For the year, PricewaterhouseCoopers forecasts RevPAR to decline 0.3 percent from 2000 levels. The statistical range of the forecast includes values slightly above 0. This forecast is highly dependent on the GDP growth forecast of 1.8 for 2001 by Macroeconomic Advisers.

PricewaterhouseCoopers forecasts a RevPAR decline in the second quarter, which had been anticipated, following growth of 3.4 percent in the first quarter (according to Smith Travel Research). The second quarter decline will be steeper and is forecast to be followed by another quarter of RevPAR decline of 2.1 percent in the third quarter. PricewaterhouseCoopers forecasts that RevPAR in the fourth quarter of 2001 will improve by 0.3 percent from the same period a year ago; the slight rebound will likely not be strong enough to offset the declines in the second and third quarters.
 
Annual nominal RevPAR declined only once in the last 32 years for which data are available. RevPAR fell 2.4 percent in 1991 when the last US recession and the Persian Gulf War depressed lodging demand and room rates. The severity of the lodging demand downturn in the second quarter of 2001 is a reflection of the depth of the current "corporate profits recession". The poorest profit performance in seven years underlies some of the major weaknesses in the economy: decreased fixed investment on equipment and software, employment reductions, and broad decreases in corporate spending.

Consumer or leisure demand and average rates have remained strong compared with business and group demand and rates, but may soften slightly as unfavorable earnings reports, stock market volatility and unemployment reports continue to be negative. The continuing weak second and anticipated third quarter corporate earnings reports will reinforce weakness in the business and group segments. Rates have been supported by corporate rate agreements and meeting contracts made last year, and as these agreements are negotiated for 2002, there will be additional downward pressure on rates.

PricewaterhouseCoopers continues to forecast that 2002 will be a year of recovery with RevPAR increasing by 2.6 over 2001.

PricewaterhouseCoopers is the leader in econometric modeling and providing reliable U.S. lodging industry forecasts that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.