Hotel Industry Pulse shows setback in November:
|December 14th, 2009
|e-forecasting.com eNews for the Hotel Industry
DURHAM, New Hampshire — This
morning, economic research firm e-forecasting.com in conjunction
with Smith Travel Research announced HIP hit another bump in
After edging down 0.1 percent in October, HIP went
down 1.8 percent in November. HIP, the Hotel Industry's Pulse
index, is a composite indicator that gauges business activity in
the U.S. hotel industry in real-time, similar to a GDP measure for
the industry. The latest monthly change brought the index to a
reading of 79.9. The index is set to equal 100 in 2000.
Looking at HIP's six-month growth
rate, which historically has signaled turning points in U.S.
hotel business activity, HIP’s growth rate worsened from the
previous month, with a reading of negative 9.3 percent
compared with negative 8.7 percent in October. As a
benchmark, March had been the worst month of the cycle when
the six-month growth rate hit negative 23.4. This compares
with a long-term annual growth rate of 3.2 percent, the same
as the 38-year average annual growth rate of the industry's
gross domestic product.
“As noted last
month, what we are seeing now is that the hotel industry
recovery has gone flat. It seems that the industry, although
we are not seeing major declines again yet, is leveling out
at very low levels,” commented Maria Simos, CEO of
Chad Church, industry research
manager at STR noted, “Although November demand performance
was affected by calendar comparisons to 2008, the revenue
input continues to drag the HIP index in negative territory.
Discounting and the subsequent revenue losses are primarily
to blame for this month’s result.” There were only eight
weekend days in November 2009 compared to nine weekend days
in 2008. The probability of business expansion was lower in
November, recorded at 44.7 percent, nearly half the 87.3
percent reading in October.
HIP is a hotel industry
indicator which was created to fill the void of a real-time
monthly indicator for the hotel industry that captures
current conditions. What the indicator does is provide
useful information about the timing and degree of the
industry’s linking with the U.S. business cycle for the last
40 years. 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.