DURHAM, New Hampshire—This morning, economic research firm e-forecasting.com, in conjunction with Smith Travel Research, announced that after 19 months of consecutive decline, HIP climbed 1.6 percent in July. HIP, the Hotel Industry’s Pulse index, is a composite indicator that gauges business activity in the US hotel industry in real-time. The latest increase brought the index to a reading of 82.2. The index was 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 improved from June’s negative 20.5 percent to July’s negative 15.3 percent. March was the worst month of the cycle when the six month growth rate hit negative 23.4. This compares to 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.
“With HIP finally showing a slight improvement after 19 months of decline, it appears we may be seeing the light at the end of the tunnel” said Chad Church, Industry Research Manager at STR. “It will be important to monitor the pace of growth in the HIP over the second half of the year to see if July was an anomaly or a true turning point in this recession.”
Maria Simos, CEO of e-forecasting.com added: “This is the tipping point, and given the deep lows the industry has felt during this recession, it will take time to feel the major effects of recovery. According to the real-time index, July was ground zero for a recovery to take shape.”
The Hotel Industry Pulse, 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 linking with the U.S. business cycle for the past 40 years. Simply put, it tracks monthly overall business conditions in the industry, like an industry GDP, and points to the changes in direction from growth to recession or vice versa in a timely way. 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.