U.S. Hotel Market H.I.P. Index Improves 1.7 Percent in December

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(DURHAM, NEW HAMPSHIRE) -- Smith Travel Research in conjunction with e-Forecast.com announced that the Hotel Industry's Pulse index gained ground in December.

After edging down 0.3 percent in November, HIP increased 1.7 percent in December. HIP is a composite indicator that gauges business activity in the U.S. hotel industry in real-time, similar to a GDP measure for the industry. The latest monthly change brought the index to a reading of 82.5. The index is set to equal 100 in 2000.

HIP's six-month growth rate, which historically has signaled turning points in U.S. hotel business activity, improved to 1.9 percent compared with a reading of negative 6.8 percent in November. As a benchmark, March represented the worst month of the cycle, when the six-month growth rate hit negative 23.4. This compares with a long-term annual growth rate of 3.2 percent, the same as the 38-year average annual growth rate of the industry's gross domestic product.

"With a boost in occupancy during the New Year weekend and other positive economic contributions, the hotel industry fared better in December than in November. The six-month growth rate continues to improve which shows that industry expansion is just around the corner if the trend holds," commented Maria Simos, CEO of e-forecasting.com. "The probability of business expansion improved in December, reaching 99.7 percent after a weaker reading in November of 92.5 percent.

Chad Church, Industry Research Manager at STR, added: "The strong performance in the closing week of December helped to drive the growth of the HIP. Although demand data looks promising for the month, discounted rates continue to stifle recovery."

HIP was created to fill the void of a real-time monthly indicator for the hotel industry that captures current conditions. What the indicator does is provide useful information about the timing and degree of the industry's linking with the US business cycle for the last 40 years. 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.

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