U.S. Focused Baird/STR Hotel Stock Index Falls 3.5% in July

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This week the Baird/STR Hotel Stock Index reported a 3.5-percent decrease in July to 2,329, but is up 15.0 percent year-to-date 2012. The index ended 2011 at 2,025.

Both the MSCI REIT (RMZ) (+1.8 percent) and the S&P 500 (+1.3 percent) outperformed the Baird/STR Hotel Stock Index in July.

"Economic uncertainties continue to make investors apprehensive," said Randy Smith, co-founder and chairman at STR. "The hotel industry's performance in July has been muted due to tougher year-over-year comparisons and less weekend days compared to July 2011. We still expect to see increases in performance, though the second half of the year is projected to be softer than the first half."

"Hotels underperformed for the third consecutive month as broader macroeconomic fears continue to cause investors to seek out investments in relatively safer real-estate sectors," said David Loeb, senior hotel research analyst and managing director at Baird. "Second-quarter earnings have been strong but conservative guidance, especially for the third quarter given the July 4 holiday occurring midweek, likely spooked some investors given the expected deceleration in (revenue-per-available-room) gains; we believe management teams are being overly conservative."