A new lodging executive tool for predicting economic future
The Department of Hospitality Management, at the Peter T. Paul College of Business and Economics, has recently completed a study, forthcoming in the Cornell Hospitality Quarterly, which found lodging executives’ sentiment can be regarded as a leading indicator for the aggregate economy. The lodging industry is known to be closely linked to the general economy with lodging executives and managers in a unique position regarding current and future economic events.
The study, conducted by E. Hachemi Aliouche, Nelson A. Barber, and Raymond J. Goodman, Jr, established that, when used in conjunction with the LESI, the predictive power and the forecast horizon of well-established indicators, such as the Conference Board’s LEI, can be significantly improved.
What is the LESI INDEX?
Twenty lodging executives, representing companies with over 2.5 million hotel rooms across lodging segments and geographic regions of the United States (over 55 percent of all US rooms) are surveyed monthly. The survey requires executives to respond to several questions about the present and future conditions of the market and these questions have remained the same over the last 13 years. For example they are asked to report on present general business conditions (e.g., How would you rate the present general business conditions for your company?) and then to look forward twelve months (e.g., 12 months from now, how do you think that general business conditions will be?). They are also asked to report their outlook during the next twelve months about room reservations and employment practices (increase/decrease of their non-managerial work force).
The LESI is expected to give lodging managers an early glimpse of the direction of the overall lodging industry beyond their own properties and markets, thereby helping them in operational and planning decisions.
LESI Index of Lodging Executives
Beginning with the quarter ending September 30, 2012, the LESI will be published with commentary on the results.