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Executive Sentiments on Hotel Prospects Rise

Lodging Executive Sentiment Index for the end of Sept 2012
LESI for Sep 2012 by UNH

DURHAM, N.H. — Hotel executives are more positive about present general business conditions, according to the University of New Hampshire Lodging Executives Sentiment Index (LESI) for the current month ending September 2012. The index rose slightly to 60.7 in September 2012 from 60.0 in August 2012.

Managed by the Department of Hospitality Management at the UNH Whittemore School of Business and Economics, LESI is based on a monthly survey of 20 lodging executives representing companies with more than 2.5 million hotel rooms across lodging segments and geographic regions of the United States -- more than 55 percent of all U.S. rooms.

Executives are asked about their outlook of now and the next 12 months for room reservation and hiring prospects, such as an increase or decrease of their non-managerial work force.

The LESI indices follow the Institute of Supply Management's Index (ISM) method of tracking leading indicators. A LESI survey reading of greater than 50 indicates expansion whereas a reading below 50 indicates decline and the distance from 50 in either direction is indicating the strength of the expansion or decline. During this same period of time, the ISM Index increased slightly from 49.6 to 51.1.

"This slight increase results from lodging executives' more positive opinions of the present general business conditions for their properties, offset in part by a large decrease in their sentiment for how they view general business conditions 12 months in the future. This month-over-month decrease on the future of general business conditions is reinforced by their expectations that room reservations will decrease over the same 12-month period," said Nelson Barber, associate professor of hospitality management who manages the index.

Less than half, or 43 percent, of lodging executives indicated current business conditions were good, up from 40 percent last period, while 43 percent indicated conditions were normal, up from 33 percent during the same period. Fourteen percent of the executives indicated such conditions were bad, an improvement over last period.

Looking forward, 28 percent of the executives thought conditions will be better in the next 12 months, while 57 percent indicated they will be the same and 14 percent thought they would be worse. These future results were worse than the previous period where 28 percent thought the future would be better, 75 percent thought the future would be the same, and no executive thought the future would be worse.

Looking forward 12 months, lodging executives expect to add more non-managerial employees, representing an increase in expectations for lodging executives reporting August 2012. This is in line with the decrease of the national unemployment rate, which fell from 8.1 percent in August 2012 to 7.8 percent in September 2012, as reported by the Bureau of Labor Statistics. This is also in-line with the ISM Employment Index, which increased by 3.1 percentage points, registering 54.7 percent.

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