“With industry fundamentals trailing initial expectations, it is nice to see that investors have concluded that a sharp industry downturn is not likely,” said Randy Smith, STR’s chairman and co-founder. “With RevPAR up only 2.7%, the first quarter’s performance was weak compared to recent trends, but investors shrugged this off and began to take a longer view of the current record-setting lodging cycle. While continuing to set new performance peaks has become difficult, the industry still expects 2016 to be a solid year with overall growth.”
“Hotel stocks continued their strong rebound in March as investor sentiment improved on lessening fears of an impending recession; hotel stocks are up 28% from their mid-January lows,” said David Loeb, senior hotel research analyst and managing director at Baird. “While stocks continue to trade at discounts to their private markets valuations, the debt markets remain challenging, which has sidelined many buyers and caused price discovery to remain somewhat elusive. March industry trends were a bit weaker than expected, but we suspect management teams’ wide 1Q16 guidance ranges accounted for the heightened level of uncertainty.”
The Baird/STR Hotel Stock Index for March outperformed the S&P 500 (+6.6%) but fell short of the performance of the MSCI REIT (RMZ) (+9.8%).
The Hotel Brand sub-index reported a 9.0% spike to 4,380 in March. The Hotel REIT sub-index experienced a 7.7% rise to 1,460 during the month.