Hotel stock values overall continued to tick up in April, and year to date have regained all of the losses of 2020, despite lagging the broader stock market gains.
The Baird-STR Hotel Stock Index — comprising 20 of the largest hotel companies publicly traded on a U.S. stock exchange by market capitalization — is up 15.8% year to date as of April, after a 13.2% decline for full-year 2020, according to the latest report from CoStar Group’s hospitality analytics firm STR and financial services company Baird.
Hotel real estate investment trust stock values are up 22.2% year to date, outperforming the hotel brands, which have gained 13.7% as of April. However, the hotel REITs had more ground to regain, with values having fallen 27.1% in 2020, compared to a 7.4% decline for the brands.
The Hotel Stock Index gained 3.2% from March to April. Comparatively, the S&P 500 is up 5.2% month over month, and up 11.3% year to date as of April. Hotel REIT stock values increased 4.4% monthly and 22.2% year to date, versus gains of 2.8% monthly and 13.7% year to date for the hotel brands.
Michael Bellisario, senior hotel research analyst and director at Baird, said while hotel stock prices increased for the month, “they were relative underperformers on a monthly basis for the third time this year,” and “the hotel REITs have outperformed the hotel brand stocks each month this year.”
For April, the top five Hotel Stock Index performers were all REITs: CorePoint Lodging, Hersha Hospitality Trust, Apple Hospitality REIT, Braemar Hotels & Resorts and Host Hotels & Resorts — all with month-over-month gains of between approximately 8% and 10%.
Year over year, the largest stock value gains have been achieved by REITs, led by Park Hotels & Resorts, which is up 134.6% from April 2020.
Bellisario said the underperformance of hotel stocks versus the broader indexes can be explained by “lost momentum recently as investors continue to rotate into more defensive and value-oriented sectors despite the progress that is being made on the vaccination front and the sequential monthly improvement in hotel fundamentals being realized.”
Despite that, monthly performance by the U.S. hotel industry is engendering confidence in the sector, according to STR President Amanda Hite.
“The first quarter of the year produced stronger room demand than expected as American consumers, emboldened by ongoing vaccinations and plenty of savings, are buying the experiences they had to forego for the last year,” Hite said. “This translated directly to higher occupancies, especially on weekends.”
She said that average daily rates at U.S. luxury hotels were actually higher in March 2021 than they were in March 2019, “pointing to the resilience of the offerings at the highest end of the market.”
As a result, Hite said STR and its forecasting partner Tourism Economics “will likely revise our new forecast upward, not because demand will exceed expectations for the remainder of 2021, but because of the strength of the first quarter.”