HENDERSONVILLE, Tennessee, and MILWAUKEE—The Baird/STR Hotel Stock Index rose 15.6% in April to a level of 3,177. Year to date through the first four months of 2020, the stock index was down 39.7%.
“Hotel stocks rebounded in April following one of their worst months on record, but the stocks remain well below levels seen earlier this year,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Worst-case zero-occupancy scenarios have not unfolded as investors had feared, and the hotel companies have significantly bolstered their balance sheets with credit facility draws, bond offerings, and points pre-sales, which afford plenty of breathing room on the liquidity front until hotel demand begins to materially rebound.”
“U.S. weekly data for the latter portion of April has provided hope that levels seen earlier in the month were the performance bottom,” said Amanda Hite, STR president. “While there have been modest demand gains over the last three weeks, the level of hotel business remains at incredible lows. Certainly, there is good news in slight demand increases versus further steep declines, but uncertainty will persist for the industry even as businesses begin to reopen and distancing limitations are eased. Hotel companies have released new cleaning protocols which should give guests a sense of safety as travel demand resumes.”
April performance of the Baird/STR Hotel Stock Index outperformed both the S&P 500 (+12.7%) and the MSCI US REIT Index (+8.0%).
The Hotel Brand sub-index jumped 17.0% from March to 5,511, while the Hotel REIT sub-index increased 11.7% to 784.
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 www.HotelNewsNow.com. 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 30 April 2020, 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.