HIP: U.S. hotel recovery slows:
|October 26th, 2010
|e-forecasting.com eNews for the Hotel Industry
DURHAM, New Hampshire —
Economic research firm e-forecasting.com, in conjunction with STR,
announced HIP dropped in September. After an increase of 1.6% in
August, HIP went down 2.2% in September.
HIP, the Hotel
Industry Pulse Index, is a composite indicator that gauges business
activity in the United States’ hotel industry in real time, similar
to a GDP measure for the industry. The latest monthly change
brought the index to a reading of 87.9. The index was set to equal
100 in 2000.
HIP's six-month growth rate, which
historically has signaled turning points in U.S. hotel business
activity, has begun to deteriorate. In September, the six-month
growth rate went up 9.6%, after going up 16% in August. It is
useful to benchmark against the long-term growth rate of 3.2% as it
is the same as the 38-year average annual growth rate of the
industry's gross domestic product.
report gives us pause and provides questions to the sustainability
of the U.S. hotel industry recovery. It will be important to keep
an eye on next month's reading and also pay special attention to
the leading indicator report released next week, the HIL, to see if
the fundamentals are shifting once again,” said Evangelos Simos,
chief economist of e-forecasting.com.
The probability of
business expansion fell away from the high marks reached the last
few months, hitting 70.8% in September. Since January, the
probability had been near 100%.
The Hotel Industry Pulse
Index 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 that influence hotel business activity.
- Current index reading at 87.9.
- Six-month growth rate shows deterioration.
- Index down 2.2% in September.