U.S. Hotel Stock Index Flat in October

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The Baird/STR Hotel Stock Index decreased 0.8% in October 2016 to close the month at 3,108. Year to date, the index remains up 0.4%.

"Calendar shifts and subsequent strong RevPAR (revenue per available room) growth helped stocks, but October prices would indicate that investors were more focused on a pending deceleration in performance," said Amanda Hite, STR's president and CEO. "Supply growth and demand growth are in equilibrium, and we expect softening occupancy to eventually turn to an occupancy decline in 2017. At the same time, rate will still push moderate RevPAR growth."

"Hotel stocks outperformed in October amid low investor expectations and rising interest rates," said David Loeb, senior hotel research analyst and managing director at Baird. "Third-quarter earnings reports were weaker than expected and showed sequential RevPAR growth deceleration, but investors remain more focused on rising interest rates and their impact on other real estate sectors' valuations rather than still-slowing hotel fundamentals."

The Baird/STR Hotel Stock Index for October outperformed both the S&P 500 (-1.9%) and the MSCI REIT (RMZ) (-5.9%).

The Hotel Brand sub-index was mostly flat (-0.1% to 4,160) in October. The Hotel REIT sub-index declined 2.2% to 1,352 during the month.