Hotel Industry's HIL Index Continues Upward Gains

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(DURHAM, NH) -- Last week the economic research firm e-forecasting.com in conjunction with Smith Travel Research announced that their U.S. Hotel Industry Leading indicator -- HIL -- went up in October, the seventh consecutive month of increase for the indicator.

HIL went up 0.7 percent in October, after edging up 0.3 percent in September. HIL, a monthly leading indicator for the U.S. hotel industry, is a composite leading indicator that, on average, leads the industry's business activity four to five months in advance. The latest increase brought the index to a reading of 106.6. The index was set to equal 100 in 2000.

Looking at its six-month growth rate, a signal of turning points, the Hotel Industry Leading indicator went up by an annual rate of 7.6 percent in October, after going up 5.9 percent in September. This compares to a long-term annual growth rate of 3.6 percent, the same as the annual growth rate of the industry's overall economic activity. At the deepest depths of the recession, this growth rate was down to negative 15.7 percent, which happened in January of this year.                   

Six of the nine components that make up Hotel Industry Leading indicator had a positive contribution in October: labor-market tightness, hotel profitability, international visitors future demand, interest-rate spread, new orders for manufactured goods and a national-vacation barometer.

Three of the nine components had a negative or zero contribution to the HIL in October: weekly hours worked in hotels, oil prices and housing activity.                      

"With the latest reading of the Hotel Industry Leading indicator, we see a continuance of the positive trend in the indicator. This is confirmation that the industry has hit a cyclical shift, from recession to expansion," commented Evangelos Simos, chief economist of e-forecasting.com.

The U.S. Hotel Industry Leading indicator, or HIL for short, is a monthly leading indicator for the 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. What the indicator does is provide useful information about the future direction of the U.S. hotel industry.

 

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