Market Report U.S.

Current US Hotel Business Conditions Continue to Stall

Business activity for US hoteliers held steady at previous month reading of 118.6 in August 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 - stalled, posting a nil growth rate in August after holding steady posting a growth rate of 0% in July.  The index is set to equal 100 in 2010.

Graph - Probability of Hotel Industry Entering a Recession

HIP's six-month growth rate, which has historically confirmed the turning points in US hotel business activity, posted a positive rate of 0.8% in August, following a positive rate of 1.1% in July. This compares to a long-term annual growth rate of 2%, the same as the 40-year average annual growth rate of the industry's gross domestic product.

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 35.9 % in August, up from 32.1% reported in July.  When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession.

"Although the recession probability currently remains below 50%, it has maintained a constant heightened level with expectations based on our predictive modeling that it will increase in the months ahead," said Maria Sogard, CEO of e­forecasting.com. "HIP posted a nil monthly change from the previous month, thus it remained within the narrow range of -0.1% to 0.1% for the twentieth month in a row," Maria added.

Only one of the three 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 August: Total Spending on Hotels (includes non-room revenues).  The two of the three indicators of current business activity which had a negative or zero contribution to HIP's change in August were Hotel Jobs and Hotel Capacity.

"The probability of the hotel industry being in recession also has been in a range between 45% to 46% in the last two months indicating that the industry is in a major slowdown near the borders of the recession," said Evangelos Simos, professor of Economics at the University of New Hampshire and editor for predictive analytics databases at e-forecasting.com. 

About HIP

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. 

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.



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