was a strong month for hotel demand trends; however, hotel stocks were relatively flat as investors' expectation for improvement has started to become a reality."
The report noted broader travel trends continue to improve as COVID-19 vaccination rates increase, but a rebound in business travel to hotels will be needed "to drive further upside as the year progresses."
"We expect the focus to begin shifting to the business traveler and what the demand environment might look like later this year," the report states.
STR President Amanda Hite said in a news release announcing the latest results that “March produced weekly occupancy levels that were the best in the U.S. in a year, supported by healthy leisure and spring break demand.“
She also said U.S. hotel room demand grew in the first quarter at a pace "slightly ahead of our forecast, reflecting the acceleration in vaccine distribution and travel" and the "forecast still calls for a return of group travelers in the later part of the year.”
In March 2020, as the onset of the COVID-19 pandemic began to impact hotel performance, hotel stock values were down 36% from the previous month. The index was already on a downward trajectory in 2020, having posted month-to-month declines of 7.7% in January and 11.7% in February. That was after a 29.5% gain for full-year 2019.
Since March 2020, hotel stock values have been on a roller coaster — rising 15.6% month-to-month in April and inching up another 1.7% in May before dropping 5.3% in June and 1.7% in July. The index surged as confidence in the sector grew due to a surprising summer travel demand boost, resulting in a 19% surge in stock values in August 2020. With a second wave of COVID-19 cases in the U.S., stock values then dropped 7.1% in September and remained at that level for October. Positive news around vaccine development caused another reversal, boosting the index by 31% in November and 5% in December.
The stock index lost some of that ground in January 2021, down 8.2%, but in February reached its highest level since COVID-19 was declared a pandemic in March 2020, growing by 22.4%.
In March 2021, stocks for the hotel brands outperformed the hotel real estate investment trusts on average. Hotel brand company stock values were down 7.4% from March 2020, but up 39.7% over March 2019, whereas hotel REIT stock values were down 27.1% year-over-year and up 10.1% from this time in 2019. Year-to-date, hotel brand stocks are up 10.6%, compared to a 17% increase for hotel REITs.
By comparison, the S&P 500 index was up 5.8% for the same period, up 16.3% year over year, and up 28.9% over March 2019 values.
Top hotel stock index performances for the month were divided between the brands and REITs.
Month over month, Extended Stay America stock values posted the biggest gain, up 22.7% from February. No other company posted a double-digit monthly gain; Pebblebrook Hotel Trust came the closest, up 7.2% month to month.
Compared to March 2020, stock values for the hotel REITs dominated the index. Braemar Hotels & Resorts stock was up 257.1% year over year, and Hersha Hospitality Trust posted a 194.7% gain over the same period.
The most significant decline in stock values was posted by Ashford Hospitality Trust, down 14% from February and 60.1% year over year.