Low Recession Risk for US Hotels
Future business activity in U.S. hotels increased in May according to the latest reading of the Hotels’ future business conditions (HIL) indicator. e?forecasting.com’s HIL, a composite indicator that gauges future monthly overall business conditions in the U.S. hotel industry, went up 0.3% in May to 113.7, after an increase of 0.3% in April. The index is set to equal 100 in 2005.
HIL’s six-month growth rate, which has historically confirmed the forthcoming turning points in U.S. hotel business activity, posted a positive rate of 2.7% in May, the same rate as in April. 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 in the near-term, which is detected in real-time from HIL with the help of sophisticated statistical techniques, registered 7.4% in May, down from April’s rate of 7.7%. When this recession-warning gauge passes the threshold probability of 50% for a more than three months, the U.S. hotel industry will enter a recession phase in its business cycle.
“While the US hotel industry has not fully recovered from recent weakness, there continues to be a low recession probability, calculated using HIL. Recession risk has remained below 15% since last May,” commented Maria Simos Sogard, CEO of e-forecasting.com.
Four of the forward looking indicators of business activity that comprise Hotel Industry Leading (HIL) Indicator had a positive contribution to its change in May: Foreign Demand; Yield Curve; Housing Activity and Vacation Barometer. Five indicators of future business activity had a negative or zero contribution to HIL’s change in May: Jobs Market; Hotel Worker Hours; Hotel Profitability; New Orders and Oil Prices.
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