US hotel industry remains stagnant

stagnationBusiness activity for US hoteliers rose to a reading of 117.2 in August according to the release of the Hotel Industry’s Pulse (HIP) indicator.  e−forecasting.com’s HIP – a predictive analytic which gauges monthly overall business conditions for hotels – edged by 0.1%  in August after an increase of 0.1% in July.  The index is set to equal 100 in 2010.      

HIP’s six-month growth rate, which has historically confirmed the turning points in US hotel business activity, posted a positive rate of 0.6% in August, following a positive rate of 0.5% in July. 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.

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 39.6 % in August, down from 40.7% reported in July.  When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession.

“The latest reading of business activity in the hotel industry shows that US hoteliers stayed in stagnation mode in August,” said Maria Sogard, CEO of e­forecasting.com. “HIP posted a monthly change of just 0.1% from the previous month, thus it remained within the narrow range of nil to 0.1% for a fourteenth month in a row,” Maria added.

Only one 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 August: Total Spending on Hotels (includes non-room revenues).  The two of the three indicators of current business activity which had a negative or zero contribution to HIP’s change in August were Hotel Jobs and Hotel Capacity.

“The probability of the hotel industry being in recession also has been in a range between 40% to 46% in the last seven months indicating that the industry is in a major slowdown near the borders of the recession,” said Evangelos Simos, professor of Economics at the  University of New Hampshire and editor for predictive analytics databases at e-forecasting.com.

The latest HIP reading will be used to update e-forecasting.com’s total US Monthly Hotel Forecast as well as market level forecasts for the top 25 US  markets.  The firm also covers EMEA markets via a partnership with HotStats with hotel market profitability forecasts.

For more information on these forecasts which include two-year predictions of occupancy, ADR, RevPAR, online ADR, room profitability and predictive analytics for investing in hotel properties, email  [email protected] with subject: UShotelforecast.

 

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