Hotel Stocks Slide But Still Outperform Broader Economic Indexes

After ending 2021 with a 12.7% increase in December, the Baird/STR Hotel Stock Index lost some of that ground in January, dropping 3.8%.

Hotel stocks, however, outperformed the broader economy, which Michael Bellisario, senior hotel research analyst and director at Baird, said shows continued forward momentum and confidence from investors in the sector.

Over the same period, economic indexes the S&P 500 and the RMZ declined 5.3% and 7%, respectively.

The Hotel Stock Index comprises 20 of the largest hotel companies — brands and real estate investments trusts — publicly traded on a US stock exchange by market capitalization.

“Despite the significant stock market volatility to start the year, both the hotel brands and hotel REITs outperformed their respective benchmarks in January, which continued the momentum from the end of 2021,” Bellisario said.

He added that concerns around rising COVID-19 cases linked to the omicron variant “are slowly subsiding, and investors are looking forward again. At the same time, leisure demand remains robust, optimism regarding a more normalized travel environment is building, and the broader growth-to-value rotation has benefited hotel stocks as inflation pressures remain front and center.”

Amanda Hite, president of CoStar’s hospitality analytics firm STR, added that US hotel performance in January was also “lower than the month prior, as leisure consumers stayed closer to home after the holidays and business travel remained hampered by work-from-home protocols. ”

“Room demand was also affected by severe weather and corresponding flight cancellations,” she said. “The one bright spot in the numbers is ADR, which continues to show robust recovery across the spectrum.”

The top-performing companies for month were REIT Braemar Hotels & Resorts, with a 4.9% gain, and brand InterContinental Hotels Group, up 2.2% over December.

Three other REITs — Apple Hospitality REIT, Host Hotels & Resorts and RLJ Lodging Trust — were also in the index’s top five performers month over month, with stock values ​​nearly flat, down 0.1%, 0.3% and 0.6%, respectively compared to December.

The biggest losses in stock values ​​month to month came from Ashford Hospitality Trust — down 18.9% — and Choice Hotels International — down 8.1%.

Compared with January 2020, all but two of the 20 companies on the index improved stock values, led by brands Wyndham Hotels & Resorts, Hilton and Choice, all of which recorded year-over-year gains of more than 42%.

Stock values ​​dropped year over year for REITs Ashford Hospitality Trust — down 73.3% — and Sotherly Hotels, which was down 26%.

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The Baird/STR Hotel Stock Index and sub-indices are available exclusively on Hotel News Now. 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 US 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 June 30, 2021, the companies that comprised the Baird/STR Hotel Stock Index included: Apple Hospitality REIT, Ashford Hospitality Trust, Chatham Lodging Trust, Choice Hotels International, DiamondRock Hospitality Company, 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.

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