The Baird/STR Hotel Stock Index closed May at 5,063, which was a 4.1% increase from the previous month. Year to date through May, the stock index was up 3.6%.
Hotel stocks were higher in May led by significant outperformance by the hotel REITs, said Michael Bellisario, senior hotel research analyst and VP at Baird. Real-estate stocks broadly outperformed as interest rates declined during the month, and improving sentiment toward the hotel sector and strengthening fundamentals pushed stock prices higher amid continued M&A speculation.
Although there was a bit of an artificial boost from the Easter calendar shift, April hotel performance results appeared strong enough to help lift investor confidence in the sector in May, said Amanda Hite, STRs president and CEO. Weekday and weekend performance produced healthy indicators once again, which reinforced the indication of strong demand in both the leisure and business segments. April was also the fifth time in the past six months with a year-over-year decrease in hotel construction activity. That trend could indicate that construction has plateaued in the current growth cycle. As shown in our updated forecast, the industry continues to break records with growth expected for the foreseeable future.
The Baird/STR Hotel Stock Index outperformed the S&P 500 (+2.2%) and the MSCI US REIT Index (+3.6%).
The Hotel Brand sub-index increased 0.5% to 7,438 from April. The Hotel REIT sub-index increased 11.8% to 1,830.
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 Indexs 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-indexs 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-indexs low point occurred on 5 March 2009 when it dropped to 298.
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