DURHAM, New Hampshire—Economic research firm e-forecasting.com in conjunction with Smith Travel Research announced that following a decline of 3.7 percent in March, HIP went down 1.1 percent in April. HIP, the Hotel Industry's Pulse index, is a composite indicator that gauges business activity in the U.S. hotel industry in real-time. The latest decrease brought the index to a reading of 84.2. 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 went down by an annual rate of 21.4 percent in April, a slight improvement over March’s 21.9 percent decline. This compares to a long-term annual growth rate for the hotel industry indicator of 3.2 percent, the same as the 40-year average annual growth rate of the industry's gross domestic product.
“With April’s reading of HIP, the hotel industry is creeping up to the weak performance of the industry during the recession in 1981-1982, which lasted 20 months. Even still, there is some promise in April’s reading as it appears the decline may have hit a bottom, looking at the six-month growth rate and monthly decline,” noted Evangelos Simos, chief economist of e-forecasting.com. The chance of business expansion was just 0.1 percent in April, with the risk of recession registering the maximum level at 99.9 percent.
Chad Church, manager of industry research at STR, added, “This is along the lines of what was expected given recent employment figures and room demand declines seen over the previous month. It looks as though we’ve hit a trough. Now the question becomes how long the industry will drag the bottom.”
The Hotel Industry Pulse index is a hotel industry indicator that was created to fill the void of a real-time monthly indicator 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; and other key economic factors that influence hotel business activity.