Future business activity in U.S. hotels declined in April according to the latest reading of the Hotels’ future business conditions (HIL) indicator. e−forecasting.com’s HIL, a composite indicator that gauges future monthly overall business conditions in the U.S. hotel industry, fell by 0.1% in April to 127.1, following a nil growth in March. The index is set to equal 100 in 2010.
HIL’s six-month growth rate, which has historically confirmed the forthcoming turning points in U.S. hotel business activity, posted a positive rate of 0.1% in April, following a positive rate of 0.6% in March. This compares to a long-term annual growth rate of 2%, 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 in the near-term, which is detected in real-time from HIL with the help of sophisticated statistical techniques, registered 47.8% in April, up from 39.8% reported in March. When this recession-warning gauge passes the threshold probability of 50% for a more than three months, the U.S. hotel industry will enter a recession phase in its business cycle.
“HIL, the best predictive analytic of what’s next for US hoteliers, failed to grow for a fifth month in a row,” said Maria Sogard, CEO at eforecasting.com. “In April, the risk for a recession in the hotel industry approached 50%. If the probability of recession follows this upward path over the next few months, a hard landing is certain for hoteliers in the second half of the year,” Maria added.
Four of the forward looking indicators of business activity that comprise Hotel Industry Leading (HIL) Indicator had a positive contribution to its change in April: Jobs Market, Foreign Demand, New Orders and Vacation Barometer. Five indicators of future business activity had a negative or zero contribution to HIL’s change in April: Hotel Worker Hours, Hotel Profitability, Yield Curve, Oil Prices and Housing Activity.
“The six month growth rate of HIL, a long-term growth predictive analytic which confirms the underlying cyclical behavior in the growth of US hotel business, has consistently slowed down in the last thirteen months, hitting an annual growth rate of 0.1% in April from a high of 5.9% in February of 2015,” said Evangelos Simos, professor of economics at the University of New Hampshire and advisor for predictive analytics at e-forecasting .com. “When long-term growth in HIL enters a negative territory, the US hotel industry enters the recession land,” he added.
For month-by month three-year ahead predictions, including insights of online room rates, costs per room and profitability, send an email for complimentary copy of the latest US Monthly Hotel Forecast at: [email protected] with subject: US Hotel Forecast.