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October 2011 Press Release of e-forecasting

Hotel Forecast News: e-forecasting Press Release for the Hotel Industry in US Europe and Global Markets

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Probability of US hotel industry recession jumps:

EDITOR'S NOTE

October 25th, 2011
e-forecasting.com eNews for the Hotel Industry

DURHAM, New Hampshire —  Business activity in U.S. hotels declined in September, according to the latest reading of e-forecasting.com’s Hotel Industry Pulse index, or HIP.

HIP, a composite indicator that gauges monthly overall business conditions in the U.S. hotel industry, fell by 0.6 % in September to 103.7, following a decline of 0.5 % in August. The index was set to equal 100 in 2005.       

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 20 % in September, up from 15.8% reported in August. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.       

“Our September reading on the U.S. hotel industry shows the third monthly decline in the Hotel Industry Pulse index,” said Evangelos Simos, chief economist of e-forecasting.com. “Also worrisome, we see the hotel recession probability jumping to 20%. The last time it jumped this high from low levels was in June of 2008, just months prior to the last recession. It will be important to watch this recession probability carefully over the next few months to see if this jump continues and goes past the threshold of 50% or retreats.”      

The index’s six-month growth rate, which has historically confirmed the turning points in U.S. hotel business activity, had a positive rate of 1.9% in September, following a positive rate of 3.5% in August. This compares to a long-term annual growth rate of 3%, which is the same as the 30-year average annual growth rate of the industry's gross domestic product.  
 
Only one of the three demand and supply indicators of current business activity that constitute HIP had a positive contribution to its change in September: Hotel Capacity; The two of the three indicators of current business activity which had a negative or zero contribution to HIP's change in September were Hotel Jobs and Spending on Hotels.

“In the last 12—September 2010 to September 2011—overall economic activity, measured by e-forecasting.com's monthly U.S. GDP, rose by 1.6%. Over the same period, economic activity in U.S. Hotels, measured by HIP, increased by 3.5%,” Simos said.
      
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. 

 
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