U.S. Hotel Stock Index Dips 2.4% in September

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The Baird/STR Hotel Stock Index reported a 2.4-percent decrease to 3,601 in September and is up 13.4 percent year to date. The index ended 2013 at 3,177.

The Baird/STR Hotel Stock Index outperformed the MSCI REIT (RMZ) (-6.5 percent) but underperformed the S&P 500 (-1.6 percent) in September.

"Hotel stocks fell into negative territory this month despite the continued positive performance trends," said Randy Smith, chairman and co-founder of STR. "In August, hotels saw an even higher demand increase (+4.8 percent) than in July (+4.7 percent). This demand growth was the second highest this year and the second highest since mid-2011, which is a good sign for the industry. Revenue per available room also continues to perform at high levels, as we saw the second-highest growth rate of 9.4 percent since September 2011, when RevPAR grew by 10 percent."

"Hotel stocks underperformed the broader market in September but outperformed other real estate sectors as interest rates moved higher following the Fed's more hawkish commentary, which led to fears of a rate increase occurring faster than previously anticipated," said David Loeb, senior hotel research analyst and managing director at Baird. "However, hotels should continue to outperform other real estate sectors in a rising rate environment, and the slow-but-steady improvement in the economy has contributed to very strong, broad-based weekly RevPAR trends."