APPROXIMATELY 51 PERCENT of hospitality industry professionals participating in STR's Hospitality Industry Sentiment survey expressed optimism about their
business confidence over the next two years. Respondents rated their confidence at "8" or higher on a 10-point scale. Analyzing the results over the survey's first
year reveals a gradual, consistent decline in confidence ratings for each time span.
Meanwhile, global recession fears have diminished since the last survey, STR said. Among various industry challenges, "concerns regarding a potential recession" saw
the most significant drop between the last two surveys, ranking third behind labor costs and supply issues. Energy and utility costs are slightly increasing, while
supply chain challenges and group demand issues are gradually diminishing.
Regarding hotel performance, outlined trends influence demand forecasting expectations, the survey said. The percentage of respondents anticipating "strong
improvement" or "some improvement" is gradually declining across all three hotel demand segments. A majority of experts still foresee growth in both business
transient and group demand.
THE BAIRD/STR Hotel Stock Index fell 9.1 percent in September, according to STR. Experts said that they have concerns regarding recession and its impact on the
sector.
The index witnessed a sharp drop of 20.6 percent year-to-date through the first nine months of 2022. In September, the Index surpassed both the S&P 500, down 9.3
percent, and the MSCI US REIT Index, which fell 12.8 percent. The hotel brand sub-index decreased 7.7 percent from August to 8,268, while the Hotel REIT sub-index
dropped 13.5 percent to 989.
"September was a risk-off month for the broader market, and hotel stocks were down sharply as well. However, the Hotel REITs were modest underperformers only, while
the Global Hotel Brands were slight relative outperformers," said Michael Bellisario, senior hotel research analyst and director at Baird. "Broader macroeconomic
concerns continue to dominate investor sentiment and positioning, but underlying hotel fundamentals held steady throughout the month, which relatively helped the
hotel stocks during a volatile time for the capital markets. Investors continue to ask about recession scenarios and downside analyses for our coverage list, which
suggests a lot of the bad news is being priced into the stocks, particularly the Hotel REITs, in our opinion."