STR - Industry Indicator Points Toward Continued Business Expansion

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. May 20, 2010

May 19, 2010 - After increasing 1.4 percent during March, the Hotel Industry Pulse Index jumped 2.5 percent in April, according to economic research firm e-forecasting.com in conjunction with STR.

The Hotel Industry Pulse Index, or HIP, is a composite indicator that 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 85.5. The index was set to equal 100 in 2000.

HIP's six-month growth rate, which historically has signaled turning points in U.S. hotel business activity, continued to show improvement. After 20 months of the six-month growth rate being negative, the rate has gone up three consecutive months. During April, the six-month growth hit 9.1 percent, more than doubling March's increase of 4 percent. This compares with a long-term growth rate of 3.2 percent, which is the same as the 38-year average annual growth rate of the industry's gross domestic product.

“As noted last month, using the same method as the National Bureau of Economic Research, whose dating committee officially determines turning points in the U.S. economy, we believe the hotel industry recession ended in November of 2009," said Maria Simos, CEO of e-forecasting.com. “This month's report suggests extremely strong fundamentals with the indicator, and the six-month growth rate is making a major turnaround."

The probability of business expansion hit 100 percent in April, an improvement from March's already impressive mark of 99.7 percent. This is the fourth consecutive month business probability has increased.

The Hotel Industry Pulse Index, or HIP for short, is a hotel industry indicator that was created to fill the void of a real-time monthly indicator for the hotel industry that captures current conditions. The indicator provides useful information about the timing and degree of the industry's linking with the U.S. business cycle for the last 40 years. Simply put, it tracks monthly overall business conditions in the industry, like an industry GDP, and points in a timely way to the changes in direction from growth to recession or vice versa. The composite indicator is made 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.

About STR
STR provides clients—including hotel operators, developers, financiers, analysts and suppliers to the hotel industry—access to hotel research with regular and custom reports covering North America, Mexico and Caribbean. STR provides a single source of global hotel data covering daily and monthly performance data, forecasts, annual profitability, pipeline and census information. STR founded the STR family of companies and is proudly associated with STR Global, RRC and HotelNewsNow.com. For more information, please visit www.str.com.