UNH: LESI Continues to Slide as Future Outlook, Reservations Drop

UNH: LESI Continues to Slide as Future Outlook, Reservations Drop

Wednesday, March 26, 2014

The UNH Lodging Executives Sentiment Index for the month ending February 2014 dropped to 75.0 from 76.9 in January 2014. Overall the lodging executives’ sentiment for present business conditions remained steady during this current period while future business conditions decreased.

“Executive sentiment for general business conditions 12 months from now have weakened, supported by a less than positive view of future reservations and non-managerial employment,” said Nelson Barber, associate professor of hospitality management, who manages the index.

Sixty-seven percent of lodging executives indicated current business conditions were good, an increase from 62 percent last period, while 26 percent indicated conditions were normal, up from 23 percent during the same period. During the current period, 7 percent of executives indicated present conditions were bad, an improvement from last period where 15 percent of the executives reporting had such concern.  

Managed by the Department of Hospitality Management at the UNH Peter T. Paul College of Business and Economics, the LESI is based on a monthly survey of 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 the present and future business conditions, and to report their outlook during the next 12 months about room reservations and employment practices, 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 the February period of time, the ISM Index increased to 52.3 from 51.3 in January 2014.   

Looking forward, 47 percent of the executives thought business conditions will be better in the next 12 months, a decrease from 62 percent last period, while 46 percent indicated they will be the same, up from 38 percent last month. Executive sentiment for this period revealed 7 percent thought business conditions would be worse. 

Looking forward 12 months, lodging executives expect hiring of non-managerial employees, as compared to January 2014 to dip slightly, while February’s unemployment rate, published by the Bureau of Labor Statistics moved up to 6.7 from 6.6 in January. The ISM Employment Index also remained flat compared to last period at 52.3, suggesting that manufacturing is holding off on new employment.  

For more information about LESI, visit http://paulcollege.unh.edu/LESI.