The Baird/STR Hotel Stock Index dropped 5.8% in May to a level of 5,584. Year to date through the first five months of 2022, the stock index has decreased 2.8%.
“Hotel stocks declined in May amid the broader stock market volatility as investors grew concerned about macroeconomic slowing and inflationary pressures, among other risks and uncertainties,” said Michael Bellisario, senior hotel research analyst and director at Baird. “Hotel fundamentals have continued to improve and are showing no signs of slowing; the demand recovery is broadening, the harder-hit urban markets are rebounding, and midweek business travel is coming back at a strong pace. Despite the positive fundamental momentum, investors remain a bit skeptical and are focused on the health of the consumer amid a slowing growth backdrop.”
“Despite macroeconomic uncertainty, consumer spending on travel and hotel rooms has continued,” said Amanda Hite, STR president. “In-person graduation ceremonies drove May performance in many university-based markets, such as New York City, which reached an occupancy level of nearly 90% – its busiest week of the pandemic-era. Leisure markets continue to show strong performance levels, with room rate growth as the prominent bright spot for the industry. Our latest forecast, released early last week at NYU, upgraded the recovery timeline for nominal RevPAR. We expect both nominal ADR and RevPAR to surpass 2019 levels in 2022. Due to increases in new supply and slower corporate demand recovery, occupancy is not forecasted to reach 2019 levels until 2024.”
In May, the Baird/STR Hotel Stock Index fell behind the S&P 500 (flat) but surpassed the MSCI US REIT Index (-6.3%).
The Hotel Brand sub-index fell 6.0% from April to 9,924, while the Hotel REIT sub-index dipped 4.9% to 1,288.