The Baird/STR Hotel Stock Index increased 7.1% from November to December and closed the year up 19.6% at 3,702.
"The strong close to the year for hotel stocks was not surprising given industry performance results in November," said Amanda Hite, STR's president and CEO. "We viewed the performance growth in November as an outlier caused by calendar shifts and subsequent group travel strength, thus, we have a more subdued approach in early 2017 even as the stock market seems to suggest that GDP growth will increase sharply. Despite macroeconomic and political turmoil, 2016 will be remembered as a rather average year for the hotel industry with RevPAR (revenue per available room) growth just above 3%."
"Hotel stocks ended the year on a strong note, building upon gains realized in November after the risk-on trade continued to push stocks higher post-election," said Michael Bellisario, senior hotel research analyst and vice president at Baird. "Hotel stock valuations appear to be pricing in a significant rebound in fundamentals for 2017, although we believe management teams will remain relatively cautious as they set guidance expectations for the upcoming year."
The Baird/STR Hotel Stock Index for December outperformed both the MSCI REIT (RMZ) (+4.0%) and the S&P 500 (+1.8%). The index also outperformed the S&P 500 (+9.5%) and the MSCI REIT (RMZ) (+4.2%) for total-year 2016.
The Hotel Brand sub-index reported a 6.8% increase to 4,911 from November to December. The Hotel REIT sub-index experienced a 7.5% rise to 1,640 during the month. In year-end figures, the Hotel Brand sub-index increased 20.4%, and the Hotel REIT sub-index rose 17.8%.
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.
As of 31 December 2016, the companies that comprised the Baird/STR Hotel Stock Index include: Apple Hospitality REIT, Choice Hotels International, Chesapeake Lodging Trust, DiamondRock Hospitality Company, Extended Stay America, Hilton Worldwide Holdings, Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels Corporation, InterContinental Hotels Group, La Quinta Holdings, LaSalle Hotel Properties, Marriott International, Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Worldwide Corporation, and Xenia Hotels & Resorts.
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