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Consumer spending will be key driver of economic growth into 2018

New York, NY, May 22, 2017 Encouraged by the prospect of a strengthening economy, US lodging performance continued to improve in the first quarter of 2017 according to the updated lodging forecast released today by PwC US. Despite a weak first quarter GDP growth estimate of 0.7 percent, lodging demand increased at the strongest quarterly rate since the first quarter of 2015, supporting modest growth in both occupancy and average daily rate (ADR). Overall, revenue per available room (“RevPAR”)  increased 3.4 percent.

Reinforced by rising employment, higher real income, and increased household net worth, consumer confidence and sentiment remain elevated.  For the remainder of 2017, US lodging performance is projected to temper, as peaking supply growth is expected to place increased pressure on pricing power.

PwC’s outlook is based on an economic forecast from IHS Markit, which anticipates the Trump administration will attempt a more modest agenda in 2017 than initially suggested. This may impact previous expectations for significant tax and regulatory reform this year.

A shift in the supply-demand balance in 2018 is anticipated to result in the first annual decline in occupancy, albeit minor, since 2009. Average daily rate growth of 2.2 percent is expected to drive an increase in RevPAR of 2.0 percent, the slowest growth rate in nine years.

The updated estimates from PwC are based on a quarterly econometric analysis of the US lodging sector, using an updated forecast released by IHS Markit and historical statistics supplied by STR and other data providers.

“Despite the on-going post-election partisanship, the US economy currently appears to be on firmer footing, compared to the same period last year,” said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. “Events such as the presidential inauguration and women’s march in January boosted demand for hotel rooms in the greater Washington, D.C. market. This, coupled with other anomalies such as timing of Easter and Passover contributed to a good start in 2017. The industry needs to keep its eye on the prize and make sure this momentum can be sustained throughout the rest of 2017.”

About PwC US

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Contact: Cecile Fradkin / 646.941.9139

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