U.S. Hotel Stocks Up 6.6 Percent for May 2017

The Baird/STR Hotel Stock Index increased 6.6% in May, closing the month at 4,193. Year to date through the first five months of 2017, the index was up 13.2%.

"Hotel stocks outperformed for the third-consecutive month driven by strong gains from the hotel brand companies," said Michael Bellisario, senior hotel research analyst and vice president at Baird. "RevPAR growth trends appear to have stabilized recently—but have not yet reaccelerated—and investors continue to ascribe premium earnings multiples to the hotel brand companies, which are growing their global market share and increasing their capital returns to shareholders."

"We've been encouraged by industry performance year to date, but the underlying supply and demand fundamentals still point toward a moderate occupancy decline," said Amanda Hite, STR's president and CEO. "The calendar shift around the Easter holiday made March and April performance difficult to interpret, but with that shift in the data behind us, we feel that there will be better visibility into the factors driving industry performance. ADR growth continues to be muted, but it is still strong enough to lift RevPAR growth for the foreseeable future. That growth continues to aid confidence around the investment community."

The Baird/STR Hotel Stock Index for May outperformed both the S&P 500 (+1.2%) and the MSCI REIT (RMZ) (-0.9%).

The Hotel Brand sub-index increased 10.3% to 6,070 from April to May, while the Hotel REIT sub-index fell 0.3% to 1,569 during the month. 

The Baird/STR Hotel Stock Index was set to equal 1,000 on 1 January 2000. Last cycle, the Index peaked at 3,178 on 5 July 2007. The Index's low point occurred on 6 March 2009 when it dropped to 573.

The Hotel Brand sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 3,407 on 5 July 2007. The sub-index's low point occurred on 6 March 2009 when it dropped to 722.

The Hotel REIT sub-index was set to equal 1,000 on 1 January 2000. Last cycle, the sub-index peaked at 2,555 on 2 February 2007. The sub-index's low point occurred on 5 March 2009 when it dropped to 298. 

As of 31 May 2017, the companies that comprised the Baird/STR Hotel Stock Index include: Apple Hospitality REIT, Choice Hotels International, DiamondRock Hospitality Company, Extended Stay America, Hilton Worldwide Holdings, Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels Corporation, InterContinental Hotels Group, La Quinta Holdings, LaSalle Hotel Properties, Marriott International, Park Hotels & Resorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Ryman Hospitality Properties, Summit Hotel Properties, Sunstone Hotel Investors, Wyndham Worldwide Corporation, and Xenia Hotels & Resorts.