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HIL is a composite leading indicator

HIL regains lost ground

New Hampshire-The U.S. Hotel Industry Leading Indicator, or HIL, went up 0.6 percent in February, gaining ground after last month’s 0.1-percent decline, according to economic research firm e-forecasting.com in conjunction with STR.

HIL 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 111.8. The index was set to equal 100 in 2000.

The indicator’s six-month growth rate, which is a signal of turning points, went up by an annual rate of 12.2 percent in February, after going up 12.6 percent in January. This compares to a long-term annual growth rate of 3.5 percent, the same as the annual growth rate of the states’ overall economic activity. To put this in perspective, this growth rate was down to negative 15.7 percent at the deepest part of the recession during January 2009.

Seven of the nine components that make up HIL had a positive contribution in February: Weekly Hours in Hotels; Hotel Profitability; International Visitors Future Demand; Interest Rate Spread; New Orders for Manufactured Goods; Oil Prices and Housing Activity. Two of the nine components had a negative or zero contribution to Hotel Industry Leading Indicator in February: Labor Market Tightness and National Vacation Barometer.


"Gains in seven components that make up the indicator turned and made up losses in growth from the previous month," said Maria Simos, CEO of e-forecasting.com. "There are two keys the report, however, that are worth noting. First, the domestic vacation barometer took a turn for the worse; its contribution to the indicator has steadily declined since a peak reached in July. Second, it appears the six-month growth rate continues to slide off its peak reached a few months ago. It is turning point identification that makes looking at the six-month growth rate so important."


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.

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