The Baird/STR Hotel Stock Index decreased 6.9% in August to close the month at 3,388.“After a bumpy summer for lodging stocks, investor attitudes seem to be shifting back to being slightly more positive,” said Randy Smith, STR’s chairman and co-founder. “The summer downturn in lodging stocks was somewhat baffling since STR, CBRE and PwC continued to release very positive forecasts at least through the end of 2016. Granted the occupancy gains will be increasingly difficult to obtain, but as the industry continues to increase RevPAR (revenue per available room) through higher room rates, profits should continue to improve for 2015 and 2016.”
“Hotel stocks fell for the sixth consecutive month and experienced their largest monthly decline since October 2012 as investors de-risked their portfolios and moved into safer asset classes,” said David Loeb, senior hotel research analyst and managing director at Baird. “Global macroeconomic concerns are top of mind for investors, particularly slowing growth in China, and the risk-off trade has caused hotel stocks to underperform. Despite these concerns, domestic lodging fundamentals have shown no signs of slowing—July RevPAR growth was solid at 8.3%—and we see a large disconnect between public market and private market valuations, which could lead to increased M&A activity in the sector, especially if fundamentals remain on solid footing.”
The Baird/STR Hotel Stock Index for August lagged the performance of the S&P 500 (-6.3%) and the MSCI REIT (RMZ) (-6.5%).
The Hotel Brand sub-index reported a 6.8% decrease to 4,408. The Hotel REIT sub-index experienced a 7.0% decrease to 1,566 during the month.