HOTELMARKETING.COM

Hotel industry leading indicator flattens

September 08, 2010 |

The U.S. Hotel Industry Leading Indicator, or HIL, increased 0.2 percent during July after going down 0.5 percent during June, according to research firm e-forecasting.com in conjunction with Smith Travel Research.

HIL is a monthly composite leading indicator that, on average, leads the U.S. hotel industry's business activity four to five months in advance. The latest monthly change brought the index to a reading of 115.8. The index was set to equal 100 in 2000.

HIL's six-month growth rate, a signal of turning points, went up by an annual rate of 6.2 percent during July after going up 7.2 percent during June. This compares to a long-term annual growth rate of 3.5 percent, the same as the annual growth rate of the United State's overall economic activity.

Five of the nine components that make up Hotel Industry Leading Indicator had a positive contribution in July: labor market tightness, weekly hours in hotels, hotel profitability, interest rate spread and new orders for manufactured goods. Four of the nine components had a negative or zero contribution to Hotel Industry's Leading Indicator in July: international visitors' future demand, oil prices, housing activity and national vacation barometer.
"The fundamentals that measure the U.S. hotel industry had a strong positive contribution in July: labor market tightness, weekly hours in hotels and hotel profitability," said Maria Simos, CEO of e-forecasting.com."Even with this monthly increase, we are still seeing a deterioration in the six-month growth rate, which is now near its long-term trend. This means that growth in the U.S. hotel industry is headed back to its long-term average and may stop seeing some of the strong months we have had this summer."

The U.S. Hotel Industry Leading Indicator, or HIL, is a monthly leading indicator for the hotel industry. Building off the tracking success of HIP, the real-time indicator for the U.S. hotel industry, HIL was built as a composite indicator that uses nine different components that, on average, when put together have led the industry four to five months in advance of a change in direction in the industry business cycle. The indicator provides useful information about the future direction of the U.S. hotel industry.

Related Link: Smith Travel Research

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