EXECUTIVE SENTIMENT CREEPS UPWARD

This month's Lodging Executives Sentiment Index (LESI) reflects the continued expansion in general business and industry conditions. The reading of 85.9 compares to 84.6 last month* and 79.8 during the same period last year. At 78.1, the Future Expectations Index is quite a bit lower than the LESI, although higher than last month (76.9) and 85.7 a year ago. The Present Situation Index mark of 93.8 compares to 92.3 last period and 73.8 a year ago to date.

The shifting sentiments between the present situation and future expectations are notable. Lodging executives are typically more pessimistic in their attitudes toward the present and highly optimistic about future expectations. The reading is the opposite this period, indicating the present is good and prospects for the near-term future wane somewhat.

Eighty-seven percent of the lodging executives responding said current business conditions are good versus 12.5 percent who view current conditions as normal. About two-thirds of those surveyed believe business conditions will be better in the next 12 months, while 31.3 percent said business conditions will be the same in a year as they are today.

The Reservations Expectations Index shows general optimism among lodging executives. The current reading of 90.6 is up from 86.5 last period and 85.7 during this same period a year ago. Eighty-two percent of executives surveyed expect rooms reservations to increase this reporting period; 18.5 percent said reservations activity will stay the same. Where Future Expectations and Reservations Expectations usually corroborate one another, this period's readings reveal a mixed response. Perhaps the significant negative impact the SARS epidemic had on the travel industry several years ago reflects the overall pessimism, as the Avian Flu continues to populate news headlines. The World Tourism Organization expressed concern that “unnecessary scare-mongering can cause a sharp drop in tourism.” This may explain the overarching pessimism in the face of a fairly positive booking of rooms reservations.

The LESI Employment Expectations Index reading of 73.3 compares to 67.3 last period. This time last year, the Employment Expectations Index was 59.5. More than half of respondents expect to add non-management employees over the next 12 months, while 40 percent say they'll keep the number of non-management employees the same. Only 6.7 percent of executives reporting plan to lay off employees during the next 12 months.

The Lodging Employment Index asks lodging industry executives whether, over the next 12 months, they expect to 1) add to the total number of non-management employees, 2) keep the number about the same or 3) reduce the number of non-management employees.

*Last month's indexes have been modified to accommodate surveys submitted after the publication deadline.

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