ARE SENTIMENTS GOING SOUTH?

Although it continues to reflect continued expansion in general lodging conditions, this month's Lodging Executives Sentiment Index (LESI) mark of 78.8 is down from 85.7 last period and last year's reading of 86.5. At 67.5, the Future Expectations Index is nearly 10 index points lower than last month's mark of 76.9 and the 85.4 reading this time last year. The Present Situation Index is lower as well, standing at 90.0 versus 95.2 last period and 87.5 a year ago.

The uncertainty of the world situation, its effects on the price of oil and the increase in interest rates have cooled the fast jets the lodging industry has been cruising on for the last year or longer. This is the LESI's first drop below 80 since January 2005.

Eighty percent of lodging executives responding to the survey say current business conditions are “good,” versus 20 percent who feel current conditions are “normal.” Four in ten think business conditions will improve over the next 12 months, while 55 percent say future conditions will be the same.

Lodging executives are somewhat optimistic about the flow of room reservations in the next 12 months. The Reservations Expectations Index reading of 77.5 is up ever so slightly from 76.2 last period but down from 93.8 during the same period a year ago. Sixty percent of those surveyed expect reservations to increase this reporting period, while 35 percent believe reservations volume will stay the same. While Future Expectations and Reservations Expectations usually corroborate one another, this period's readings reveal a mixed response as the reservations index is 10 points higher than future expectations. Perhaps actual reservations on the books are better than the feelings and sentiments lodging executives have about business conditions in general due in part to the world situation.

The 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 Employment Expectations Index reading of 76.3 this period compares to 75.0 both last period and a year ago. Nearly 60 percent of those surveyed expect to add employees over the next 12 months, while 36.8 expect to keep the total number of non-management employees the same. Only 5.3 percent plan to lay off employees over the next 12 months.

The LESI Index follows the Institute of Supply Management's Index method of tracking leading indicators. The LESI was developed and is maintained by the University of New Hampshire's Hospitality Management Program. If you are a lodging executive and would like to be a monthly respondent, please email RayGoodman@aol.com.

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