LODGING SENTIMENTS RISE

The composite Lodging Executives Sentiment Index (LESI) continues to reflect the upturn in general business conditions. This month's reading of 83.3 (up from an adjusted 79.8 in the last period) suggests continued, healthy expansion in the lodging sector.

The Present Situation Index reading of 85.7 is up significantly from last period's mark of 73.8 and is the highest reading since September, 2000. This indicates that general business conditions in the lodging sector are the best since before Sept. 11, 2001. The Future Situation Index reading of 81.0 moved slightly downward from 85.7 (adjusted) in the last period.

The LESI, created more than four years ago, is a leading indicator based on opinions of lodging executives. 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 is shows the strength of the expansion or decline of the industry.

The spread of responses during this reporting period represents a skewed distribution to the positive side compared to previous reports. In particular, the Present Situation Index is outpacing the Future Situation Index — a rare deviation from the usual opinions of lodging executives. None of the executives reporting this period say current business conditions are bad, and 29 percent believe current conditions are normal. Seven in 10 respondents describe current conditions as good; 61percent feel even more positive about the future.

Lodging executives continue to corroborate their optimism about the future through The Reservations Expectations Index, which reads at 88.1 — up slightly from the previous reading of 85.7. Three-fourths of lodging executives surveyed expect room reservations to increase versus 71 percent who shared this view last period. The survey asks lodging executives to project rooms reservations over the next 12 months as compared to the last 12 months.

The Lodging Employment Index reads significantly higher at 76.2 versus last period's reading of 59.5. The employment index asks lodging industry executives whether, over the next 12 months, they expect to 1) add the total number of non-management employees, 2) keep the number about the same or 3) reduce the total number of non-management employees. Fifty-seven percent of respondents expect to add non-management employees over the next 12 months, while 38 percent expect to keep the total number of non-management employees the same. Only five percent of the group say they anticipate any layoffs in the coming year.

The LESI Index follows the Institute of Supply Management's Index method of tracking leading indicators. The LESI was developed, and is maintained by, LodgingForecast. It satisfies the need for real-time information for executive decision making in the lodging industry.

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