U.S. hotel recovery continues despite inconsistent economy

UNITED STATES A composite indicator measuring hotel industry metrics has deteriorated slightly in the past six months, but the recovery is expected to continue in the United States, despite an inconsistent economy.

The Hotel Industry Pulse Index, or HIP, continued to fall in October, according to in conjunction with STR. After a decline of 0.4% in September, HIP went down 0.3% in October.

HIP gauges business activity in the United States hotel industry in real-time, similar to a GDP measure. The latest monthly change brought the index to a reading of 89.2. The index was set to equal 100 in the year 2000. HIP is calculated 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.

HIP’s six-month growth rate, which historically has signaled turning points in U.S. hotel business activity, continued to deteriorate. During October, the six-month growth rate went up 10.9%, after increasing 13.3% in September. It is useful to benchmark against the long-term growth rate of 3.2% as it is the same as the 38-year average annual growth rate of the industry’s GDP.

“For the second month in a row, U.S. hotel performance metrics have shown an increase while the underlying economic data has stalled,” says Chad Church, director of special services at STR. “The data is still not at a level where we are concerned about a slowdown in the near term.”

HIP pegs the probability of business expansion in the hotel industry at 96.1% in October, slightly lower than September’s reading of 97.2%.