Positive signs continued in September Hotel Industry's Pulse index

Following 19 months of decline, HIP went up for the second month in a row, gaining 1.5 percent in August. HIP, the Hotel Industry's Pulse index, is composite indicator that gauges business activity in the US hotel industry. The latest increase brought the index to a reading of 82.0. The index is set to equal 100 in 2000.

Looking at HIP's six-month growth rate, which historically has signaled turning points in U.S. hotel business activity, HIP's growth rate improved from July‚s negative 17.9 percent to a negative 12.8 percent rate in August. In comparison, March was the worst month of the cycle when the six month growth rate hit negative 23.4. This compares with a long-term annual growth rate of 3.2 percent, the same as the 38-year average annual growth rate of the industry's gross domestic product.

"The hotel industry seems to be pointed to a recovery path for a second month in a row," noted Chief Economist of e-forecasting.com Evangelos Simos. "The bottom of the recession can be confirmed by an upward trend that lasts for five months after a contraction. However, given the second consecutive monthly increase in HIP, our statistical signal of expansion probabilities and the recent behavior of the hotel leading indicator, it seems the current recession has hit a turning point. The question now we have to answer is about the strength and speed of the future upswing."

"We are seeing a softening of demand losses over the previous two months, which does indicate a potential recovery pattern," added Chad Church, Industry Research Manager at STR. "It is important to note that our model does adjust for the date change in Labor Day in 2009, reducing the noise we will see in the monthly performance comparison resulting from last year leading up to the holiday travel week."

Employment figures for the industry have shown a stabilization trend over the past 3 months as well. When comparing levels of employment so far in 2009 to 2008, it appears that absolute levels of employment in the industry have hit a trough at a value 8-8.5% lower than levels in 2008. Because the industry began to shed jobs in the second half of 2009, we expect the percent change of employment year-over-year to show improvement in the 4th quarter of 2009.

About the Hotel Industry Pulse index
The Hotel Industry Pulse, or HIP for short, is a hotel industry indicator which was created to fill the void of a real-time monthly indicator for the hotel industry that captures current conditions. What the indicator does is provide useful information about the timing and degree of the industry‚s linking with the US business cycle for the last 40 years. Simply put, it tracks monthly overall business conditions in the industry, like an industry GDP, and points in a timely way to the changes in direction from growth to recession or vice versa. The composite indicator is made with the following components: revenues from consumers staying at hotels and motels adjusted for inflation, room occupancy rate and hotel employment, along with other key economic factors which influence hotel business activity.

About STR & STR Global
For more than 20 years, Smith Travel Research has been the recognized leader for lodging industry benchmarking and research. Smith Travel Research and STR Global offer monthly, weekly, and daily STAR benchmarking reports to more than 36,000 hotel clients, representing nearly 5 million rooms worldwide. STR is headquartered in Hendersonville, Tenn., and STR Global is based in London. For more information, visit www.smithtravelresearch.com or www.strglobal.com.


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