Business activity for US hoteliers declined to a reading of 121.5 in May according to today's release of the Hotel Industry's Pulse (HIP) indicator. "Our predictive analytic, which gauges monthly overall business conditions for hotels earlier than any industry indicator, fell by 0.1% in May after a nil change in April, said James Webber, economic analyst for hotel databases at e-forecasting.com.
HIP's six-month growth rate, which has historically confirmed the turning points in US hotel business activity, posted a positive rate of 0.7% in May, following a positive rate of 1.1% in April. This compares to a long-term annual growth rate of 2%, the same as the 40-year average annual growth rate of the industry's gross domestic product.
Two of the three demand and supply indicators of current business activity that make up Hotel Industry's Pulse (HIP) Index had a positive contribution to its change in May: Hotel Jobs and Hotel Capacity. The current business activity indicator which had a negative or zero contribution to HIP's change in May was hotel Total Revenues – it includes room and non-room revenues.
"The probability of the hotel industry being in recession, which is detected in real-time from HIP with the help of sophisticated statistical techniques, registered 38.0 % in May, up from 31.9% reported in April," said Evangelos Otto Simos, Professor at the University of New Hampshire and Predictive Analytics Database Editor for e-forecasting.com. "When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession," Evangelos added.
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: total revenues from guests staying at hotels and motels, adjusted for inflation; hotel capacity, and hotel employment.
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