U.S. Hotel Stock Tracking Index Closes Up 19.6 Percent in 2016

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Hotel consulting firm STR is reporting that their Baird/STR Hotel Stock Index increased 7.1 percent from November to December 2016, and closed the year up 19.6 percent at 3,702.

"The strong close to the year for hotel stocks was not surprising given industry performance results in November," said Amanda Hite, STR's president and CEO. "We viewed the performance growth in November as an outlier caused by calendar shifts and subsequent group travel strength, thus, we have a more subdued approach in early 2017 even as the stock market seems to suggest that GDP growth will increase sharply. Despite macroeconomic and political turmoil, 2016 will be remembered as a rather average year for the hotel industry with RevPAR (revenue per available room) growth just above 3%."

"Hotel stocks ended the year on a strong note, building upon gains realized in November after the risk-on trade continued to push stocks higher post-election," said Michael Bellisario, senior hotel research analyst and vice president at Baird. "Hotel stock valuations appear to be pricing in a significant rebound in fundamentals for 2017, although we believe management teams will remain relatively cautious as they set guidance expectations for the upcoming year."

The Baird/STR Hotel Stock Index for December outperformed both the MSCI REIT (RMZ) (+4.0%) and the S&P 500 (+1.8%). The index also outperformed the S&P 500 (+9.5%) and the MSCI REIT (RMZ) (+4.2%) for total-year 2016.

The Hotel Brand sub-index reported a 6.8% increase to 4,911 from November to December. The Hotel REIT sub-index experienced a 7.5% rise to 1,640 during the month. In year-end figures, the Hotel Brand sub-index increased 20.4%, and the Hotel REIT sub-index rose 17.8%.