U.S. hotel recovery may slow

• The current HIP reading is 89.2. The index was set to equal 100 in 2000.
• HIP fell by 0.4% during September.
• The probability of business expansion in the hotel industry was 96.1% in October, down from 97.2% in September.

DURHAM, New Hampshire— HIP continued to fall in October, according to e-forecasting.com in conjunction with STR. After a decline of 0.4% in September, HIP went down 0.3% in October.

HIP, the Hotel Industry Pulse Index, is a composite indicator that gauges business activity in the United States hotel industry in real-time, similar to a gross domestic product measure. The latest monthly change brought the index to a reading of 89.2. 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, continued to deteriorate. During October, the six-month growth rate went up 10.9%, after increasing 13.3% in September. It is useful to benchmark against the long-term growth rate of 3.2% as it is the same as the 38-year average annual growth rate of the industry's GDP.   
        
“For the second month in a row, U.S. hotel performance metrics have shown an increase while the underlying economic data has stalled. The data is still not at a level where we are concerned about a slowdown in the near term," said Chad Church, director, special services at STR. 

The probability of business expansion in the hotel industry was at 96.1% in October, slightly lower than September's reading of 97.2%.
 
The Hotel Industry Pulse Index, or HIP for short, is a hotel industry indicator that 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 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: revenue 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.