Hospitality Stockwatch — April 2023

Authors
Arun Upneja, Ph.D. MBA, Dean, Boston University – School of Hospitality Administration
Steve Kent, Ph.D., CFA, Assistant Professor, Molloy University-School of Business

Review of March 2023 Performance: Winners and Losers

It’s hard to believe that just a few weeks ago, we were worried about a bank run fueled by the failure of Silicon Valley Bank and Signature Bank. Many of us are still worried, but the broader stock market turned around in mid-March. In the second week, the S&P 500 dropped nearly 5% (March 6-March 13, 2023) in reaction to the bank failures. However, it has rallied back recently, primarily led by mega cap tech stocks. Year to date, the S&P 500 is up 7.5%, shrugging off fears of more aggressive Federal Reserve tightening either sending the economy into a recession or exacerbating the losses for banks on their bond holdings. Investors are usually very forward-thinking, but it seems as if they are looking for a period of bliss after a moment of misery. 

The Russell 3000, one of the broadest measures of overall equity performance, is up 7.2% year to date, outperforming the Dow Jones Industrials, one of the most widely viewed but narrow indicators, which is only up 0.4%. The Dow is dollar weighted by stock price and has a higher relative exposure to financial service companies, which may have weighed on its performance. In just a few weeks, companies will start reporting their results for Q1 and updating their forecasts: the debate between near-term reality versus forward thinking may be resolved as this information hits the tape.

Of the 17 sub-sectors we look at most closely, over the past month, the big winner was online sports betting (DraftKings), which rallied on strong results and a great outlook fueled by their operating strength, Super Bowl activity, and new states rolling out betting. Fitness stocks also did well due in large part to Xpotential, a boutique fitness company, reporting strong December quarter results pushing the whole sub-sector up.  

In contrast, the recent travel and leisure SPAC sub-sector was once again incredibly weak. One factor weighing on performance is simply the low base of their share price. With six of the eight stocks below $2.00, even a $0.10 decline shows as a large percentage drop. Car rental stocks (Avis and Hertz) were also weak this past month, after a strong performance earlier in 2023, possibly due to slowing demand for both rentals and used cars in a higher-interest-rate environment. 

Click here to download Hospitality Stockwatch – current as of Saturday, April 1 2023

View last month’s Hospitality Stockwatch – March 2023