SENTIMENT REMAINS ON EVEN KEEL

This month's Lodging Executives Sentiment Index (LESI) reading of 79.0 held steady from 78.0 last period but was down from 85.9 during the same period last year. Continued economic expansion is the watchword in the lodging sector, as indicated by the LESI. This period's Present Situation Index reads at 86.0 from 88.0 last period and 91.3 during the same period a year ago. The Future Expectations Index increased somewhat to 72.0 from 68.0 and from 80.4 last year.

The LESI is a leading economic indicator for the lodging sector, and while executives seemed to be telling us that the best of times may come to an end, the current increase in the Futures Expectation Index suggests a small wave of recurrent optimism.

The Construction Expectations Index is a statistic captured by the LESI but seldom reported here. Out of 82 monthly observations, only 19 periods were higher than this month's reading of 78.0. Investment opportunities indicating expansion of rooms inventory appear quite healthy. Sixty percent of executives say they plan to add rooms within the next 12 months.

More than 70 percent of the respondents indicate that current business conditions are good — down from 76 percent last period — with 18 percent saying that conditions are normal.

About half of lodging executives think business conditions will improve over the next 12 months, while 40 percent feel business conditions will stay the same. Less than 10 percent predict that conditions will worsen.

Lodging executives expect a fairly large increase in rooms reservations in the near future. The Reservations Expectations Index reading of 78.0 compares to last month's mark of 80.0 and a reading of 80.4 a year ago. The Reservations Expectation Index asks lodging executives to project rooms reservations over the next 12 months as compared to the last 12 months. About two-thirds of respondents expect reservations to increase in the next 12 months, while 18 percent believe reservations would stay the same. Just eight percent predict a downturn in res activity over the next year.

The Lodging Employment Index jumped to 77.1 last month and reads the same this period. At this time last year, the index reading was 73.9. Fifty-two percent of lodging executives expect to add non-management employees over the next 12 months, while 44 percent plan to keep the total number of employees the same. Nobody expects to lay off employees in 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 total number of non-management employees.

Write to RayGoodman@aol.com to become a survey contributor.

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