Executive Sentiment Slowly Sinks

The current Lodging Executives Sentiment Index, or LESI, is 72.3, down from last period's 73.8 and farther down from the 79.2 reading of a year ago. Nevertheless, the LESI is holding relatively steady and indicates continued economic expansion in lodging, with this period's Present Situation Index flatlined at 78.6, the same as the last two periods but down from the 87.5 reading a year ago. The Future Expectations Index is 66.1, down from 69.0 last period and last year's reading of 70.8. A reading greater than 50 indicates general industry expansion. One below 50 signals decline. The distance from 50 indicates relative strength or weakness.

Fifty-seven percent of respondents, down from 61.9 percent last period, called current business conditions good, and 43 percent called them normal, versus 33.3 percent last period. None of the executives surveyed indicated current business conditions were bad. With regard to the future, 43.1percent of the executives thought business conditions will improve in the next 12 months versus 47.6 last period. Forty-six percent feel conditions will be the same, up from 42.8 percent last period, and 10.7 percent indicated conditions would be worse, compared to 9.6 percent last period.

The Reservations Expectation Index asks executives to project rooms reservations over the next 12 months as compared to the last 12 months. They expect a somewhat significant decrease: The current period's REI reads 64.3; last period's reading was 76.2, last year's 77.1. Expecting reservations to increase were 35.7 percent of the executives, far fewer than the 57.1 percent last period. That same percentage felt rooms reservations would stay the same this period.

The Lodging Employment Index asks industry executives whether, in the next 12 months, they expect to increase the total number of non-management employees, maintain current levels or reduce that number. This index indicates a decrease to 63.0 this period from last period's 70.0 and last year's reading of 76.1. Thirty-seven percent of the executives indicated they expect the number to to increase.

Lodging Executive Sentiment at a Glance
Indicator Current Index Last Period Index Last Year Index Direction of Business Activity Speed of Change in Business Activity
LESI 72.3 73.8 79.2 Expanding Very Slightly Slower
Present Situation Index 78.6 78.6 87.5 Expanding Flat Lined
Future Expectations 66.1 69.0 70.8 Expanding Slightly Slower
Reservation Expectations Index 64.3 76.2 77.1 Expanding Much Slower
Employment Expectations Index 63.0 70.0 76.1 Expanding Slower
Source: Department of Hospitality Management at the University of New Hampshire

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