Hotel stocks, as indicated by the Baird/STR Index dipped 6.4% to close September at 3,134 points. However, year to date performance remains in positive territory as the index stayed up by 1.3%, according to reports.
“As we enter the final months of 2016, the U.S. hotel industry is bracing for a slowdown in demand growth and (sic) acceleration in the number of open hotels,” said Amanda Hite, STR’s president and chief executive.
“STR expects nationwide occupancy to flatten or decline, as can already be seen in a number of Top 25 Markets. We expect revenue per available room (RevPAR ) to continue to grow and be entirely driven by average daily rate (ADR) growth, but there is
uncertainty around pricing power given we are entering a period of declining occupancies. Investors are clearly underwhelmed by the most recent and expected future performance, and the stock prices in September reflected that,” Hite further explained.
David Loeb, senior hotel research analyst and managing director at Baird, added that hotel stocks “underperformed” in the previous month, as investors focused on their less than stellar performance in the fourth quarter.
“Top-line growth remains sluggish, especially in urban markets, and bottom-line results are being pressured due to higher customer acquisition costs and higher labor-related expense items, both of which set up 2017 to be another slow-growth year.”