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Hotel industry recession reaches 15 months:
EDITOR'S NOTE
| February 10th, 2009 |
| e-forecasting.com eNews for the Hotel Industry |
DURHAM, New Hampshire — The
Hotel Industry’s Pulse index declined 1.9-percent in January to
bring the index to a reading of 90.8, according to a report from
economic research firm e-forecasting.com in conjunction with Smith
Travel Research.
The index measures the likelihood of a
recession for the U.S. hotel industry. It was set to equal 100 in
2000. January’s 1.9-percent decline followed a drop of 1.2 percent
in December.
HIP’s six-month growth rate, which
historically has signaled turning points in U.S. hotel business
activity, decreased by an annual rate of 16.1 percent in January,
building on December’s 14.5 percent decline. This compares to a
long-term annual growth rate for the hotel industry indicator of
3.2 percent, the same as the 40-year average annual growth rate of
the industry's gross domestic product.
“In January, the
recession risk for the hotel industry, based on HIP’s reading, was
again above the threshold of 35 percent, confirming that the
industry is currently in a recession,” said Maria Simos, CEO of
e-forecasting.com. “This monthly reading takes into account
adjustments due to annual benchmarking of the components and once a
year updates of seasonal factors.”
The odds of business
expansion in the hotel industry were just 1.3 percent in January,
slightly lower than December’s reading of 4.5 percent, Simos
added.
Using the National Bureau of Economic Research
methodology in dating U.S. recessions, HIP indicates that the hotel
industry reached its peak of business activity in November 2007, a
month earlier than the national economy.
“According to HIP,
the hotel industry entered its 15th month in the current recession
in January,” said Chad Church from Smith Travel Research.
The previous two industry recessions, in 1991 and 2001, lasted 17
months each. “If HIP continues to decline for a few more months,
the current recession in the hotel industry may outpace the longest
hotel recession on record that occurred in 1981 and lasted 20
months,” Simos added.
The Hotel Industry Pulse is a hotel
industry indicator created to fill the void of a real-time monthly
indicator that captures current conditions. It provides information
about the timing and degree of the industry’s performance compared
with the U.S. business cycle for the past 40 years. HIP tracks
monthly overall business conditions in the industry, like an
industry gross domestic product, 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: revenue
from consumers staying at hotels and motels adjusted for inflation,
room occupancy rate and hotel employment, along with other key
economic factors that influence hotel business activity.
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