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US Hotel Construction Surges Ahead

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United States  STR  Baird  S and P 500  David Loeb  Randy Smith  hotel investment research  US Hotel Sector Performance 

US Hotel Construction Surges Ahead

By - Wednesday 13 February 2013

According to the Baird/STR Hotel Stock Index report, the U.S. hotel market recorded a 6.5-percent increase in January to 2,608. The index ended 2012 at 2,448.

This is the latest in a succession of positive reports about the US hotel industry, but is arguably the happiest of all. A boom in the construction of multi-family housing fuelled the US housing recovery, so what now looks like a similar surge in hotel construction not only indicates confidence in the industry, but will fuel growth in it and the economy.

The Baird/STR Hotel Stock Index outperformed both the MSCI REIT (RMZ) (+3.5 percent) and the S&P 500 (+5.0 percent) in January.

"The Baird/STR Hotel Stock Index started 2013 on a positive note," said Randy Smith, co-founder and chairman at STR. "With positive performance expected for 2013, investors are keeping an eye on the industry. And we are forecasting favourable performance increases across the board, most notably in average daily rate and revenue per available room."

"Hotel stocks started the year on a strong note and outperformed for the third consecutive month," said David Loeb, senior hotel research analyst and managing director at Baird. "With the fiscal cliff averted and the debt ceiling delayed, we expect investors to be focused on management teams' 2013 outlooks with fourth-quarter reporting season just around the corner; supply-and-demand fundamentals remain favourable, but valuation keeps us cautious especially after the recent run up in stock prices."

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