DURHAM, New Hampshire—Economic research firm e-forecasting.com, in conjunction with Smith Travel Research, announced this morning that their U.S. Hotel Industry Leading indicator, HIL, went up in August for the fourth consecutive month. HIL rose 1.7 percent in August, after rising 2 percent in July. HIL, a monthly leading indicator for the U.S. hotel industry, is a composite leading indicator that, on average, leads the industry’s business activity four to five months in advance. This means that when the HIL increases for four to five consecutive months, the hotel industry should begin to show signs of improvement. The latest increase brought the index to a reading of 105.6. The index was set to equal 100 in 2000.
Looking at its six-month growth rate, a signal of turning points, the HIL indicator went up by an annual rate of 4.9 percent in August, after an increase of 0.7 percent in July. This compares to a long-term annual growth rate of 3.6 percent, the same as the annual growth rate of the industry’s overall economic activity. At the deepest depths of the recession, this growth rate was down to negative 15.7 percent, which happened in January of this year.
Six of the nine components that make up the Hotel Industry's Leading indicator had a positive contribution in August: weekly hours in hotels; hotel profitability; international visitors’ future demand; interest rate spread; new orders for manufactured goods and national vacation barometer. The remaining three components had a negative or zero contribution to HIL in August: labor market tightness; oil prices and housing activity.
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“The leading indicator continues to improve, with the August reading continuing the trend,” said Maria Simos, CEO of e-forecasting.com. “This is the first time in nearly three and a half years that the six-month growth rate of the indicator has been above the long-term trend of 3.6 percent. This is positive news for the industry that expansion lies ahead.”
The U.S. Hotel Industry Leading indicator, or HIL for short, is a monthly leading indicator for the industry. Building off the tracking success of the Hotel Industry Pulse, the real-time indicator for the U.S. hotel industry, HIL was built as a composite indicator that uses nine different components that, on average, when put together have led the industry four to five months in advance of a change in direction in the industry business cycle. What the indicator does is provide useful information about the timing of future shifts in the direction of the U.S. hotel industry.
Read What the HIL? A new leading indicator for the hotel industry
