According to economic research firm e-forecasting.com in conjunction with Smith Travel Research (STR), after an increase of 0.2 percent during December, the Hotel Industry Pulse Index (HIP) went up 0.9 percent during January 2011.
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 for the industry. The latest monthly change brought the index to a reading of 90.7. 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, reversed course and increased compared to the previous month. The six-month growth rate during January was 8.2 percent, an improvement over December's reading of 7.8 percent. It is useful to benchmark against the long-term growth rate of 3.2 percent as it is the same as the 38-year average annual growth rate of the industry's gross domestic product.
"January is the first time the Hotel Industry Pulse Index broke the level of 90 since December 2008. The month also witnessed a rebound in the index's six-month growth rate, as the deterioration stopped and increased over December," said Maria Simos, CEO of e-forecasting.com.
The probability of business expansion in the hotel industry was at 99.4 percent in January, which was higher than December's reading of 98.2 percent.
The Hotel Industry Pulse Index, or HIP for short, was created to fill the void of a real-time monthly indicator for the hotel industry. The index 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 hotel 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.