HENDERSONVILLE, Tennessee, and MILWAUKEE—The Baird/STR Hotel Stock Index decreased 1.3 percent in May to close the month at 3,817.“Investors are obviously concerned about real estate-oriented companies, and the hotel industry is a notable segment of real estate,” said Randy Smith, chairman and co-founder of STR, Inc. “We’re somewhat surprised by this sentiment as the hotel industry continues to have strong performance metrics, and we believe that performance will continue into the foreseeable future. The nervousness from investors about hotels, and hotel REITs in particular, could stabilize once it becomes clear which direction The Fed is going to take with interest rates.”
“Hotel stocks continued their underperformance in May despite strong first-quarter earnings reports,” said David Loeb, senior hotel research analyst and managing director at Baird. “Investor sentiment remains negative, particularly toward the Hotel REITs, on continued relative weakness in New York City and broader concerns toward real estate stocks in the face of rising interest rates. Despite the significant pullback in share prices and valuations over the last several months, hotel real estate values continue to rise as capital flows to the sector remain strong; we see a disconnect between public and private market valuations.”
The Baird/STR Hotel Stock Index during May lagged the performance of the S&P 500 (+1.0 percent) and the MSCI REIT (RMZ) (-0.5 percent).
The Hotel Brand sub-index reported a 1.6-percent decrease to 5,003 during May. The Hotel REIT sub-index experienced a 0.8-percent decrease to 1,735 during the month.