LODGING SENTIMENT HOLDS STEADY

The Lodging Executives Sentiment Index (LESI) continues to show the lodging industry's strength with a mark of 89.1, versus 89.5 last month and 72.9 during the same reporting period last year.

The Future Expectations Index climbed slightly higher to 91.3 versus 86.8 last month and 81.3 one year ago. The Present Situation Index reading of 87.0 compares to 92.1 last period and 64.6 a year ago. As one executive in the survey noted, “We're seeing many cities like Atlanta, Chicago and Las Vegas picking up group rooms from business displaced from New Orleans all the way through March 2006.”

Our traditionally optimistic group of lodging executives continues to be positive about the future, even more positive than they were last period. More than 80 percent feel future business conditions will be better in the next 12 months; last month 73.7 percent felt positive about future business conditions.

The Reservations Expectations Index reading of 93.5 is up from 86.8 last period and 79.2 during this same period last year. Eighty-seven percent of lodging executives expect room reservations to increase this reporting period versus 73.7 percent who had the same expectation last period. About three-fourths of respondents say current business conditions are good versus 84.2 percent who had the same sentiment in the last reporting period.

The LESI was created more than four years ago by RevForecast, LLC, a group of professors at the University of New Hampshire's Hospitality Management Program. A LESI index reading greater than 50 indicates that the industry is generally expanding and below 50, the lodging sector is generally declining. The distance from 50 shows the strength of the expansion or depth of the decline.

Many hospitality executives believe the recent increases in energy prices will have less of an impact on travel than first thought. Consumers still seem to consider vacation time too valuable to let higher fuel costs stop them. A recent survey by Yesawich Pepperdine Brown and Russell showed that “a strong majority of adults who were planning vacations within six months said they were unlikely to cancel trips because of gas prices.” While their answers were based on gas prices of $3.50 a gallon or lower, the survey found that “higher prices would cause 19 percent to cancel trips, and 53 percent said they would alter travel plans if prices pushed that high.”

The employment index portion of LESI shows a very slight decrease to 73.9 versus 76.3 last month and 65.2 a year ago. About 60 percent of those surveyed expect to add non-management employees over the next 12 months, while 26 percent say they'll keep the total number of management employees the same. 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 total number of non-management employees.

The LESI Index follows the Institute of Supply Management's Index method of tracking leading indicators and satisfies the need for real-time information for executive decision making in the lodging industry.

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