Market Report U.S.

Downwards Revision of US Hotel Indicator Reveals Weakness, Hotel Recession Probability Advances

e-forecasting.com

Business activity for US hoteliers declined to a reading of 119.4 in December according to today's release of the Hotel Industry's Pulse (HIP) indicator. "Our predictive analytic, which gauges monthly overall business conditions for hotels earlier than any industry indicator, fell by 0.1%  in December after a decline of 0.1% in November and a nil growth in the previous two months," said Maria Sogard, CEO at e-forecasting.com.

Graph - Probablity of U.S. hotel industry entering a recessionHIP's six-month growth rate, which has historically confirmed the turning points in US hotel business Durham, New Hampshire USA -  Business activity for US hoteliers declined to a reading of 119.4 in December according to today's release of the Hotel Industry's Pulse (HIP) indicator. "Our predictive analytic, which gauges monthly overall business conditions for hotels earlier than any industry indicator, fell by 0.1%  in December after a decline of 0.1% in November and a nil growth in the previous two months," said Maria Sogard, CEO at e-forecasting.com.

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 December, following a positive rate of 1.1% in November. 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.

Two 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 December: Hotel Jobs and Hotel Capacity.  The current business activity indicator which had a negative or zero contribution to HIP's change in December was Total Spending on Hotels (includes non-room revenues).

"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 36.9 % in December, up from 31.6% reported in November," said Evangelos Otto Simos, Professor at the University of New Hampshire and Predictive Analytics Database Editor for e-forecasting.com. "When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession," Evangelos added.

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

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