U.S. Hotel Stocks Drops 36.0% in March
The Baird/STR Hotel Stock Index dropped 36.0% in March to a level of 2,748. Year to date through the first three months of 2020, the stock index was down 47.9%.
“Hotel stocks experienced one of their worst months on record as investors contemplated worst-case liquidity scenarios for hotel companies driven by the COVID-19 demand shock and potential hotel closures,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Overall, the majority of the publicly traded hotel companies are generally well capitalized, especially relative to private hotel owners, but the ultimate length and depth of the demand shock remain the key wildcards.”
“Hotel performance declines have been severe around the world, and decreases will likely continue for most markets until we see significant signs of containment of COVID-19,” said Amanda Hite, STR’s president. “In the U.S., occupancy levels have fallen to unprecedented lows, and we are forecasting a 50.6% drop in RevPAR for the year. The industry will be positioned for recovery once concerns are abated, but there is obviously great uncertainty on when that time will come.”
March performance of the Baird/STR Hotel Stock Index posted greater declines than both the S&P 500 (-12.5%) and the MSCI US REIT Index (-22.2%).
The Hotel Brand sub-index decreased 34.5% from February to 4,712, while the Hotel REIT sub-index declined 40.0% to 702.
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.
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