HENDERSONVILLE, Tennessee, and MILWAUKEE—The Baird/STR Hotel Stock Index decreased 1.4% in July to close the month at 3,639.“The hotel industry continues to perform at record levels across the board, so it has been surprising to watch this type of trend develop over the last several months,” said Randy Smith, chairman and co-founder of STR, Inc. “There have been worldwide economic and political factors that have influenced investor sentiment, but with 18-month forecasts calling for further performance increases, we remain confident about the state of the hotel industry.”
“Hotel stocks declined for the fifth consecutive month as sentiment toward the sector has turned quite negative,” said David Loeb, senior hotel research analyst and managing director at Baird. “While second-quarter earnings were generally ahead of expectations, RevPAR growth for both the C-Corps and REITs disappointed investors; additionally, third-quarter guidance reflects expected tough comparisons due to a few holiday shifts and weaker convention calendars across the country, which also surprised investors and added to the stocks’ recent weakness. Domestic hotel fundamentals remain solid, and we see a large disconnect between current valuations and still strong top- and bottom-line growth projections.”
The Baird/STR Hotel Stock Index for July lagged the performance of the MSCI REIT (RMZ) (+5.5%) and S&P 500 (+2.0%).
The Hotel Brand sub-index reported a 1.6% decrease to 4,732. The Hotel REIT sub-index experienced a 1.2% decrease to 1,684 during the month.