Hotel Rates, Profits Hit Benchmark Levels

As expected, the seller's market is showing no signs of letting up. Research firm PricewaterhouseCoopers says hotel-industry profits will reach $20.8 billion this year, the highest level since 2000. And in 2006, profits are expected to reach a new record high of almost $25 billion.

Revenue per available room, better known as RevPAR and a key measure of industry productivity, will increase 7.8 percent this year over last year, according to PwC. The luxury segment is forecasted to experience the strongest average RevPAR growth in the period from 2004 through 2007, at 9.9 percent.

Nationwide occupancy will reach 63.4 percent this year, an increase of 3.3 percent over last year and the highest occupancy rate since 1997, according to PwC's hospitality practice, which also forecasts sizable occupancy growth through 2007.

The average hotel room rate in the United States will hit a record high this year of $89.97, PwC predicts in its midyear lodging forecast.

In 2004, the business travel rebound boosted overall lodging demand by approximately 110,000 average daily rooms, according to PwC's analysis of Smith Travel Research data, resulting in a 4.5-percent increase in room demand. This year, that same segment will contribute 102,000 average daily rooms to total U.S. demand.