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HIP: Hotel business activity hits July high
August 27 2013

The Hotel Industry Pulse or HIP increased 0.3% during the month of July to a reading of 108.2.

DURHAM, New Hampshire—Business activity in U.S. hotels reached record heights in July, according to e-foecasting.com’s U.S. Hotel Industry Pulse index, or HIP.

HIP increased 0.3% during the month to a reading of 108.2. The index gauges monthly overall business conditions in the U.S. hotel industry. HIP was set to equal 100 in 2005.

HIP's six-month growth rate, which historically has confirmed turning points in U.S. hotel business activity, had a positive rate of 4.7% in July, the same rate as in June. This compares to a long-term annual growth rate of 3%, the same as the 30-year average annual growth rate of the industry's gross domestic product. 

The probability of the hotel industry entering into recession, which is detected in real-time from HIP, registered 5% in July—the same rate as the previous month. When this recession-warning gauge passes the threshold probability of 50%, the U.S. hotel industry enters a recession.

“HIP rose in July for a 10th month in row to an all-time high level of business activity during the last 44 years,” said Maria Sogard, CEO of e-forecasting.com.

Two of the demand and supply indicators of current business activity that constitute HIP had a positive contribution to its change in July: Hotel Jobs and Spending on Hotels. The current business activity indicator that had a negative or zero contribution to HIP's change in July was Hotel Capacity. 

“The hotel industry expanded by four times faster than the national economy,” added Maria. “In the last 12 months, overall economic activity, measured by e-forecasting.com's monthly U.S. GDP, rose by 0.8%. Over the same period, economic activity in U.S. Hotels, measured by HIP, increased by 3.9%,” she explained. 

Looking forward, future business activity in U.S. hotels rose in July according to the latest reading of the U.S. Hotel Industry Leading indicator, or HIL. The composite indicator, which gauges future monthly overall business conditions in the U.S. hotel industry, increased 0.1% in July to 114.1, following an increase of 0.8% in June. The index was set to equal 100 in 2005.

“Although HIL reached its highest level on record, cuts in weekly worker hours and rising energy costs held down the growth of the indicator in July,” Simos said.        

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