“Hotel stocks took a breather in August after July’s sharp rebound. Despite the slight decline in stock prices, both the Global Hotel Brands and Hotel REITs outperformed their respective benchmarks in August,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Hotel trends have remained solid throughout the summer months despite all the capital markets volatility and macroeconomic uncertainties. However, investors appear somewhat skeptical about the prospects for a significant recovery in business transient travel post-Labor Day, and hotel stocks appear to be discounting this relatively conservative fundamental expectation, in our opinion.”
“Even with expected seasonal slowing, demand and room rates have remained at healthy levels,” said Amanda Hite, STR president. “Upscale and upper midscale hotels reported stronger occupancy levels in August, appealing to price-conscious leisure and corporate transient travelers. With schools now back in session, owners and operators are closely watching the return of the corporate group and individual traveler to understand if, and how, patterns have changed since the onset of the pandemic. Association and large group event organizers are looking forward to the first fall without significant health restrictions, which could drive event attendance to new heights. When looking at the bottom line, GOPPAR surpassed 2019 levels for a fourth consecutive month in July. But as wages increase and operations are ramped up further, expenses will likely continue to rise, putting pressure on profit growth.”
In August, the Baird/STR Hotel Stock Index surpassed both the S&P 500 (-4.2%) and the MSCI US REIT Index (-6.1%).
The Hotel Brand sub-index fell 2.3% from July to 8,959, while the Hotel REIT sub-index dropped 3.7% to 1,143.
