The hotel industry is sending a clear signal that the US economy is not grinding to a halt

By: Myles Udland

Want a sign that the economy is doing fine? Look no further than the hotel industry.

First flagged by Bill McBride at Calculated Risk, in April all of the major metrics measuring the hotel industry hit all-time highs.

Via Jan Freitag at HotelNewsNow:

April had the highest occupancy ever (66.8%) and the highest room demand (99.4 million rooms) ever.

This pushed annualized occupancy (measured as a 12-month moving average) up to 65%.

What does this mean? All key performance indicators (rooms available, rooms sold, revenue, average daily rate, occupancy and revenue per available room) are still at all-time highs.

The broader economic takeaway is simple: If people are moving around the country, be it for leisure or business, the economic engine is still humming along.

In his report, Freitag also noted that April was the 62nd straight month that RevPAR, or revenue per available room, increased. What this measure means, most simply, is that hotels are getting more money for each of their rooms, whether via price increases or because each room is booked more often. And right now, it appears the latter is the case.

In his report, Freitag writes, "Demand was 3 million rooms higher than last year, and supply was only 1.7 million roomnights higher. Ultimately that will change and the industry will sell less new rooms than build new rooms, but we do not expect that to happen until 2017."

So basically, there is a supply shortage in the hotel industry, and there looks poised to be one for some time.

Of course, those who want to signal alarms about eventual problems in the industry or the economy will say that once the hotel industry builds enough rooms to meet current demand, the market will find itself oversupplied.

And maybe so.

But right now, hotels are full more often than not as people move around the country, which isn't really the sign of an economy grinding to a halt.