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PwC US Indicates U.S Lodging Sector Recovery Continues, Albeit Cautiously,
with a Projected RevPAR Growth of 5.9% for 2013

NEW YORK, June 3, 2013 -- Reflecting strong performance during the first quarter and positive momentum in travel activity, offset by impacts from near-term fiscal challenges, an updated lodging forecast released today by PwC US anticipates revenue per available room ("RevPAR") recovery in 2013 to stay on course, consistent with PwC's expectations at the start of the year. Recent lodging performance has been favorable, with occupancy levels at higher-priced hotels ahead of prior peak levels, real RevPAR that is above its long-term average, and slow supply growth. This positive trajectory is expected to continue, resulting in RevPAR growth of 5.9 percent in 2013. PwC expects slightly stronger RevPAR growth of 6.2 percent in 2014, driven by strengthening economic growth and solid room rate gains in the context of below-average lodging supply growth.

The updated estimates from PwC US are based on a quarterly econometric analysis of the lodging sector, using an updated macroeconomic forecast released by Macroeconomic Advisers, LLC and historical statistics supplied by Smith Travel Research and other data providers. Macroeconomic Advisers' outlook released in May anticipates sequestration impacts and other fiscal challenges in the near-term, resulting in weaker economic growth in the second and third quarters of 2013. Macroeconomic Advisers expects real gross domestic product ("GDP") to increase by 2.4 percent in 2013, and then accelerate to slightly above-trend growth of 3.3 percent in 2014, measured on a fourth-quarter-over-fourth-quarter basis.

While fiscal contraction is slowing the broader economy, underlying economic momentum is expected to drive further growth in business and leisure travel activity. Recent macroeconomic data suggest that consumer spending is firming, supported by strong gains in household wealth, lower household debt burdens, and gradual improvement in labor markets. 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.

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. Increased occupancy levels are expected to give operators further confidence to drive increased pricing, resulting in a solid 6.2 percent increase in RevPAR in 2014. The strongest performance gains are expected in urban markets, as additional demand allows hotels to be more selective and yield the highest rates on available rooms.


2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Occupancy

59.2%

61.3%

63.0%

63.2%

62.8%

59.8%

54.6%

57.5%

59.9%

61.4%

62.2%

62.9%

ADR Growth

0.2%

4.3%

5.6%

7.5%

6.7%

3.0%

-8.7%

0.0%

3.8%

4.2%

4.4%

5.1%

RevPAR Growth

0.4%

7.9%

8.6%

7.7%

6.1%

-2.0%

-16.7%

5.4%

8.2%

6.8%

5.9%

6.2%

Source: PwC and Smith Travel Research.


"Recent performance of the lodging sector has exceeded industry expectations, even as fiscal challenges encourage near-term caution," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. "Hotels in higher-priced segments are achieving occupancy levels above the prior peak, and looking ahead, the foundation is in place for solid rate gains as travel demand grows and hotel operators adjust strategies accordingly."

About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 158 countries with more than 180,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 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:

Suzanne Dawson
LAK Public Relations, Inc.,
sdawson@lakpr.com
(212) 329-1420
or
Laura Schooler
PwC US
laura.schooler@us.pwc.com
 (646) 471-3229

 

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Also See: U.S. Lodging Sector on Solid Footing at the Start of 2013, Says PwC U.S. Forecasting RevPAR Gains to 5.9% for 2013 / January 2013

Near-term Economic Uncertainty, Weaker Q3 Lodging Performance and the Impact of Superstorm Sandy Result in Lodging Outlook Setback According to Updated Forecast by PwC U.S. / November 2012

Despite Near-term Economic Uncertainty, U.S. Lodging Recovery Remains Intact, Says PwC U.S. Report / August 2012

Continued Recovery in Hotel Room Demand Supports Expected Gains in U.S. RevPAR in 2012 & 2013, According to PwC U.S. Report / June 2012

When a Negative Experience Occurs, Fix it Before Check-Out; Issue Resolution and Current Room Amenities Most Important to Hotel Guests, According to Latest Experience Radar Report Released by PwC for the Hospitality Industry / May 2012

With Improved Occupancy, Focus Turns to Pricing in 2012, According to PwC US Lodging Industry Forecast / January 2012


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