Strengthening Dollar Weighs Down U.S. Hotel Stock Tracking Index

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According to STR, the Baird/STR Hotel Stock Index decreased 0.2 percent in March 2015 to close the month at 3,929.
 
"Concerns about effect of the strength of the dollar on hotels, particularly in New York, continue to be the chief worry for investors," said Randy Smith, chairman and co-founder of STR. "While we certainly agree it's something to keep an eye on, we remain bullish about the overall conditions surrounding the U.S. hotel industry. Our forecast includes a 6.4% increase in revenue per available room this year based on strong demand and the increased depth of the group business market."
 
"Hotel stocks posted mixed results in March as interest rates declined and slowing global growth fears persisted," said David Loeb, senior hotel research analyst and managing director at Baird. "Investor sentiment has turned negative recently, especially toward the Hotel REITs, on concerns of decelerating RevPAR growth, continued relative weakness in New York City, and still-high valuations. Year-to-date fundamentals have been strong, however, with RevPAR growth up over 8% despite the tough start of the year in New York City; we expect demand to remain strong and management teams to provide upbeat commentary regarding their 2015 outlooks in the coming weeks during first quarter earnings conference calls."
 
The Baird/STR Hotel Stock Index during March outperformed the S&P 500 (-1.7 percent) but fell short of the performance of the MSCI REIT (RMZ) (+1.3 percent).
 
The Hotel Brand sub-index reported a 0.6-percent increase to 5,099 during March. The Hotel REIT sub-index experienced a 2.1-percent decrease to 1,827 during the month.
 
As of 1 April 2015, FelCor Lodging Trust replaced Hersha Hospitality Trust in both the Baird/STR Hotel Stock Index and the Hotel REIT sub-index.