Stock values for major hotel companies sagged in January, with hotel brands taking a harder hit than real estate investment trusts, according to the Baird-STR Hotel Stock Index.
The index — comprising 20 of the largest companies publicly traded on a U.S. stock exchange by market-capitalization — declined 8.2% from December to January, underperforming the S&P 500, which was down 1.1%.
On aggregate, hotel brand company stocks were down 9.1% in January, and REIT stocks were down 5.3%.
Lifting the REITs were top performers Ashford Hospitality Trust, with a 12.7% increase over December; and Braemar Hotels & Resorts, up 8.5%. Both REITs are externally advised by Ashford. Among the brands, Marriott International and Hyatt Hotels Corporation were the bottom performers in the index, with stock values declining 11.8% and 11.6% respectively from December.
Hotel brands fared better in year-over-year comparisons.
RLH Corporation — which on Dec. 31, 2020, announced a merger agreement with Sonesta International Hotels Corporation — led the index with a 23.2% increase in stock value from January 2020 to January 2021. Extended Stay America stock was up 13.6% year over year, while Ashford was down 88.1% over the same period.
In its monthly hospitality report, financial services firm Baird noted that factors dragging down stock performance for the sector included "a slower-than-expected initial [COVID-19] vaccine rollout" in the U.S. Hopes and a timeline for the recovery of travel and hotel demand have commonly been pinned on vaccinations.
“Hotel stocks pulled back in January and significantly underperformed the broader indices as the vaccine rollout and reopening narrative lost some momentum,” Michael Bellisario, senior hotel research analyst and director at financial services firm Baird, said in a news release.
“The ‘pent-up demand’ thesis remains topical for bullish investors and industry participants, especially on the leisure travel front, but the more important intermediate- to long-term recovery needs to come from the business traveler, for which a rebound appears further out, in our opinion.”
Amanda Hite, president of STR, CoStar's hospitality analytics firm, said the stock index results for January were unsurprising.
“Performance for these opening months of the year will resemble some of the slowest of 2020,” she said in the news release. “Once vaccine distribution becomes more widespread and the pandemic numbers improve, we should see better travel conditions that will push recovery. Our latest forecast points to Q3 as the period with more meaningful recovery of corporate and group business."
Companies comprising the Hotel Stock Index as of Jan. 31, 2021, are: Apple Hospitality REIT, Chatham Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, 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.