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Future Outlook for US Hotels Shows Improvement Over Current Weakness

2012-11-19

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e-forecasting.com Hotel Industry Real-Time And Leading Indicators - HIP & HIL - Report On Upcoming Turning Point For Us Hotels

Business activity in U.S. hotels declined to in October according to the latest reading of the Hotel Industry's Pulse (HIP) indicator. e−forecasting.com's HIP, a composite indicator that gauges monthly overall business conditions in the U.S. hotel industry, declined to a reading of 103.5 in October, following a decline of 0.1 % in September. The index is set to equal 100 in 2005.

Looking at HIP's six-month growth rate, which has historically confirmed the turning points in U.S. hotel business activity, it had a positive rate of 1.3% in October, following a positive rate of 2.6% in September. This compares to a long-term annual growth rate of 3%, the same as the 30-year average annual growth rate of the industry's gross domestic product.

The probability of the hotel industry entering into recession, which is detected in real-time from HIP with the help of sophisticated statistical techniques, registered 15.5 % in October, up from 10.3% reported in September. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.

"The hotel industry pulse has decreased the last two months in a row, with year over year growth and the six month growth rates showing continued weakness," commented Dr. Evangelos Simos, Chief Economist of e-forecasting.com."

None of the demand and supply indicators of current business activity that constitute Hotel Industry's Pulse (HIP) Index had a positive contribution to its change in October. The three indicators of current business activity which had a negative or zero contribution to HIP's change in October were Hotel Jobs; Spending on Hotels and Hotel Capacity.

Continues Dr. Simos, "In the last twelve months - October 2011 to October 2012 - overall economic activity, measured by e-forecasting.com's monthly U.S. GDP - rose by 1.7%. Over the same period, economic activity in U.S. Hotels, measured by HIP, increased by 1.4%."

Looking forward, HIL, which is the US hotel industry's leading indicator, HIL experienced monthly gains, showing upcoming improvements in the US hotel industry. HIL increased 0.2% in October to 112.1, following a gain of 0.8% in September. The index is set to equal 100 in 2005.

The six month growth rate of HIL improved, posting 3% in October after registering 2.9% in September.

The future outlook for the US hotel industry entering a recession retreated. Future recession risk decreased from September's probability of 6.8% to 6.7% in October. In comparison, the risk of upcoming recession in the US economy, based on e-forecasting.com's eLEI, US economic leading indicator, registered 2% in October.

Six of the forward looking indicators of business activity that comprise Hotel Industry Leading (HIL) Indicator had a positive contribution to its change in October: Jobs Market; Foreign Demand; Yield Curve; New Orders; Oil Prices and Vacation Barometer. The three indicators of future business activity had a negative or zero contribution to HIL's change in October: Hotel Worker Hours; Hotel Profitability and Housing Activity.

"The leading nature of the HIL shows that while current business activity has slowed, the winter months will be slightly stronger due to Americans' continued appetite to take a vacation," continued Mrs. Sogard.

About e-forecasting.com

e-forecasting.com, an international economic research and consulting firm, offers forecasts of the economic environment using proprietary, real-time economic indicators to produce customized solutions for what's next. e−forecasting.com collaborates with domestic and international clients and publications to provide timely economic content for use as predictive intelligence to strengthen its clients' competitive advantage.

The Hotel Industry Pulse, or HIP for short, is a hotel industry indicator that was created to fill the void of a real-time monthly indicator for the hotel industry that captures current conditions. The indicator provides useful information about the timing and degree of the industry's link with the US business cycle for the last four decades. 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.

The US hotel industry leading indicator, or HIL for short, is a monthly leading indicator for the industry. Building off the tracking success of HIP, the real-time indicator for the US hotel industry, HIL was built as a composite indicator that uses nine different components that, on average, when put together have led the industry four to five months in advance of a change in direction in the industry business cycle. HIL provides useful information about the future direction of the US hotel industry.

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