HIP: US hotel growth continues to slow:

EDITOR'S NOTE

DURHAM, New Hampshire — Business activity in U.S. hotels went down during December, according to e-forecasting.com’s Hotel Industry's Pulse index.

The Hotel Industry Pulse index, or HIP, is a composite indicator that gauges monthly overall business conditions in the U.S. hotel industry. The index edged down 0.2% to a reading of 104.5 in December, following a decline of 0.2 % in November. The index was set to equal 100 in 2005.

HIP's six-month growth rate, which has historically confirmed the turning points in U.S. hotel business activity, had a positive rate of 1.3% in December, following a positive rate of 2.4% in November. 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 22.5% in December, up from 16.9% reported in November. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.


“Looking at the charts, you can clearly see a slowdown in growth for US hotels closing out the year. While in the end, 2011 was better than anticipated, it looks like 2012 will start off with a slow sputter at best,” said Evangelos Simos, chief economist of e-forecasting.com.

Only one of the three demand and supply indicators of current business activity that constitute HIP had a positive contribution to its change in December: Spending on Hotels. The two of the three indicators of current business activity which had a negative or zero contribution to HIP's change in December were Hotel Jobs and Hotel Capacity.

Continued Simos, “In the last 12 months, overall economic activity, measured by e-forecasting.com's monthly U.S. GDP, rose by 1.5%. Over the same period, economic activity in U.S. hotels, measured by HIP, increased by 3.9%.”

The Hotel Industry Pulse index, 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