U.S. Hotel Stock Index Falls 6.9% in September

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It seems that U.S. based hotel stocks did not fare well in the month of September, according to STR. The Baird/STR Hotel Stock Index decreased 6.9% in September to close the month at 3,155.

"Investors continue to discount lodging stocks as global concerns are expected to negatively impact future earnings," said Randy Smith, STR's chairman and co-founder. "While the global expansion of major brands continues to fuel a substantial part of their growth, it also has exposed their earnings to the global slowdown that is affecting our major trading partners. While the outlook for the domestic lodging industry continues to be positive, the strong dollar and the slowdown abroad may continue to be a drag on stock prices."

"Hotel stocks fell for the seventh consecutive month as investors moved into more yield-oriented names following the Fed's decision not to raise short-term interest rates," said David Loeb, senior hotel research analyst and managing director at Baird. "Investors remain wary of slowing macroeconomic trends, which has caused hotel stocks' multiples to reach levels last seen in August and September 2011. Fundamentals slowed a bit in August, mostly due to holiday shifts and weaker convention calendars across most major markets, but September trends have rebounded nicely, and there remains a large disconnect between public market and private market valuations."

The Baird/STR Hotel Stock Index for September lagged the performance of the MSCI REIT (RMZ) (+2.4%) and the S&P 500 (-2.6%).

The Hotel Brand sub-index reported a 6.8% decrease to 4,107. The Hotel REIT sub-index experienced a 7.0% decrease to 1,457 during the month.

As of 1 October 2015, Apple Hospitality REIT and Xenia Hotels & Resorts replaced FelCor Lodging Trust and Strategic Hotels & Resorts in both the Baird/STR Hotel Stock Index and the Hotel REIT sub-index.