Hotel stocks underperformed the broader market in May but outperformed real estate stocks as interest rates moved sharply higher following the Fed's commentary that quantitative easing could slow in the coming months.
HENDERSONVILLE, TENNESSEE, and MILWAUKEE – The Baird/STR Hotel Stock Index reported a 1.4-percent decrease in May to 2,745. Year-to-date 2013, the Baird/STR Hotel Stock Index is up 12.1 percent. The index ended 2012 at 2,448.
Robert W. Baird and Co. and STR partnered to create the Baird/STR Hotel Stock Index -the first widely available U.S. hotel stock index in the hotel industry. The index combines Baird’s financial markets expertise, the data processing of STR and the up-to-the-minute distribution capabilities of HotelNewsNow.com, the industry’s leading hotel news website.
The Baird/STR Hotel Stock Index outperformed the MSCI REIT (RMZ) (-6.2 percent), but underperformed the S&P 500 (+2.1 percent) during May.
“May was a quiet month for the Baird/STR Hotel Stock Index, though hotel performance is consistent,” said Randy Smith, co-founder and chairman at STR. “April saw high demand increases (+4.4 percent), while supply increases remain low. Preliminary data for May also shows continued revenue-per-available-room growth. We expect to see an uptick in industry performance this summer, as demand and average daily rate continue to rise.”
“Hotel stocks underperformed the broader market in May but outperformed real estate stocks as interest rates moved sharply higher following the Fed’s commentary that quantitative easing could slow in the coming months,” said David Loeb, senior hotel research analyst and managing director at Baird. “We view a potential slowdown in quantitative easing as a positive for hotel stocks given expectations for an improving economy, which should boost top- and bottom-line performance at hotels; also, we would expect investors to continue rotating out of yield-focused real estate sectors and into hotel stocks given their stronger growth profile.”
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