U.S. Lodging Sector Performance Remains Favorable Despite Sluggish Economic Growth, Says PwC US
August 27, 2013 2:03pm
NEW YORK, Aug. 27, 2013 -- PwC US anticipates that positive momentum in travel activity will continue to boost revenue per available room ("RevPAR") in 2013, despite the recent sluggish pace of economic recovery. An updated lodging forecast released today by PwC US shows favorable gains in hotel performance, consistent with PwC's expectations at the start of the year. Occupancy levels at higher-priced hotels are ahead of prior peak levels, industry RevPAR is above its prior peak, and hotel construction activity, while rebounding, is still quite moderate, according to PwC. As demand continues to outpace supply growth, and economic growth strengthens, PwC expects growth in average daily rate ("ADR") will continue, resulting in RevPAR growth of 5.6 percent in 2013, improving slightly to 5.9 percent in 2014.
The updated estimates from PwC are based on a quarterly econometric analysis of the lodging sector, using an updated macroeconomic forecast released by Macroeconomic Advisers, LLC in August and historical statistics supplied by Smith Travel Research and other data providers. Macroeconomic Advisers expects real gross domestic product ("GDP") to increase by 2.0 percent in 2013, and then accelerate to a growth of 3.0 percent in 2014, measured on a fourth-quarter-over-fourth-quarter basis.
Overall, based on the analysis referenced above, PwC expects lodging demand in 2013 to increase 2.2 percent, which combined with still-restrained supply growth of 0.8 percent, is anticipated to boost occupancy levels to 62.2 percent, the highest since 2007. Demand gains are primarily being led by the business and leisure transient segments, which have benefited from activity in sectors important to lodging, such as technology, healthcare, and business and professional services, among others, while the group segment continues to lag. Recent macroeconomic data suggest that consumer spending is firming, in part due to gains in household wealth, lower household debt burdens, and gradual improvement in labor markets, supporting the underlying momentum of leisure travel. And, though business leaders remain cautious, business investment spending is growing, and companies continue to plan group meetings and events, with stronger bookings in place for 2014. Increased occupancy levels are expected to give operators further confidence to drive increased pricing, resulting in a solid 4.7 percent increase in ADR in 2014.
"While the pace of economic recovery remains an overhang on some segments, particularly group travel, we're seeing business and leisure transient hotel demand remain robust, particularly in most of the U.S. top 25 markets," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC . "As U.S. hotels enter the budgeting and rate negotiation period this fall with their most significant corporate customers, the foundation is in place for room rate gains, in part due to a favorable supply-demand balance."
Tags: u.s. lodging sector,
© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Contact: Laura Schooler
Contact: Suzanne Dawson, LAK Public Relations, Inc.
PwC's Lodging Outlook for U.S.: Hospitality Directions for 2018
PwC: Global Economic Growth in 2018 on Track to Be Fastest Since 2011
Fitch's 2018 Outlook for U.S. Lodging: Fitch Predicts Uninspiring Growth, with Some Upside Risk from Brighter Corporate Outlook
PwC's Manahattan Lodging Index Q3 2017
PwC's Hospitality Directions Forecast
Africa's Hospitality Sector Withstands Economic Headwinds
Lodging Demand Increases Amidst Increased Consumer Confidence, According to PwC
The Five Megatrends That Will Impact the Middle East’s Travel and Tourism Industry: PwC Report
Post-Election Surge in Consumer and Business Sentiment Suggests Momentum for 2017, According to PwC
South Africa’s Hotel and Tourism Sector Set for Steady Growth as Visitor Numbers Continue to Grow
Hotel Loyalty - What’s Driving Customer Loyalty for Today’s Hotel Brands? A PwC Report
In 2016, Average Daily Rate Reluctantly Takes the Driver’s Seat According to Updated Lodging Forecast
Average Daily Rate Growth Continues to Lag Expectations, Despite Peak Occupancy Levels, says PwC US
Room for Growth: European Cities Hotel Forecast for 2015 and 2016 by PwC
Average Daily Rate Growth Expected to Drive US Lodging Performance in Remainder of 2015 and in 2016
Spa Industry Surpasses $15 Billion Mark
Hotel Occupancy Continues to Surprise in 2015 According to PwC US
PwC's 5th Edition of the 'Hospitality Outlook: 2015-2019': South Africa, Nigeria, Mauritius & Kenya
Further Growth Expected in Africa's Hospitality Sector in the Next 5 Years, According to PwC Report
Please login or register to post a comment.