DURHAM New Hampshire—Business activity in the U.S. hotel industry was flat at a reading of 104.6 during March after an increase of 0.1% in February, according to the latest reading of e-forecasting.com’s Hotel Industry Pulse index, or HIP.
HIP is a composite indicator that gauges monthly overall business conditions in the U.S. hotel industry. The index was set to equal 100 in 2005.
HIP's six-month growth rate, which has historically confirmed the turning points in U.S. hotel business activity, had a positive rate of 1.3% in March following a positive rate of 1.7% in February. 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.
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 21.8% in March, up from 20.1% in February. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.
"We continue to see a flat trend in the HIP, hotel industry pulse. The six-month growth rate continues to slow and the recession risk is rising," 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 March: Hotel Jobs and Hotel Capacity. The current business activity indicator which had a negative or zero contribution to HIP's change in March was Spending on Hotels.
Continued Simos, "In the last 12 months, overall economic activity, measured by e-forecasting.com's monthly U.S. GDP, rose by 3.1%. Over the same period, economic activity in U.S. hotels, measured by HIP, increased by 1.9%."
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.
