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High-Flying REIT Lodging Sector Crashes: Ebola Concerns Or Profit Taking?

Hotel REIT shares dove into a veritable sea of red ink during trading on Wednesday October 1 — kicking off a weak Q4 for one of the strongest REIT sectors during 2014.

During the Great Recession hotel stocks languished as companies cut business travel expenses, while job losses and weakened consumer confidence devastated popular resort and vacation destinations. However, during 2013 and YTD, the lodging REIT sector came back from the Great Recession with a vengeance.

The performance set the stage for several hotel REIT IPOs, including Blackstone's huge Hilton Worldwide Holdings Inc.'s record-breaking debut.

So why did shares plunge on Wednesday?

The decline followed reports of one confirmed ebola case in Texas. That case has started to make people nervous; additional reports of Ebola cases could create an environment where the travel and hospitality industries would once again see weaker performance.

Big Picture Has Been Positive

Three of the strongest performers in the lodging REIT sector YTD have been the Ashford Hospitality Trust, Inc., Strategic Hotels and Resorts Inc, and Pebblebrook Hotel Trust.

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