Business activity for China's hoteliers improved in June according to the latest reading of the country's Hotel Industry Pulse (HIP). e−forecasting.com's China HIP - a business analytic which tracks monthly overall business conditions in China's hotel industry - increased 0.6% in June to a reading of 98.8. HIP index is set to equal 100 in 2010.
Looking ahead of the curve, prospects of future business activity for China's hoteliers decreased in June according to the latest reading of the country's Hotel Industry Leading (HIL) indicator. e−forecasting.com's China HIL - a predictive analytic which gauges monthly what's next for business in China's hotel industry - fell 0.2% in June to a reading of 100.3, following an increase of (+0.1%) in May. HIL index is set to equal 100 in 2010.
The six-month smoothed annualized growth rate of China's predictive analytic HIL registered a positive reading of (+1%) in June, following a gain of (+2.1%) in May. Consistent with its goal, the six-month smoothed annualized growth rate in HIL dips down several months ahead of the growth rate of the country's hotel performance indicators, like Revenue Per Available Room (RevPAR). Similarly, when the country's hotels are in a downswing of the industry's business cycle, the growth in HIL pops up first, signaling an upcoming end of the business recession, which implies a forthcoming recovery in business activity.
"The probability for the country's hotels entering a recession in the near future with falling performance indicators, like Revenue Per Available Room (RevPAR), rose to 47.3% in June from 44.3% in May," said Maria Sogard CEO at e-forecasting.com.
"When this recession-warning gauge passes the doorstep probability of 25%, growth in hotel performance indicators slow down substantially; and, when the recession probability passes the threshold of 50%, growth rates in hotel industry's performance indicators will turn from positive to negative in a few months later." Maria added.
"Six of the eight forward looking indicators of business activity that comprise China's Hotel Industry Leading (HIL) had a positive contribution to its change in June: US Future Hotel Business; Merchandise Imports; Leading Economic Indicator; Manufacturing Barometer and Economic Climate; Consumer Confidence; " said Evangelos Simos, editor of predictive analytics databases and professor of economics at the University of New Hampshire. Two indicators of future business activity had a negative or zero contribution to the change of China's Hotel Industry Leading (HIL) in June: Energy Costs and Foreign Demand.
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