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US hoteliers in recession mode

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 59.7 % in May, up from 51.8% reported in April.

DURHAM, NEW HAMPSHIRE USA – Business activity for US hoteliers declined to a reading of 116.0 in May according to 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 earlier than any industry indicator – fell by 0.3%  in May after a decline of 0.1% in April. 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 negative rate of 0.7% in May, following a negative rate of 0.1% in April. 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 59.7 % in May, up from 51.8% reported in April. When this recession-warning gauge is near or passes the threshold probability of 50%, the US hotel industry has entered a recession.

"In the last seven months, monthly growth rates in HIP posted zero or negative numbers" said Maria Sogard, CEO of e­forecasting.com. "Particularly in May, HIP declined by 0.3%, or an annualized decline of 3.6%; such a decline was last seen in May 2009 during the great recession," Maria added.

None of the 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 May. The three indicators of current business activity which had a negative or zero contribution to HIP's change in May were Hotel Jobs; Total Spending on Hotels (includes non-room revenues); Hotel Capacity;

“Two turning-point predictive analytics, recession probabilities and the long-term growth rate, show underlying trends indicative to a recession for US hoteliers. The probability of recession passed the 50% threshold, and the six-month growth rate hit negative readings for a second month in a row,” said Evangelos Simos, professor at University of New Hampshire and research advisor for predictive analytics 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.

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