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Hotel stocks sink after Trump travel restrictions

Public hotel companies' stock prices dropped Jan. 30, lagging broader markets on the first trading day after President Donald Trump signed an executive order restricting travel from seven predominantly Muslim countries.

Trump's order, signed on the afternoon of Jan. 27, sparked protests at airports across the U.S. and court challenges from opponents, including the American Civil Liberties Union.

As of early afternoon Jan. 30, the SNL U.S. REIT Hotel index was down roughly 2.7%, compared to a decline of roughly 0.8% for both the SNL U.S. REIT Equity Index and the MSCI US REIT (RMZ) index. The SNL U.S. REOC Hotel index was down roughly 1.1%, compared to a decline of roughly 0.8% for the S&P 500.

Trump's order came days after the CEO of his hotel company, Trump Hotels, told a conference audience he hoped to expand into all 26 major U.S. cities from the five major U.S. cities where it currently has properties. At the same conference, several hotel executives and investors said they feared protectionist and anti-immigration comments from Trump and his administration could hurt the hospitality industry.

In a note, Robert W. Baird analyst Michael Bellisario said the order, which banned refugees, migrants, and foreign nationals from Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen from entering the U.S., could have broad implications for the hotel industry.

While none of the restricted countries is a top-50 inbound travel market to the United States, "we see broader negative implications to inbound international travel trends to the United States over the near-to-intermediate term as foreigners could become incrementally reluctant to travel to the United States," Bellisario said.

The possibility that the U.S. could build a wall along its border with Mexico, fulfilling a Trump campaign promise and another executive order, is also likely to weigh on travel to the U.S. from Mexico, "given the potential rise in negative sentiment toward the U.S.," Bellisario added.