U.S. Hotel Stock Tracking Index Rises 6.1% in July

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According to STR, the Baird/STR Hotel Stock Index increased 6.1% in July to close the month at 3,320. Year to date, the index is up 7.3%.

"As U.S. hotel lodging performance continues its period of slow growth, the stock index reflects those new realities," said Amanda Hite, STR's president and CEO. "After an overcorrection post-Brexit, we are now in a 'new normal' environment of muted, but still positive RevPAR performance. Most industry participants and observers understand the existing supply and demand situation and are refocusing on ADR growth, which should be a catalyst for profit growth. That said, there are few factors, positive and negative, that are not yet well understood and priced in."

"Hotel stocks continued their rebound in July, especially the REITs, as investors bid up higher-yielding stocks in the aftermath of the Brexit referendum in what is believed by many to be a lower-for-longer interest rate environment," said David Loeb, senior hotel research analyst and managing director at Baird. "Second-quarter earnings reports were generally in line with recently lowered expectations, and most management teams took a much more cautious approach to forward-looking commentary and guidance, which better aligns their views with the investment community's slow-growth expectations."

The Baird/STR Hotel Stock Index for July outperformed the S&P 500 (+3.6%) and the MSCI REIT (RMZ) (+4.1%).

The Hotel Brand sub-index reported a 4.2% increase to 4,301 in July. The Hotel REIT sub-index experienced a 10.3% increase to 1,547 during the month.