DURHAM, New Hampshire—The Hotel Industry Pulse Index (HIP) posted a slight recovery in February, according to economic research firm e-forecasting.com in conjunction with STR. After edging down 0.5 percent in January, HIP improved 1.3 percent in February.
HIP is a composite indicator that gauges business activity in the U.S. hotel industry in real-time, similar to a gross domestic product measure for the industry. The latest monthly change brought the index to a reading of 82.5. 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, improved from the previous month, going back into positive territory with a reading of 0.8 percent compared with negative 3.0 percent in January. During the worst of the hotel industry recession last March, 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.
“This report really takes the same cue as the last few months, and recovery will be a bumpy ride,” said Maria Simos, CEO of e-forecasting.com. “One month of decline, as we saw last month, should not become too worrisome as there tends to be this back and forth while the industry finds its way out of recession.
“Looking at the 6-month growth rate, we see the industry is in fact pulling through, but this by no means a guarantee that it will be smooth sailing from here on out,” Simos said. “Taking a cue from the Hotel Industry Leading Indicator, which typically leads activity in the hotel industry by about five to six months, we do expect to see a leveling in HIP growth after the summer. We will become more confident with this statement if the upcoming readings of the HIL verify the downward trend our last January report identified.”
The probability of business expansion increased to 99.2 percent in February, an improvement from January's reading of 93.7.
The Hotel Industry Pulse Index is an indicator that was created to fill the void of a real-time monthly indicator for the hotel industry. The indicator provides 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, HIP 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.