Lodging Derivative Index Debuts

ITHACA, NY— HQuant LLC has established the HQuant Lodging Index, which is designed to perform as an investment tool for investors who wish to participate in the hotel industry’s future performance without investing in the underlying real estate. The index will provide investors with information on seasonally adjusted hotel ADRs that are based on data collected on more than three million U.S. hotel rooms, or what amounts to 68% of the country’s total room count. The index will specifically allow traders to buy and sell derivative contracts tied to the performance of the U.S. hotel industry. Several prominent trading groups have already expressed an interest in subscribing to the index service. The index is a calculation of the nation’s average ADR and is capable of providing data nationally and in terms of the top 25 markets and in all seven of the market segments tracked by Smith Travel Research. As explained by Daniel Quan, co-founder of the HQuant Lodging Index and the professor of real estate and finance at Cornell University’s School of Hotel Administration, the index will allow investors to participate only in hotels’ day-to-day profitability from operations by constructing and trading contracts based on seasonally adjusted room rate data on a weekly, monthly, quarterly or annual basis without the larger investment involved in acquiring the related real estate. The index grew out of the trend of banks seeking to develop a U.S. commercial derivatives market. Until now, there had been no derivative index exclusively for the hotel industry. The index is expected to be the first in a series of indexes that HQuant will publish to measure the hotel industry’s performance in the U.S. and internationally.