UNITED STATES The Baird/STR Hotel Stock Index ended August at 1,828, a 6.7% decrease for the month but up 14% year to date. The Index ended 2009 at 1,603.
“August was a terrible month for the stock market in general, and hotel stocks were no exception,” says Randy Smith, CEO of Smith Travel Research. “Dropping 6.7% for the month, the Baird/STR Hotel Stock Index reflected the growing concern about the direction of the economy and the travel industry. So while industry fundamentals continue to gradually improve, investors are clearly anxious about the strength and duration of the rebound.”
The relative strength of the overall economy, perhaps not surprisingly, is the key issue facing hotel investors for the rest of the year, says David Loeb, managing director of Baird’s hotel research platform. “During the last month, investors have become nervous about the sustainability of the economic recovery, and hotel stocks have been hit hard as a result. We expect hotel shares to remain volatile near term until a clearer consensus emerges about hotel demand trends for the rest of 2010 and 2011.”
The U.S. hotel industry’s first widely available stock index, created by Robert W. Baird & Co. and Smith Travel Research, combines Baird’s financial markets expertise with the data processing of STR. The index was set to equal 1,000 on January 1, 2000. It peaked at 3,178 on July 5, 2007 hitting its nadir of 573 on March 6, 2009.
The market-cap weighted index is comprised of 15 of the largest market capitalization hotel companies publicly traded on a U.S. exchange and attempts to characterize the performance of hotel stocks. The index is not actively managed, and direct investment in it cannot be made.
The companies listed on the index are: Ashford Hospitality Trust, Choice Hotels International, DiamondRock Hospitality, FelCor Lodging Trust, Hersha Hospitality Trust, Hospitality Properties Trust, Host Hotels & Resorts, Hyatt Hotels Corp., IHG, LaSalle Hotel Properties, Marriott International Inc., Orient-Express Hotels, Starwood Hotels & Resorts Worldwide, Sunstone Hotel Investors and Wyndham Worldwide.