The Baird/STR Hotel Stock Index increased 3.3% in March, closing the month at 3,876. Through the first quarter of 2017, the index was up 4.7%.
Hotel stocks outperformed the broader indices in March as investors rotated into the sector, given still-attractive relative valuations versus other real-estate sectors, and as Marriott (International) presented better-than-expected three-year scenarios at its recent investor day, said Michael Bellisario, senior hotel research analyst and VP at Baird. However, we expect management teams in the coming weeks to provide industry commentary that remains relatively cautious given the moderate year-to-date growth trends and continued lack of a meaningful growth reacceleration.
With the shift in the Easter and Passover holidays, we expect group demand to shift meaningfully, said Amanda Hite, STRs president and CEO. This, in turn, will show wide swings in performance data between March and April, and interpretations of underlying fundamentals will be a bit more difficult than usual. We do not expect the sentiment of slower ADR growth to change much, and we continue to monitor the supply pipeline closely as growth in new rooms accelerates.
The Baird/STR Hotel Stock Index for March outperformed both the S&P 500 (0.0%) and the MSCI REIT (RMZ) (-3.0%).
The Hotel Brand sub-index increased 4.5% to 5,340 from February to March, while the Hotel REIT sub-index rose 1.1% to 1,597 during the month.
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