DURHAM, New Hampshire—Economic research firm e-forecasting.com in conjunction with Smith Travel Research announced their U.S. Hotel Industry Leading indicator—HIL—went up in November, the eighth consecutive month of increase for the indicator. HIL went up 1.4 percent in November after increasing 0.6 percent in October.
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. The latest increase brought the index to a reading of 108.3. The index was set to equal 100 in 2000.
Looking at its six-month growth rate, a signal of turning points, the Hotel Industry's Leading indicator went up by an annual rate of 12.5 percent in November after going up 10.1 percent in October. 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. When the industry was in the deepest part of the recession, this growth rate was down to negative 15.7 percent, which happened in January of this year.
“As the national and global economy shifts out of recession, we see that two components that measure travel intention contributed positively to the leading indicator,” said Maria Simos, CEO of e-forecasting.com. “Expected increases in leisure and business travel increased as economic conditions around the world continue to slowly lift the industry out of the recession.”
Chad Church, industry research manager at STR noted, “On average, the HIL leads recovery in the industry by four to five months; however, as we noted earlier in the year, the lead time will be much longer this time around. The fundamentals are beginning to shape up for 2010. We just have to wait and see if those travel intentions turn into actual trips.”
Six of the nine components that make up Hotel Industry's Leading indicator had a positive contribution in November: labor market tightness, weekly hours in hotels, international visitors future demand, interest rate spread, new orders for manufactured goods and national vacation barometer. Three of the nine components had a negative or zero contribution to the Hotel Industry's Leading Indicator in November: hotel profitability, oil prices and housing activity.
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 HIP, 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 future direction of the U.S. hotel industry.