Market Report U.S.

US Hotel Industry Recession Risk Remains Low

Hotel Industry Real-Time Indicator - HIP - Report on Current Business Activity
A hotel sign
US Hotel Industry Recession Risk Remains Low

Business activity for US hoteliers rose to a reading of 119.7 in January according to today's release of the Hotel Industry's Pulse (HIP) indicator.  e−forecasting.com's HIP - a predictive analytic which gauges monthly overall business conditions for hotels earlier than any industry indicator - climbed by 0.4%  in January after an increase of 0.2% in December.  The index is set to equal 100 in 2005.

Graph Historical Hotel Business Activity

HIP's six-month growth rate, which has historically confirmed the turning points in US hotel business activity, posted a positive rate of 2.8% in January, following a positive rate of 2.5% in December. This compares to a long-term annual growth rate of 3%, the same as the 40-year average annual growth rate of the industry's gross domestic product.

Graph - Probability of Hotel Industry entering a Recession

The probability of the hotel industry being in recession, which is detected in real-time from HIP with the help of sophisticated statistical techniques, registered 9.1 % in January, down from 10.4% reported in December.  When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession. 

Graph - Hotel Business Activity Jan 2015 -Jan 2016"The slowdown in the growth rate of HIP continued in January for US hoteliers." said Maria Sogard, CEO of e­forecasting.com. "Our recession-risk analytic in the last three months has now stabilized in the 9%-11% range," Maria added.

All demand and supply indicators of current business activity that make up Hotel Industry's Pulse (HIP) Index had a positive contribution to its change in January: Hotel Jobs; Total Spending on Hotels (includes non-room revenues) and Hotel Capacity;.  None of the three indicators of current business activity had a negative or zero contribution to HIP's change in January.

In the last twelve months - January 2015 to January 2016 - overall economic activity, measured by e-forecasting.com's monthly US GDP - rose by 1.8%.  Over the same period, economic activity in US Hotels, measured by HIP, increased by 2.8%."The slowdown in the growth of the national economy has been profound while the hotel industry is so far on a solid upward trend," Maria added.

The latest HIP reading will be used to update e-forecasting.com’s total US Monthly Hotel Forecast as well as market level forecasts for the top 25 US  markets.  For more information on these forecasts which include two-year predictions of occupancy, ADR, RevPAR, online ADR, room profitability and predictive analytics for investing in hotel properties, email us at info@e–forecasting.com with subject: UShotelforecast. 

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 U.S.-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. HIP indicators are also available for the United Kingdom and Germany.

The US hotel industry leading indicator, or U.S.-HIL for short, is a monthly leading indicator for the industry. Building off the tracking success of HIP, the real-time indicator for the U.S. hotel industry, U.S.-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. U.S.-HIL provides useful information about the future direction of the U.S. hotel industry. HIL indicators are also available for the United Kingdom and Germany.



Logos, product and company names mentioned are the property of their respective owners.