HENDERSONVILLE, Tennessee, and MILWAUKEE — The Baird/STR Hotel Stock Index dipped 2.8% in May to a level of 5,148. Year to date through the first five months of 2021, the stock index was up 12.6%.
“Hotel stocks declined in May and underperformed their respective benchmarks for the third consecutive month,” said Michael Bellisario, senior hotel research analyst and director at Baird. “The broader reopening trade continues to lose momentum despite hotel fundamentals that continue to improve on a sequential basis, which is being driven by strong leisure demand. The return of the business traveler later this year is our key area of focus over the intermediate term.”
“Investor sentiment toward hotel stocks is set up to receive an injection of optimism as the summer metrics roll in over the coming weeks,” said Amanda Hite, STR president. “Leisure demand continues to drive improvement in a lot of markets, and the Saturday before Memorial Day produced the country’s highest occupancy level—83%—since the fourth quarter of 2019. With more than 2 trillion dollars in accumulated savings, many have the means and the banked vacation time to travel and pay for premium experiences in the coming months. If 2020 is any guide, we expect robust demand for destinations that offer access to beaches, parks and other outdoor settings. At the same time, there is an understanding that full recovery remains far off until a prominent return of business travel, groups and international arrivals. Midweek occupancies continue to hover around 50%, pointing to a slow recovery in the business segment that hinders growth in the major metros and at the top end of the market. April was the first month in a year with more than 2 million group rooms sold. Those rooms are more likely skewed toward social events with large corporate gatherings still on the back burner.”
In May, the Baird/STR Hotel Stock Index fell behind both the S&P 500 (+0.5%) and the MSCI US REIT Index (+0.8%).
The Hotel Brand sub-index decreased 2.2% from April to 8,862, while the Hotel REIT sub-index dropped 4.5% to 1,300.
About the Baird/STR Hotel Stock Index and Sub-Indices
The Baird/STR Hotel Stock Index was set to equal 1,000 on 1 January 2000. Last cycle, the Index peaked at 3,178 on 5 July 2007. The Index’s low point occurred on 6 March 2009 when it dropped to 573.
The Hotel Brand sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 3,407 on 5 July 2007. The sub-index’s low point occurred on 6 March 2009 when it dropped to 722.
The Hotel REIT sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 2,555 on 2 February 2007. The sub-index’s low point occurred on 5 March 2009 when it dropped to 298.
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 31 May 2021, the companies that comprised the Baird/STR Hotel Stock Index included: 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.
This communication is not a call to action to engage in a securities transaction and has not been individually tailored to a specific client or targeted group of clients. Research reports on the companies identified in this communication are provided by Robert W. Baird & Co. Incorporated, and are available to clients through their Baird Financial Advisor. This communication does not provide recipients with information or advice that is sufficient on which to base an investment decision. This communication does not take into account the specific investment objectives, financial situation or need of any particular client and may not be suitable for all types of investors. Recipients should consider the contents of this communication as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this release.
Putting clients first since 1919, Baird is an employee-owned, international wealth management, asset management, investment banking/capital markets, and private equity firm with offices in the United States, Europe and Asia. Baird has approximately 4,500 associates serving the needs of individual, corporate, institutional and municipal clients and more than $350 billion in client assets as of December 31, 2020. Committed to being a great workplace, Baird ranked No. 32 on the 2021 Fortune 100 Best Companies to Work For® list. Baird is the marketing name of Baird Financial Group. Baird’s principal operating subsidiaries are Robert W. Baird & Co. Incorporated in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s website at www.rwbaird.com.
STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.