Forecasting industry turning points: the US hotel industry cycle model

Abstract

This study developed for the US hotel industry a business cycle that would cover hotel activity as broadly as possible and one that would represent the magnitude of growth of the industry. For the 28-year period (from 1966 to 1993), the hotel industry demonstrated three cycles (peak to peak or trough to trough). The hotel industry peaked in 1967, 1973, 1980, and 1989. The industry troughed in 1969, 1974, 1982, and 1991. The mean duration of the hotel industry cycle is 7.3 yr, calculated either by peak to peak or trough to trough. This means the next peak would be 1996 or 1997 if the past trends take the same track. According to the mean expansion figure (5.7 yr) the next peak would be also 1996 or 1997. The hotel industry declined sharply after it reached the peaks. The mean duration for the contraction is about two years (1.7 yr) and the mean duration for the expansion is about six years (5.7 yr). The hotel industry cycle was reformed with the hotel industry growth cycle based on year-over-year growth rate. The hotel industry experienced high growth (boom) every four or five years. The average expansion period is about three years and the average contraction period is about two years. The hotel industry led the general business cycle peaks by about 0.75 yr on average and also led at troughs in the general business cycle by roughly 0.5 yr. The results of this study provide useful guideposts for taking every possible advantage of the cycle study to the practitioners and researchers in the hotel industry.