DURHAM, New Hampshire –Economic research firm e-forecasting.com, in conjunction with Smith Travel Research, announced HIP edged down 0.7 percent in June, following a decline of 1.2 percent in May. 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 82.5. 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 declined by an annual rate of 19.2 percent in June, following a decline of 20.7 percent in May. 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.
“This recession continues to drag out, just one month shy of matching the longest one the industry felt back in May ’81 to January ’83, which lasted 21 months,” said Maria Simos, CEO of e-forecasting.com. “At the 20-month mark, this has been a long, drawn-out decline; yet with this reading, we see a continuance of some recovery in the index. The six-month growth rate continues to improve. Even though the industry is still suffering, we’re on the long path to recovery.”
The Hotel Industry Pulse, or HIP for short, 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. 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. 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.