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After rising 7.7% in 2010, Lodging Demand Expected to Increase a Further 3.2%
in 2011 According to PricewaterhouseCoopers US Lodging Industry Forecast

 

NEW YORK, Jan. 24, 2011 -- PwC US's updated lodging forecast expects recovery in lodging industry fundamentals to transition from the initial, demand-driven stage of rebound, to the next stage, which will be largely driven by growing pricing power for hotels. After a period of moderate economic growth in 2010, during which lodging demand continued to increase at a brisk pace, a strengthening U.S. economy, improving consumer confidence and spending, and a continued increase in business and leisure travel are expected to solidify further growth in lodging demand in 2011. After rising 7.7 percent in 2010, lodging demand is expected to increase a further 3.2 percent in 2011.

PwC's updated quarterly lodging forecast is based on an updated US macroeconomic forecast from Macroeconomic Advisers, LLC, which reflects acceleration in real gross domestic product (GDP) growth to an above-trend rate of four percent in 2011. This acceleration was expected even before additional fiscal stimulus was announced in early December, though Macroeconomic Advisers estimate that aspects of the fiscal stimulus will add approximately 0.5 percentage points to real GDP growth in 2011, relative to the forecast assumptions in place in November.

While lodging demand growth is expected to continue in 2011, growth in lodging supply is expected to remain subdued, resulting in continued improvement in the operating performance of existing hotels. Hotel construction activity in 2010 slowed to levels not seen since the early 1990s, with the ratio of new hotel construction starts to existing supply averaging less than one percent. This slowdown in lodging supply is expected to keep the number of new hotel rooms under check, with lodging supply increasing by only 0.6 percent in 2011, significantly below the long-term average of 2.1 percent. As a result of this demand-supply imbalance, occupancy levels are expected to increase to 59.0 percent in 2011. However, with improving occupancy levels, lodging operators are expected to focus on attaining higher average daily room rates (ADR). The combination of benign supply growth and continued demand growth is expected to result in an ADR increase of 5.1 percent in 2011.

"Robust lodging demand growth during 2010 and an improved economic outlook for 2011 are raising expectations for a continued recovery in the U.S. lodging market. Operators will increasingly shift their focus to generating higher room rates in markets that have already recognized a solid base of demand recovery," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC.

A full copy of PwC's US Lodging Forecast can be accessed by visiting: http://www.pwc.com/us/en/asset-management/hospitality-leisure/publications/index.jhtml

About the PwC Network

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

© 2011 PwC. All rights reserved. "PwC" and "PwC US" refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate and independent legal entity.


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Contact: 

Suzanne Dawson, Linden Alschuler & Kaplan
 +1-212-329-1420,
sdawson@lakpr.com

Laura Schooler
PwC US, +1-646-471-3229
laura.schooler@us.pwc.com

 

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