DURHAM, New Hampshire—Business activity in the U.S. hotel industry declined in February, according to the latest reading of e-forecasting.com’s Hotel Industry's Pulse index, or HIP.
HIP's six-month growth rate, which has historically confirmed the turning points in U.S. hotel business activity, slowed to 1.9% in February after posting a rate of 2.3% in January. This compares to a long-term annual growth rate of 3%, the same as the 30-year average annual growth rate of the industry's gross domestic product.
HIP, which is a composite index that gauges monthly overall business conditions in the U.S. hotel industry, edged up to a reading of 104.7 in February, following an increase of 0.1% in January. The index was set to equal 100 in 2005.
The probability of the hotel industry entering into recession, which is detected in real-time from HIP with the help of sophisticated statistical techniques, registered 19.1% in February, up from 17.3% reported in January. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.
"In the last four months, HIP has edged up just 0.1% each month. The six-month growth rate is now at the lowest level since January of 2010, and the risk of recession has slowly increased each month since April," said Evangelos Simos, Chief Economist of e-forecasting.com.
Two of the three demand and supply indicators of current business activity that constitute Hotel Industry's Pulse (HIP) Index had a positive contribution to its change in February: Hotel Jobs and Spending on Hotels. The current business activity indicator which had a negative or zero contribution to HIP's change in February was Hotel Capacity.
Continues Dr. Simos, "In the last twelve months - February 2011 to February 2012 - overall economic activity, measured by e-forecasting.com's monthly U.S. GDP - rose by 2.7%. Over the same period, economic activity in U.S. Hotels, measured by HIP, increased by 2.8%."
The Hotel Industry Pulse, 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 link with the US business cycle for the last four decades. 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, along with other key economic factors which influence hotel business activity.