Hotel company stock values continue to grow on average, but the pace has slowed as persistently higher interest rates cast a shadow over real estate stocks in general.
After a 3.3% gain in January and a 6.3% improvement in February, the Baird Hotel Stock Index was up 1.9% in March. The index comprises 20 of the largest hotel brand companies and real estate investment trusts publicly traded on a U.S. stock exchange by market capitalization.
The hotel brands continue to outperform the REITs on the index. The brand subindex was up 2.4% for March, compared to a 0.1% decline by the REIT subindex.
Both subindexes underperformed their relative benchmarks. The S&P 500, representing the broader economy, was up 3.1% in February. The RMZ, or MSCI US REIT Index, which is a gauge of the overall real estate investment market, was up 1.2% for the month.
Still, the hotel stock index is up 11.9% year to date, compared to a 10.2% improvement by the S&P 500 over the same time period. The hotel REIT subindex is up 3.6% year to date, compared to a 1.3% decline by the RMZ.
“Investors broadly continue to pay up for growth equities and risk assets, which has benefited the hotel brand stocks over the last five months,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Hotel REITs have gained ground over that same time frame but have been the relative laggard as investors have discounted real estate stocks amid the still-high interest rate backdrop.”
Brands and REITs shared top spots for month-to-month performance improvements, led by Choice Hotels International and Park Hotels & Resorts. Choice's stock improved by double-digits compared to February — the only stock on the index to do so.
Compared to March 2023, brands represented four of the five top-performing stocks. IHG Hotels & Resorts led with a 58.6% year-over-year improvement, followed by Park Hotels & Resorts, up 54%. Marriott International and Hilton also posted better-than-50% gains.
For more information about the Hotel Stock Index, email hotelstockindex@rwbaird.com.
The Baird Hotel Stock Index and sub-indices are available exclusively on Hotel News Now. The indices were created by Robert W. Baird & Co. (Baird). 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 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.